Purpose and Scope of GST ACT

The Goods and Services Tax (GST) is a comprehensive, multi-stage, destination-based tax levied on the supply of goods and services in India, introduced to replace a complex system of multiple indirect taxes. The primary purpose of GST is to eliminate the cascading effect of taxes, promote ease of doing business, and create a unified national market by subsuming indirect taxes such as VAT, service tax, excise duty, and others. It enhances tax compliance through a technology-driven framework and ensures greater transparency by integrating businesses under a single tax regime. GST follows a dual structure, with the Central GST (CGST) levied by the Central Government and State GST (SGST) or Union Territory GST (UTGST) levied by State or UT governments, alongside the Integrated GST (IGST) for inter-state transactions. The scope of GST extends across all goods and services except alcohol for human consumption, petroleum products, and certain exempted items, ensuring a broad tax base. It applies to manufacturers, traders, and service providers, facilitating seamless input tax credit (ITC) across the supply chain, thereby reducing tax liability and boosting economic growth. The introduction of GST has significantly impacted various sectors, streamlining tax administration, reducing compliance costs, and enhancing revenue collection efficiency. The tax is levied at multiple rates—5%, 12%, 18%, and 28%—depending on the nature of goods and services, with specific exemptions for essential items and a compensation cess on luxury and demerit goods. The GST framework is administered through the GST Council, a constitutional body responsible for decision-making on tax rates, exemptions, and policy changes, ensuring uniform implementation across India. With e-invoicing, GST returns, and e-way bills, the tax system fosters a more structured and accountable business environment. Its impact extends to international trade, with an efficient refund mechanism for exporters ensuring competitiveness in global markets. The compliance requirements under GST, such as registration, return filing, and audits, ensure better revenue management while minimizing tax evasion. By unifying the taxation system, GST has played a pivotal role in transforming India’s economy into a more transparent and business-friendly environment, aligning with global best practices in indirect taxation.