What is meant by the 'Goods and Services Tax' (GST) ? Explain the steps taken by the Indian Government to…

Question

What is meant by the 'Goods and Services Tax' (GST) ? Explain the steps taken by the Indian Government to facilitate trade and 'ease of doing business' under the GST regime.

Ghissu Editorial · Accepted Answer

GST, introduced on 1 July 2017, is a destination-based consumption tax that unified central and state indirect taxes under a dual CGST-SGST structure, with IGST on inter-state supplies. Trade was eased through the Composition and QRMP schemes, faster export refunds, the E-Way Bill and the GSTN portal.

**Introduction**

The Goods and Services Tax (GST), effective from 1 July 2017⟦1⟧, unified India’s indirect tax system into a destination-based consumption tax, aiming to boost growth and ease of doing business. It replaced multiple central and state taxes, creating a single national market and reducing tax cascading.

**Institutional Framework and Governance**

SKETCH: flow | GST Institutional Mechanism  
- Constitution (101st Amendment) enables GST  
- Formation of GST Council⟦3⟧⟦2⟧ for rate and policy decisions  
- Dual GST system implemented (CGST + SGST + IGST)  
- IT infrastructure supports compliance and administration

1. **GST Council as Apex Body**: Chaired by the Union Finance Minister with state finance ministers, the GST Council decides tax rates, exemptions, and procedures, ensuring cooperative federalism with two-thirds state votes.  
2. **Dual GST Structure and Compensation**: CGST and SGST apply on intra-state supplies, IGST on inter-state; a compensation scheme guarantees states 14% revenue growth for five years, cushioning fiscal impact.

**Implementation and Trade Facilitation⟦4⟧**

1. **Simplified Compliance Schemes**: The Composition Scheme and QRMP Scheme ease compliance for small taxpayers and MSMEs by allowing quarterly filings and lower tax rates.

**Technological Facilitation**

1. **GST Network (GSTN)**: Provides a unified digital platform for registration, returns, payments, and grievance redressal, supported by the GST Grievance Redressal Committee to resolve disputes efficiently.  
2. **IT Upgrades and Export Support**: Features like electronic invoicing, automated input tax credit matching, and expedited refunds (90% within seven days for exporters) improve compliance, reduce errors, and enhance liquidity.

**Way Forward**

1. **Expand Composition Scheme**: Broaden scope, especially in ==Andhra Pradesh==, to ease tax burdens on small businesses and formalize the informal sector.  
2. **Strengthen State Capacity**: Enhance GST administration and dispute resolution in states like ==Andhra Pradesh== to maintain cooperative federalism and fiscal health.

**Conclusion**

GST’s institutional, procedural, and technological reforms have significantly enhanced trade facilitation and ease of doing business in India, creating a more transparent and unified tax environment.

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