Goods and Services Tax (GST) What is GST in India? Taxation4U Explained


What is GST in India?

GST is known as the goods and Services Tax. GST is known as the Goods and Services Tax. It is an indirect tax which has replaced many indirect taxes in India such as the excise duty, VAT, services tax, etc. GST is a tax that India imposes on the supply of specific products and services. There is only one tax that is imposed in India.

The Goods and Service Tax Act was passed in the Parliament on 29th March 2017 and came into effect on 1st July 2017..

Types of GST

There are four different components of GST such as CGST, SGST, IGST, and UTGST.

  •     CGST: Central Goods and Services Tax is charged on the intra state supply of products and services.
  •     SGST: State Goods and Services Tax like CGST, is charged on the sale of products or services within a state.
  •     IGST: Integrated Goods and Services Tax is charged on inter-state transactions of products and services.
  •     UTGST: Union Territory Goods and Services Tax is levied on the supply of products and services in any of the Union Territories in the country, viz. Andaman and Nicobar Islands, Daman and Diu, Dadra and Nagar Haveli, Lakshadweep, and Chandigarh. UTGST is levied along with CGST. 

Objective of GST

The following are the key objectives of Goods and Services Tax:

  1.     To minimise the cost
  2.     To enhance the productivity and efficiency
  3.     To make taxation simple by eliminating multiple tax system
  4.     Enhances the compliances with businesses
  5.     To improve the country’s revenue
  6.     To make ‘One Nation, One Tax’
  7.     To replace majority of indirect taxes
  8.     To widen taxpayer base in India
  9.     To decrease the cascading effect of taxes

Advantages Of GST

GST has mainly removed the cascading effect on the sale of goods and services. Removal of the cascading effect has impacted the cost of goods. Since the GST regime eliminates the tax on tax, the cost of goods decreases.

Also, GST is mainly technologically driven. All the activities like registration, return filing, application for refund and response to notice needs to be done online on the GST portal, which accelerates the processes.

Tax Laws Before the Implementation of GST

  •     The Centre and the State used to collect tax separately. Depending on the state, the tax regimes were different.
  •     Even though import tax was levied on one individual, the burden was levied on another individual. In the cases of direct tax, the taxpayer must pay the tax.
  •     Prior to the introduction of GST, direct and indirect taxes were present in India.

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