Taxes will move with goods :
The major problem in present system of sales tax is that goods move from one State to other, but taxes remain within the State. For example, if goods on which State Vat is paid at 15% are sold inter-state against C form, CST rate is 2%.
Similar ‘retention’ is there if goods are stock transferred to another State.
The assesses then has to claim refund of this excess input credit of local Vat. In almost all States, there are tremendous delays in getting the refunds. Most of the States are practically insolvent and have no money to pay off these refund claims.
Besides, there is tremendous harassment, corruption and delays in getting the refunds. Huge funds of assesses are blocked for years.
In IGST, the question of refund will be only in case of physical export of goods or supplies to SEZ, international bidding etc. In other cases, assessee will pay IGST in one State and its input tax credit will be available to customer in other State.
The inter-state adjustment will be made by Central Clearing Agency. Assessee is not concerned with that adjustment at all.