About Good and Service Tax
Goods and Service Tax (‘GST’) is new buzz word in the tax regime. It is proposed to merge service tax, value added tax and central excise into one tax i.e. GST. Goods and Service Tax is a comprehensive indirect tax levy on manufacture, sale, supply and consumption of goods and services. Its main objective is the converge of all indirect taxes into a single tax, replacing multiple tax levies, overcoming limitation of current indirect tax structure and creating efficiencies in tax administration.
The current taxation framework allows limited inter-levy credits between Central Excise Duty and Service Tax. However, no cross credits are available in respect of other taxes specifically VAT, CST, Entry Tax. Introduction of GST would allow the inter levy credits and thus rationalize tax content in product price; enhance ability of assessed to compete globally and possible trickle down the benefit to ultimate consumer.
GST is levied at every stage of production-distribution chain with applicable set-off/ credits in respect of tax paid at previous stages. Under dual GST system, taxable base is proposed to be subject to the following taxes: