Sanjay C - PC181219

KUVEMPU UNIVERSITY
Project on
A Study on Impact of GST on Automobile Industry in Shivamogga
Submitted in Partial Fulfillment of the Requirement for the Award of the Degree
MASTER OF COMMERCE
By
Mr. Sanjay. C
Register Number: PC181219
Under the Guidance of
Dr. S.R Nagaraja

Coordinator
PG Department of Commerce
PESIAMS SHIVAMOGGA
PES Institute of Advanced Management Studies,

(Affiliated to Kuvempu University)
N H 206, Sagar Road, SHIVAMOGGA – 577 204
2019-20
Acknowledgement
This project work would not have been completed without the moral support and
encouragement of all whom I would like thank for their immense help in this Endeavour. I
feel happy and proud of mentioning those who motivated me and contributed directly and
indirectly in completing my dissertation work.
I would like to express my sincere and special thanks of gratitude to

Dr. S.R Nagaraja., Assistant Professor, P.G Department of Commerce, PESIAMS,
Shivamogga for his guidance and support throughout this project work.
I would like to express my special thanks to Coordinator Dr. S.R Nagaraja
Coordinator, P.G Department of Commerce, PESIAMS, Shivamogga who gave me the
opportunity to do this project and supporting me throughout the project study.
I would like to express my special thanks to Principal Dr. K. Sailatha who gave
me the opportunity to do this project and supporting me throughout the project study.
I would like to offer my whole hearted gratitude to all faculty members and non-
teaching staff, M.Com Department, PESIAMS, Shivamogga and other friends for being
so encouraging and supportive throughout the study.
I would like to offer my sincere thanks to gratitude towards all those people who
helped me in the successful completion of my project work without whose timely co-
operation my Endeavour would not have been success.
I am pleased to my beloved parents for their affection and love throughout my
career. I thank all my friends who directly or indirectly helped me in completion of this
work.
Mr. Sanjay. C
DECLARATION
I hereby declare that the Project work entitled “A Study on Impact of GST
on Automobile Industry in Shivamogga” is the result of my own study
done under the supervision and guidance of Mr Harsha C Mathad Asst.
Professor, PGDepartment of Commerce, PES Institute of Advanced
Management Studies, Shivamogga– 577204 and I further declare that the
findings in the project report are independent study done by me.
Place: Shivamogga Mr. Sanjay. C

Date: Reg. No.PC181219
IV Semester M.Com
Dr. S.R Nagaraja
Asst. Professor
P G Department of Commerce,
PES Institute of Advanced Management Studies
SHIVAMOGGA - 577204
GUIDE CERTIFICATE
This is to certify that Mr. Sanjay. C bearing the Register No.PC181219of
IV Semester M.Com has carried out the Project Work entitled “A Study on
Impact of GST on Automobile Industry in Shivamogga” under my
guidance as part of his curriculum activity as per the norms for obtaining
Degree in Master of Commerce from PES Institute of Advanced
Management Studies, Shivamogga during the Academic year 2019-20.
Guide
Dr. S. R Nagaraja
Place: Shivamogga Assistant Professor & Coordinator
Date: PES Institute of Advanced Management Studies
Shivamogga
COORDINATOR CERTIFICATE
This is to certify that Mr. Sanjay. C is a bonafide student of IV
Semester M.Com bearing the Register No.PC181219has successfully
completed the project work entitled “A Study on Impact of GST on
Automobile Industry in Shivamogga” in partial fulfillment of the
requirement for the award of Master of Commerce from PES Institute of
Advanced Management Studies, Shivamogga during the Academic year
2019-20.
Coordinator
Dr. S.R Nagaraja
Place: Shivamogga Coordinator
Date: PG Department of Commerce
PES Institute of Advanced Management Studies
Shivamogga
CERTIFICATE
This is to certify that Mr. Sanjay. C student of IV Semester M.Com
bearing the Register No.PC181219has successfully completed the
project work entitled “A Study on Impact of GST on Automobile
Industry in Shivamogga” in partial fulfillment of the requirement for
the award of Degree in Master of Commerce from PES Institute of
Advanced Management Studies, Shivamogga during the Academic year
2019-20.
Principal
Place: Shivamogga
Date:
Contents
Chapter Chapter name Page no
1 Introduction 01 - 10
2 Automobile Industry Profile 11 - 18
3 Conceptual Frame Work 19 - 42
4 Analysis of Data and Interpretation 43 - 67
Findings, Suggestions and

5 68 - 72
Conclusion
6 Questionnaire
Bibliography
List of Tables
Table Page
Particulars
No. No.
4.1 Classification of the Respondents on the basis of Gender factor 44
4.2 Classification of the Respondents on the basis of Marital Status 45
4.3 Classification of the Respondents on the basis of Age Group 46
4.4 Classification of the Respondents on the basis of Qualification 47
4.5 Classification of the Respondents on the basis of living in the Area 48
4.6 Classification of the Respondents about Category of Serving 49
4.7 Table showing the respondents belongs to Support to GST 50
Table showing the respondents Opined about effect of GST on the
4.8 51
automobile Industry in India
Table showing the respondents belongs to think is more beneficial
4.9 52
both Government and People
respondents opined towards GST will Burden the people or
4.10 53
Consumer
Table showing the respondents Opined that the introduction of GST
4.11 54
in India has affected the demand for the product / service
4.12 Table showing the respondents opinion on present GST Slab Rate 55
Table showing the respondents opinion towards Transition of GST
4.13 56
Regime
Table showing the respondents opined towards GST influence their
4.14 57
Consumption behavior
Table showing the respondents opinion towards GST will effect on
4.15 58
4.16 Table showing kinds of expenditure will be affected most by GST 59
Table showing observation after the implementation of GST with
4.17 60
regard to prices of the products
Table showing introduction of GST will result in better input tax
4.18 61
credits for your business resulting in better profitability
4.19 GST improves the revenue growth to the state and country 62
Table showing biggest challenge for business during the transition to
4.20 63
GST regime
Table showing the respondents think that what should be the rate
4.21 64
structure
Table showing the respondents belongs tax payer may have
accumulated credit in one state and a liability in another state
4.22 65
therefore whether a mechanism to transfer credit from one state to
another should be built into the GST Regime
Table showing the respondents opined that Introduction of GST has
4.23 66
created confused customer / Businessmen
Table showing the respondents belongs to think GST will reduce the
4.24 67
evasion of tax
List of Graphs
Table Page
Particulars
No. No.
4.1 Classification of the Respondents on the basis of Gender factor 44
4.2 Classification of the Respondents on the basis of Marital Status 45
4.3 Classification of the Respondents on the basis of Age Group 46
4.4 Classification of the Respondents on the basis of Qualification 47
4.5 Classification of the Respondents on the basis of living in the Area 48
4.6 Classification of the Respondents about Category of Serving 49
4.7 Graph showing the respondents belongs to Support to GST 50
Graph showing the respondents Opined about effect of GST on the
4.8 51
Graph showing the respondents belongs to think is more beneficial
4.9 52
respondents opined towards GST will Burden the people or
4.10 53
Consumer
Graph showing the respondents Opined that the introduction of GST
4.11 54
in India has affected the demand for the product / service
4.12 Graph showing the respondents opinion on present GST Slab Rate 55
Graph showing the respondents opinion towards Transition of GST
4.13 56
Regime
Graph showing the respondents opined towards GST influence their
4.14 57
Graph showing the respondents opinion towards GST will effect on
4.15 58
4.16 Graph showing kinds of expenditure will be affected most by GST 59
Graph showing observation after the implementation of GST with
4.17 60
Graph showing introduction of GST will result in better input tax
4.18 61
4.19 GST improves the revenue growth to the state and country 62
Graph showing biggest challenge for business during the transition
4.20 63
to GST regime
Graph showing the respondents think that what should be the rate
4.21 64
structure
Graph showing the respondents belongs tax payer may have
accumulated credit in one state and a liability in another state
4.22 65
therefore whether a mechanism to transfer credit from one state to
another should be built into the GST Regime
Graph showing the respondents opined that Introduction of GST has
4.23 66
Graph showing the respondents belongs to think GST will reduce the
4.24 67
evasion of tax
Chapter – 1
Introduction
1.1 Introduction
1.2 Review of Literature
1.3 Statement of the Problem
1.4 Objectives of the Study
1.5 Scope of the Study
1.6 Research Methodology
1.7 Sampling Technique
1.8 Limitations of the Study
1.9 Chapter Scheme
PESIAMS, Shivamogga Page 1

Introduction
1.1 Introduction
India is currently moving towards major reforms in its taxation systems and economic
policies. The growth pattern of India is very high and by 2030 itmoving forward to
become the third-largest economy of the world. Government is taking significant
initiatives to boost the overall economic growth of the country. Introduction to GST
and its 3 types- CGST, SGST, IGST AND UTGST are providing effective support to
such major economic development programs.
Goods and Services Tax is considered as the biggest taxation reform in the history of
Indian economy. It is a single uniform taxation systemwhere all the taxes are
subsumed into one. It will subsume taxes like Value Added Tax, Service Tax, CST,
Excise duty, entertainment and luxury tax, etc. GST will help in eliminating time, cost
and effort.
Goods and Service Tax is introduced as The Constitution Amendment Act 2016 and it
is regulated by the Union Finance Ministry of India. It is a consumption based tax
which is levied on the supply of goods and services and will be imposed at each stage
of sale or purchase of goods or services based on the input tax credit method.
Based on a uniform taxation system, GST will not only turn Indian economy into one
common market but also enhance the ease of doing business in India. Due to GST
industries will be able to make substantial savings in terms of logistics and supply
chain. Some companies will be benefitted more due to lower GST rate as compared to
the current taxation structureand few companies will have to pay more tax as the GST
rate will be higher than existing tax structure, which may increase the rate
respectively.
National Securities Depository Limited (NSDL) will support the government and they
have created Goods and Services Tax Network (GSTN). It‘s a non-government firm
which will provide IT infrastructure services to the central and state governments,
stakeholders and taxpayers for proper implementation and regulation of GST.

Before GST implementation and unification of taxes, we had a series of indirect taxes
in India, wherein every state had their own indirect tax structure. Now, after GST
implementation, all these taxes have been subsumed to one tax.
Impact of GST on automobile sector particularly is considered as a positive thing as
manufacturers of automobiles will have to pay reduced taxes and ultimately
customers will also be benefited. Before GST, various taxes such as sales tax, road
tax, sector tax, VAT, motor vehicle tax, registration duty, etc. were imposed. All of
these have been subsumed to GST on automobile services.
GST Impact on Automobile Sector
GST tax on automobiles has significantly reduced the cost of transporting goods, as
transportation anywhere in India doesn’t pass through check posts or various taxes. It
has, in fact, reduced the price of automobiles across the country when compared to the
prices before GST.
Another way GST will affect dealers is by cash lock-on free services. Many
automobile manufacturers provide free services or warranty cards at the time of sales
in form of customer benefits. Dealers will have to pay the GST on these at the time of
issue but the customers may redeem these services any time later.
The automobile industry in India is a giant business which produces a vast number of
cars and bikes annually, to cater to the needs of huge population of the country. The
Automobile sector in India is one of the largest in the world. The industry
contribution to country's Gross Domestic Product (GDP) accounts for 7.1%.India is
one of the largest tractor manufacturer in the world, second largest twowheeler
manufacturer, second largest bus manufacturer, fifth largest heavy truck
manufacturer, sixth largest car manufacturer and eight largest commercial vehicle
manufacturers. Under Automotive Mission Plan 2026,the goal is to make Indian
Automotive Industry among top three in manufacturing, engineeringand exports of
vehicles & components in the world and expected to accounts for 12 per cent of India
GDP during the next decade.The Two Wheelers segment is the leader of the Indian
Automobile market with 80% market share due to a growing middle class and a
young population and the Passenger Vehicle (PV) segment holds 14 per cent market

share. India is also a prominent auto exporter and automobiles companies are also
exploring the rural markets which will also boost the growth of the sector.in near
future.Under the current tax system, there are several taxes applicable on this sector
like excise, VAT, sales tax, road tax, and motor vehicle tax, registration duty on car
and bikes which will be subsumed by GST.
CST or central state tax, which was applied when there was an interstate sale, has
been eliminated. There is no longer need for automobile companies to maintain
different warehouses at different locations. They can join various warehouses and
enjoy low operating cost. Further, taxes paid on advertising, promotions, and other
overhead come under input credit tax, which will lead to an additional decrease in
operational cost.
Although operational cost is reduced, GST tax on automobiles has increased dealers'
concerns and here’s why this has happened:
Whenever any vehicle is transferred, GST is cleared and capital is locked as the
supply is taxable with GST. Now, the dealer needs to pay the GST on the exact day as
the reception of advance. However, this will also make dealers more cautious to avoid
hurting their outflow.
1.2 Review of Literature

K.Neelavathi, Mrs. Rachana Sharma,(2015) in their article " Impact of GST on
Automobile Industry " stated that Automobile industry in India is one of the most
successful and emerging manufacturing industry post liberalization. The industry has
potential to grow and become a major contributor for the economic development and
employment creation. The Government of India has planned to implement GST in
manufacturing sector in India. The execution of GST, charges moves from the root
state to the utilization state because of that general financial action is required to
broaden and it could expect a vastly improved GDP development that should push
interest for vehicle crosswise over classes.
Akshara Mahesh ,Karthika K ,(2017) in their article "Impact of GST on
Automobile Industry in India" stated that Automobile industry in India is one among

the most victorious and rising manufacturing industry after liberalization. The
industry has prospective to grow and become a most important contributor for the
economic development and employment formation. The Indian government has also
identified the need for Automobile industry in the Indian economy and is currently
functioning on Automotive Mission Plan 2026. Automobile industry can become one
of the important contributor for the economic development of the country as well as it
help in increasing the employment opportunity.
Dr. P. Mahender,(2017) in his article " GST Effect on Manufacturing Industry –
India " stated that Every nation will impose various taxes on people and thing in
order to undertake developmental work. In India the government of India recently
enacted a law namely GST. This paper seeks to explain the positive and negative
effects of GST on manufacturing industry in India. Tax compliance can be improved
by implementing simple reforms in personnel policy in Indian income tax .He
concluded that the GST will lead to higher tax compliance and lower tax evasion by
Indians. Examined VAT is a type of indirect tax that is imposed on goods and
services, and they advocated the tax impact on budget and revenue.
Tarunika Jain Agrawal ,C.A. Aashna Goyal ,(2017) in their article " Impact Of
Gst On Real Estate And Automobiles Sector " stated that One of the crucial reforms,
changing the landscape of indirect taxation in India is the introduction of Goods and
Services Tax (GST), to be implemented from 1st July, 2017. It is after a lot of
amendments and deliberations that this act has seen the light of the day. The proposed
idea is to have a single tax rate for all goods and services, charged by states and
central governments, in tune with the developed nations. Discuss different aspects of
GST implementation, relating to the principles, issues, and procedures. The paper
cited the introduction of GST to be the most significant tax reform in India, increasing
tax compliance and transparency.
Pooja Jha , F.B. Singh ,(2017) in their article "A Study On Implementation Of Gst
And Its Repercussion On Indian Automobile Sector" stated that The paper highlights a
brief analysis of GST which would bring a substantial change in the purview of
indirect tax in India. Basically, it is called the mother of indirect tax as it will subsume

most of the indirect tax leading to a lucid ambiance for tax payer to deal with it. The
paper depicts the background and mission of proposed GST and its repercussion on
Indian industry with special reference to automobile sector. Proper GST
administration and dispute resolution (more importantly on inter-state transactions) is
very critical. The industry is also expecting the procedural changes to be notified in
advance, and may require a lead time of at least six months before introduction of
GST.
Mr.S D Kharde, ,(2017) in his article " Impact Of Gst On Indian Automobile
Industry " stated that GST also known as Goods and Services Tax. More than 150
nations have implemented GST so far. Goods and Service Tax or GST as it is known
is all set to be a game changer in Indian Economy. However, there is a cry against its
implementation. It would be interesting to study and understand its impact on Indian
Economy. GST, the basis of tax credit should be on ‘Cost to Business’, i.e. any tax
which is paid and forms cost to business should be allowed as tax credit both at the
central and state level. The document based credit should also be dispensed with and
could be substituted by appropriate certification by independent Chartered Accountant
(or the Appointed Company Auditors).
Dr. Ashok Sharma ,(2018) in his article "Impact of GST on Automobile Industry in
India" stated that Automobile industry is the fastest growing sector in India having
clear correlation with the reforms related policies influencing domestic demand
pattern as well as trade. The Automobile sector in India is one of the largest in the
world. The industry contribution to country's Gross Domestic Product (GDP)
accounts for 7.1%. India is one of the largest tractor manufacturer in the world,
second largest two-wheeler manufacturer, second largest bus manufacturer, fifth
largest heavy truck manufacturer, sixth largest car manufacturer and eight largest
commercial vehicle manufacturers.
Charumathi S,(2019) in his article " Gst Implication On Sales Of Automobile
Industry With Reference To Tata Motors " stated that In this present generation,
individuals are highly sophisticated in their life standard as it is directly determined
by their individuals and family income. Pool of earnings in a family take them to next

level life style. Copy and comparison are the two important C’s which influence the
individuals to lead their life in comfort t zone. In the last two decades people are
totally isolating to prefer public transport. Heavy traffic penetrates the individuals to
frustrate, in turn it leads to attract to buy their own vehicles.
Songara Manoj ,(2019) in his article " Goods and Services Tax (GST) in India – An
Overview and impact " stated that GST also known as the Goods and Services tax is
defined as the giant indirect tax structure designed to support and enhance the
economic growth of a country. The aim of this research paper is regarding impact of
GST and its impact on various sectors. With the introduction of GST, there is chaos
and confusion among common man. GST bill will be a form for economic integration
of India. The main trait of the GST is to transform India into a unified market by
dismantling the present fiscal barrier among states and can expect improved tax
compliance. GST is also different in the way it is levied — at the final point of
consumption and not at the manufacturing stage.
Rachana Sharma, (2019) in his article " Impact of GST Automotive Sector " stated
that India has a robust automotive industry which ranges from a two wheelers to four
wheelers as well as a presence in varieties of commercial vehicles. It is now heading
towards electrification, albeit slowly. With increasing spending capacity, high levels
of product awareness, rapidly evolving expectations and demand for personalized
products & services, customers are taking the center stage of the entire automotive
ecosystem. Understanding changing customer needs and having the ability to serve
them differentially will be a key competitive advantage. An overview of the
automotive ecosystem is provided below for ease of reference.
1.3 Statement of the Problem

The tax is aptness for the revenue authorities to have the tax collected through the
agencies of the manufactures or merchants who are used as “unofficial tax collectors”.
There is no direct assembly between tax payers and revenue authority and taxes so
collected maybe termed as indirect tax EG: GST.

The most applied and suitable way to differentiate between direct and indirect tax
which is in conformism with generally accepted view of direct and indirect tax that is
levied immediately on conception of individuals may be called indirect taxes. Present
study focus the GST impact on automobile spare parts with references to the total
turnover of Automobile Industry with aim to analysis the above mentioned research
problem , the following of hypotheses and objective have been formulated.
1.4 Objectives of the Study
• To study about the need and the Importance of the Goods and Service Tax to
the Indian economy.
• To study the key role of Automobile industry in the Indian economy
• To analyze the impact of GST on Consumers who use Automobile Industry.
• To study the impact of GST on Automobile Industry in Karnataka
• To study the pertinent issues in current taxation and GST under Automobile
industry.
1.5 Scope of the Study
The study was conducted to analyze the Impact of GST on Automobile Industry
sector of India with Special reference to Shivamogga City with the sample size of 50
respondents. It covered the opinions of the professionals, traders, manufacturers. It
brought to light the impacts of GST on Automobile Industry sector. This study
emphasizes the reason for transition from VAT to GST.
1.6 Research Methodology
The research design is probability research design and is descriptive research.

Sources of data
The data was collected through primary and secondary sources. The sufficient and
relevant literature is available pertaining to the Automobile industry in Karnataka.
Primary Data
The Primary data is the first hand information.

Primary data has been collected with the help of interview technique, for which
interview schedules were designed, containing structured questions.
Secondary data
The secondary data has been collected through the government reports, books,
journals and information available on internet was referred and considered for the
study.
The additional information was collected through the trade union leaders, employees
by personal interviews and discussions.
1.7 Sampling Technique
To carry out this project Random Sampling technique has been used
Sample Size
The total sample size for the data collection for the research was 50 respondents.
Tools for data collection:
Structured Questionnaires were the tools for data collection. The Questionnaire was
neatly designed and constructed for the purpose in line with the objective of the study.
1.8 Limitations of the Study
• The present study is restricted to Shivamogga District

• Only 50 respondents are taken for the survey
1.9 Chapter Scheme
In this study included five chapter namely First chapter deals with
introduction, second chapter profile of Automobile industries, third chapter is a
conceptual frame work of GST, fourth chapter data analysis and interpretation and
finally finding suggestion and conclusion.
In this first chapter includes introduction, review of literature, statement of
problems, objectives of the study, research methodology, sample size, sample
techniques, scope of the study and finally limitations of the study.
Second chapter includes Conceptual frame work of GST, Advantages and
Disadvantages of GST

Third chapter include conceptual framework of GST on Automobile

industries
Fourth chapter includes Data Analysis and interpretation, Tables and Charts.
Finally fifth chapter includes findings, suggestions, conclusion and
bibliography.

Chapter - 2
Automobile Industry Profile
2.1 Introduction
2.2 Market Size
2.3 Investments
2.4 Government Initiatives
2.5 Achievements
2.6 Road Ahead
2.7 Factors that will drive growth in the sector
2.8 Upcoming trends
2.9 Scope of Indian Automobile Sector
2.10 Important of auto mobiles
2.11 India's Position in World's Production
2.12 Challenges that Indian auto industry has to address
2.13 Indian Automobile Industry SWOT Analysis

Automobile Industry Profile

2.1 Introduction
Driving the most luxurious car has been made possible by the stiff competition in the
Automobile industry in India, with overseas players gathering the same momentum as
the domestic participants.
Every other day, we have been hearing about some new launches, some low cost cars
- all customized in a manner such that the common man is not left behind. In 2009,
the Automobile industry is expected to see a growth rate of around 9%, with the
disclaimer that the auto industry in India has been hit badly by the ongoing global
financial crisis.
The Automobile industry in India happens to be the ninth largest in the world.
Following Japan, South Korea and Thailand, in 2009, India emerged as the fourth
largest exporter of Automobiles. Several Indian Automobile manufacturers have
spread their operations globally MNC’s are making more investments in the Indian
Automobile sector.
The Automobiles sector is divided into four segments – two-wheelers (mopeds,
scooters, motorcycles, electric two-wheelers), passenger vehicles (passenger cars,
utility vehicles, multi-purpose vehicles), commercial vehicles (light and medium-
heavy vehicles), and three wheelers (passenger carriers and good carriers).
The Auto industry is one of the key drivers of economic growth of the nation. Since
the delicensing of the sector in 1991 and the subsequent opening up of 100 percent
FDI through automatic route, Indian Automobile sector has come a long way. Today,
almost every global auto major has set up facilities in the country.
The world standings for the Indian Automobile sector, as per the Confederation of
Indian Industry, are as follows:
• Largest three-wheeler market
• Second largest two-wheeler market
• Tenth largest passenger car market
• Fourth largest tractor market

• Fifth largest commercial vehicle market

• Fifth largest bus and truck segment
The Indian auto industry became the 4th largest in the world with sales increasing 9.5
per cent year-on-year to 4.02 million units (excluding two wheelers) in 2017. It was
the 7th largest manufacturer of commercial vehicles in 2017.
The Two Wheelers segment dominates the market in terms of volume owing to a
growing middle class and a young population. Moreover, the growing interest of the
companies in exploring the rural markets further aided the growth of the sector.
India is also a prominent auto exporter and has strong export growth expectations for
the near future. Automobile exports grew 20.78 per cent during April-November
2018. It is expected to grow at a CAGR of 3.05 per cent during 2016-2026. In
addition, several initiatives by the Government of India and the major automobile
players in the Indian market are expected to make India a leader in the two-wheeler
and four wheeler market in the world by 2020.
2.2 Market Size

Domestic automobile production increased at 7.08 per cent CAGR between FY13-18
with 29.07 million vehicles manufactured in the country in FY18. During April-
November 2018, automobile production increased 12.53 per cent year-on-year to
reach 21.95 million vehicle units.
Overall domestic automobiles sales increased at 7.01 per cent CAGR between FY13-
18 with 24.97 million vehicles getting sold in FY18. During April-November 2018,
highest year-on-year growth in domestic sales among all the categories was recorded
in commercial vehicles at 31.49 per cent followed by 25.16 per cent year-on-year
growth in the sales of three-wheelers.
Premium motorbike sales in India crossed one million units in FY18. . During
January-September 2018, BMW registered a growth of 11 per cent year-on-year in its
sales in India at 7,915 units. Mercedes Benz ranked first in sales satisfaction in the
luxury vehicles segment according to J D Power 2018 India sales satisfaction index
(luxury).

Sales of electric two-wheelers are estimated to have crossed 55,000 vehicles in 2017-
18.
2.3 Investments
In order to keep up with the growing demand, several auto makers have started
investing heavily in various segments of the industry during the last few months. The
industry has attracted Foreign Direct Investment (FDI) worth US$ 19.29 billion
during the period April 2000 to June 2018, according to data released by Department
of Industrial Policy and Promotion (DIPP).
Some of the recent/planned investments and developments in the automobile sector in
India are as follows:
• Ashok Leyland has planned a capital expenditure of Rs 1,000 crore (US$
155.20 million) to launch 20-25 new models across various commercial
vehicle categories in 2018-19.
• Hyundai is planning to invest US$ 1 billion in India by 2020. SAIC Motor has
also announced to invest US$ 310 million in India.
• Mercedes Benz has increased the manufacturing capacity of its Chakan Plant
to 20,000 units per year, highest for any luxury car manufacturing in India.
• As of October 2018, Honda Motors Company is planning to set up its third
factory in India for launching hybrid and electric vehicles with the cost of Rs
9,200 crore (US$ 1.31 billion), its largest investment in India so far.
2.4 Government Initiatives
The Government of India encourages foreign investment in the automobile sector and
allows 100 per cent FDI under the automatic route.
Some of the recent initiatives taken by the Government of India are -
• The government aims to develop India as a global manufacturing centre and
an R&D hub.
• Under NATRiP, the Government of India is planning to set up R&D centres at
a total cost of US$ 388.5 million to enable the industry to be on par with
global standards

• The Ministry of Heavy Industries, Government of India has shortlisted 11

cities in the country for introduction of electric vehicles (EVs) in their public
transport systems under the FAME (Faster Adoption and Manufacturing of
(Hybrid) and Electric Vehicles in India) scheme. The government will also set
up incubation centre for start-ups working in electric vehicles space.
2.5 Achievements
Following are the achievements of the government in the past four years:
• Number of vehicles supported under FAME scheme increased from 5,197 in
June 2015 to 192,451 in March 2018. During 2017-18, 47,912 two-wheelers,
2,202 three-wheelers, 185 four-wheelers and 10 light commercial vehicles
were supported under FAME scheme.
• Under National Automotive Testing And R&D Infrastructure Project
(NATRIP), following testing and research centres have been established in the
country since 2015
o International Centre for Automotive Technology (ICAT), Manesar
o National Institute for Automotive Inspection, Maintenance & Training
(NIAIMT), Silchar
o National Automotive Testing Tracks (NATRAX), Indore
o Automotive Research Association of India (ARAI), Pune
o Global Automotive Research Centre (GARC), Chennai
• SAMARTH Udyog – Industry 4.0 centres: ‘Demo cum experience’ centres
are being set up in the country for promoting smart and advanced
manufacturing helping SMEs to implement Industry 4.0 (automation and data
exchange in manufacturing technology).
2.6 Road Ahead
The automobile industry is supported by various factors such as availability of skilled

labour at low cost, robust R&D centres and low cost steel production. The industry
also provides great opportunities for investment and direct and indirect employment
to skilled and unskilled labour.

Indian automotive industry (including component manufacturing) is expected to reach

Rs 16.16-18.18 trillion (US$ 251.4-282.8 billion) by 2026. Two-wheelers are
expected to grow 9 per cent in 2018.
2.7 Factors that will drive growth in the sector

• Rising incomes among Indian population will lead to increased affordability,
increasing domestic demand for vehicles, especially in the small car segment.
• Fuel economy and demand for greater fuel efficiency is a major factor that
affects consumer purchase decision that will bring leading companies across
two-wheeler and four-wheeler segment to focus on delivering performance-
oriented products.
• Product innovation and market segmentation will channelize growth. on
alternative fuels will be an area of interest for both consumers and auto
makers.
• Focus on establishing India as auto-manufacturing hub is reigning in policy
support in form of technology modernisation fund.
• Industry will seek to augment sales by tapping into rural markets, youth,
women and luxury segments.
2.8 Upcoming trends
India is emerging as a strong automotive R&D hub with foreign players like Hyundai,
Suzuki, General Motors setting up base in India. This move is further enhanced by
Government’s support towards setting up centres for development and innovation.
Tata Nano’s successful entry in the Indian market has steamed up the opportunities of
growth available in alternative segments like electric cars, vehicles run on natural gas,
etc.
2.9 Scope of Indian Automobile Sector
The Indian Automobile industry is going through a phase of rapid change and high
growth. With new project coming up on a regular basis, the industry is undergoing

technological change. The major player are expanding their plants and focusing on
customization, mass production, etc.
2.10 Important of auto mobiles
The Automobile is important because it allowes for easier and more convenient travel.
When people travel, they spread ideas and information, whether they are aware of it
or not, and the invention of the Automobile made it possible to spread ideas and
information across different areas of the country. Before the Automobile, people
didn't travel outside of their communities as often as they do now.
Automobile is the most important part for the human life specially in European
countries and other developed nations have the most Automobiles to travel to and
from work to run around, visit friends and to take vacations. The origin of Automobile
can be traced to Europe. But it became a major form of transportation first in US.
Most European cars were built by hand. They were expensive and few people could
afford them. The development of Automobiles has had an enormous effect on people's
way of life throughout the world. Probably no other invention, discovery and
technological advance has created more changes in the society.
The Automobile has given many people incredible freedom of movement. The
Automobile itself has become safer over the years because of advance in its design
and manufacture. An Automobile burn gasoline, they release hydrocarbons, carbon
monoxide and nitrogen oxide into the air and so pollute it. Air pollution endangers
people's health and damages crops and livestock. But even in developing nations the
Automobile is increasingly reshaping patterns of living
2.11 India's Position in World's Production

• Well-developed, globally competitive auto ancillary industry
• Established Automobile testing and R&D centres
• Among one of the lowest cost producers of steel in the world
• World’s second largest manufacturer of two wheelers
• Fifth largest manufacturer of commercial vehicles
• Manufactures largest number of tractors in the world

• Ninth largest car manufacturer in world

2.12 Challenges that Indian auto industry has to address
• Scale up Capacities & Absorbing newer technologies
• Infrastructure development
• Favorable and predictable business environment
• Availability of raw material commensurate with growth
• Cost competitiveness
• Improve productivity of both labour and capital
• Availability of cost effective capital
• Availability of auto grade
• technically advanced material
2.13 Indian Automobile Industry SWOT Analysis
Strengths
• Domestic Market is large
• Government provides monetary assistance for manufacturing units
• Reduced Labor cost
Weaknesses
• Infrastructural setbacks
• Low productivity
• Too many taxes levied by government increase the cost of production
• Low investments in Research and Development
Opportunities
• Reduction in Excise duty
• Rural demand is rising
• Income level is at a constant increase
Threats
o Increasing rates of interest
o Too much competition
o Rising cost of raw materials

Chapter – 3
Conceptual Frame Work
3.1 Introduction
3.2 GST (Goods and Service Tax)
3.3 Meaning and Definition
3.4 GST Structure in India
3.5 HSN code and rates in GST
3.6 E-Way Bill
3.7 GST Procedure
3.8 GST in India
3.9 Services Sector in India
3.10 Difference between goods and services
3.11 Streamlining of taxation for intra-state service providers
3.12 Input credit facility
3.13 VAT (Value Added Tax)
3.14 The Challenges of Implementing GST
3.15 The Impact of GST
3.16 Background of Goods and Services Tax (GST) in India
3.17 Features of Goods and Services
3.18 Significance of GST
3.19 Advantages of GST Goods & Services Tax
3.20 Drawbacks of GST
3.21 Action Plan of GST Council
3.22 Regulatory Framework of GST
3.23 Impact of GST on Automobile Industry

Conceptual Frame Work

3.1 Introduction
In 2000 the Vajpayee Government started discussion on GST by setting up an
empower committee headed by Asim Dasgupta, (finance minister, government of
west Bengal.) The committee was given the task of designing the GST model &
overseeing the IT backend preparedness for its rollout. Later in 2006, Union Finance
Minister Shri P. Chidambaram moved toward GST in his Budget, and purpose to
introduce it by 1st April, 2010. However, the Empower Committee of State Finance
Minister (EC) realized it First Discussion Paper (FDP) on the GST in November,
2009. This spells out the feature of the proposed GST & has formed the basis for
discussion between the Centre & the States so far.
3.2 GST (Goods and Service Tax)
Introduction of goods and service tax (GST) in India is a certainty and its
impact on the retail sector is equally crucial to examine. It is believed that traders,
including retailer, would be one of the biggest beneficiaries of this harmonized system
of taxation. Although retail sector has succeeded in evolving as an organized revenue
generating sector, it still continues to be fraught with some inherent challenges posed
by the current indirect tax regime.
3.3 Meaning and Definition
Meaning
Goods & services tax is a board based & a single comprehensive tax levied on goods
& services consumed in an economy. GST is levied at every stage of the of the
production-distribution chain with applicable set offs in respect of the tax remitted at
previous stages. It is basically taxes can financial consumption.
Definition
GST is tax on goods & services with value addition at each stage having
comprehensive & continuous chain of set of benefit from the producer’s/service
provider’s point up to the retailers level where only the financial consumer.

3.4 GST Structure in India

The single GST (Goods and Service taxes) replaced several former taxes and
levies which included: central excise duty, services tax, additional customs
duty, surcharges, state-level value added tax and Octroi. Other levies which were
applicable on inter-state transportation of goods have also been done away with in
GST regime. GST is levied on all transactions such as sale, transfer, purchase, barter,
lease, or import of goods and/or services. India adopted a dual GST model, meaning
that taxation is administered by both the Union and State Governments. Transactions
made within a single state are levied with Central GST (CGST) by the Central
Government and State GST (SGST) by the State governments. For inter-state
transactions and imported goods or services, an Integrated GST (IGST) is levied by
the Central Government. GST is a consumption-based tax/destination-based tax,
therefore, taxes are paid to the state where the goods or services are consumed not the
state in which they were produced. IGST complicates tax collection for State
Governments by disabling them from collecting the tax owed to them directly from
the Central Government. Under the previous system, a state would only have to deal
with a single government in order to collect tax revenue.
3.5 HSN code and rates in GST
HSN (Harmonized System of Nomenclature) is an 8-digit code for identifying the
applicable rate of GST on different products as per CGST rules. If a company has
turnover up to RS. 1.5 Crore in the preceding financial year then they need not
mention the HSN code while supplying goods on invoices. If a company has turnover
more than 1.5 Cr but up to 5 Cr then they need to mention the 2 digit HSN code while
supplying goods on invoices. If turnover crosses 5 Cr then they shall mention the 4
digit HSN code on invoices.
Rates
The GST is imposed at variable rates on variable items. The rate of GST is 2.5% for
soaps and 28% on washing detergents. GST on movie tickets is based on slabs, with
18% GST for tickets that cost less than Rs. 100 and 28% GST on tickets costing more
than Rs.100 and 5% on readymade clothes. The rate on under-construction property

booking is 12%.Some industries and products were exempted by the government and
remain untaxed under GST, such as dairy products, products of milling industries,
fresh vegetables & fruits, meat products, and other groceries and necessities.
Check posts across the country were abolished ensuring free and fast movement of
goods.
The Central Government had proposed to insulate the revenues of the States from the
impact of GST, with the expectation that in due course, GST will be levied on
petroleum and petroleum products. The central government had assured states of
compensation for any revenue loss incurred by them from the date of GST for a
period of five years. However, no concrete laws have yet been made to support such
action. GST council adopted concept paper discouraging tinkering with rates.
3.6 E-Way Bill
An E-Way Bill is a waybill for a inter-state transport of goods in India, and is
coming into effect on 1 April 2018. The states were divided into four zones. The e
way bill can be generated or cancelled through an SMS, and has a QR code for faster
processing. It also helps in ease of moving goods without any hassles, bring in a
uniform billing rule across the country. An unique E Way Bill Number or EBN is
generated to be used by a supplier, recipient and the transporter. The Department
Officers verify the e-Way Bills and foods carried with the e-Way Bills. The
mechanism is aimed at plugging loopholes and boosting government revenue.
It is a GSTN project under the Goods and Services Tax, is required to be generated
for every inter-state movement of goods beyond 10 kilometres (6.2 mi) and the
threshold limit of ₹50,000 (US$770). The network has a capacity to process 75 lakh e
way bills per day.
Goods Kept Outside the GST
Alcohol for human consumption.
Tobacco and Tobacco products.
Petrol and petroleum products (GST will apply at a later date) viz. Petroleum
crude, High speed diesel, Motor Spirit (petrol), Natural gas, Aviation turbine
fuel.

GST Council
Goods and Services Tax Network (GSTN)
As per the government website on GST, "Goods and Services Tax" Network (GSTN)
is a nonprofit organisation proposed to be formed for creating a website / platform for
all the concerned parties related to the GST, namely stakeholders, government and
taxpayers to collaborate on a single portal. When up and running, the portal is
supposed to be accessible to the central government which allows it to track down
every transaction on its end while taxpayers are advertised to have the ability of
connecting this to their tax returns. However its efficacy and efficiency is yet to be
tested. According to GSTN, the organisation's authorised capital is ₹10
crore (US$1.5 million) in which Central Government holds 24.5 percent of shares
while the state government holds 24.5 percent. The remaining 51 percent are held by
non-Government financial institutions
3.7 GST Procedure
Goods and Service Tax (GST) is structured for efficient tax collection, reduction in
corruption, easy inter-state movement of goods and a lot more.
The GST Law provides for self-assessment to facilitate easy compliance and payment
of taxes. It also explains the notices, the demand and recovery provisions when the
taxes are unpaid, short paid and/or returns are not filed.
Broadly, the GST Procedures can be listed as:
1. Audits
2. Assessment
3. Demand and Recovery
4. Advance Ruling
3.8 GST in India
The nation’s services sector accounts for the predominant share of GDP, and
its performance is critical. The sector in India is characterized by a plethora of small
establishments with low value addition, employing large numbers of unskilled
persons. Therefore, even though the contribution of GST to the economy at the
aggregate level is significant, the service tax revenue comes predominantly from 2 per

cent of the enterprises. The important services sectors from the revenue point of view
are banking, insurance, telecom, construction, business support and transportation.
The government has unveiled a four-tier GST rate structure for the sector — 5 per
cent, 12 percent, 18 per cent and 28 per cent. The bulk of the services will, however,
be taxed at 18 per cent. The sector is currently taxed at 15 per cent, so the GST regime
will likely increase tax incidence for this sector.
The main challenge for the sector in the GST era is multiple registration. Service tax
will be collected by the Centre under a system of centralised registration. States have
been reluctant to agree to centralised registration; the government is now exploring an
arrangement for centralised compliance verification. There is a provision to grant
centralised registration, but it has to be seen if the Centre can persuade the States
through the GST Council.
Besides this, there is the technological challenge of helping small enterprises in the
services sector to electronically file their return. This would require technical support
through tax return helpers. They will also have to be assisted in the area of
maintaining documentary discipline.
The differential rate between the goods and services sectors may distort/influence
business by providing arbitrage practice. For example, if a car is taxed at 10 per cent
and leasing rates are at 18 per cent, we may have a situation where car sales could be
replaced by car leasing. In the area of composite services, a contract may be specially
designed to avail the lower rates on services. Therefore, there are implications in the
area of dispute management.
3.9 Services Sector in India
India is a strong services-led economy with the sector generating a significant
chunk of employment opportunities and contributing to the GDP. It contributed
around 66.1% of India’s Gross Value Added (GVA) growth in 2015-16, is the biggest
magnet for Foreign Direct Investment (FDI), and an important net foreign exchange
earner. Some of the core areas of service are IT and ITES, banking and financial
services, outsourcing, research and development, transportation, telecommunications,
real estate and professional services.

Some of the positive impacts of GST on service providers are:

3.10 Difference between goods and services
The old regime does not clearly distinguish between goods and services,
leading to many instances of double taxation. For example, software is often treated
as a good and as a service. The new regime clearly distinguishes goods from services,
and also defines principal supply, composite supply, and mixed supply separately. For
example, when an individual books a Rajdhani train ticket which includes meals, it
involves a composite supply wherein the ticket and the meals cannot be sold
separately. Since the transportation of the passenger is the principal supply, the rate of
tax will only be charged on the ticket. Alternatively, for items that can be sold
separately, but are sold together, like a hamper of snacks and aerated drinks, the rate
of tax applicable on the higher product will be levied on the composite supply. There
are also separate definitions for supply of software, works contracts, and leasing
transactions to bring in more clarity and transparency on their taxation rules.
3.11 Streamlining of taxation for intra-state service providers
Due to the state level taxes being subsumed, it will become easier for service
providers that operate within the state to know their tax obligations better. Such
companies can move away from multiple tax calculations. For example, a CD with
software incurs Excise, Service Tax, and VAT under the old regime; this is simplified
to one unified rate under GST, making tax calculations and administration easier for
intra-state service providers.
3.12 Input credit facility
VAT payment under the old regime was not eligible for setting off against
output liabilities. The input credit facility is now made available to service providers
as well, wherein tax paid on any inputs can be claimed and adjusted against tax paid
on output. This will result in direct cost savings for service providers and may even
offset the expected rise in end pricing. For example, an AC fitter who paid tax on the
raw material for AC fittings (pipe, tape, solder etc.) will be able to claim that tax, and
end up spending less on the cost of fitting the AC. This cost advantage can spill over
to the customer as well.

3.13 VAT (Value Added Tax)

VAT is a multi-point sales tax with set-off for tax paid on purchases. It is
collected in installments at each transactions stage in the production distribution
system it does not have cascading effect due to the system of distribution or credit
mechanism. VAT is a tax on consumption. The final and total burden of the tax is
fully and exclusively borne by the domestic consumer of goods and services. Value
added tax is, therefore a multi-stage sales tax levied as a proportion of value added. In
people terms, VAT is tax on sale of commodity at every point in the series of sales by
business firms which the provision of set-off tax already paid on inputs as well as on
previous purchases. Unlike a retailer sales tax or the present sales tax or the present
tax scheme, which are essentially single taxes, VAT is charged and collected at each
stage of the production/delivery of goods and services
VAT is an acronym for value added tax. It is basically known as a tax on consumption
because its ultimate effect is borne by the consumer it is also known as goods and
service tax (GST). In European Union it is known as VAT while in Australia, Canada,
New Zealand, and Singapore it is known as GST. In Japan it is known as consumption
tax.
However, most of the states in India, from April 01, 2005, have supplemented the
sales tax with the new value added tax (VAT). In India is classified under the
following tax slabs.
0% for the essential commodities.
1% on gold as well as expensive stones.
4% on capital merchandise, industrial inputs, and commodities of mass
consumption.
12.5% on all other item.
Variable rates (depending on states) are applicable for tobacco, liquor,
petroleum product etc.

3.14 The Challenges of Implementing GST

The introduction of good & services tax (GST) is one of the biggest tax reforms for
India GST is not just a tax change but it will benefit the economy
The Current Challenges
GST is meant to simplify the Indian indirect tax regime by replacing a host of taxes
by a single unified tax. There by subsuming central excise, service tax VAT entry tax
etc. However there is a plethora of challenges implementation some of these are
highlighted below. The GST constitutional amendment bill was passed by Lokasabha
in May, 2015. However, the government faced tremendous political setbacks & failed
to get it passed in the Rajyasabha during the monsoon & the winter session last year.
Once this is achieved another herculean task would be to get the GST bill passed by
the respective state government in state assemblies. The government would also be
required to put the GST bill in the public domain & give sufficient time to all
stakeholders to comprehend & give their views on the ill, tax rate of 17 percent to 19
percent. Further the threshold limit of turnover for idea under GST is another bond of
contention between the government and empowered committee, aiming to burden the
tax base under GST another factor that will impact the success of GST is the robust it
backbone connection all state government trade and industry banks and other
stakeholders on a real time basis the government has already incorporated an SPV
VIZ goods and service tax network (GSTN),which has to develop a GST portal _front
end system for trade and industry and back end system for all industry and back end
system for registration return filing tax payment IGST settlement, MIS and other dash
boards on GST portal to all the stakeholders. GST is quite different from the existing
indirect taxation system in the country, for effective implementation of GST, tax
administration staff_ both at central and state levels would require to be trained
properly in terms Of concept legislation and produce. The tax administration staff
would also need to change this mind set.
Budget Offerings
In the previous budget the payer to learn, unlearn and relearn, the GST not only in
letter but in spirit too. As per the constitutional Amendment bill placed in the

Lokasabha. It was proposed that states would be allowed to levy an additional’

percent non-valuable tax on inter–state supply of goods for the initial two years. In
order to compensate the states for loss of revenue while moving to GST this was
supported by a few states while a few others criticized the same, while few others
criticized the same. However, recently the Empower Committee recommended
abolition of the additional tax.
3.15 The Impact of GST
GST will be a welcome change for the economy since is expected to simplify the
indirect tax structure India. However, it is expected to have for reaching impact on
businesses while the constitution. Amendment bill has not yet been passed, at this
stage. The businesses should prepare for GST by undertaking GST impact assessment
study & have a high–level plan for the GST transition.
3.16 Background of Goods and Services Tax (GST) in India
The Vijay kelkar task force on implementation of the financial responsibility and
budget management (FRBM) Act, 2003 had pointed out that although the indirect tax
policy in India has been steadily progressing in the direction of VAT principle since
1986, the existing system of taxation of goods and services still suffers from many
problems. The tax base is fragmented between the centre and states. Which make up
half of the GDP, are not taxed appropriately. In many situations, the existing tax
structures has cascading effects. These problems lead to tax-GDP ratio, besides
causing various distortions in the economy
In this context, the Kelkar Task force had suggested a comprehensive goods and
services tax (GST) based on vat principal. Value-added tax (VAT) is a modern and
progressive system of sales tax. It brings in the system of system of self-assessment
giving rise to transparency and mutual trust. It is charged and collected by dealers on
the price paid by the customer. The empowered committee released a White paper on
VAT on 17th January 2005. This was the uniform basis the states agreed to adopt to
avoid competition b\w states. VAT replaced sales tax on 4th January 2005.The
empowered committee, constituted by Government of India, provided the basic

framework for VAT laws in the states but the have a liberty to set their own
valuations for the VAT levied in their own territory.
In 2000, the Vajpayee Government started discussion on GST by setting up an
empowered committee, headed by Asim Dasgupta, (Finance Minister, Government of
west Bengal). The committee was given the task of designing the GST model and
overseeing the IT back-end preparedness for its rollout. The effort to introduce the
new tax regime was reflected, for the first time, in 2006 -2007 Union budget speech.
The then finance minister Shri. P. Chidambaram remarked that there is a large
consensus that the country must move towards a national level GST that must be
shared between the centre and the states. He proposed 1st April, 2010. As the date for
introducing GST.
The present rates for services tax and CENVAT, that is most proximate to the global
GST rate, and the continuous steps towards phasing out of central sales tax (CST),
clearly hints at the endeavour on the part of government of with the central
Government to prepare a roadmap for introducing a national level GST with effect
from 1st April 2010.In May 2007 empowered committee (EC) of state finance
ministers in consultation with central government, constituted a joint working group
(JWG), to recommend the GST model. The mandate of the working group was as
follows:
• GST should be so designed that it should be revenue neutral to the centre and
the states.
• Interest of the special category, North-Eastern states and union territories are
to be especially kept in mind.
• The Group will examine different models and ensure that the power of levy,
collection and appropriation of revenue must be vested with the centre and the
states by examining the pros and cons.
3.17 Features of Goods and Services
The present essay looks at the salient feature of the proposed GST& how it is
different from the current system of taxation of GST. The information herein is drawn
from the official paper on GST on the website of the central board of excise &

