GST Council’s Track and Trace Mechanism

GS 3 – Economy 

The GST Council has introduced a new system called the Track and Trace Mechanism to improve tax compliance and reduce tax evasion. Here’s a simpler breakdown:

1. Track and Trace Mechanism

• What It Is: A system where products will have unique identification marks on their packaging, making it easier to track them throughout the supply chain.
• Why It’s Important: This helps prevent tax evasion by ensuring that goods are properly documented and taxes are paid as they move from the manufacturer to the consumer.

2. Benefits

• Better Accountability: Authorities can track goods easily, ensuring businesses pay the correct taxes.
• Less Tax Evasion: It reduces the chances of goods being sold without paying taxes.
• More Transparency: Consumers can be confident that the goods they buy are legitimate.

3. Impact

• For Businesses: Those handling goods vulnerable to tax evasion will need to follow this system, possibly adding some costs but making tax compliance easier in the long run.
• For Consumers: The system ensures that the products they purchase are legally taxed and genuine.