The Bill rolling out the country's biggest indirect tax reform since 1947 has been subject to heated debate since it was introduced for discussion in 2009 by the previous UPA government. The tabling of the Bill was prolonged as the centre and states struggled to reach consensus on sharing tax revenue once the GST is implemented.

In a nutshell, GST is a value added tax to be levied on both goods and services except for a list of exempted goods and services at both the centre and state level.

GST is expected to replace the plethora of indirect taxes including service tax, central excise duty, additional excise and customs duties, central surcharges and cesses, state VAT, state sales tax, entertainment tax not levied by local bodies, luxury tax, taxes on lottery, betting and gambling, tax on advertisements and state cesses and surcharges related to supply of goods and services. As these taxes have been ineffective and have suffered from a litany of infirmities, including exemptions and multiple rates, GST is expected to transform the labyrinthine patchwork of taxes to a lean, streamlined process.

GST will also enhance revenue for the Centre and states as the streamlined tax collection system will lead to better compliance.

In addition to simplifying tax system, enhancing compliance and boosting tax revenues for both the centre and states, GST will reduce tax outflow in the hands of the consumers. As cost of production dips, goods and services produced in the country will turn price-competitive in foreign markets, it will help exporters compete with manufacturers abroad.

GST will also reduce paperwork needed to remitting taxes and simplify accounting complexities for businesses. A simple taxation system is also expected to make several sectors, including manufacturing and infrastructure, more competitive.

As per the tweaked version of the Bill tabled in the Parliament, the unified tax system will comprise central and state GSTs (same taxable base will be subject to both GSTs) which will be legislated, levied and administered separately.

Essentially, the Bill will pave the way for the centre to tax sale of goods and the states to tax provision of services, though the former will have the exclusive power to levy GST on imports and inter-state trade.

The Bill also proposes to set up a powerful GST council, comprising union finance minister and representatives of both the centre and states, to ensure that revenue sharing is done neutrally between the centre and states.

There will also be a Dispute Settlement Authority that will moderate possible disputes between the centre and states.

The Bill also proposes a standard rate of GST across various goods and services in line with international rates.

Initially certain goods including crude petroleum, diesel, petrol, natural gas, aviation turbine fuel and alcohol for human consumption will be kept out of the GST's purview, as sharing tax over these goods has been a point of contention between the centre and states. States will have the power to levy taxes on these items, except in the case of imports and inter-state trade.

The beauty of GST is that though it will be levied on all products and services, and will cover all stages from manufacture to sale, it will be changed only on the value added at each stage of the product life cycle, hence reducing the tax to be collectively paid by companies and eventually by consumers.

Under the proposed tax regime, companies can claim deduction on the taxes already paid by their suppliers. This in turn enhances compliance and overall tax income for the government as every firm will be encouraged to ensure that its supplier has paid its portion of tax part to be eligible for deductions.

The fact that more than 150 countries have already adopted GST is a testimony to the argument that it can help raise revenue in a neutral and transparent manner.

Complying with the most important development in taxation over the last six decades will also lend a leg-up to India's attractiveness as a market that is fast maturing in terms of regulation and taxation.