GST stands for Goods and Services Tax. It’sa multilevel taxation system that iscomprehensive in nature and applies to thesale of goods and services in a country.
The aim of this taxation system is to curbthe cascading effect of other indirect taxes.It is applicable throughout India.
India imposes GST on the supply of specificproducts and services. It was implementedto replace a variety of previous indirecttaxes, including service tax, excise duty,VAT, purchase tax, etc.
In December 2023, GST collections jumped10 per cent to about Rs 1.64 lakh crorecompared to Rs 1.49 lakh crore in the samemonth in 2022, the finance ministryinformed recently.
During the April-December 2023 period,gross GST collection witnessed a robust 12per cent growth, reaching Rs 14.97 lakhcrore, as against Rs 13.40 lakh crorecollected in the same period of the previousyear, the ministry said in a statement.
The GST structure was implemented by theModi government in July 2017. It has asignificant impact on the budget allocationby the Union Finance Ministry.
With Finance Minister NirmalaSitharaman scheduled to present theinterim Budget in the Lok Sabha onFebruary 1, 2024, we take a look at thetaxation system’s role in the budget.
Role of GST in Budget
Ever since a single uniform tax structurewas introduced, the composition of the taxcomponent of the budget has changed, withthe GST structure aimed at dismantling thefiscal barriers among states.
The Centre and state used to levy multipletaxes such as excise duty, octroi tax, VAT,entry tax etc prior to the implementation ofGST, all of which have been subsumedunder GST.
Earlier, the Centre used to collect onlyservice taxes. But, under the uniform directtax structure, both state and the Centrecollect identical taxes on services andgoods.
With 18 per cent GST levied throughout thenation, the Centre and state receive 9 percent tax each named CGST and SGST,respectively.