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To be a part of globalize taxation regime, the Hon. Finance Minister has declared a road map for introduction of “Goods and Service Tax” in our country and according to it the year 2010 has been declared as the year of introduction of “Goods and service Tax”. 
At present we have a system in which goods and services are taxed in a totally separate manner. Goods are taxed through sales tax, which is now converted in VAT (Value added Tax) and central Excise. Both these systems of tax are governed by two separate set of Governing bodies i.e. VAT is governed by the State Governments and the central Excise is governed by the Central Government.
Further Taxing the services in our country is relatively a new concept which was introduced by the Present Prime Minister of the country Shri Man Mohan Singh when he was at the helm of affairs of the Finance Ministry in 1994 with a very popular motto “When Goods are taxed why not services”. Started with only 3 services in 1994, now till 2006 this tax has covered 96 services under it’s net. Services tax is a totally different tax and it is governed by the central government, though at present states are also demanding the power to tax the services.
The Finance Minister Mr. P. Chidambaram has declared that Goods and service Tax will be introduced in India in 2010. How this tax system will work and the what type of difficulties and problems will be faced by the Central Government while introducing this tax coupled with the reaction of the states is the main issues to be seen with respect introduction and smooth implementation of this tax.
Here see the statement of Hon. Finance Minister Mr. P. Chidambaram regarding introduction of GST in our country: -
“ It is my sense that there is a large consensus that the country should move towards a National Level Goods and Service Tax (GST) that should be shared between the center and the states. I propose that we set April 1, 2010 as the date of introducing GST. World over, Goods and Services attract the same rate of Tax. This is the foundation of GST. People must get used to the idea of a GST. We must progressively converge the service tax rate and Cenvat rate. I propose to take one step this year and increase the service tax rate from 10 percent to 12 percent. Let me hasten to add that since service tax paid can be credited against service tax payable or excise duty payable, the net impact will be very small”- Shri P.Chidambaram, Hon. Finance Minister of the country in his Budget speech 2006.
When Goods and service tax will be introduced it will replace the three taxes as mentioned above and these are: -
2.Central Excise
3. Service Tax
The concept is relatively new for our country but the system has already adopted by some of the countries like Canada and Australia more than a decade back. The countries like Malaysia are in the line to introduce this concept in 2007. 
In our country where the system of governance is federal and the states have also immense power to tax it will be very difficult for the center to take this power from the states in the present political scenario where the states and the center are governed by the totally different set of political parties and further the economical balance of the states is not the same. Some of the states are financially strong and some are not so strong but there is a certain group of states, which can only be termed as economically backward states. It will not be easy for the states, specially the economically sound states to compromise with the power to tax the goods.
Since the Finance Minister of the country has declared the road map of the introduction of the GST and 2010 is declared as the benchmark year hence the study of the “GST” has got the importance.
M. Govind Rao, The director of the National Institute of Public Finance and policy has also mentioned about this system in the following way: -

The prime minister himself has suggested that we should move towards a harmonised goods and services tax. Calibrating such a co-ordinated indirect tax reform in an environment where the states value their autonomy dearly is not easy.
Given that we have parallel systems of indirect taxation at the central and state levels, each of the systems needs to be reformed to eventually harmonise them.
Thus, central excise duty should be converted into a full fledged manufacturing stage VAT on goods and services and the states sales tax systems should be transformed into a retail stage destination based VAT, before the two are integrated by striking a "grand bargain" to harmonise the two systems.

The initial reaction of the trade and Industry is also very positive .The chambers have welcomed the Kelkar Task Force Report's recommendations on introducing the goods and services tax (GST) as it would simplify the tax structure.
However, there are some concerns on the proposal to do away with tax exemptions for infrastructure projects.
Integration of goods and services taxation would "provide India a world class tax system even while improving tax collections and ending the long standing distortions of differential treatments of manufacturing and service sector," said a Federation of Indian Chambers of Commerce and Industry (FICCI) statement.
This will ensure the abolition of taxes such as octroi, Central sales tax, State level sales tax, entry tax, stamp duty, telecom licence fees, turnover tax, tax on consumption or sale of electricity, taxes on transportation of goods and services, and eliminate the cascading effects of multiple layers of taxation, it added.

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