customs which has played a vital role in the formulation of the GST model the paper
can be accessed at the journey of GST.
Conferring so simultaneous power upon parliament & the state legislatures to
make lows governing the GST
Levy of the integrated GST(IGST )on inter-stateϖ transactions of good & services
only by the central government
The GST to be levied on all goodsϖ & services except alcoholic liquor for human
consumption petroleum & its products.
Shall be subject to the levy of the GST on a later dateϖ notified on the
recommendation of the GST council.
Compensation to the states for loss or revenue arisingϖ on account of
implementation of GST for five year.
The act empowers the centre to impose inter -stateϖ supply of to 1% on the year
or more this tax will accrue to states from where the supply originates.
Creation of the GST council to examine issue relatingϖ to goods & services tax &
make recommendations to the union & the states on parameters like rates cesses &
surcharges to be subsumed, exemption list & threshold limits, model GST laws,
etc.
The council shall function under the chairmanship ofϖ the union finance minister
& will have all the state governments as members, any decision of the GST
council would require three- fourths approval of the council.
The states would have two-third of the voting powers and the centre one- third.
3.18 Significance of GST
The goods & services tax GST is a value added tax GST is expected to be critical
reform in spurring growth in the economy when introduced GST will not only make
the tax system simpler, but will also help in increased compliance boost tax revenues
reduce the tax out flow in the hands of the consumers & make export competitive it is
hoped that the new government will set forth a road map of the GST implementation

in the upcoming, the basic idea of this bill is to create a single cooperative &
undivided India market to make the economy stronger & powerful.
GST is transparent tax & also reduce no of indirect taxes, with GST
implemented a business premises can show the tax applied in the sales invoice.
GST will not be a cost to registered retailers therefore three will be no hidden
taxes & the cost to registered retailers therefore there will be no hidden taxes &
the cost of doing business will be lower
Benefit people a spruces will come down which in turn will help companies as
consumption will increase
There is no doubt the product & distribution of goods services are increasingly
used or consumed & vice versa separate taxes for goods services.
It would make possible the taxation burden to be split equal ably b/w
manufacturing & service.
GST will be levied only at the final destination of consumption based on VAT
this will help in removing economic destination & bring about development of a
common national market
It will also help to build a transparent & corruption free tax administration
The presently a tax is levied on when a finished product¬ moves out from a
factory which is paid by the manufacturer.
3.19 Advantages of GST Goods & Services Tax
As the Rajya Sabha prepares to pass the constitutional amendment paving the way for
the goods & services tax GST the reforms is expected to bump up GDP by about a
percentage point or even more here’s a look at GST benefit the present structure of
indirect taxes is very complex in India government on goods & services.
The tax structure will be made lean & simple
The entire India market will be uniform market which way translate into lower
business cost
It is good for export oriented businesses
In the long run the lower prices on goods for consumer
It can bring more transparency & better compliance

Because it is not applied for goods & services which are exported out of India
This reduces the cost of doing business thus enabling fairer prices, for
consumers
Number of department tax (Department) will reduce which in turn may lead to
less corruption
For many capital goods input tax credit is not available full input tax credit
under GST will mean a 12-14% drop in the cost of capital goods expected a
6% rise in capital goods investment 2% overall.
3.20 Drawbacks of GST
The prices of some goods may fall after successful implementation of GST.
But this is possible only if the benefit is actually passed on to the customers there are
other factors also like the sellers profit margin that determine the final price of goods
but the GST alone does not determine the final price of goods.
Services will become expensive for ex., telecom banking, airlines and the like.
Scope of GST Goods and Services Taxes
All goods & services are covered under GST regime expect Alcoholic liquor for
human consumption Tobacco products subject to levy of GST & centre may also levy
excise duty GST council yet to decide the incidence & levy of GST on following.
Crude petroleum
High speed diesel (HSD)
Motor spirit (petrol)
Nature Gas
Aviation turbine fuel
3.21 Action Plan of GST Council
Least number of taxes, cess & surcharges to be subsumed under GST preparation of
list of goods & services subject to or exempt from GST determination of threshold
limit of turnover for application of GST fixation of rates proportion of model GST
laws, principle of levy apportionment of taxes benefits firming up place or supply
rules recommend on compensation to state losing on revenue post implementation of
GST subject to maximum period of five years.

3.22 Regulatory Framework of GST

A new set up by government of India named as “GST council”. The GST council
consists of
a) The union finance minister (as chairman)
b) The union minister of state in charge of Revenue or finance
c) The minister in charge of finance or taxation or any other minister nominated by
each state government.
All decision of the GST council will be made by three fourth majority of the votes
cast the centre shall have one third of the votes cast & the states together shall have
two third of the votes cascading effect.
3.23 Impact of GST on Automobile Industry
Implemented in 2017, the Goods and Services Tax (GST) is a non-discriminatory tax
with its effects being seen across various sectors. As there is a lot of information
published on GST at large, we believe that elaborating on its impact on specific
sectors will help people better understand the implications of GST on their respective
sectors. After discussing the effects of GST on the hospitality sector, we will focus on
the automobile sector and the effects of GST on related business transactions and
undertakings in this post.
The automobile sector is mainly comprised of commercial and non-commercial
vehicles, with the former consisting of vehicles like three-wheelers, minibuses, etc.
and the latter comprising of personal vehicles (including SUVs, budgeted cars, luxury
cars, etc). There exist different tax slabs for both the sections and we’ll be elaborating
on the same through this post.
Firstly, we’ll look at the impact of GST on the commercial vehicles category and
following that, we’ll focus on the non-commercial category. Here goes:
Impact of GST on Commercial Vehicles
The commercial vehicle segment, comprising of vehicles used for transportation of
goods and people, vehicles used for execution of business services and three-wheelers
has been heavily affected by GST. Earlier, the segment was paying 12.5% Excise

Duty + 12.5% VAT and 2 % CST as well as other taxes which totalled to overall
around 30-33% of tax. After the implementation of GST, the overall impact on the
segment is a slight dip as the tax levied is now reduced to 28%. So, the impact in
valuation is relatively negligible.
However, there would be no change in the prices of tractors. As agriculture is
considered the backbone of the Indian economy, the GSTN Council (Goods and
Services Tax Network) has aimed to provide major relief to the farming sector. GST
tax rate on tractors and its parts has seen no change in the pre and post-GST scenario,
as it continues to remain at a rate of 18%.
The maximum effect would be visible on the new category introduced, of mini-buses
(buses with a capacity of carrying up to 13 seated passengers). Besides the base rate,
this passenger vehicle segment would invite a 15% cess on them, which shoots up the
total GST rate to 43%. This is a major cause of concern to the economy as it will not

only impact businesses using such transport vehicles but also the end-consumer as
their cost-of-consumption, i.e. ticket prices wherever applicable, will increase.
For example, consider a goods transport agency carrying goods from one location to
another. The increased costs associated with the purchase of transport vehicles and
their maintenance will inevitably inflate the selling price of goods, ultimately
affecting the end-consumer. This is a major concern which the GSTN Council needs
to resolve.
Impact on Non-Commercial Vehicles
As compared to commercial vehicles, GST has had relatively low impact on non-
commercial vehicles. We’ll be elucidating its effect on small-budget cars (passenger
cars costing under Rs 10 lakh), luxury cars, SUVs and further detailing how engine
capacity relates to the tax rate levied on the vehicles.
• Small-Budget Cars (Both petrol and diesel variants, costing under 10 lakh
INR):
This section of cars would attract the base rate of 28% GST along with a cess of 1%
and 3% which is smaller than the taxes that were applicable in the pre-GST scenario
which were around 30-33%. This reduction of levied taxes is very beneficial to
middle class families who wish to buy small-budget cars.
• Effect of Engine Capacity on the Tax Levied:
Further, the automobile sector has tax implications based on the engine
capacity of the vehicles. For example, for cars having an engine capacity <
1200cc, the GST levied will be 28% with 1% cess whereas for
motorcycles/small cars/single aircraft engines or chartered planes < 1500cc,
GST levied will be 28% along with 3% cess. For larger vehicles such as Sport
Utility Vehicles (SUVs), etc. > 1500cc, GST levied will be 28% along with
15% cess.

• Effect of GST on Hybrid Cars:

A drawback is seen in the case of hybrid cars. With global concerns such as the rise of
pollution, damage to the environment, and climate change, the GSTN council has not
given importance to the sheer need for hybrid cars by levying GST tax rate of 43%
(28%, with 15% cess), which is higher than the tax on smaller cars. In comparison,
pure electric vehicles attract a relatively low GST rate of only 12%.
• Effect on Luxury Vehicles/SUVs:

In the recent amendment by the GSTN council, luxury cars have seen significant
changes in terms of taxation. The council has increased the cess rate from 15% to
25%, escalating the total GST tax rate to 53%, which has lead to decrease of in sales
in the luxury segment of the automobile sector.
The levy of GST in this segment is similar to the pre-GST scenario. Though Lok
Sabha has passed this amendment, it is yet to be implemented.
Transactions Involving Transfer of Vehicle’s Ownership:
Transfer of vehicles to other people will be liable for GST, irrespective of whether the
transaction is intra-state or inter-state.
In the case of businesses trading in second-hand goods, valuation rules under the GST
regime state that the value of supply will be the difference between selling and
purchase prices. Additionally, for cases involving negative value of supply, there will
be no taxable component. These aspects of GST will surely have a positive impact in
this industry, because GST needs to be paid only on the difference value of the
transaction.
It has been specifically provided in the valuation rules that where a taxable supply is
provided by a person dealing in buying and selling of second hand goods, then the
value of supply shall be the difference between the selling price and purchase price
and where the value of such supply is negative it shall be ignored. This shall very
positively impact this industry as GST needs to be paid only on the difference value.
Impact on Valuation
In the pre-GST scenario, the various commissions received from manufacturers such
as ‘Extended Warranty’ or ‘Roadside Assistance’, Service Tax was paid only on the
commission component. However, in the GST regime such tax treatment is not
acceptable, and dealers will have to pay GST initially on the entire value of the
warranty receipts. The amounts charged by the manufacturer can later be taken as a
credit.

