1. What is GST in India?

Goods and Services Tax (GST) is a pivotal reform in India's indirect taxation framework, streamlining and unifying the tax on goods and services nationwide. It replaced various former taxes, including excise duty, Value Added Tax (VAT), and service tax, under the Goods and Services Tax Act passed by the Parliament on March 29, 2017, effective July 1, 2017.

GST is an all-encompassing, multi-tiered, and destination-oriented tax that applies uniformly across India. It transformed India's previously fragmented indirect tax landscape by levying taxes at every stage of the supply chain. For intra-state sales, Central GST (CGST) and State GST (SGST) are applied, whereas Integrated GST (IGST) is imposed on inter-state transactions.

2. Understanding the Goods and Services Tax

GST's architecture embraces several critical aspects:

Multi-Stage Taxation: GST's multi-stage approach ensures tax is imposed at each supply chain phase, such as the raw material purchase, production, warehousing, wholesale, and retail stages, distributing the tax burden.

Value Addition: The GST framework taxes only additional value at each production and distribution stage, ensuring fair pricing at all points from manufacturing to consumer purchase.

Destination-Based Taxation: This system attributes GST revenue to the state where the goods or services are consumed, not where they're produced, redirecting tax benefits to the consuming state.

3. The Evolution of GST in India

Tracing GST's path, it began in 2000 with a committee forming the draft law, leading to 17 years of refinement through consultations and legislative processes. In 2017, the GST Bill passed in Parliament, with the enactment official on July 1, 2017.

4. Objectives of GST

Key objectives driving GST's inception include:

Unified Tax System: By integrating various indirect taxes into one, GST simplifies tax compliance, ensuring consistent tax rates nationwide.

Subsuming Existing Taxes: GST streamlined the multitude of prior indirect taxes into a single structure, lessening the administrative load for taxpayers and authorities.

Eliminating the Cascading Effect: By taxing only the added value and granting input tax credits, GST eliminates the cumulative tax burden characteristic of the earlier tax regime.

Curbing Tax Evasion: Through measures like e-invoicing and a central surveillance mechanism, GST enhances compliance and minimizes fraudulent activities.

Expanding the Tax Base: GST incorporates both goods and services under one umbrella, broadening the taxpayer base and improving compliance, particularly in under-taxed sectors.

Enhancing Online Processes: Transitioning to a digital format for registration, return filing, refunds, and e-way bill creation, GST ensures a more business-friendly environment.

Improving Logistics and Distribution: With the removal of checkposts and a streamlined e-way bill system, logistics efficiency and reduced costs are notable GST contributions.

Promoting Competitive Pricing: By removing cascading taxes and standardizing rates, GST fosters competitive pricing, enhancing consumption and tax revenues.

5. Components of GST

GST consists of three taxes:
CGST - for intra-state sales levied by the Central Government;
SGST - for intra-state sales levied by State Governments;
IGST - for inter-state sales managed by the Central Government.

6. Tax Laws Before GST

Previously, India faced a convoluted indirect tax system, including Central Excise Duty, State VAT, among others, often resulting in a compounding tax effect synonymous with the then tax-on-tax structure.

7. How GST Has Helped in Price Reduction

By addressing the cascading tax impact, GST significantly lowered transaction costs and final price, benefiting consumers by taxing only at additional value stages with applicable input tax credits.

8. New Compliance Measures Under GST

e-Way Bills: Initiated on April 1, 2018, for inter-state trade and April 15, 2018, for intra-state, these bills enhance the logistical flow, curbing tax evasion.
e-Invoicing: Starting October 1, 2020, it mandates businesses above specified turnovers to verify invoices, improving accuracy and reducing errors, thus streamlining India's tax processes significantly.