The full form of GST is Goods and Service Tax. It is an indirect tax introduced in India from 1st July 2017. It is a value-added tax levied on the manufacture, sale, and consumption of goods and services. Alternatively, GST can be defined as a destination based tax where the tax is collected on the place where the ultimate consumption is done, no matter how long the journey of good otherwise had been!! At every stage of supply, credit for, the taxes already paid on purchases or inward supply is allowed. And, the final payout occurs from the pocket of the consumer of goods or service. There are differential rates prescribed by Central Board of Indirect Tax & Customs (CBIC). There is also a GST council set up to make and implement the by laws. Here are some of the key changes which GST has brought to the old taxes system :
- Abolishing Cascading effect i.e. tax on tax.
- Removing the differentiation between goods and service, the only concept is supply
- Bringing harmony to the overall economy by concepts like E waybill
- TDS and TCS introduced in the indirect taxes
- Single window clearance
- Freedom from multiple taxations
- Increased transparency and so on