ThinkYuva Desk | “Goods and Services Tax” would be a comprehensive indirect tax on manufacture, sale and consumption of goods and services throughout India, to replace taxes levied by the Central and State governments.
Literally, GST (Goods and Services Tax) is a tax levied when a consumer buys a good or service. The GST aims to have one indirect tax for the whole nation, which will make India a unified common market. The bill aims to eliminate the cascading effect of taxes on production and distribution prices on goods and services.
Why GST is important?
GST subsumes all indirect taxes levied by the Centre and the states, including excise duty, service tax, value-added tax, luxury tax and entertainment tax. It will remove all barriers across states and make the country a common market. It is expected to add up to 2% to the gross domestic product, once implemented successfully.
How will it work?
India will adopt a dual GST model wherein the Centre will levy the central GST and the states will levy state GST. An integrated GST will be levied on inter-state movement of goods. The entire tax registration, payment, tax return and refund system will be online and will be administered by the GST network.
By when will it be implemented?
Assuming the Constitution Amendment Bill does pass in the Monsoon Session, GST will still not be in force before April 1, 2017.
Consumers will benefit as the reduced tax burden on goods will get passed on to them.