Impact of GST on Automobiles sector

Before GST implementation and unification of taxes, we had a series of indirect taxes
in India, wherein every state had their own indirect tax structure. Now, after GST
implementation, all these taxes have been subsumed to one tax.
Impact of GST on automobile sector particularly is considered as a positive thing as
manufacturers of automobiles will have to pay reduced taxes and ultimately
customers will also be benefited. Before GST, various taxes such as sales tax, road
tax, sector tax, VAT, motor vehicle tax, registration duty, etc. were imposed. All of
these have been subsumed to GST on automobile services.
GST Impact on Automobile Sector
GST tax on automobiles has significantly reduced the cost of transporting goods, as
transportation anywhere in India doesn’t pass through check posts or various taxes. It
has, in fact, reduced the price of automobiles across the country when compared to the
prices before GST.
1. Reduced Operational Cost
CST or central state tax, which was applied when there was an interstate sale, has
been eliminated. There is no longer need for automobile companies to maintain
different warehouses at different locations. They can join various warehouses and
enjoy low operating cost. Further, taxes paid on advertising, promotions, and other
overhead come under input credit tax, which will lead to an additional decrease in
operational cost.
2. Effect on Working Capital
Although operational cost is reduced, GST tax on automobiles has increased dealers'
concerns and here’s why this has happened:
Whenever any vehicle is transferred, GST is cleared and capital is locked as the
supply is taxable with GST. Now, the dealer needs to pay the GST on the exact day as
the reception of advance. However, this will also make dealers more cautious to avoid
hurting their outflow.
Another way GST will affect dealers is by cash lock-on free services. Many
automobile manufacturers provide free services or warranty cards at the time of sales

in form of customer benefits. Dealers will have to pay the GST on these at the time of
issue but the customers may redeem these services any time later.
GST Rate on Automobiles
GST rate on automobiles is calculated with the fixed base rate of 28% on all cars
with additional cess slabs such as 1%, 3%, 15%, 17%, 20%, and 22%. Both the cess
and base rate together impacts GST rate on the automobile sector.
1. Two-Wheelers
GST impact on two-wheelers is rather low as the 350 cc or below engine is taxed in
28% slab and engine above 350 cc is charged with 31% tax.
2. Commercial Vehicles
Most of the commercial vehicles fall under 28% tax, which was earlier 30.2%.
However, minibuses have been greatly affected as these fall in 15% cess slab, which
makes the tax 43%. While most commercial vehicles have seen a negligible effect
after GST implementation, GST on 13 passenger minibuses has raised concerns.
3. Luxury Car
Luxury car tax scenario has seen good times with GST as these cars are taxed at 42-
45%. But, this was previously 50% or more than that. So, the overall tax has reduced
for luxury cars.
4. Small Cars
Small cars have not been highly affected by GST implementation as earlier the tax
rate was 29% which included every tax including VAT. But, after GST, it is 28% and
cess is 1%.
5. Hybrid Cars
The major GST effect on automobile industry can be seen in hybrid cars, as these
are taxed 28% with additional 15% cess. Previously, hybrid cars were taxed at 30%
only.
6. Spare Parts
Spare parts are taxed with the highest rate in the slab of 28% while previously it was
just 12%, which makes the current tax charges more than double of what was charged
before.

Check Out the Before and After GST Tax Rates on Automobile Industry
Category Before GST After GST
Two wheelers 30.2% 28-31%
Commercial vehicles 30.2% 28%
Luxury cars 50% 42-45%
Small cars 24-25% 29-31%
Hybrid cars 30% 43%
Spare parts 12% 28%
GST: A Positive Impact

The overall effect of GST on the automobile industry is positive, as, on a whole, it has
reduced the rate. Further, GST has enhanced the manufacturing of automobiles by
reducing taxes to one and made the taxation system less complicated than before. For
obtaining detailed knowledge of GST's impact on other sectors and end users, check
out gstinindia.in blog.
Conclusion
For the businesses in the automobile sector, GST has been good from a compliance
standpoint. The previous state-wise compliance system has now been replaced with a
single window for all compliance-related matters.
Multiple taxes have been subsumed under GST such as CST, VAT, Service Tax,
Entry Tax, Excise Duty, etc. Now, corporates need to deal only with GST officers
rather than going to different officers for the various tax departments.
From the Government’s point of view, it has also been beneficial because of GST
revenue sharing between the Centre and States.
As the premise of GST states that it is a consumption-based tax rather than an origin-
based one, it will increase the revenue of many states because the number of

consumers (from States across the country) are more than the manufacturers (who are
typically located in clusters in few states).
Finally, from the end-consumers’ point of view point, GST has resulted in a mixture
of positive and negative impact. Because, on one hand we have an increased cost
associated with commercial vehicles which consequently inflates the selling price of
daily consumed goods. And on the other hand, the GSTN Council simplified the
process of input credit mechanism on manufactured goods and traded goods through
the Anti-Profiteering Act, thus providing relief to the end-consumers. This will
encourage corporates/businesses to pass on the benefit of the input tax credit to the
common man on large scale by reducing the maximum retail prices of goods.
In the non-commercial vehicle space, the varying rates based on the different
categories and engine-capacities of cars has been structured bearing in mind the
household incomes of different sections of society.
There are multiple future implications which an also be traced when we talk about
GST’s impact on the automobile sector. A few of them are as follows:
• The cheaper cost of vehicles will fuel their demand in the market and
consequently boost manufacturing growth. Also, with the GST rates of
taxation being the same across the country, there will be no differentiation of
tax cost for the consumer when procuring the vehicles from another state. This
will reduce incidences of tax evasion which occur due to consumers buying
vehicles from the states other than where they reside.
• With GST, things like multiple levels of taxation, elaborate tax compliance
obligations and cascading taxes will be a thing of the past. A simplified and
fully-automated tax mechanism will ensure better compliance.
• Another thing to note is that GST will reduce the cost of manufacturing due to
the subsuming of different taxes levied in the past. Since the taxes will be
charged on supply and consumption state rather than the origin state, it would
give a boost to the growth rate of the automobile industry.
• Now with CST out of the way, the companies will not need to maintain
warehouses in multiple states. This will help in consolidating the warehousing

structure and can also lower down the operational costs in the supply chain.
Additionally, with the inclusion of business overheads (advertising, business
promotion, etc.) under ITC, operational costs can be reduced even further.
3.24 Conclusion
The GST implementation was a very long pending amendment to even out the
problems existing in the Value Added Tax system. The focus of the Government was
to bring in uniformity in the sales tax system in India. With GST the lean and simple
form of taxation should be brought in so as to ease the complexities.

Chapter – 4
Analysis of Data and Interpretation
• Tables
• Graphs
• Analysis
• Interpretation

Analysis of Data and Interpretation

Table No: 4.1 Classification of the Respondents on the basis of Gender factor
Gender No of Respondents Percentage
Male 14 46
Female 16 54
Total 30 100 percent
Source: primary Data
Graph No: 4.1
56
54
54
52
50
48
46
46
44
42
Male Female
Interpretation
The table and graph showing that 46% of the respondents are male & 54% of the
respondents are female.
Its interprets that majority of the respondents are Female (54%).

Table No: 4. 2 Classification of the Respondents on the basis of Marital Status

Marital Status No of Respondents Percentage
Married 11 37
Unmarried 19 63
Total 30 100
Source: Primary Data
Graph 4. 2
70
63
60
50
40 37
30
20
10
0
Married Unmarried
Interpretation
The above table and graphs showing that, 37%
% of the respondents are married. 63 %
of the respondents are Unmarried
Its interprets that majority of the respondents are Unmarried (63%).

Table No: 4. 3 Classification of the Respondents on the basis of Age Group

Age group No of Respondents Percentage
Below 20 5 17
Between 21-30 15 49
Between 31-40 5 17
Above 41 5 17
Total 50 100
Graph 4. 3
60
49
50
40
30
20 17 17 17
10
0
Below 20 Between 21-30 Between 31-40 Above 41
Interpretation
% of the respondents Age group is
Below 20, 49%
% of the respondents Age group is Between 21-30,
2 17% of the
respondents Age group is Between 31
3 - 40 , 17%
% of the respondents Age group is
Above 41 years
Its interprets that majority of the respondents Age group is Between 21-30
21 (49%).

Table No . 4 .4 Classification of the Respondents on the basis of Qualification

Educational Qualifications No of Respondents Percentage
SSLC 0 0
PUC/Diploma 2 6
Graduate 10 34
Post Graduate 18 60
Other 0 0
Total 30 100
Sources: Primary Data
Graph: 4. 4
70
60
60
50
40 34
30
20
10 6
0 0
0
SSLC PUC/Diploma Graduate Post Graduate Other
Interpretation
The above table and graphs showing that,,
that, 16%
% of the respondents educational
qualification is PUC/Diploma ,34%
,34 of the respondents educational qualification is
graduation, 60% of the respondents educational qualification is Post graduation,
graduat
Its interprets that majority of the respondents are Post graduates (34%).

Table No: 4. 5 Classification of the Respondents on the basis of living in the Area
Particular No of Respondents Percentage
Rural 14 46
Urban 16 54
Total 30 100 percent
Graph No: 4.5
56
54
54
52
50
48
46
46
44
42
Rural Urban
Interpretation
The above table and graphs showing that, 46% of the respondents are living in Rural
Area , 54%
% of the respondents are living in urban area
Its interprets that majority of the respondents are living in Urban Area (54%).

Table No: 4.6 Classification of the Respondents about Category of Serving

Particulars No of Respondents Percentage
Automobile 10 33
Trading 7 23
Service 0 0
Others 13 44
Total 30 100
Source: Field Survey
Graph No: 4.9
50
44
45
40
35 33
30
25 23
20
15
10
5
0
0
Automobile Trading Service Others
Analysis & Interpretation

The above table and graphs showing that,, 33% of the Respondents are serving in
Automobile Industry, 23% of the Respondents are serving in Trading Industry, 44%
of the Respondents are serving in other Industry they didn’t mentioned specific
category
Its interprets that majority of the Respondents are serving in other Industry they didn’t
mentioned specific category (44%).

