What is GST?

Before we proceed with the finer nuances of Indian GST, let us first understand the basic concept of GST.

• GST is a value added tax levied on manufacture, sale and consumption of goods and services.
• GST offers comprehensive and continuous chain of tax credits from the producer’s point/service provider’s point up to the retailer’s level/consumer’s level thereby taxing only the value added at each stage of supply chain.
• The supplier at each stage is permitted to avail credit of GST paid on the purchase of goods and/or services and can set off this credit against the GST payable on the supply of goods and services to be made by him. Thus, only the final consumer bears the GST charged by the last supplier in the supply chain, with set-off benefits at all the previous stages.
• Since, only the value added at each stage is taxed under GST, there is no tax on tax or cascading of taxes under GST system. GST does not differentiate between goods and services and thus, the two are taxed at a single rate.