Goods and Services Tax: Jemtec School of Law

JEMTEC SCHOOL OF LAW
POLITICAL SCIENCE
PROJECT
TOPIC:
Goods and Services Tax
SUBMITTED TO:
SUBMITTED BY:
RAHMAN SIR
PARTHESH (Roll. No. 22)
Goods and Services Tax

GST or Goods and Services Tax is considered as major Tax reform policy in India which will
be implemented from January 2016 if passed in next Parliament session. Most Economists
are very positive about GST implementation. GST is the single tax on supply of goods and
services, right from manufacturer to customer.
Credits of input taxes paid at each stage will be available at subsequent stage of value
addition, which makes gst a essentially a tax only on value addition at each stage. The final
consumer will thus bear only the gst charged by last dealer in the supply chain, with set of
benefits at all the previous stages.
The Goods and Service Tax (GST) is a new form of indirect tax which will replace others like
service tax, sales tax, octroi, central and state sales tax imposed under the current multi-tax
system.
It was expected to be a single tax levied by the central government on the production of
goods and services.
Currently, each state imposes a different tax. So, each state was counted as a different market
by businesses. It is a huge task to move goods from one state to another due to differential
taxes. GST will remove such demarcation and create a unified market. This is expected to
help ease movement of goods across states and reduce costs for businesses.
We all know that GST Bill in Rajya Sabha is Passed on 3rd August 2016. Now this Bill is in
the process to Make a Law in India after certain process.
As of Now the Tax rates and process of it is not Cleared. therefore India is not cleared about
the advantages and disadvantages of GST Bill.
Once the act will applicable there are many products which will be cheaper. On the other
hand some of the products will be costlier. We have to pay more to purchase those products.
Like all the other things there are some pros and cons of GST bill. This will clarify only after
the final draft of the bill. Final Draft of the bill will clear after the approval of GST council.
Just wait for some time to come to know what exactly will be the tax rates of GST in India.
Advantages of GST Bill in India

For business and industry
o Easy compliance: A robust and comprehensive IT system would be the
foundation of the GST regime in India. Therefore, all tax payer
services such as registrations, returns, payments, etc. would be
available to the taxpayers online, which would make compliance easy
and transparent.
o Uniformity of tax rates and structures: GST will ensure that indirect tax
rates and structures are common across the country, thereby increasing
certainty and ease of doing business. In other words, GST would make
doing business in the country tax neutral, irrespective of the choice of
place of doing business.
o Removal of cascading: A system of seamless tax-credits throughout the
value-chain, and across boundaries of States, would ensure that there is
minimal cascading of taxes. This would reduce hidden costs of doing
business.
o Improved competitiveness: Reduction in transaction costs of doing
business would eventually lead to an improved competitiveness for the
trade and industry.
o Gain to manufacturers and exporters: The subsuming of major Central
and State taxes in GST, complete and comprehensive set-off of input
goods and services and phasing out of Central Sales Tax (CST) would
reduce the cost of locally manufactured goods and services. This will
increase the competitiveness of Indian goods and services in the
international market and give boost to Indian exports. The uniformity
in tax rates and procedures across the country will also go a long way
in reducing the compliance cost.
For Central and State Governments

o
Simple and easy to administer: Multiple indirect taxes at the Central and
State levels are being replaced by GST. Backed with a robust end-toend IT system, GST would be simpler and easier to administer than all
other indirect taxes of the Centre and State levied so far.
o
Better controls on leakage: GST will result in better tax compliance due
to a robust IT infrastructure. Due to the seamless transfer of input tax
credit from one stage to another in the chain of value addition, there is
an in-built mechanism in the design of GST that would incentivize tax
compliance by traders.
o
Higher revenue efficiency: GST is expected to decrease the cost of
collection of tax revenues of the Government, and will therefore, lead
to higher revenue efficiency.
For the consumer

o
Single and transparent tax proportionate to the value of goods and
services: Due to multiple indirect taxes being levied by the Centre and
State, with incomplete or no input tax credits available at progressive
stages of value addition, the cost of most goods and services in the
country today are laden with many hidden taxes. Under GST, there
would be only one tax from the manufacturer to the consumer, leading to
transparency of taxes paid to the final consumer.
Relief in overall tax burden: Because of efficiency gains and prevention of
leakages, the overall tax burden on most commodities will come down,
which will benefit consumers.
Disadvantages of GST Bill in India

The Service Tax in India is now 15% but the proposed GST is about 18-20%. All the services
will be Costlier and this one of the Disadvantages of GST Bill on Common Person.
There are some retail products where the Tax rate is only 4 percent but with GST it will be
costlier like Garments and cloths.
The control on business will be of state and central government so it may be some complex
for businessman.
All credits will be online and some penalties are like criminal activity. So it is threatening for
small businessman who are now free from Taxes.
GST is also having three type of taxes and all have to be maintained and this not going too
easy for small Businessman.
The salient features of the Bill are as follows:
g.
h.
i.
j.
k.
l.
m.
n.
Conferring simultaneous power upon Parliament and the State Legislatures to

make laws governing goods and services tax;
Subsuming of various Central indirect taxes and levies such as Central Excise
Duty, Additional Excise Duties, Service Tax, Additional Customs Duty commonly
known as Countervailing Duty, and Special Additional Duty of Customs;
Subsuming of State Value Added Tax/Sales Tax, Entertainment Tax (other than the
tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected
by the States), Octroi and Entry tax, Purchase Tax, Luxury tax, and Taxes on lottery,
betting and gambling;
Dispensing with the concept of declared goods of special importance under the
Constitution;
Levy of Integrated Goods and Services Tax on inter-State transactions of goods
and services;
GST to be levied on all goods and services, except alcoholic liquor for human
consumption. Petroleum and petroleum products shall be subject to the levy of GST
on a later date notified on the recommendation of the Goods and Services Tax
Council;
Compensation to the States for loss of revenue arising on account of
implementation of the Goods and Services Tax for a period of five years;
Creation of Goods and Services Tax Council to examine issues relating to goods
and services tax and make recommendations to the Union and the States on
parameters like rates, taxes, cesses and surcharges to be subsumed, exemption list
and threshold limits, Model GST laws, etc. The Council shall function under the
Chairmanship of the Union Finance Minister and will have all the State
Governments as Members.
What happens next?

However, with the passage of the GST Bill, the government will have to put up a mad
scramble to put together all the mechanisms and state approvals in place to implement
the GST by its rollout date of April 1, 2017.
Additionally, companies and tax collectors will have to be prepared on the necessary
changes. Some companies may even have to overhaul their business processes to
make way for the new tax change.

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JEMTEC SCHOOL OF LAW

Goods and Services Tax

PARTHESH (Roll. No. 22)

Goods and Services Tax

Advantages of GST Bill in India

For Central and State Governments

For the consumer

Disadvantages of GST Bill in India

The salient features of the Bill are as follows:

Conferring simultaneous power upon Parliament and the State Legislatures to

What happens next?

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