What is GST?

GST, or Goods and Services Tax, is an indirect tax imposed on the supply of goods and services. It is a multi-stage, destination-oriented tax imposed on every value addition, replacing multiple indirect taxes, including VAT, excise duty, service taxes, etc. Goods and services are included under a single domestic indirect taxation law for the whole of India. In this regime, tax is charged at each point of sale.

1. History of GST (Goods and Service Tax)

GST was first implemented as a tax regime in 1954 in France and subsequently adopted by several countries, including Australia, Canada, the United Kingdom, Spain, South Korea, Vietnam, Monaco, etc.

In India, the GST came into force in 2000 after a committee was set up by the then Prime Minister Atal Bihari Vajpayee, a task force. Headed by the finance ministry’s advisor, Vijay L. Kelkar, he concluded that GST could help improve the tax structure in India.

In 2006, the Union ministry of finance proposed GST introduction from 1st April 2010. But, the Constitution Amendment Bill to facilitate the introduction of GST law was introduced in 2011. However, four supplementary GST bills were passed in Lok Sabha and approved by the cabinet. Subsequently, GST came into force on 1st July 2017.

Upon implantation, the GST replaced the following central taxes:

GST services also subsumed the following state taxes:

Note that taxpayers who have an annual turnover of up to Rs. 20 lakh can be exempted from the Goods and Services Tax. This cut off is at Rs. 10 lakh for special category states. The GST law also extended the option of choosing a compounding scheme and threshold exemption.

2. Meaning and objective of GST

GST definition states that it is a tax that has replaced multiple indirect taxes, like – VAT, service taxes, excise, etc., in India. Notably, gaining an insight into the objectives of this tax regime helps to understand GST meaning better.

For instance, the primary objectives of the GST service tax include:

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3. Advantages of GST

The introduction of GST is touted as one of the biggest tax reforms in India. To know more about the impacts of GST, it is imperative to learn more about its advantages and disadvantages.

In this regard, the most prominent advantages of GST include:

Besides these, the GST bill has replaced 17 indirect taxes with one uniform tax. Resultantly, it has lowered the cost of goods and boosted demand for them, bringing in more revenue for both the centre and state governments.

4. Types of GST

There are four different types of GST which are as follows: