Goods and Services Tax in India: An Opportunities and Challenges

Value added tax was first introduced by Maurice Laure, a French economist, in 1954. The tax was designed such that the burden is borne by the final consumer. Since VAT can be applied on goods as well as services it has also been termed as goods and services tax (GST).The date of introduction of Goods and Service Tax [Goods and Service Tax (‘GST’)] likea ‘mirage’. It looks like what it is not; and the closer you reach to this mirage, the fartherit goes. GST is a value added tax (VAT) and do merged most of the indirect taxes exist at the level of state and federal governments. This will be a comprehensive tax for almost all goods and services. Some of the goods like crude oil, natural gas, turbine fuel, high speed diesel, and alcohol for human consumption are the list due to import dependence, environmental and social reasons. Supposing that there is a chain indirect channel of distribution including producer, stockiest and the end user, assume that GST is 10%. Suppose the manufacturer purchases the inputs worth Rs.100 for producing a good worth Rs.150. He will pay net GST of Rs.5 by taking the tax credit of Rs. 10 on the inputs.