The Goods and Services Tax (GST) is a comprehensive indirect tax system that was introduced in India in 2017, replacing several existing taxes. The GST system aimed to simplify and streamline the country’s indirect tax system by combining several taxes into a single, unified system.
One of the taxes that GST replaces is the Value Added Tax (VAT). VAT is a consumption-based tax that is imposed on the sale of goods and services. Under the previous system, VAT was imposed by the state government and varied from state to state. GST replaced VAT by subsuming it under the GST system.
GST also replaces the Central Sales Tax (CST). CST is a tax imposed by the central government on inter-state sales of goods. Under the previous system, CST was in addition to VAT, creating a cascading effect on taxes. GST subsumed CST as well and replaced it with IGST (Integrated GST) for inter-state transactions.
Another tax that GST replaces is the Service Tax. Service Tax is a tax imposed by the central government on the provision of services. This tax was subsumed under GST and replaced with GST on services.
Additionally, GST replaces several other taxes and cesses such as Excise Duty, Additional Excise Duty, Special Additional Duty of Customs, and surcharges that were imposed on goods and services.
Overall, GST replaces a number of existing taxes in India, including Value Added Tax (VAT), Central Sales Tax (CST), Service Tax, Excise Duty, Additional Excise Duty, Special Additional Duty of Customs, and surcharges. The GST system was introduced to simplify and streamline the country’s indirect tax system by combining these taxes into a single, unified system.