Goods and services tax is a consumable tax under which people engaged in business of having annual turnover more than Rs-40lakhs. Also applicable to the persons who is purchasing goods and services across India.

Advantages of GST

GST is a comprehensive indirect tax that was designed to bring indirect taxation under one umbrella. More importantly, it is going to eliminate the cascading effect of tax that was evident earlier.
Cascading tax effect can be best described as ‘Tax on Tax’. Let us take this example to understand what is Tax on Tax:

Before GST regime

A consultant offering services for say, Rs 50,000 and charged a service tax of 15% (Rs 50,000 * 15% = Rs 7,500).
Then say, he would buy office supplies for Rs. 20,000 paying 5% as VAT (Rs 20,000 *5% = Rs 1,000).
He had to pay Rs 7,500 output service tax without getting any deduction of Rs 1,000 VAT already paid on stationery.
His total outflow is Rs 8,500.

The 4 types of GST in India are: