About Goods And Service Tax

The Goods and Services Tax (GST) is a comprehensive value added tax (VAT) on the supply of goods or services. It is levied and collected on value addition at each stage on sale or purchase of goods or supply of services based on input tax credit method but without state boundaries. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.

France was the first country to introduce this value added tax system in 1954 .Many countries have single unified  GST system i.e. a single tax applicable throughout the country. In India, a dual  GST is proposed whereby a Central Goods and Service (CGST) and a State Goods and Service Tax (SGST) will be levied on the taxable value of every transaction of supply of goods and services.

 The current system of taxation on goods and services is characterized by multiplicity of taxes on goods and services. Excise duty on manufacture, customs duty on imports and exports, service tax on services are levied by the Central Government. Such multiplicity of taxes distorts the tax structure and brings in complexities. GST will unify taxation system in the entire nation. This will help business and industry in easy compliance, uniformity of tax and structure, removal of cascading effect, help government for simple and easy administration, high revenue efficiency, provide consumer a relief from overall tax burden.                                                                                                                         

It is recommended that the Center and States should adopt a consumption based  GST with no distinction being made between raw materials and capital goods, in availment of Input tax credit.  GST is based on destination principle, thus tax base will shift from production to consumption of goods. The taxable event is Consumption of goods or services. As a result, revenue will accrue to the state in which consumption takes place or deemed to take place.

Under  GST, this new concept of mixed supply and composite supply has been introduced. This will cover all supplies made together, whether the supplies are not related or not. This concept is somewhat similar to the bundled services which were there earlier. For example, when goods are packed, and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply. Insurance, transport cannot be done separately. Thus, the supply of goods is the principal supply.                                                                                                                                                                                                                                                         

The  GST compliance rating is a performance rating that is given to all registered taxpayers. This rating tells you how complaint the supplier will be with respect to  GST provisions. This gives an option for the buyer to choose the seller based on the  GST compliance rating.