Goods and Service Tax

The income generated by the government to meet the required expenditure of the public is called Public revenue. The major sources of public revenues are Tax and Non-Tax revenue.

Tax is the major source of public revenue for the government. Taxation provision is provided by the constitution. Tax is a fee levied by the government on income, goods, services, and business activities to meet public expenditure. The Indian Taxation system is broadly classified into two categories namely Direct and Indirect Taxes. Direct taxes are taxes that are levied on the income or profit and wealth of a person and the tax is paid directly to the government. Examples are Income tax, wealth tax, and corporate tax. Indirect tax is levied on goods and services rather than on income and wealth. The burden of the tax will be borne by the end consumer. Examples are Customs duty, excise duty, VAT etc.?

Indirect taxation on goods and services is effected in double taxation as well as multiple duties or taxes on different levels of goods and services. it has resulted in more burden on customers and tax evasion. This led to the introduction of a new tax regime for goods and services. It is named as Goods and Services Tax (GST). India has nomenclatured this as “one nation one tax” regime.

The goods and services tax came into effect on the 1st of July 2017. Goods and service tax is an indirect tax levied on the value of the supply of goods or services or both except taxes on the supply of alcoholic liquor for human consumption. Here supply includes all forms of supply of goods or services such as transfer, barter, exchange, license, rental, lease, or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. Goods mean any movable property other than money or securities but include things attached to forming part of the land which are agreed to be severed before supply or under a contract of supply. Services in the GST means anything other than money or securities but include activities relating to money like the conversion of cash from one currency to another for which separate consideration is charged.?

As India is a federal country where both the center and states have the power to levy and collect taxes. It lead to the creation of a dual model of GST, viz. Central GST (CGST), State GST (SGST) Union Territory GST (UTGST), and Integrated GST (IGST). In an indirect taxation system without registration no one can pay or collect tax from customers, it is the most fundamental requirement for the identification of taxpayers for ensuring tax compliance. Registration legally recognizes a person as a supplier of goods or services and legally authorizes him to collect the tax from the customer. He can also claim the input tax credit paid and utilize the same for payment of taxes due. GST registration is a single PAN-based registration, but if the person has multiple businesses or is in multiple states he needs to register for each business.? The different types of registration in GST are Compulsory registration, Voluntary registration, Composition registration, and Deemed registration.

Goods and Service Tax helped to mitigate the cascading effect of tax. The process of GST is totally online and simple. Earlier VAT, Sales & Services tax each had their own returns and compliances but GST reduced the compliances. This has helped to reduce the cost of collection of government and improve revenue efficiency.

Abhishek Tikotekar is a Semester III MBA Student of the Batch 2022 - 24.

Article edited by Prof. Cdr Himanshu Joshi .