What is Goods and Service Tax?

What is GST?

  • The proposed Goods and Service Tax (GST) is a destination based indirect tax that will be levied on supply of goods and services, which is set to subsume the various indirect taxes currently levied by the Centre and the states including excise duty, service tax, value added tax (VAT), Central Sales Tax (CST), purchase tax, octroi, entry tax etc.
  • These taxes are levied at various stages viz manufacture, sale, entry of goods, rendition of services etc.
  • 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 stages.
  • The proposed GST structure is two-tiered, whereby tax would be levied by both Centre and state on intra-state supply of goods or services viz. the Central Goods and Service Tax (CGST) and State Goods and Service Tax (SGST) respectively.
  • The Central GST and the State GST would be levied simultaneously on every transaction of supply of goods and services except on exempted goods and services
  • Credit of the above taxes would available throughout the entire supply chain and the ultimate burden would be borne by the customer.
  • 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 under Article 269A (1) of the

GSTN

  • 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 and services.

Import taxation

  • The Additional Duty of Excise or CVD and the Special Additional Duty or SAD presently being levied on imports will be subsumed under GST.
  • IGST will be levied on all imports into the territory of India.

 

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