WHY GST IS NEEDED?

Why GST is needed

1. The term "GST" stand for "Good's and Service's Tax" and is comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as service at the national level. 
2. Its main objective is to cover most of the indirect tax levied into a single tax,  replacing multiple tax levies, overcoming the limitation of current indirect tax structure,  and creating efficiencies in the tax administration. 
3. Another reason is to go to the GST way is to facilitate seamless credit across the entire supply chain and across all states under a common tax base. 
4. Therefore,  GST is a board based and a single comprehensive tax levied on goods and services  consume in an economy. GST is levied at every stage of the production-distribution chain with applicable set-offs in respect of tax remitted at previous stages.  It is basically a tax on final consumption. 
5. With the use of extensive computerization, it would widen the indirect tax network and eliminate avoidance of tax. 
6. To summarise, GST may be defined as a tax on supply of goods and services, which is available at each point of sale of goods or provision of service, where seller of the goods or provider of services may claim the credit of input tax which he has paid while purchasing the goods or procuring the services.

 There is no requirement of actual sale of goods under GST.  The alternative methods of supply of goods could be in the form of :

• Stock transfer;
• Captive consumption in another location;
• Supply on consignment basic or any other basic by the principal to his agent;
• Supply job work basic;
• Any other supply such as donation,  sample etc.