The Goods and Services Tax (GST) is a/an:

An indirect tax is a tax collected by an intermediary, such as a seller, from the person who finally bears the burden, such as the consumer. In an indirect tax, the person who pays the tax to the government (the seller) and the person who actually bears its burden (the buyer) are different. GST is charged on the supply of goods and services, added to the price, and paid by the consumer, while the business deposits it with the government.

GST was introduced in India from 1 July 2017 through the 101st Constitutional Amendment Act, 2016, which added Article 246A. It replaced many central and state indirect taxes, such as central excise duty, service tax, VAT, entry tax and entertainment tax, creating "One Nation, One Tax". It is a destination-based tax on consumption.

GST has three main forms:

• CGST (Central GST) and SGST (State GST, or UTGST in Union Territories), charged together on supplies within a state.
• IGST (Integrated GST), charged on supplies between states and on imports.

The GST Council, under Article 279A, decides tax rates and rules. It is chaired by the Union Finance Minister and includes the finance ministers of the states. For many years, the main GST slabs were 5%, 12%, 18% and 28%; in September 2025, the Council simplified the structure into two main slabs of 5% and 18%, with a 40% rate for a few luxury and "sin" goods. Some essential items are exempt. Petroleum products and alcohol for human consumption are kept outside GST for now.

Why not the other options?

• ✗A direct tax, such as income tax, is paid by the person on whom it is imposed and cannot be shifted.
• ✗Wealth tax was a direct tax on net wealth; it was abolished in 2015.
• ✗Capital gains tax is a direct tax on profits from selling assets.