The Goods and Services Tax (GST)

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You are here: Home / Economics / The Goods and Services Tax (GST)
The Goods and Services Tax (GST)

May 28, 2016 By Prafull 1 Comment
Goods and Services Tax (GST), a value added tax, is collected at all points in the supply chain. In this
particular tax, credit is permitted for any tax that has been paid on inputs procured for use in making the
supply. The tax would be applied to both goods and services in a broad manner in which exemptions are
restricted to minimum.
Abiding by the principles of federal structure of India it has been proposed that Goods and Services Tax
should be imposed by the Centre (CGST) and the States (SGST) concurrently. For inter-state supply there is
an integrated GST (IGST).
In the context of the supply of goods, an additional tax, in addition to IGST, of up to 1% has been proposed
to be imposed by the Union Government. The revenue collected from this tax is going to be assigned to the
concerned states. This tax would be levied for initial two years or as recommended by the Goods and
Services Tax council as far as the time limit is concerned.
Must Read:Colonial Exploitation of Indian Economy
History of the GST in Parliament

Goods and Services Tax was introduced in the year 200 when the Vajpayee Government formed a
committee to design a model for Goods and Services Tax. This committee was headed by Asian Dasgupta
who was then Finance Minister of the West Bengal.
On 28th February 2006, during the budget session of (2006-07) of the Union Government, the then Finance
Minister made the announcement that Goods and Services Tax would be introduced from 1 April 2010 and
that the Empowered Committee of State Finance Ministers, on the Ministrys request, would work in tandem
with
Central Government
in preparing a CURRENT
road mapAFFAIRS
for introduction
of Goods
in India.
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National Proposals about Goods and Services Tax

Following the announcement of 2006-07 of the Finance Ministry, on May 10, 2007 Joint Working Group
(JWG) was set up by the Empowered Committee of State Finance Ministers. After going through several
rounds of intensive internal discussions and interaction with experts and representatives of Chambers of
Commerce and Industry (CCI), on 19 November, 2007 the JWG submitted its report to the Empowered
Committee which the Committee discussed in detail in its meeting on 28 November 2007. After doing some
modications to the report the nal version of the Empowered Committee (EC) was sent by it to the
Government of India on 30 April 2008. The report, titled A Modal and Roadmap for Goods and Services Tax
(GST) in India, consisted of comprehensive recommendations about the structure and design of GST.
Responding to the report of the EC, the Revenue Department referred some suggestions to be incorporated
in the design and structure of the proposed Goods and Services Tax.
On 10 November 2009 the EC released based on inputs from Government of India and States, its First
Discussion Paper on Goods and Services Tax in India with an aim to generate debate and avail inputs from
all stakeholders.
The EC proposed a dual GST modal under which Goods and Services Tax have two sections: the Central
GST to be imposed and collected by the Centre and the State GST to be imposed and collected by the
respective States. Taxes to be subsumed within the Goods and Services Tax are: Central Exercise duty,
additional exercise duty, Service Tax, and additional duty of customs (equivalent to excise), state VAT,
entertainment tax, taxes on lotteries, betting and gambling and entry tax that are not raised by local bodies.
Also Read:Industries Contributing to Indian Economy
The Present Status of GST

The GST Bill, ofcially known as the Constitution (One Hundred and twenty second Amendment) Bill, 2014,
proffers a national Value Added Tax to be introduced in India from June 2016.
On 6th May 2015, in order to introduce GST, the Lok Sabha passed the much delayed Constitutional
Amendment Bill to pave the way for a new Bill on the uniform tax regime. The Bill is set to be sent to a
Parliamentary Committee for review by the Rajya Sabha, where the opposition has said that they are in
favor of the GST Bill, but want some amendments to be made by the Union Government to be vetted by a
select
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The GST Bill, that was conceived twelve years ago, has been kept pending because there were some
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changes needed in the basic Bill and all states were not in favor of many provisions of the Bill particularly
with the clause dealing with sharing of the revenue collected through the GST.
However, the incumbent Finance Minister has assured the states to compensate them for any revenue loss
by saying that the new uniform indirect tax will be much less than 27% that has been recommended by an
expert panel.
Must Read:Agriculture in India: Challenges with Agricultural Marketing and APMC Act
Advantages of Goods and Services Tax

The advantages of the Goods and Services Tax, an efcient tax system, neutral in its application and
attractive in terms of its distribution, are :
Elimination of multiplicity of taxes and their gushing effects;
Rationalization of tax structure and simplication of procedures of its compliance;
Harmonization of States and Central tax administrations that would abate duplication and
compliance costs;
Wider tax base, essential for decreasing the tax rates and eliminating classication disputes.
GST would substitute most indirect taxes which are currently in place such as service tax, Central
Excise Tax, Purchase Tax etc.
The Goods and Services Tax structure would follow work on the destination principle according to
which imports would be subject to Goods and Services Tax, while exports would be zero-rated. The
State tax would be applicable in the State destination, in the context of inter-state transactions, as
opposed to that of origin.
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Filed Under: Economics, GS
Tagged With: Goods and Services Tax
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Shifa says
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July 23, 2016 at 2:59 pm
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Must Read:Colonial Exploitation of Indian Economy

History of the GST in Parliament

National Proposals about Goods and Services Tax

Also Read:Industries Contributing to Indian Economy

The Present Status of GST

Advantages of Goods and Services Tax

July 23, 2016 at 2:59 pm

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