Goods and Service Tax (GST): Its Impact and Effect on the Economy

The Goods and Services Tax (GST) is a Value Added Tax (VAT) to be implemented in India which has been approved by the President Mr. Pranab Mukherjee posts its passage in the Parliament (Rajya Sabha 3^rd Aug 2016 and Lok Sabha on 8th Aug 2016) and ratification by more than 50% of the legislatures. The tentative date which is decided by the ministry is the next financial year i.e. April 2017. All the indirect taxes levied on goods and services by the Central and State governments of India will be replaced by GST. According to federal regime of India, the GST will be implemented with the mutual consent of the central and state governments as the Central GST and the State GST respectively. Thus, cascading effect will be eliminated, exports will be zero-rated and imports will be levied the same taxes as domestic goods and services adhering to the destination principle.