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What is GST (Goods And Services Tax) in India?

Goods and Services Tax (GST) is the biggest indirect tax reform of India. GST will subsume Central Excise Law, Service Tax Law, State VATs, Entry Tax, Luxury Taxes, Octroi etc. Earlier, there were so many taxes which were levied on goods such as Excise, VAR, entry tax, octroi. Similarly, service tax, entertainment tax, luxury tax were levied on services. Now, there will be only single tax i.e. GST and it will make dream of One Nation, One Tax feasible.

What is GST in India?

GST is one indirect tax for the whole nation, which will make India one unified common market. GST is a single tax on the supply of goods and services. GST is a destination based tax which is levied only on value addition at each stage because credits of input taxes paid at procurement of inputs will be available. Thus, the final consumer will bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages

GST Queries Book

You can also read: Benefits of GST in India

What taxes will be levied under GST?                          

Since India is federal country, Centre Government and State Government both have powers to levy taxes. Under GST regime, Centre and State both have power to levy GST. Therefore, GST in India is divided into two parts:

1.       Central GST (CGST)

2.       State GST (SGST) 

      GST will be divided into two components, one is CGST which is levied by Central Government and other is SGST which is levied by State Government.

   

GST Acts


However, there will be one more type of GST is Integrated GST (IGST). IGST will be levied on inter-state transactions. Since, there are chances that people will get confused in case of transactions between two persons of two different States and there will be difficulty setting off dues of taxes between two States, thus IGST will be levied by Centre. Now, Centre will apportion the State’s portion of GST from IGST to relevant State.


Author Bio: CA Vishal Raheja is a writer and editor for GST Research and Development Department of Taxmann. He is also alumni of Shree Ram College of Commerce and qualified UGC-NET


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Disclaimer: This information is updated till 07 June 2017.

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