The salient features of GST

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The salient features of GST

GST would be applicable on supply of goods or services as against the present concept of tax on the manufacture of goods or on sale of goods or on provision of services. GST is based on the concept of one nation, one tax. The shift to GST regime will lead to a uniform, seamless market across the country. It will be a uniform rate, will check evasion and boost growth rates.

Hence, instead of valuing goods at different stages as in the present system; GST will focus on the supply or in common parlance valuation is done as soon as goods / services changes hands. This will ensure free flow of goods with input being provided at each stage and thus making goods taxed on the value added each stage.

GST would be based on the principle of destination based consumption taxation as against the present principle of origin based taxation. Indirect taxes can be either origin based or destination based. Origin based tax (also known as production tax) is levied where goods or services are produced. Destination based tax (consumption tax) are levied where goods and services are consumed. In destination-based taxation, exports are allowed with zero taxes whereas imports are taxed on par with the domestic production.

It would be a dual GST with the central and the state simultaneously levying it on a common base. The GST to be levied by the Centre would be called Central GST (CGST) and that to be levied by the state would be called State GST (SGST).

An alternative Integrate GST (IGST) would be levied on interstate supply (including stock transfers) of goods or services. This would be collected by the centre so that the credit chain is not disturbed.

Import of goods or services would be treated as interstate supplies and would be subject to IGST in addition to the applicable customs duties.