Goods and Services Tax (GST) is a tax levied on the consumption, manufacture or sale of goods and services in India. It is a direct tax system that has replaced most other indirect taxes in the country. The Indian government introduced this tax on July 1, 2017. GST is levied whenever value addition or value addition is made to a product or service. And this tax is levied at every stage of the sale.

Types of GST

There are four different types of GST levied on goods and services in India.

• Central Goods and Services Tax (CGST) - CGST is levied by the central government on transactions of goods and services within a state.
• State Goods and Services Tax (SGST) – State governments in India levy SGST on the supply of goods and services within their respective states. It is collected alongside the Central Goods and Services Tax (CGST).
• Union Goods and Services Tax (UGST) - Union Territories in India levy UGST on transactions of goods and services within their borders. This is in addition to CGST.
• Integrated Goods and Services Tax (IGST) - If the transaction of goods and services is between two states, the government will impose Integrated GST. This applies to both imports and exports. The taxes levied under IGST are shared by the Centre and the state. Objectives of GST

The main objectives of GST are:

• Simplification of Tax Structure : One of the primary objectives of GST in India was to simplify the complex indirect tax structure that existed prior to its implementation. GST replaced multiple indirect taxes levied by the central and state governments with a single tax, thereby reducing tax cascading and making it easier for taxpayers to comply with the law.
• Inter-State integration: GST aims to create a uniform tax regime across the country by combining various central and state taxes such as excise duty, service tax and VAT. This unification of taxes promotes seamless interstate trade and commerce and reduces administrative hurdles and costs for businesses.
• Broadening the tax base: GST seeks to widen the tax base by bringing more firms into the formal economy. By making GST registration mandatory for turnover above a certain threshold, the tax base expands, capturing previously unaccounted transactions and increasing the tax outgo.
• Boost to economic growth : GST aims to promote economic growth by rationalising supply chains, reducing transaction costs and improving overall efficiency in the movement of goods and services across the country. It eliminates barriers to inter-state trade and fosters a common market within India.
• Increasing Transparency and Compliance: GST aims to increase transparency in tax administration and reduce tax evasion through better monitoring and data analysis. The digital platform for GST registration, return filing and payment enables real-time reporting and compliance verification, reducing the risk of tax leakage.