GST full form is Goods and Services Tax

Q: What are the types of GST?

There are 4 types of GST as given below Central GST (CGST), State GST (SGST), Integrated GST (IGST), Union Territory GST (UTGST).

Updated on August 4, 2026Author:NEXT IAS Contributors

The GST full form is Goods and Services Tax (GST), it is an all-inclusive indirect tax that was launched in India from 1 July 2017. This tax has been designed in order to merge several indirect taxes imposed by both the central and state governments into one uniform tax system. It is a destination-based tax imposed on the supply of goods and services in all stages of manufacturing and distribution and gives benefit of input tax credit in order to prevent the problem of cascading tax.

जीएसटी (GST) यानी वस्तु एवं सेवा कर (Goods and Services Tax) भारत में लागू एक एकीकृत अप्रत्यक्ष कर है। यह 1 जुलाई 2017 को लागू हुआ और इसने कई पुराने करों जैसे की मूल्य वर्धित कर (VAT), एक्साइज ड्यूटी, सर्विस टैक्स आदि को हटाकर “एक देश, एक कर” की व्यवस्था बनाई। जीएसटी वस्तुओं और सेवाओं की आपूर्ति पर लगता है । इसे अंतिम उपभोक्ता देता है और व्यापारी सरकार तक पहुँचाते हैं। इसमें इनपुट टैक्स क्रेडिट की सुविधा मिलती है, जिससे “टैक्स ऑन टैक्स” कम होता है।

Types of GST

S.No.	Type of GST	Levied By	Applicable On	Revenue Goes To
1	CGST or Central Goods and Services Tax	Central Government	Intra-state supply of goods and services (within the same state)	Central Government
2	SGST or State Goods and Services Tax	State Government	Intra-state supply of goods and services (within the same state)	Respective State Government
3	IGST or Integrated Goods and Services Tax	Central Government	Inter-state supply, imports, exports, and supplies to or from Union Territories (UTs)	Shared between Centre and Destination State
4	UTGST or Union Territory Goods and Services Tax	Union Territory Administration	Intra-UT supply in Union Territories without their own legislature such as Chandigarh, Lakshadweep, Andaman & Nicobar	Respective Union Territory

Input Tax Credit (ITC)

The Input Tax Credit or ITC is one of the most important tools under GST through which a registered trader can reduce their tax burden on sales (output tax) by the amount of GST already paid for purchases (input tax).
It removes the ‘cascade’ or ‘tax-on-tax’ effect since tax is collected only on the value addition at each point of the value chain.
For example, if the trader pays ₹18 of GST on input but earns ₹30 of GST on output, then he can get a credit of ₹18 and pay ₹12 of net GST to the government.
In order to claim ITC, the buyer should be registered under GST, receive a valid tax invoice, receipt of goods, services and tax payment by the supplier through filing of returns. Certain goods or services are not eligible for claiming the ITC.

Historical Background

The concept of GST in India was first introduced in 2000 in order to reform the highly complicated indirect taxation system of the country. A committee was constituted that designed a model GST structure that would eventually lead to the introduction of one uniform tax structure to replace various central and state taxes. It was only in 2006 that the Government of India declared its intent to introduce GST, which was delayed due to consultations with the Centre and the states. With the passage of the Constitution (101st Amendment) Act, 2016, the path to GST was cleared.

Objectives of GST

To remove the need for multiple indirect taxes levied by the center and the states.
To simplify the existing indirect taxation system and avoid cascading through the Input Tax Credit (ITC).
To ensure a common national market where there is uniformity in taxation in all states and UTs.
To ensure the smooth movement of goods and services without any inter-state tax barriers.
To introduce more transparency and accountability in the tax system and earn more money for the government by widening the tax base.
To minimize tax evasion through the online system of tax filing and payment.
To boost the economic growth of the country by minimizing business costs and increasing efficiency and make the ease of doing business better.
To help formalize the economy through GST and make the consumers' life better through fair pricing and reduced taxes.

Significance

Goods & Services Tax (GST) is India’s greatest indirect tax transformation, which is marked by several important developments:

No More Cascading Taxes: With the implementation of the Input Tax Credit (ITC) facility, GST abolished “taxes on taxes,” thereby reducing costs of production and costs to consumers.
Unified National Market: The creation of one national tax out of many state and central taxes helped India achieve the long-awaited dream of “One Nation, One Tax, One Market” and made logistical processes easier.
Formalizing the Economy: Through the implementation of the digital GST Network (GSTN), India has managed to make all transactions traceable, thus formalizing the economy.
Making Businesses Easier: Registration, filing, and refund of taxes became much easier through a single digitized portal, increasing foreign investments and entrepreneurship.