The major source for the revenue for the government is indirect tax. The Central Board of Indirect Taxes and Customs (CBIC) (erstwhile Central Board of Excise and Customs) is the apex regulatory body that supervises the levy and administration of Indirect Taxes in India. CBIC is a part of the Department of Revenue under the Ministry of Finance, Government of India. It deals with the tasks of formulation of policy concerning levy and collection of customs, Central Excise duties, Central Goods & Services Tax and IGST, prevention of smuggling and administration of matter relating to customs, Central Excise, Central Goods & Services Tax (CGST), IGST and narcotics to the extent under CBIC's purview. The board is the administrative authority for its subordinate organizations, including Custom Houses, Central Excise and Central GST Commissionerate's and the Central Revenue Control Laboratory. In recent years, the Indian government has undertaken significant reforms under the indirect taxation system. This includes the implementation of Goods and Services Tax (GST). Goods and Services Tax (GST) is an indirect tax has replaced many indirect taxes in India. The Goods and Services Tax Act was passed in the Parliament on March 29, 2017. This Act came into effect on July 01, 2017. GST is a destination based tax on consumption with credit of taxes paid at previous stages available as set-off. In nutshell. Only value addition will be taxed and the burden of tax is to be borne by the final consumer.

Destination based tax on consumption means the tax would accrue to the taxing authority which has jurisdiction over the place of consumption which is also termed as place of supply. GST has removed the cascading effect of taxes. This cascading effect implies charging tax on tax. In other words, at the time of levy of tax, the total value is considered which is inclusive of all taxes paid up to the points. In this manner, if the tax is always charged on the selling price of the products, the burden of tax keeps on increasing at each point of sales. In this process, the effect of taxation magnifies as at each level tax is calculated on value, which includes taxes already levied and paid. The charging of tax on tax is called the 'Cascading Effect of Tax'.