Goods & Services Tax (GST), founded on the notion of one nation, one market, one tax’, is one of the most important tax reforms in the history of India. Until June 30, 2017, Indians were perpetually surrounded by a gamut of indirect taxes.
Through a significant initiative taken by the Indian government - GST - a common indirect tax has been implemented across India with effect from July 1, 2017. Its objective is to bring about uniformity in taxation by merging all indirect taxes, which will assist in reducing the hassles of compliances and help in improving tax governance in India. Under the GST regime, the tax is levied at every point of sale. In the case of intra-state sales, Central GST (CGST) and State GST (SGST) are charged. Inter-state sales are chargeable under Integrated GST (IGST).
Background
The main reason behind GST implementation was the cascading structure of the Indian tax system. Rakesh Raj Singh, Manager, GST Operations and Head, Communications, Samadhan Consultancy Services, informed BE, “The old tax system was very complex and was unable to prevent the cascading effect of tax (tax-on-tax). The old system had many loopholes, so those liable to pay tax could not be brought under the tax net which also led to evasion. Tax revenue of the government was another important reason behind GST implementation.”
How has GST impacted the Indian economy?
This story is from the June 16-30, 2019 edition of BUSINESS ECONOMICS.
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This story is from the June 16-30, 2019 edition of BUSINESS ECONOMICS.
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