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The concept behind the establishment of the CGST Act was one nation: one tax for manufacturing, trading, and services. Before GST, the tax regime was grossly inefficient. Taxes had cascading effects on businesses and consumers, i.e. there was inefficient breakage of input taxes resulting in the imposition of a tax chain at multiple stages, which at last added to the cost of a product and resulted in the tendency of the businesses and consumers to use corruptive means to avoid paying taxes.
Before GST, multiple laws required multiple compliances and registrations without any interlinkages with one another. It was observed that both central and state governments are taxing one transaction.
Before GST tax used to get levied at three levels, i.e.
These taxable events made taxes overlapping and complicated, resulting in rising issues ultimately burdening courts.
The implementation of GST on 1st July 2017 resulted in multiple benefits. For example –
As per section 2(17) of CGST Act[1], 2017 “Business” includes–
The CGST Act is a major breakthrough in the field of indirect taxation in India. The objective of the government behind the establishment of this Act is to bring all the transactions entered into by a person in return for consideration under the ambit of business and the inclusive definition of business under section 2(17) of CGST Act broadens the scope of business and interprets it in a way that no window is left open for tax invasion and other corruptive practices.
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