Goods and Services Tax (GST) — Meaning and Objectives

Goods and Services Tax (GST) is a single, comprehensive, destination-based indirect tax levied on the supply of goods and services, which replaced most of the earlier central and state indirect taxes listed in Section 3, with effect from 1st July 2017, following the 101st Constitutional Amendment Act, 2016. It is popularly described as "One Nation, One Tax."

Objectives of GST:

• To create a single, unified national market for goods and services, replacing the earlier fragmented state-wise tax structure.
• To eliminate the cascading effect (tax on tax) of the earlier system, through a comprehensive Input Tax Credit mechanism (covered in Section 6).
• To simplify compliance by replacing multiple indirect taxes with one tax, filed through one largely-unified return system.
• To broaden the tax base and improve tax buoyancy by bringing more transactions transparently into the formal tax net.
• To make Indian goods more competitive by removing the hidden cascading tax burden built into export prices under the old system. …