What is GST?

• GST is an indirect tax that has replaced many indirect taxes in India such as excise duty, VAT, services tax, etc.
• The Goods and Service Tax Act was passed in Parliament on 29th March 2017 and came into effect on 1st July 2017. It is a single domestic indirect tax law for the entire country.
• It is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.
• Under the GST regime, the tax is levied at every point of sale. In the case of intra-state sales, Central GST and State GST are charged. All the inter-state sales are chargeable to the Integrated GST.

What are the components of GST?

There are three taxes applicable under this system:

1. CGST: It is the tax collected by the Central Government on an intra-state sale (e.g., a transaction happening within Maharashtra)
2. SGST: It is the tax collected by the state government on an intra-state sale (e.g., a transaction happening within Maharashtra)
3. IGST: It is a tax collected by the Central Government for an inter-state sale (e.g., Maharashtra to Tamil Nadu)

Advantages of GST

• GST has mainly removed the cascading effect on the sale of goods and services.
• Removal of the cascading effect has impacted the cost of goods.
• Since the GST regime eliminates the tax on tax, the cost of goods decreases.
• Also, GST is mainly technologically driven.
• All the activities like registration, return filing, application for refund, and response to notice needs to be done online on the GST portal, which accelerates the processes.

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