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The Goods and Services Tax (GST) system in India comprises four main types of taxes: Integrated Goods and Services Tax (IGST), State Goods and Services Tax (SGST), Central Goods and Services Tax (CGST), and Union Territory Goods and Services Tax (UTGST). These taxes were introduced to streamline the indirect taxation system in India, replacing various state and central taxes.
IGST is levied on interstate transactions and imports/exports, collected by the central government and distributed among the states. SGST and CGST apply to intrastate transactions, with revenue going to respective state and central governments. UTGST is similar to SGST but is applicable in Union Territories, with revenue collected by the Union Territory government.
The allocation of GST revenue differs based on the type of transaction, ensuring that both the central and state governments receive their share of taxes. The implementation of GST has replaced numerous state and central taxes such as VAT, excise duty, and service tax, aiming to simplify the tax structure and promote economic efficiency.
The introduction of GST is touted as one of the biggest tax reforms in India. To know more about the impacts of GST, it is imperative to learn more about its advantages: disadvantages.
In this regard, the most prominent advantages of GST include:
Besides these, the GST bill has replaced 17 indirect taxes with one uniform tax. It has lowered the cost of goods and boosted demand for them, bringing in more revenue for both the centre and state governments.
The objectives of the Goods and Services Tax (GST) in India are multifaceted, aiming at reforming the tax structure while promoting economic efficiency and growth. Key objectives include:
In essence, GST aims to create a more simplified, transparent, and efficient tax structure that supports business growth, curbs tax evasion, and promotes a unified national market, contributing to the broader objectives of economic development and fiscal consolidation in India.