Type
Essay
Pages
9 pages
Word Count
3023 words
School
N/A
Course Code
N/A

Goods and Service Tax

February 7, 2016
Introduction
GST stands for “Goods and Services Tax”, and is proposed to be a comprehensive indirect tax levy on
manufacture, sale and consumption of goods as well as services at the national level. It’s main
objective is to consolidates all indirect tax levies into a single tax, except customs (excluding SAD)
replacing multiple tax levies, overcoming the limitations of existing indirect tax structure, and creating
efficiencies in tax administration. One of the reasons to go the GST way is to facilitate seamless credit
across the entire supply chain and across all States under a common tax base. The current framework
allows limited inter-levy credits between CENVAT (tax on manufacture) and service tax. However, no
cross credits are available across these taxes and the sales tax/VAT
paid (on input) or payable (on output). Introduction of GST would thus rationalize the tax content in
product price, enhance the ability of business entities to compete globally, and possibly trickle down to
benefit the ultimate consumer.
The Goods and Services Tax (GST) is a value added tax that will replace all indirect taxes
levied on goods and services by the Government, both Central and States, once it is
implemented. The GST is all set to consolidate all State economies. This will be one of the
biggest taxation reforms that will take place in India once the Bill gets officially the green signal
to implement. The basic idea is to create a single, cooperative and undivided Indian market to
make the economy stronger and powerful. The GST will see a significant breakthrough towards
an all-inclusive indirect tax reform in the country. In the year 2000, for the first time the idea of
initiating the GST was made by the then BJP Government under the leadership of Atal Behari
Vajpayee. An empowered committee was also formed for that, headed by Asim Dasgupta (the
then Finance Minister of the West Bengal Government). The committee was formed to design
the model of the GST and at the same time inspect the preparation of the IT department for its
rollout. In 2011, the previous United Progressive Alliance (UPA) Government also introduced a
Constitution Amendment Bill to facilitate the introduction of the GST in the Lok Sabha but it
was rejected by many States.
What is GST?
The GST is basically an indirect tax that brings most of the taxes imposed on most goods and
services, on manufacture, sale and consumption, under a single domain at the national level. In

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