Introduction

The introduction of Goods and Services Tax (GST) would be a significant step in the reform of indirect taxation in India. Amalgamating several Central and State taxes into a single tax would mitigate cascading or double taxation, facilitating a common national market. The simplicity of the tax should lead to easier administration and enforcement. Keeping in mind the federal structure of India, there will be two components- Central GST (CGST) & State GST (SGST). Both Central & State will simultaneously levy GST across the value chain. Tax will be levied on every supply of goods & services.

GST is a 'destination-based' tax, which means it's charged where goods are consumed, as opposed to where they are produced. It is a single tax on the supply of goods and services, right from the manufacture to the consumer. Credit 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 supply chain, with set off benefits at all the previous stages.