Goods and Services Tax (GST): A Panacea for Indian Economy

Abstract

GST stands for “Goods and Services Tax”, and is proposed to be a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level. It will replace all indirect taxes levied on goods and services by the Central Government and State Governments. GST is the only indirect tax that directly affects all the sections of our economy. India has been trying to implement the Goods and Services Tax (GST)for last few years but due to political and state governments autonomy issues the Federal government has been unable to make it law.

Several countries has implemented this tax system followed by France, the first country introduced the GST in 1954. In India the proposed GST would be implemented from 1 April 2016. For this the Constitution (One Hundred and Twenty Second Amendment) Bill, 2014 was Introduced in the Lok Sabha. The Bill was passed by the Lok Sabha on 6 May 2015. Now Bill has to get the approval of Rajya Sabha and President. India is a federal democratic and therefore the GST will be implemented parallel by the Central and State governments as CGST and SGST respectively.

The present paper focused on explaining the concepts of GST and its evolution in India. Then it discussed the salient features of proposed GST and how does it works. It highlights the benefits of the GST for Indian economy. This paper also shows the challenges to implement GST and how it can be overcome.

Keywords: CGST, Input tax credit (ITC), GST, SGST, VAT