History of GST

Origin of GST system of taxation (also known as VAT as the basis principle of this system is to provide a framework of taxing only value addition across the chain from production to consumption by allowing credit of tax paid on purchases) can be traced to two sources. The first suggests that German businessman Dr Wilhelm von Siemens proposed the VAT in 1918 as a ‘refinement’ or improvement to the German cascading turnover tax. The second suggests that the American economist T. S. Adams, writing between 1910 and 1921, proposed an invoice-credit method VAT as an alternative to business income taxation. Today 32 out of 33 member countries of Organization for Economic Cooperation and Development (OECD) have adopted some form of GST. Even amongst developing economies,

The second suggests that the American economist T. S. Adams, writing between 1910 and 1921, proposed an invoice-credit method VAT as an alternative to business income taxation. Today 32 out of 33 member countries of Organization for Economic Cooperation and Development (OECD) have adopted some form of GST. Even amongst developing economies,

Today 32 out of 33 member countries of Organization for Economic Cooperation and Development (OECD) have adopted some form of GST. Even amongst developing economies, growth of GST is phenomenal with two-thirds of the least developed countries in the world having GST. Only prominent exception of the country which has not adopted GST is USA.

Noted expert Mr. Cnossen has defined an ideal GST as “It is widely agreed that a good VAT extends through the retail stage, is as broadly based as possible, permits registered firms a full and immediate deduction (tax credit) of the VAT on inputs (including capital goods) from the VAT on output, limits the extent of rate differentiation, and is imposed on the destination principle.”

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