GST- A Layman’s Guide
By Team Legistify / 2017-07-07
GST, the Goods and Service Tax was imposed by the Government on its citizens in order to provide services that would benefit the general public in the long run. Taxes are broadly categorized under Direct Taxes & Indirect Taxes.

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In India, Government imposes taxes on its citizens in order to provide services that would benefit the general public in the long run. Taxes are broadly categorized under Direct Taxes & Indirect Taxes. Direct Taxes are those taxes whose burden cannot be shifted to someone else, these taxes are directly paid to the government, e.g. Income Tax. But Indirect Taxes refers to those taxes, whose burden can be shifted to someone else, these taxes are basically levied on a third person,

For example a person rendering any service would be charged for certain taxes on the service being provided, further, these taxes would be reverted to the Government by the Service provider, such taxes are Indirect taxes, e.g. Service Tax.

As the explanation denotes, GST is an Indirect Tax, it has been categorized into two types- CGST i.e. Central GST, and, SGST (or IGST) i.e. State GST (& Inter GST), here all the Central level Indirect Taxes except Custom Duty would be now replaced with CGST & State level Indirect Taxes would be replaced by SGST.

Constitutional Amendment For GST

While the Centre is empowered to tax services and goods upto the production stage, the States have the power to tax sale of goods. The States do not have the powers to levy a tax on supply of services while the Centre does not have the power to levy tax on the sale of goods. Thus, the Constitution does not vest express power either in the Central or State Government to levy a tax on the ‘supply of goods and services’. Moreover, the Constitution also does not empower the States to impose tax on imports. Therefore, it is essential to have Constitutional Amendments for empowering the Centre to levy tax on sale of goods and States for levy of service tax and tax on imports and other consequential issue.

GST, the Goods and Service Tax was imposed by the Government on its citizens in order to provide services that would benefit the general public in the long run. Taxes are broadly categorized under Direct Taxes & Indirect Taxes.

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