GST (Goods & Services Tax) Overview
Goods and Services Tax(GST) is a comprehensive tax levied on manufacture, trade and services across India. From 1st July, 2017 GST has now been replaced most of Centre and State imposed indirect taxes like VAT, Service Tax , Excise etc. It brings in "One nation one tax system" to unite indirect taxes under one umbrella and facilitate Indian businesses to become globally competitive. The Indian GST is structured for efficient tax collection, reduction in corruption, easy inter-state movement of goods etc.
GST has been envisaged as an efficient tax system, neutral in its application .
The advantages of GST are:
- Wider tax base, necessary for lowering tax rates and eliminating classification disputes
- Elimination of multiplicity of taxes and their cascading effects
- Rationalization of tax structure and simplification of compliance procedures
- Harmonization of center and state tax administrations, which would reduce duplication and compliance costs
- Automation of compliance procedures to reduce errors and increase efficiency
The GST structure would follow the destination principle. Accordingly, imports would be subject to GST, while exports would be zero-rated. In the case of inter-state transactions within India, State tax would apply in the state of destination as opposed to that of origin.