What is GST?
GST is nothing but a hybrid version of the Value Added Tax (VAT), modified to suit the complexities of a federal system. The central taxes do not cover value addition in goods beyond the manufacturing stage, and in services only listed services are covered. On the other hand, in the case of state taxes, only sale of goods is covered. GST rectifies this defect by covering all goods and services. It is essentially a tax only on value addition at each stage, permitting a supplier at each stage to set-off, through a tax credit mechanism. The final consumer will bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages. GST is the latest in the category of indirect tax reform.