Yesterday was a truly historic day in India's tax reform journey. This path-breaking reform will surely encourage Make in India, boost exports and thus enhance employment while providing enhanced revenue to the nation. It is also a great example of all states coming together for the ‘National Good' and for Nation's Service.

In fact, PM Modi has called it ‘the best example of cooperative federalism'. Modi thanked the leaders and members of all the parties on the occasion of passage of the GST Bill in the Rajya Sabha. "Our MPs must be congratulated for their path breaking decision to give India an indirect tax system for the 21st century. We continue to work with all parties and states to introduce a system that benefits all Indians and promotes a vibrant and unified national market."

For the benefits of our readers, we are simplifying the GST and explaining how it will impact all of us through a series of insightful pieces.

One indirect tax

Goods and Services Tax (GST) is actually one indirect tax for the whole nation, which will make India one unified common market.

It is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.

END of Part 1