GST is the comprehensive tax levy on the manufacturing, selling and consumption of consumer good at the national level. The Government of India took a step to replace all the indirect taxes levied on goods and services by the Centre and States and formulated GST to be implemented by 2016. GST will be a remarkable reform for Indian economy by developing a common Indian market and reducing the cascading effect of tax on the cost of goods and services. It will impact the Tax Structure, Incidence, Computation, Payment, Compliance, Credit Utilization and Reporting leading to an entire restructuring of the present indirect tax system. Implementation of GST will also reflect on aspects of the business operations in the country, for instance, pricing of products and services; IT, accounting; supply chain; and tax compliance systems.
Objective of GST:
1. To curb the process of dual taxation of the commercial goods i.e taxation on production and distribution of products and services.
2. Tax on tax will ensure the competitiveness and improved quality of original goods which will in turn do good to the GDP of the country
3. It would help the multiple tax structures of center and state taxes to one entity.
Approx 150 countries have already implemented GST in some or the other form.The GST will be a two-rate structure- a lower rate for the basic day to day goods and standard rates for the others. There will also be special rates for the luxurious goods like perishables and precious metals. GST has two components Central GST and State GST which will be approved aptly and will be applicable to all transactions of goods and services.