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Microlesson · 5-min read

Taxes subsumed and not subsumed under GST

# Which Taxes Got Subsumed into GST

GST was designed as a comprehensive consumption tax. To avoid duplication, several existing Central and State indirect taxes were folded into it. But not every indirect tax was subsumed — some sit alongside GST.

## The five principles for subsumation

A tax was considered for subsumation only if:

1. It was an indirect tax on supply of goods or services.

2. It was part of the transaction chain from import/manufacture/provision down to consumption.

3. Subsuming it would enable free flow of tax credit across intra & inter-State supplies (unrelated levies excluded).

4. Revenue fairness for Centre and each State could be ensured.

5. The levy did not relate to areas constitutionally reserved (e.g., alcohol for human consumption).

## Central taxes subsumed

  • Central Excise Duty & additional excise duties
  • Service Tax
  • Excise duty under the Medicinal & Toilet Preparation Act
  • CVD and Special CVD (additional customs duties)
  • Central Sales Tax (CST)
  • Central surcharges and cesses, insofar as they relate to supply of goods/services

## State taxes subsumed

  • State VAT / Sales tax
  • Entry tax (all forms) and Purchase tax
  • Luxury tax
  • Entertainment tax (except those levied by local bodies)
  • Tax on lottery, betting and gambling
  • Taxes on advertisements
  • State surcharges and cesses, insofar as they relate to supply of goods/services

## Taxes / duties NOT subsumed (still levied)

  • Basic Customs Duty (BCD) — continues on imports.
  • State Excise Duty on alcoholic liquor for human consumption.
  • Stamp duty on instruments.
  • Property tax, road tax, electricity duty — State subjects, not subsumed.
  • Entertainment tax levied by local bodies (Panchayats / Municipalities).

## Memory hook

Subsumed = taxes in the supply chain that you can credit. If a levy was outside the credit chain (BCD, stamp duty) or constitutionally protected (State excise on liquor), it stayed.

Worked example

### Example 1

Identify subsumed vs not: From the list — Service Tax, Stamp Duty, CST, BCD, Luxury Tax, State Excise on Liquor — which are subsumed? Subsumed: Service Tax, CST, Luxury Tax. Not subsumed: Stamp Duty, BCD, State Excise on Liquor.

### Example 2

Import scenario: A laptop is imported in 2026. Levies applicable today: BCD (NOT subsumed) + IGST (which replaces the erstwhile CVD + SAD that ARE subsumed).

⚠️ Common exam mistakes

  • Including Basic Customs Duty (BCD) in the subsumed list — only CVD and SAD are subsumed; BCD continues.
  • Saying State Excise on liquor is subsumed — alcoholic liquor for human consumption is outside GST entirely.
  • Listing stamp duty among subsumed taxes — stamp duty is a transaction-based State levy and not subsumed.
  • Forgetting entertainment tax LEVIED BY LOCAL BODIES is NOT subsumed (only State-level entertainment tax was).
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