Taxes on Buying a New Car in India (2025): GST, RTO, Registration Fees & EV Exemptions

 

GST and Other Taxes in India: A Complete Guide for Beginners

 

 Table of Contents

1. Introduction to Taxes in India
2. What is GST?
• GST Full Form
• Why GST was Introduced
• History of GST in India
• GST Structure in India
3. Types of GST in India
• CGST
• SGST
• IGST
• UTGST
4. GST Rate Slabs in India
• 0% GST
• 5% GST
• 12% GST
• 18% GST
• 28% GST
5. Benefits of GST
6. Real-Life Examples of GST Calculation
• Within State Purchase
• Interstate Purchase
• Small Business Example
7. Other Important Taxes in India
• Income Tax
• Professional Tax
• Property Tax
• Excise Duty & Customs Duty
• Securities Transaction Tax (STT)
• Stamp Duty
8. Difference Between GST and Other Taxes (with Comparison Table)
9. Challenges and Criticism of GST
10. How GST and Other Taxes Affect Our Daily Life (Simple Examples)
11. FAQs on GST and Taxes
12. Conclusion

 

1. Introduction to Taxes in India

Taxes are the backbone of any country’s economy. Every citizen, directly or indirectly, contributes to the growth of the nation by paying taxes.

• The government uses these funds for building infrastructure, running schools, paying government employees, defence, healthcare, and welfare schemes.
• In India, there are two main types of taxes:
1. Direct Taxes – Paid directly to the government (like Income Tax, Property Tax).
2. Indirect Taxes – Paid indirectly through businesses (like GST, Customs Duty).

Earlier, India had a complicated indirect tax system with VAT, Service Tax, Excise Duty, etc. But in 2017, the Goods and Services Tax (GST) was introduced to simplify this structure.

 

2. What is GST and Why GST Was Introduced

Before GST:

• Every state had its own tax laws.
• Goods were taxed multiple times (Excise, VAT, Service Tax).
• High logistics cost because trucks had to stop at multiple checkpoints for tax clearance.

GST solved these problems with “One Nation, One Tax”.

GST Structure in India

GST is a dual structure – both Centre and State collect tax.

• CGST (Central Goods and Services Tax)
• SGST (State Goods and Services Tax)
• IGST (Integrated GST)
• UTGST (Union Territory GST)
  
  

 

3. Types of GST in India

1. CGST (Central GST):
• Collected by the central government.
• Example: Buying clothes worth ₹1,000 in Delhi → 5% GST = ₹50. Out of this, ₹25 goes to Centre (CGST).
2. SGST (State GST):
• Collected by the state government.
• Using the above example, ₹25 goes to Delhi Government (SGST).
3. IGST (Integrated GST):
• Collected by the Centre on interstate sales.
• Example: Buying the same clothes from Delhi and shipping to Mumbai → 5% IGST = ₹50 (all goes to Centre, later shared with Maharashtra).
4. UTGST (Union Territory GST):
• Applicable in Union Territories like Chandigarh, Andaman, Lakshadweep.

 

4. GST Rate Slabs in India

GST is not a single fixed rate. Different goods and services fall under different slabs:

GST Rate	Items Covered	Example
0%	Essential goods	Fresh vegetables, milk, bread
5%	Daily use items	Edible oil, sugar, tea, medicines
12%	Standard goods	Mobile phones, computers, packed food
18%	Most goods/services	TV, restaurants, online services
28%	Luxury & sin goods	Cigarettes, luxury cars, AC, alcohol (extra cess)

 

5. Benefits of GST

        1. Simplified tax structure (removed VAT, Excise, Service Tax).
        2. Transparent pricing for consumers.
        3. Boosts digital compliance and reduces corruption.
        4. Encourages interstate trade (no multiple checkpoints).
        5. Increased government revenue for development.

 

6. Real-Life Examples of GST Calculation

Example 1 – Within State Purchase

You buy a Refrigerator worth ₹20,000 in Delhi (GST 18%)

• GST = ₹20,000 × 18% = ₹3,600
• Final Price = ₹20,000 + ₹3,600 = ₹23,600
• GST Split = ₹1,800 CGST + ₹1,800 SGST

Example 2 – Interstate Purchase

You buy the same Refrigerator online from Delhi to Mumbai:

• GST = 18% = ₹3,600
• All ₹3,600 collected as IGST (later shared by Centre with Maharashtra).

Example 3 – Small Business Example

A bakery sells cakes worth ₹50,000 in a month (GST 5%)

• GST Collected = ₹2,500
• Bakery owner deposits this GST to government while filing GST return.

 

7. Other Important Taxes in India

Apart from GST, we also pay several direct and indirect taxes:

7.1 Income Tax

• Paid on income by individuals/businesses.
• Example: Salary of ₹8,00,000/year → Tax payable as per income slab.

7.2 Professional Tax

• Levied by state governments on salaried people and professionals.
• Example: In Karnataka, max ₹2,500/year.

7.3 Property Tax

• Paid annually to local municipality.
• Example: Owning a flat in Delhi → Pay property tax to MCD.

7.4 Excise Duty & Customs Duty

• Excise Duty: Tax on manufacturing (merged into GST, except liquor & petrol).
• Customs Duty: Still applicable on imports. Example: Importing an iPhone adds customs duty.

7.5 Securities Transaction Tax (STT)

• Paid when trading shares in stock market.
• Example: Buying shares worth ₹1,00,000 → A small % added as STT.

7.6 Stamp Duty

• Paid on buying property or land.
• Example: Buying a flat worth ₹50 lakh in Maharashtra → Stamp duty around 5-6%.

 

8. Difference Between GST and Other Taxes

Tax Type	Direct/Indirect	Who Pays?	Example
GST	Indirect	Consumers via businesses	Buying clothes, electronics
Income Tax	Direct	Individuals/Companies	Salaried employee
Professional Tax	Direct	Salaried employees, traders	Deducted monthly
Property Tax	Direct	Property owners	Annual house tax
Customs Duty	Indirect	Importers/Consumers	Imported iPhone
Stamp Duty	Direct	Property buyers	Buying a flat
STT	Direct	Investors/Traders	Buying/Selling shares

 

9. Challenges and Criticism of GST

• Complicated filing process for small businesses.
• Frequent changes in GST rates confuse traders.
• Petrol, diesel, alcohol are still outside GST → multiple taxation.
• Small traders feel burden of compliance.

 

10. How GST and Other Taxes Affect Our Daily Life

• Buying pizza → GST 5% or 18%
• Receiving salary → Income Tax + Professional Tax
• Owning a house → Property Tax + Stamp Duty
• Trading shares → STT
• Buying imported laptop → Customs Duty

So, whether we realize it or not, every Indian pays taxes daily.

 

11. FAQs on GST and Taxes

Q1. Who needs to register for GST?
       Businesses with annual turnover above ₹40 lakh (₹20 lakh in special category states).

Q2. Is petrol and diesel under GST?
       No, they are taxed separately by state and central government.

Q3. Do I pay GST while shopping online?
       Yes, GST is already included in the price of online products.

Q4. Can GST be avoided?
       No, it’s mandatory. Avoiding tax is illegal and punishable.

 

12. Conclusion

Taxes are the foundation of a nation’s progress. With GST, India simplified indirect taxation, but other taxes like Income Tax, Property Tax, Stamp Duty, Customs Duty still exist and play a crucial role.

As responsible citizens, we must pay taxes honestly. This not only helps the government run the country but also contributes to better roads, schools, hospitals, and overall development.

 In short: GST = Simplified Indirect Tax. Other Taxes = Direct Contributions. Both are equally important for India’s growth.