Goods and Services Tax In India: New Taxation System In India-Jus Dicere

Goods And Services Tax

Goods and Service tax is one centralized indirect tax which is implemented in India. It is a destination based tax which is proposed to be levied at all stages from manufacture to consumer providing the mechanism of Input Tax credit at different stages to set off. The value addition will be taxed and the burden is to be borne by the Final consumer.

Keywords: GST, India & Input Tax Credit

Implementation of GST in India has removed the cascading effect of the taxation system. Mechanisms such as input tax credit, reverse charge etc will result in a better and effective indirect tax system in the country in the long run. GST will cover all commodities except Alcohol for human consumption, petroleum products including petroleum crude, motor spirit, high-speed diesel, natural gas and aviation turbine fuel & Electricity. This indirect form of taxation will be a system of dual GST with centre and States simultaneously levying it in a common tax base. Article 264A of the Constitution of India empowers the Centre and State to levy and collect the GST.


The GST levied by the Centre on Intra State supply would be known as Central GST (CGST). The GST levied by the state on Intra State Supply would be known as State GST (SGST). Intra supply wherein refers to the supply within one individual state. Similarly, Integrated GST (IGST) will be levied and administered by the Centre on every inter-State Supply of goods and services.

The New Era Of GST

Introduction of GST in the country has been an effective and significant step in the field of indirect tax. GST is the result of an amalgamation of a large number of Central and State taxes into a single tax. Introduction of GST in India will in the near future make the products competitive in domestic and international markets. There will be a revenue gain for Centre and State by the levy of GST. GST is easier to administer and correct due to the nature of its transparency. The GST rates are notified on the recommendations of GST Council which comprises of Union Finance minister and the State Finance Ministers. The role of the council is to harmonize implementation of GST at different stages.

Under the Current GST regime in India, Liability to pay taxes arises when a taxable person crosses a threshold of Rs. 10 Lakhs. Composition Levy scheme has been introduced for the benefit of small taxpayer which is an optional scheme. Under this scheme, small taxpayers with an aggregate turnover of up to 50 Lakhs, shall pay tax as a percentage of his turnover during the year and without the benefit of ITC. The government has set up a special purpose vehicle called the GSTN (Goods and Service Tax Network) to cater the needs of GST. The GSTN has developed a common GST Portal and applications for registration, payment, return and MIs Reports.

Another feature of GST is Input Tax credit, the person who obtains voluntarily registration is entitled to take input tax on inputs in stock, input in semi-finished goods and finished goods in stock, held on the day immediately preceding the date of registration. Input Tax Credit can only be availed by registered taxable person and only for business purpose. The conditions necessary to claim input tax credit is laid down under Section 16 of MGL. There are certain areas wherein a supplier cannot claim Input Tax Credit such as motor vehicles, goods, and services in relation to food and beverages etc.

GST in India has ensured to provide easy compliance, uniform indirect tax structure, removal of cascading effect, improved competitiveness, higher revenue efficiency. Adoption of the GST system in the country will prove beneficial in the long run perspective.

By Yuvakshi