1. Goods and Service Tax (GST) is the single comprehensive indirect tax, operational from 1 July 2017, on supply of goods and services, right from the manufacturer/ service provider to the consumer.
2. It is a destination based consumption tax with facility of Input Tax Credit in the supply chain.
3. It is applicable throughout the country with one rate for one type of goods/service.
4. It has amalgamated a large number of Central and State taxes and cesses. It has replaced a large number of taxes on goods and services levied on production/ sale of goods or provision of service.
5. As there have been a number of intermediate goods/services, which were manufactured/provided in the economy, the pre GST tax regime imposed taxes not on the value added at each stage but on the total value of the commodity/service with minimal facility of utilisation of Input Tax Credit (ITC). The total value included taxes paid on intermediate goods/services. This amounted to cascading of tax.
6. Under GST, the tax is discharged at every stage of supply and the credit of tax paid at the previous stage is available for set off at the next stage of supply of goods and/or services. It is thus effectively a tax on value addition at each stage of supply.
7. In view of our large and fast growing economy, it aims to establish parity in taxation across the country, and extend principles of ‘value- added taxation’ to all goods and services.
8. It has replaced various types of taxes/cesses, levied by the Central and State/UT Governments.
9. Some of the major taxes that were levied by the Centre were Central Excise Duty, Service Tax, Central Sales Tax, Cesses like KKC and SBC. These have been subsumed in GST.
10. The major State taxes were VAT/Sales Tax, Entry Tax, Luxury Tax, Octroi, Entertainment Tax, Taxes on Advertisements, Taxes on Lottery /Betting/ Gambling, State Cesses on goods etc. These have been subsumed in GST.
11. Five petroleum products have been kept out of GST for the time being but with passage of time, they will get subsumed in GST.
12. State Governments will continue to levy VAT on alcoholic liquor for human consumption. Tobacco and tobacco products will attract both GST and Central Excise Duty.
13. The GST council has fitted over 1300 goods and 500 services under four tax slabs of 5%, 12%, 18% and 28% under GST. This is aside from the tax on gold that is kept at 3% and rough precious and semi-precious stones that are placed at a special rate of 0.25% under GST.
|The 101th Constitution Amendment Act received assent of the President of India on 8 September, 2016.|
The amendment introduced Article 246A in the Constitution, empowering Parliament and Legislatures of States to make laws with reference to Goods and Service Tax imposed by the Union and the States.
Thereafter (Central GST) CGST Act, (Union Territory GST) UTGST Act and (State GST) SGST Acts were enacted for GST.