There are so many indirect taxes which are levied on sale of goods and services in India. These indirect taxes are divided in two parts ie. State Indirect Taxes and Central Indirect Taxes.

State Indirect Taxes:- These taxes are classified as under:-

  • Local Sales Tax or Value Added Tax (VAT)
  • Central Sales Tax
  • Purchase Tax
  • Luxury Tax
  • Entertainment Tax
  • Purchase Tax
  • Octroi and Entry Tax
  • Taxes on Lottery
  • State Cess and Surcharge relating to supply of goods and services etc.

Central Indirect Taxes:- These taxes can be classified as under:-

  • Central Excise Duty
  • Additional Excise Duties
  • Service Tax
  • Additional Custom Duty
  • Special Additional Duty of Customs
  • Central Cess and Surcharge relating to the supply and services etc.

GST is an indirect tax to replace the above taxes. It means that the above mentioned taxes will not be in existence and there will only be one indirect tax in respect of supply of goods and services in India and that is known as GST.

Benefit of GST

  1. It is very good step to reform the indirect taxation in India.
  2. So many indirect taxes are amalgamated in to a single tax.
  3. Double taxation will be avoided.
  4. From the point of view of administration of a single tax will be very transparent and effective.
  5. Goods and services will be little cheaper.
  6. There will be free movement of goods from one state to other state without stopping at state borders for checking and paying the duties.
  7. Of course, lot of paper work will be reduced from the point of view of business man and the government.