A Comparative View On Goods And Services Tax

Posted by hgsba on February 13, 2018

This kind of comparison is based on the suggestions of the First Discussion Paper produced by the Empowered panel of states finance ministers (hereafter referred as EC) and the Report of the Task Force on GST constituted by the Thirteenth Finance commission. gst full form

Prior to going on discussion we should define GST and the Objective to it.

What is GST? 

GST is a tax on services and goods with thorough and continuous chain of set-off advantages from the Producer’s point and Services provider’s point upto the retailer level. It can be essentially a tax only on value addition each and every stage and a supplier at each level is permitted to set-off through a tax credit mechanism. Under GST composition, all different stages of production and distribution can be interpreted as merely a tax pass through and the tax essentially supports on final consumption within the taxing jurisdiction.

Goal behind GST

a) The incidence of tax only falls on domestic intake. b) The efficiency and equity of the system is optimized. c) Generally there should be no move of taxes across demanding jurisdictions. d) The Native american market should be included into a single common market. e) It improves the cause of cooperative federalism.

Our comparative debate will be based only on significant points making overall GST.


A dual structure has been recommended by the EC. Both components are: Central GST (CGST) to be imposed by the center and state GST (SGST) by the claims. The Task Force in addition has recommended for the dual levy imposed concurrently by the centre and the states, but independently to market co-operative federalism. Both the CGST and SGST should be levied on a common and identical basic.

Both have suggested for consumption type GST, that is, there should be no distinction between organic materials and capital goods in allowing input taxes credit. The tax basic should comprehensively extend over all goods and services upto final consumption point.

Also both are of the view that the GST should be organised on the destination basic principle. According to Task Pressure this will cause the shift from production to consumption whereby imports will be liable to both CGST and SGST and exports should be allayed of the burden of goods and services duty by zero rating. As a result, revenues will accrue to the state when the ingestion takes place or is deemed to take place.

The Task Force on GST said the calculation of CGST and SGST liability should be structured on the Invoice credit method. i. e., allow credit for tax paid on all intermediate services and goods on the basis of invoices granted by the supplier. Since a result, many different stages of production and distribution can be translated as a mere duty pass-through and the duty will effectively ‘stick’ on final consumption within the taxing jurisdiction. This will facilitate elimination of the cascading effect at various stages of production and distribution.

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