What is GST and how will it affect you?

Sixteen years in the making, India rolls out the Goods and Services Tax (GST) from July 1, 2017.
The Narendra Modi-led government will inaugurate the new indirect tax at the stroke of midnight
of June 30 in Parliament.

GST
What is GST?


The GST is meant to be a unified indirect tax across the country on products and services. In the current system,

tax is levied at each stage separately by the Union government and the States at varying rates, on the full value of

the goods. But under the GST system, tax will be levied only on the value added at each stage. It is a single tax

(collected at multiple points) with a full set-off for taxes paid earlier in the value chain.



Thus, 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.



What is State GST and Central GST?


For transactions within a State, there will be two components of GST - Central GST (CGST) and State GST

(SGST) - levied on the value of goods and services. Both the Centre and the States will simultaneously levy

GST across the value chain.



In the case of inter-State transactions, the Centre would levy and collect the Integrated Goods and Services

Tax (IGST). The IGST would be roughly equal to CGST plus SGST.



How will GST affect the common man?


The impact of the GST on the prices of goods and services will largely depend on the item in question. It will

also depend upon the respective State governments and their intervention with respect to controlling prices of

essential commodities. Milk, for example, which is likely to see a spike in prices after GST is implemented, can

still be sold at cheaper rates, if the State government offers a subsidy on it