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In 2005, the Kelkar committee recommended rolling out GST as suggested by the 12th Finance Commission. In 2002, the Vajpayee government formed a task force under Vijay Kelkar to recommend tax reforms. It later came out for rolling out a uniform taxation regime in the country. The Asim Dasgupta committee which was also tasked with putting in place the back-end technology and logistics (later came to be known as the GST Network, or GSTN, in 2015).
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Vajpayee set up a committee headed by the Finance Minister of West Bengal, Asim Dasgupta to design a GST model. A single common "Goods and Services Tax (GST)" was proposed and given a go-ahead in 1999 during a meeting between the Prime Minister Atal Bihari Vajpayee and his economic advisory panel, which included three former RBI governors IG Patel, Bimal Jalan and C Rangarajan. Subsequently, Prime Minister P V Narasimha Rao and his Finance Minister Manmohan Singh, initiated early discussions on a Value Added Tax (VAT) at the state level. The reform of India's indirect tax regime was started in 1986 by Vishwanath Pratap Singh, Finance Minister in Rajiv Gandhi’s government, with the introduction of the Modified Value Added Tax (MODVAT).
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However, petroleum products, alcoholic drinks, and electricity are not taxed under GST and instead are taxed separately by the individual state governments, as per the previous tax system. Goods and services are divided into five different tax slabs for collection of tax: 0%, 5%, 12%, 18% and 28%.
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Multi-staged as it is, the GST is imposed at every step in the production process, but is meant to be refunded to all parties in the various stages of production other than the final consumer and as a destination-based tax, it is collected from point of consumption and not point of origin like previous taxes. It is a comprehensive, multistage, destination-based tax: comprehensive because it has subsumed almost all the indirect taxes except a few state taxes. Goods and Services Tax ( GST) is an indirect tax (or consumption tax) used in India on the supply of goods and services. For the legislation introducing this tax, see One Hundred and First Amendment of the Constitution of India.