Goods and Services Tax in India
The Goods and Services Tax (hereinafter referred to as “GST”) is often termed as a “game changer” under the Indian taxation regime. It was first proposed by the then Finance Minister in the budget speech of 2006 and thereafter the GST was introduced officially in India on July 1, 2017.
What is GST?
It is an indirect tax. It is a single tax on the supply of goods and services. It is 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 stages.
GST is further classified into:
- CGST– Central Goods and Services Tax. CGST is levied by the Central Government on intra- State sales
- SGST– State Goods and Services Tax. SGST is levied by the State Government on intra- State sales
- IGST– Integrated Goods and Service Tax. IGST is levied by the Central Government on inter-State sales.
Advantages of GST
Some of the key benefits inter alia include:
- GST taxation regime is relatively a simpler taxation policy as it removes the cascading effect of taxes.
- For trade and industry, it has enhanced the ease of doing business in India
- Removing double taxation in sectors like hospitality, software
- Consolidation and harmonization of laws and procedures relating to taxes in India
- Reduction in compliance costs
It is expected that in the long run, the successful implementation of GST regime in India will lead to a single national market, common tax base and common tax laws in the Centre and States.
Read more about Goods and Services Tax here.