Home >politics >policy >GST bill: Five things to know

New Delhi: As the Rajya Sabha debates the Constitution amendment bill to roll out the goods and services (GST) tax on Wednesday, here are the five things you may like to know about GST.

What is GST?

GST in an indirect tax levied on goods and services that works on a destination principle. It is a tax on value addition at each stage of production as it allows setting off of credit on tax paid at every purchase in the supply chain.

Why GST is important?

GST subsumes all indirect taxes levied by the Centre and the states, including excise duty, service tax, value-added tax, luxury tax and entertainment tax. It will remove all barriers across states and make the country a common market. It is expected to add up to 2% to the gross domestic product, once implemented successfully.

How will it work?

India will adopt a dual GST model wherein the Centre will levy the central GST and the states will levy state GST. An integrated GST will be levied on inter-state movement of goods. The entire tax registration, payment, tax return and refund system will be online and will be administered by the GST network.

Will it benefit the industry?

It will benefit the industry as it will eventually reduce the tax burden by doing away with the cascading impact that prevails due to multiple taxes. It will ensure input tax credit is available for the taxes paid by suppliers at various levels of the supply chain. It will also simplify processes as industries will not have to pay multiple taxes and file multiple returns.

Will GST benefit consumers?

Consumers will benefit as the reduced tax burden on goods will get passed on to them.

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