One Indirect Tax For The Entire Country: GST | Kairos Institute

One Indirect Tax For The Entire Country: GST

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The concept of GST was first introduced by French Officials in 1950’s. Goods and service tax is a comprehensive taxation policy enforced by Government of India. In 29th March 2017 Parliament has passed Goods and Service Tax act and from 1st July 2017 it came into action. GST has replaced the indirect taxes like.

  • Central Excise Duty
  • Additional duties of Excise
  • Additional Duties of Customs
  • Purchase Tax
  • Luxury Tax
  • Entertainment Tax
  • Cess
  • State VAT
  • Central Sales Tax

In GST Tax system, at every point of sale tax will be charged, hence it is a multi stage tax. GST has classified goods and services into 5 slabs as 0%, 5%, 12%, 18%, and 28%. But still old taxation system has following for some of the product like alcohol, electricity, petroleum products etc.

There are 4 kinds of GST, namely
  • CGST: CGST is levied by the Central Government on an intrastate transaction
  • SGST: SGST is levied by the state Government on an intrastate transaction
  • IGST: IGST is levied by the Central Government on an interstate transaction
  • UTGST: is levied in the transactions in Union territories.


In 2000, Ministry of Prime Minister Atal Bihari Vajpayee has come up with the concept of imposing GST in India and for this state ministers created Empowered Committee (EC) in order to build a framework. Suggestions were taken from various persons representing different state, for evaluating GST aspects and policies. Asim Dasgupta, the financial Minister of West Bengal was the caption of the Committee and he has continued till 2011 in this position. Vijay L Kelkar, one of the advisor in Finance ministry in 2004, claimed that GST system can lighten the many complications raised by the existing taxation policy. Through the Budget session of the year 2005-06 Shri. P Chidambaram, Finance Minister, explains the importance of implementing GST system all over the country.

In February 2006 Finance Minister set GST introduction date as 1 April 2010. Later on Union budget 2007-08 GST implementation has hold on. But on next budget Finance Minister make sure that GST implementation is being processed and it targeted to 1st April 2010. Then on June 2009 Finance Minister Pranab Mukharjee has declared the basic blueprint of GST regime. After the Constitution Bill forwarded by the Congress Government made disagreement from the opposition party which leads to the additional examination by the Standing Committee.

On August 2013, Standing Committee submitted the final reports to the Parliament and the panel approved the final tax body with some of the amendments. New Finance Minister Arun Jaitley has submitted Bill but in August 2015 Bill has not approved by Rajyasabha and Jaitley pointed out that there were no particular reason for this disruption. In June 2016, Ministry of Finance created a draft model on GST to the public in order to allowing their participation in rebuilding it. Finally in 2017 GST Council completed its rules and regulations and in 1st July 2017 GST came into action.

Changes made by GST

  • GST helps to identify hidden taxes. Before GST regime most of the taxpayers are not even familiar with the taxes. Now they realized the purpose of the tax money which they are going to pay.
  • GST replaces the cascading effect of taxes. It means we don’t need to pay taxes on each and every step of production process.
  • Traders have to go before digital way in order to return filing process.
  • There were no price changes for essential goods are visible because it is maintaining in a lower tax under GST


  • Nation as a common market
  • Helps to avoid cascading effect
  • Tax compliances can bring down
  • Registration and filing return in digital way


  • It may become expensive due to the software purchase.
  • GST may increase operational cost.
  • Small and medium scale enterprises may face heavy tax burden.
  • Being online taxation system, it may face technical errors.

Introducing a change in a system is not an easy task. Especially in case of a smoothly running economy. After a lot of disagreements and arguments GST has successfully passed its 4 years in India.



Prepared by

Veena Vinod


Kairos Institute, Thodupuzha

   2022-02-08 16:40:24
   Kairos Institute

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