Dr. T. Chenna Kesavulu


After almost a decade-long wait, India’s Upper House approved in August the introduction of a unified goods and services tax, the GST. This landmark reform will ultimately make India a true single market, by replacing the multiple central and local taxes levied in each of India’s 29 states. It also marks a key achievement for the government, which managed to build sufficient political consensus with the states and opposition parties to reach the necessary approval by two-thirds of both houses.  The Goods and Services Tax (GST) is a vast concept that simplifies the giant tax structure by supporting and enhancing the economic growth of a country. GST is a comprehensive tax levy on manufacturing, sale and consumption of goods and services at a national level[1]. The Goods and Services Tax Bill or GST Bill, also referred to as The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014, initiates a Value added Tax to be implemented on a national level in India. GST will be an indirect tax at all the stages of production to bring about uniformity in the system.  On bringing GST into practice, there would be amalgamation of Central and State taxes into a single tax payment. It would also enhance the position of India in both, domestic as well as international market. At the consumer level, GST would reduce the overall tax burden, which is currently estimated at 25-30%.  Under this system, the consumer pays the final tax but an efficient input tax credit system ensures that there is no cascading of taxes- tax on tax paid on inputs that go into manufacture of goods[2].  In order to avoid the payment of multiple taxes such as excise duty and service tax at Central level and VAT at the State level, GST would unify these taxes and create a uniform market throughout the country. Integration of various taxes into a GST system will bring about an effective cross-utilization of credits. The current system taxes production, whereas the GST will aim to tax consumption.

[1]. The Economic Times (2009) Featured Articles from The Economic Times.

[2]. GST India (2015) Economy and Policy.


cross-utilization of credits,international market.

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