Goods and Services Tax popularly known as GST is a new system for indirect tax merged with most of prevailing tax existing into a system of single taxation. This act had been introduced by The Constitution Act of the year 2016.
Goods and Services Tax is known as a comprehensive tax indirect on sale, consumption and manufacture, of goods as well as services throughout India. It will work to replace levied taxes of the central and state governments. This would be levied or collected as Goods and Services Tax at each phase of purchase or sale of services or goods based on the method or system of input tax credit. This system will be allowed to those who have GST registration or to any GST-registered business. They can claim a tax credit to GST that they might had paid on the buying of services or goods as part of their general commercial transaction. Taxable services or goods will not distinguished from each another and they will be taxed at a single prescribed rate in supply chain till the services or goods reach the ultimate consumer.
With introduction of GST (Goods and Services Tax) it will be an important step in reformation of taxation in India and applicability of import export code. Amalgamating of indirect taxes and Central and State tax into a single tax can mitigate double or cascading taxation. Single tax can mitigate double or cascading taxation system can further facilitating a nationwide market. The simplicity of GST (Goods and Services Tax) as soon as will become applicable will lead to easier enforcement and administration. From the point of view of consumer, a biggest advantage will be in reduction in the tax burden on all goods. Reduction in documentation and paperwork will be an added advantage of this to a large extent. Import export code will further become applicable.
What changes there would be if GST launched soon
GST (Goods and Services Tax) rate may be zero or nominal rated on certain important services or goods for the time being. This has been planned to insulate the incomes of the States from the influence of Goods and Services Tax, with the anticipation that in due progression, Goods and Services Tax will be levied on gas and similar products. The government of India has further assured that all states of production may face any revenue losses from the date of introduction of Goods and Services Tax for a period of five years.
In India being a federal republic Goods and Services Tax would be concurrently implemented by the by all state governments and central government.