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What is GST - Goods and Services Tax in India

GST - Goods and Services Tax

What is GST?

GST, abbreviation for Goods and Services Tax is a revolution in the tax history and the future of India. It was recently introduced in the systems of India as an indirect tax reform. It refers to a single/one way tax implied on all goods and services. Every commodity or service that functions in India is subject to GST. As a result, it is a “destination based tax” in it’s true sense. The following are subsumed by GST – VAT, Entry Tax, Octroi, Central Excise Law, etc.

The installation of GST in the Indian system has brought massive change in the system.

The importance of GST in the Indian economy is as follows:

GST is one among the major reforms that the Indian economy has had. The main aim of introducing the concept of GST was to initiate the union of state economies and encourage the overall growth of the Indian economy.

At the national level, GST is an indirect tax levy, comprehensive in nature, that is imposed on manufacture, production, distribution and consumption of goods and services. The norms set therein, have managed to effectively replace all indirect taxes implied by the State and the Central.
A total of 160 countries function on GST. It is an indirect tax that is collected by the State. It is collected on an account of consumption of goods. GST came into effect in the Indian economy since, July 1, 2017. A dual GST model was adopted on which, taxes were levied by the State and the Central on the goods and services or sometimes both.

The components of GST are as follows:

SGST: State GST which is collected by the State government.
CGST: Central GST which is collected by the Central government.
IGST: Integrated GST which is collected by the Central government.

Why is GST needed in India?

Reformation in the Indian taxation system has been broughtabout by the introduction of GST. Tax evils like double taxation, cascading, multiplicity of taxes, taxable event, classification issues and many more have been eliminated due to the amalgamation of various Central and State taxes into a single one.

The rules and regulations set by VAT are different for different states. Also, GST has led to uniformity in the tax systems across the country. The tax system in India has been divided into the Central and the State to enhance co – ordination and smooth functioning. 

1 comment:

  1. Great work indeed. These articles are very impressive, informative and also innovative. Keep posting and sharing . Thanks a lot.

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