Goods Services Tax India

GST – It is a type of value added tax, which will replace the indirect taxes levied on goods and services.

Value added tax is a multi-stage tax, here tax is levied at each stage of value addition. Eg: - When wood is converted to paper, there is value addition. Similarly when this paper is converted to a greeting card, there is value addition. In VAT, the tax will be levied only to the value added at each stage.

source:www.kinibiz.com

Why GST?

India presently has multitude of indirect taxes. This creates confusion, tax evasion and inefficiency. To reform the present system to create a unified tax collection, GST is being introduced.

GST will :

• ·         Simplify the tax structure (the multitude of the indirect taxes will be abolished after GST)
• ·         Broaden tax base and rationalise tax collection.
• ·         To create a common tax base across states. (States and centre will implement GST)
• ·         Increase growth by increasing export and import

What is objection regarding GST?

States fear loss of revenue and fiscal autonomy.

Solution: Compensation formula after consultation with states.