The present tax system promotes different pricing in states and competition in the domestic market. The proposed tax system will help and prompt a smooth business across the country and we are expecting this from the new government, Garg added.
When a manufacturer is sourcing his raw materials from one state and his clients too mostly are in the same state the present tax system is right. But, when he/she collects raw materials from one state to other, he/she has to pay 2 percent central sales tax (CST) on it and when he transports the finished product back into his state, he has to pay another 2 percent CST on it.
But the GST is a tax reform that seeks to create a common market for all goods and services across India. It has long been delayed only because the difference between states and center tax compensation design.
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