GST Full Form
The Full form of GST is Goods and Services Tax. GST is an indirect tax which was introduced to simplify the complicated indirect tax system in India. At the national level, it brings all other indirect taxes imposed by the central and state governments on the manufacture and sale of goods and services under a single domain. In India, GST is one single tax replacing all the indirect taxes levied at central and state level. There is a facility to avail the credit of input taxes paid at each stage in the subsequent stage of value addition. So, GST is basically a consolidated tax and it would be based on the uniform rate of tax and will be payable only at the final point of consumption, unlike a cascade tax that is imposed at every stage in the supply chain without considering the taxes paid at previous stages. This way of applying a tax on tax is known as the cascading effect of taxes. Let’s take an example; a distributor sells a product of price Rs. 1000 to a retailer after adding the indirect tax 12%, at Rs. 1120. Then the retailer sells the same product of price Rs. 1120 to a customer after adding the indirect tax 12% at Rs. 1260. In this scenario, due to the cascading effect of taxes, the final price of the product has increased.