GST is a destination-based tax levied on the supply of goods and services. The proposed dual GST in India is designed to be levied concurrently by both the states and the central government on a common tax base. This tax applies at all stages of the supply chain up to the final sale to consumers, providing Input Tax Credit (ITC) benefits based on invoices issued at previous stages of the supply chain.
Destination based consumption tax means that state and central taxes levied at different stages of the supply chain will be totally shifted to the final destination, consumers, and the destination state will get the full SGST paid by its residents.
Exports are zero rated.
If credit of IGST levied on interstate movement of goods is set off against state GST by dealers in the consuming states, such credited IGST will be refunded to the consuming states. Similarly, if SGST credit is utilized for payment of IGST, the concerned state which has collected the SGST should remit such credit to the IGST account managed by the Central Government.
The Goods & Service Tax or GST is one of the biggest fiscal reforms in India since Independence. All businesses, small or large, will be impacted by this new indirect tax regime. GST will be levied on both goods and services and will subsume and replace the current indirect taxes such as excise, VAT, and service tax.