DEMYSTIFYING GST (INDIA)

The Goods and Services Tax, which is also known as VAT in many countries is a multi-stage consumption tax on goods and services. It is levied on the supply of goods and services at each stage of the supply chain from the producer up to the stage of final consumption. The taxation of goods and services in India has, hitherto, been characterized as inconsistent and distortionary tax, resulting in mis-allocation of resources, lower productivity and economic growth. Thus, the need for a uniform formula for the calculation and implementation of tax has been felt for a very long time. The new amendment on GST aims at removing all these distortions and moving India towards greater growth. The Constitution Amendment Bill for Goods and Services Tax (GST) was approved by The President of India post its passage in the Parliament (Rajya Sabha on 3 August 2016 and Lok Sabha on 8 August 2016) and after ratification by more than 50 percent of state legislatures. The Government of India is committed to replacing all the indirect taxes levied on goods and services by the Centre and States, and implementing GST by April 2017. The following paper examines salient features of the new GST Act in India.