Goods and Services Tax is the most significant tax reform in the fiscal periphery of India and aims at providing level market to both the goods and services as well as the taxable persons. Thus, the logical outcome of this taxation system is to provide equal opportunities of production and distribution and step by step taxation culminating at the end of the consumer. It is indeed a brilliant concept to reduce the cost of production and increase the viability of the product in the existing competitive market.
Introduction of GST to replace the existing multiple tax structures of Centre and State taxes is not only desirable but imperative in the emerging economic environment. Goods and services have become indistinguishable. Increasingly, services are used or consumed in production and distribution of goods and vice versa. Separate taxation of goods and services often requires splitting of transaction values into value of goods and services for taxation, which leads to greater complexities, administration and compliances costs. Integration of various taxes into a GST system would make it possible to give full credit for inputs taxes collected. GST, being a destination-based consumption tax based on VAT principle, would also greatly help in removing economic distortions and will help in development of a common national market and providing a level field to the business community.
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