GST Goods and services tax Short Notes

GST (Goods and services tax)

• Goods and Services Tax is an indirect tax used in India on the supply of goods and 

services. It is a comprehensive, multistage, destination-based tax: comprehensive 

because it has subsumed almost all the indirect taxes except a few state taxes.

• Goods and Service Tax (GST) is levied on the supply of goods and services. Goods 

and Services Tax Law in India is a comprehensive, multi-stage, destination-based tax 

that is levied on every value addition. GST is a single domestic indirect tax law for 

the entire country.

Objectives Of GST

• To achieve the ideology of ‘One Nation, One Tax’

 GST has replaced multiple indirect taxes, which were existing under the 

previous tax regime. The advantage of having one single tax means every state 

follows the same rate for a particular product or service. Tax administration is 

easier with the Central Government deciding the rates and policies. Common 

laws can be introduced, such as e-way bills for goods transport and e-invoicing 

for transaction reporting. Tax compliance is also better as taxpayers are not 

bogged down with multiple return forms and deadlines. Overall, it’s a unified 

system of indirect tax compliance.

• To subsume a majority of the indirect taxes in India

 India had several erstwhile indirect taxes such as service tax, Value Added Tax 

(VAT), Central Excise, etc., which used to be levied at multiple supply chain 

stages. Some taxes were governed by the states and some by the Centre. There 

was no unified and centralised tax on both goods and services.

• To eliminate the cascading effect of taxes

 One of the primary objectives of GST was to remove the cascading effect of 

taxes. Previously, due to different indirect tax laws, taxpayers could not set off 

the tax credits of one tax against the other. For example, the excise duties paid 

during manufacture could not be set off against the VAT payable during the 

sale.

• To curb tax evasion

 GST laws in India are far more stringent compared to any of the erstwhile 

indirect tax laws. Under GST, taxpayers can claim an input tax credit only on 

invoices uploaded by their respective suppliers. 

• To increase the taxpayer base

 GST has helped in widening the tax base in India. Previously, each of the tax 

laws had a different threshold limit for registration based on turnover. 

• Online procedures for ease of doing business

 Previously, taxpayers faced a lot of hardships dealing with different tax 

authorities under each tax law. Besides, while return filing was online, most of 

the assessment and refund procedures took place offline. Now, GST procedures 

are carried out almost entirely online.