Description

One of the main objectives to replace erstwhile indirect taxes with GST was to reduce the cascading effect of various taxes and seamless flow of credit from one stage of value chain to the other stage so that the tax paid at the input stage does not become the cost and does not hamper the trade at large. This leads to taxation only of value addition. In Statement of Objects and Reasons attached with the Constitution (122nd Amendment) (GST) Bill, 2014, it is categorically mentioned that the goods and services tax shall replace a number of indirect taxes being levied by the Union and State Governments and is intended to remove cascading effect of taxes and provide for a common national market for goods and services. Further, in the “statement of objects and reasons” issued along with the CGST Bill it was specifically stated that the tax system present prior to introduction of GST was facing the following difficulties.