The document discusses the rationale and benefits of implementing the Goods and Services Tax (GST) in India. It aims to overcome deficiencies in earlier tax laws by creating a common market with uniform tax rates and procedures. This would boost investment, reduce tax evasion, and improve tax compliance. GST benefits various stakeholders by simplifying the tax system, reducing cascading taxes, and mitigating price increases through input tax credits. Key aspects of GST include the types of taxes, governing acts and councils, and recommendations on tax rates, exemptions, and special provisions for certain states. Overall, GST aims to develop a national market, increase exports and revenues, and make the taxation system more transparent.

1. Rationale of Goods & Services Tax in India
By
Dr. Mohmed Amin Mir
Assistant Professor
Department of Commerce & Management
Studies
Islamia College of Science & Commerce
(Autonomous with CPE Status)
Srinagar - 190002, Jammu & Kashmir, India

2. Rationale of GST
 Deficiency in the earlier tax Laws & to overcome those
issues
 Though there are still few levies like Custom Duty,
Excise Duty on alcoholic liquor for human consumption
which are still in force even after introduction of GST
 Benefits to stakeholders justify the rationale of GST
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3. Benefits to Government
a. GST aims to make India a common market with common
tax rates & procedures
b. Boosts foreign investment & ‘Make in India’ campaign
c. States will be benefited due to improvement in
investment cult in the country
d. Uniform SGST & IGST rates actually reduce the incentive
for tax evasion
e. widening the tax base and improving the tax payer
compliance
f. Will bring buoyancy to the govt revenue
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4. Benefits to Trade & Industry
a. Multiplicity of taxes have been reduced
b. By allowing a set-off of prior stage taxes for the
transaction across the entire value chain (i.e. ITC), GST
leads to mitigation of ill effects of cascading
c. Due to uniformity in tax rates, the common national
market has been developed
d. Export has been classified as zero rated supply. It will
boost exports
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5. Benefits to Customers
a. Relatively a simple tax system
b. Reduction in prices of goods & services on account of
mitigation of cascading effect
c. Uniform Pricing structure throughout the country
d. Taxation system is more transparent
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6. Structure/ Architecture of GST in India
1. GST is on supply of Goods and/ or services
2. Four types of taxes in GST
a. Central Tax i.e. CGST levied under CGST Act, 2017
b. Integrated Tax i.e. IGST levied under IGST Act, 2017
c. State Tax i.e. SGST levied under SGST levied under SGST Act, 2017
d. Union Territory Tax i.e. UTGST levied under UTGST Act, 2017
3. There are four Acts relating to GST laws
4. In addition, there is a provision for the levy of GST
compensation cess on Sin & Luxury Goods
5. There are 29 States in India and accordingly they have
their own state GST Acts
 States include UTs with their own legislature [Article-366 (26B)]
 Out of 7, we have two UTs (Delhi & Puducherry) with their own legislature
 In total there are 31 SGST Acts (29 SGSTs Acts – States, 2 SGSTs Acts enacted
by UTs)
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7. GST COUNCIL
 Is a apex constitutional body (authority) to decide policies
of GST
 Article-279A in constitution of India makes provision for
constitution of GST Council for which president is
empowered
 Provisions relating to GST Council came into force on 12th
September, 2016 & the president constituted GST Council
on 15th September, 2016
 Joint forum of the Central & States to make
recommendations to Union & States relating to GST
 Make recommendations to the Union & the States on
important issues like
 Tax Rates
 Exemptions
 Threshold Limits
 Dispute Resolutions etc
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8. Structure / Members of GST COUNCIL
1. The Union Finance Minister (Chairperson)
2. The Union Minister of State in charge of Revenue or Finance
(Member)
3. The Minister incharge of Finance or Taxation or any other
Minister nominated by each state Govt (Member)
 Vice-Chairperson of GST Council is elected by GST Council from
amongst its members
 ½ of the total number of the GST Council shall constitute the
quorum at its meetings
 Every decision of the GST Council is taken by a majority of not
less than 3/4rd of the weighted votes of the members present
 Vote of the centre has a weightage of 1/3rd of the total votes
cast and votes of all the state Govts taken together has a
weightage of 2/3rd of the total votes cast, in that meetings
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9. Recommendations of GST Council
1. Taxes, Cesses & other Charge levied by the Union/State/Local bodies which
may be subsumed in GST
2. Exempted Goods & Services
3. Laws, Principles of Levy, Apportionment of GST on inter-state supplies
4. Threshold limit of turnover below which Goods & Services may be
exempted from GST
5. Special Provisions with respect to the States of:
I. Arunacahl Pradesh
II. Assam
III. J & K
IV. Manipur
V. Meghalaya
VI. Mizoram
VII. Nagaland
VIII. Sikkim, Tripura
IX. H.P &
X. Uttarakhand
6. Any other matter relating to GST (e.g date on which GST be levied on petroleum, crude,
High Speed diesel, motor spirit, natural gas and aviation turbine fuel)
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