What Are the Taxes Subsumed Under GST?
The Goods and Services Tax (GST) introduction in India on 1st July 2017 was a historic tax reform. It replaced a complex system of multiple indirect taxes with one simple, unified tax. But what does this mean? In this blog, we’ll explain in easy words what taxes were subsumed under GST, that is, which taxes got merged into GST and are no longer charged separately.
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What Does “Subsumed” Mean in GST?
The word “subsumed” means absorbed or included into something bigger. So, taxes subsumed under GST (Goods and Services Tax) are those old indirect taxes that were abolished and included within GST. Instead of paying separate taxes to the Centre and the State, businesses now pay a single tax system, GST.
This has made tax filing easier, removed the cascading effect (tax on tax), and brought more transparency into India’s taxation system.
Categories of Taxes Before GST
Before GST was introduced, there were two types of indirect taxes:
- Central Taxes – Collected by the Central Government
- State Taxes – Collected by the State Governments
Both had multiple types of taxes, leading to confusion and complexity.
Central Taxes Subsumed Under GST
| Name of Tax | Explanation |
|---|---|
| Central Excise Duty | Tax on manufacturing of goods |
| Service Tax | Tax on services like consultancy, hospitality, transport, etc. |
| Additional Excise Duties | Additional tax on certain goods (like tobacco, textiles) |
| Countervailing Duty (CVD) | Duty imposed on imported goods, equivalent to excise duty |
| Special Additional Duty (SAD) | Duty on imports to counterbalance sales tax/VAT |
| Excise Duty on Medicinal and Toiletry Products | Tax on production of cosmetic and healthcare items |
| Central Surcharges & Cesses | Now merged with GST (except a few specific ones) |
These taxes are now part of CGST (Central GST) under the new system.
State Taxes Subsumed Under GST
| Name of Tax | Explanation |
|---|---|
| Value Added Tax (VAT) | Tax on sale of goods within the state |
| Sales Tax | Levied on intra-state sales |
| Purchase Tax | Charged on certain goods purchased |
| Luxury Tax | Imposed on luxury goods like hotel rooms, cars, etc. |
| Entry Tax | Charged when goods entered a state |
| Entertainment Tax | Now part of GST except for local bodies |
| Taxes on Lottery, Betting and Gambling | Subsumed under GST at higher rates |
| State Cesses and Surcharges | Merged into GST to remove duplication |
These are now covered under SGST (State GST) in the GST system.
Why Were These Taxes Merged into GST?
- To simplify the indirect tax structure
- To avoid tax-on-tax situations
- To make business easier across states with uniform rules
- To increase transparency and reduce corruption
- To bring all goods and services under one tax system
This was a major step forward in India’s indirect tax reforms and has helped with smoother GST return filing.
Which Taxes Were Not Subsumed?
Some taxes are still outside the scope of GST:
- Basic Customs Duty (on imports)
- Stamp Duty (on property transactions)
- Electricity Duty
- Alcohol for human consumption (still taxed by states)
- Petroleum products (like petrol and diesel)
These continue under the old laws until brought into the GST framework.
Conclusion
The taxes subsumed under GST show how India’s indirect tax system was simplified and reformed. Instead of dealing with dozens of taxes from different authorities, businesses now follow a single GST structure. This has made it easier for companies to operate across states and has improved overall tax compliance.
To make compliance easier, you can use powerful GST accounting software that helps track taxes, manage returns, and ensure accurate filings.
Also Read: GST Registration – Step-by-Step Guide
I am a chartered accountant with over 14 years of experience. I understand income tax, GST, and balancing financial records. I analyze financial statements and tax codes effectively. However, I also have a passion for writing, which is different from working with numbers. Recently, I started writing articles and blog posts. My goal is to make finance easier for everyday people to understand.
