GST stands for "Goods and Services Tax", and is proposed to be a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level. It will replace all indirect taxes levied on goods and services by the Indian Central and State governments.
GST is a consumption-based, which means that the tax is to be collected by the state in which the goods or services were consumed, not where they were manufactured. However, the bulk of GST will be with the central government, as its three components make clear.
Central GST is the component of GST that will be levied by the central government on all items, both goods and services. It only applies to intra-state trade.
State GST is the component of GST that will be levied by the state government on all items, both goods and services. It only applies to intra-state trade.
Integrated GST is the component of GST that will be levied by the central government in case of inter-state trade. It is applicable on all items, both goods and services.
