GST is one indirect tax for the whole nation, which will make India one
unified common market.
GST is a single tax on the supply of goods and services, right from the
manufacturer to the consumer.
Credits of input taxes paid at each stage will be available in the
subsequent stage of value addition, which makes GST essentially a tax only
on value addition at each stage.
The final consumer will thus bear only the GST charged by the last
dealer in the supply chain, with set-off benefits at all the previous
Tax payer services such as registrations, returns, payments, etc. would
be available to the taxpayers online, which would make compliance easy and
GST will ensure that indirect tax rates and structures are common across
the country, thereby increasing certainty and ease of doing business.
A system of seamless tax-credits throughout the value-chain, and across
boundaries of States, would ensure that there is minimal cascading of taxes.
Under GST, there would be only one tax from the manufacturer to the
consumer, leading to transparency of taxes paid to the final consumer.
Because of efficiency gains and prevention of leakages, the overall tax
burden on most commodities will come down, which will benefit consumers.
It would also bring in a lot of unorganized sector of the economy within
Goods and Services Tax Council
To examine issues relating to goods and services tax and make
recommendations to the Union and the States
It is on parameters like rates, taxes, cesses and surcharges to be
subsumed, exemption list and threshold limits, Model GST laws, etc.
The Council shall function under the Chairmanship of the Union Finance
Minister and will have all the State Governments as Members.
Taxes subsumed under GST
Central Excise Duty, Service Tax, Countervailing Duty, Special
Additional Duty of Customs.
At the State level, State Value Added Tax/Sales Tax, Entertainment Tax
(other than the tax levied by the local bodies), Central Sales Tax
Octroi and Entry tax, Purchase Tax, Luxury tax, and Taxes on lottery,
betting and gambling
Administration of GST
There will be two components of GST – Central GST (CGST) and State GST (SGST).
Both Centre and States will simultaneously levy GST across the value
chain. Tax will be levied on every supply of goods and services.
Centre would levy and collect Central Goods and Services Tax (CGST), and
States would levy and collect the State Goods and Services Tax (SGST) on all
transactions within a State.
The input tax credit of CGST would be available for discharging the CGST
liability on the output at each stage.
Similarly, the credit of SGST paid on inputs would be allowed for paying
the SGST on output. No cross utilization of credit would be permitted.
In case of inter-State transactions, the Centre would levy and collect
the Integrated Goods and Services Tax (IGST) on all inter-State supplies of
goods and services
For the implementation of GST in the country, the Central and State
Governments have jointly registered Goods and Services Tax Network (GSTN) as
a not-for-profit, non-Government Company to provide shared IT infrastructure
The key objectives of GSTN are to provide a standard and uniform
interface to the taxpayers, and shared infrastructure and services to
Central and State/UT governments.
There would no manual filing of returns. All taxes can also be paid
online. Most returns would be self-assessed.
Analysts feel that in the short term, there could be some impact on
prices of services which now attract an average service tax of around 14 per
cent only at the Central level.
However, in the case of manufactured products like automobile, the
standard GST could be much lower than the combined present effect of excise
and state levies.
However, in the medium to long term, this should play out. On the whole,
GST should be anti-dote to inflation.