Table No: 4.7 Table showing the respondents belongs to Support to GST
Yes 27 90
No 3 10
Total 30 100
Graph No: 4.7
100
90
90
80
70
60
50
40
30
20
10
10
0
Yes No

that, 90%
% of the respondents opined that they
support GST, 10% of the respondents opined that they don't support GST,
Its interprets that majority of the respondents are opined that they support GST (90%).

Table No: 4.8 Table showing the respondents Opined about effect of GST on the
Positively 21 70
Negatively 4 13
No Impact 5 17
Can’t say 0 0
Total 30 100
Graph No: 4.8
80
70
70
60
50
40
30
17
20 13
10
0
0
Positively Negatively No Impact Can’t say
The above table and graphs showing that, 70% of the respondents opined that GST
Positively effect on the Automobile Industry in India , 13% of the respondents opined
that GST negatively effect on the Automobile Industry in India Negatively, 17% of the
respondents opined that No Impact of GST effect on the Automobile Industry in India
Its interprets that majority of the respondents opined that GST Positively effect on
o the
Automobile Industry in India (70%).

Table No: 4.9 Table showing the respondents belongs to think is more beneficial
Vat & CST 27 90
Goods & Service Tax 3 10
Total 30 100
Graph No: 4.9
100
90
90
80
70
60
50
40
30
20
10
10
0
Vat & CST Goods & Service Tax

The above table and graphs showing that, 90% of the respondents opined that Vat &
CST is beneficial both Government and People , 10%
10% of the respondents opined that
Goods & service tax is beneficial both Government and People .
Its interprets that majority of the respondents are opined that Vat & CST is beneficial
both Government and People (90%).

Table No: 4.10 respondents opined towards GST will Burden the people or
Consumer
Strongly Agree 6 20
Agree 19 63
Disagree 5 17
Strongly Disagree 0 0
Total 30 100
Graph No: 4.10
70 63
60
50
40
30
20 17
20
10
0
0
Strongly Agree Agree Disagree Strongly Disagree

The above table and graphs showing that, 20% of the respondents are strongly
agreed that GST will Burden the people or Consumer , 63% of the respondents
agreed GST will Burden the people or Consumer , 17% of the respondents Disagreed
that GST will Burden the people or Consumer .
Its interprets that majority of the respondents agreed GST will Burden the people or
Consumer (63%).

Table No: 4.11 Table showing the respondents Opined that the introduction of
GST in India has affected the demand for the product / service
Positively 20 66
Negatively 5 17
No Impact 5 17
Total 30 100
Graph No: 4.11
70 66
60
50
40
30
20 17 17
10
0
Positively Negatively No Impact

The above table and graphs showing that, 66% of the Respondents Opined that the
introduction of GST in India has positively affected the demand for the product /
service, 17% of the Respondents Opined that the introduction of GST in India has
negatively affected the demand for the product / service and 17% of the Respondents
are belong to No Impact.
Its interprets that majority of the Respondents Opined that the introduction of GST in
India has positively affected the demand for the product / service (66%).

Table No: 4.12 Table showing the respondents opinion on present GST Slab Rate
Very Good 8 27
Good 22 73
Bad 0 0
Very Bad 0 0
Total 30 100
Graph No: 4.12
Very Good Good Bad Very Bad
0% 0%
27%
73%

% of the Respondents are opined that
Present GST Slab Rate is very good, 73% of the Respondents are opined that Present
GST Slab Rate is good.
Its interprets that majority of the Respondents are opined that Present GST Slab Rate
is good. (73%).

Table No: 4.13 Table showing the respondents opinion towards Transition of
GST Regime
Easy 16 53
Very Easy 3 10
Difficult 11 37
Very Difficult 0 0
Total 30 100
Graph No: 4.13
60
53
50
40 37
30
20
10
10
0
0
Easy Very Easy Difficult Very Difficult

The above table and graphs showing that, 53% of the Respondents are opined that
Transition of GST Regime is Easy, 10% of the Respondents are opined that Transition
of GST Regime is very Easy, 37% of the Respondents are opined that Transition of
GST Regime is difficult
Its interprets that majority of the Respondents are opined that Transition of GST
Regime is (53%).

Table No: 4.14 Table showing the respondents opined towards GST influence
their Consumption behavior
Yes 22 73
No 8 27
Total 30 100
Graph No: 4.14
80
73
70
60
50
40
30 27
20
10
0
Yes No

that,, 73% of the respondents opined that GST
influence in their Consumption behavior , 27% of the respondents opined that GST
don’t influence in their Consumption behavior
Its interprets that majority of the respondents opined that GST influence in their
Consumption behavior (73%).

Table No: 4.15 Table showing the respondents opinion towards GST will effect
on Consumption behavior
Consumes goods More 17 56
Consumes goods Less 13 43
Total 30 100
Graph No: 4.15
60 56
50
43
40
30
20
10
0
Consumes goods More Consumes goods Less

that, 56%
% of the Respondents are opined that
GST will effect on consumption behavior to consumes goods more, 43 of the
Respondents are opined that GST will effect on consumption behavior to consumes
good less.
Its interprets that majority of the Respondents are opined that GST will effect on
consumption behavior to consumes goods more (56%).

Table No: 4.16 Table showing kinds of expenditure will be affected most by GST
Necessary goods 4 14
Luxury goods 18 60
Entertainment 6 20
Other 2 6
Total 30 100
Graph No: 4.16
70
60
60
50
40
30
20
20 14
10 6
0
Necessary goods Luxury goods Entertainment Other

% of the respondents opined that
necessary goods expenditure will be affected most by GST . 60% of the respondents
opined that Luxury goods expenditure will be affected most by GST . 20% of the
respondents opined that Entertainment goods expenditure will be affected most by
GST . 6% of the respondents opined that Others goods expenditure will be affected
most by GST
Its interprets that majority of the respondents opined that Luxury goods expenditure
will be affected most by GST (60%).

Table No: 4.17 Table showing observation after the implementation of GST with
Price have increased 13 44
Price have decreased 0 0
No changes in price 6 20
Fair and uniform 11 36
Total 30 100
Graph No: 4.17
50
44
45
40 36
35
30
25 20
20
15
10
5 0
0
Price have increased Price have decreased No changes in price Fair and uniform

observation after the implementation of GST with regard to prices of the products
have increased, 20% of the Respondents are opined that observation
obse after the
implementation of GST with regard to prices of the products have no changes and
36% of the Respondents are opined that observation after the implementation of GST
with regard to prices of the products fair and inform
Its interpreted that majority of the respondents are opined that observation after the
implementation of GST with regard to prices of the products have increased (44%)

Table No: 4.18 Table showing introduction of GST will result in better input tax
Yes 22 74
No 8 26
Total 30 100
Graph No: 4.18
80 74
70
60
50
40
30 26
20
10
0
Yes No

that,, 74% of the respondents agreed that
introduction of GST will result in better input tax credits for your business resulting in
better profitability and 26% of the Respondents are not agreed that introduction of
GST will result in better input tax credits for your business resulting in better
profitability
Its interprets that majority of the respondents agreed that introduction of GST will
result in better input tax credits for your business resulting in better profitability
(74%).

Table No: 4.19 GST improves the revenue growth to the state
state and country
Strongly Agree 6 20
Agree 14 46
Neither agree nor disagree 7 23
Disagree 3 11
Total 30 100
Graph No: 4.19
50 46
40
30 23
20
20
11
10
0
Strongly Agree Agree Neither agree nor Disagree
disagree

% of the respondents are strongly
agreed that GST improves the revenue growth to the state and country , 46% of the
respondents agreed that GST improves the revenue growth to the state and country .
23% of the respondents Neither agree nor disagreed
disag that GST improves the revenue
growth to the state and country, 11% of the respondents disagreed
disagree that GST improves
the revenue growth to the state and country
Its interprets that majority of the respondents agreed that GST improves the revenue
growth to the state and country.
country (46%)

Table No: 4.20 Table showing biggest challenge for business during the
transition to GST regime
Supply chain restructuring 10 33
IT/ Systems changes 17 57
Product pricing 3 10
Other (please specify) 0 0
Total 30 100
Graph No: 4.20
60 57
50
40 33
30
20 10
10 0
0
Supply chain IT/ Systems changes Product pricing Other (please
restructuring specify)

% of the respondents opined that
supply chain restricting is the biggest challenge for business during the transition to
GST regime , 57% of the respondents opined that IT/ systems changes is the biggest
challenge for business during the transition to GST regime , 10% of the respondents
opined that product pricing is the biggest challenge for business during the transition
to GST regime .
Its interprets that majority of the respondents opined that IT/ systems changes is the
biggest challenge for business during the transition to GST regime (57%).
(57%)

Table No: 4.21 Table showing the respondents think that what should be the
rate structure
One single common rate for CGST
12 40
& SGST across India
One single rate for CGST and
Common Standard rate for SGST
11 36
Across all state
One single rate for CGST and

Multiple rates for SGST across all
7 24
states
Total 30 100
Graph No: 4.21
45 40
40 36
35
30
24
25
20
15
10
5
0
One single common rate for One single rate for CGST and One single rate for CGST and
CGST & SGST across India Common Standard rate for Multiple rates for SGST across
SGST Across all state all states

One single common rate for CGST & SGST across India, 36% of the Respondents are
opined that One single rate for CGST and Common Standard rate for SGST Across all
state and 24% of the Respondents are opined that One single rate for CGST and
Multiple rates for SGST across all states

Table No: 4.22

Table showing the respondents belongs tax payer may have accumulated credit
in one state and a liability in another state therefore whether a mechanism to
transfer credit from one state to another should be built into the GST Regime
Yes 25 83
No 5 16
Total 30 100
Graph No: 4.22
90 83
80
70
60
50
40
30
20 16
10
0
Yes No

that,, 74% of the respondents opined yes GST
will get result in better input tax credits for your business resulting in better
profitability , 26% of the respondents opined No GST will get result in better input tax
Its interprets that majority of the
th respondents are opined yes GST will get result in
better input tax credits for business resulting in better profitability (74%).

Table No: 4.23 Table showing

showing the respondents opined that Introduction of GST
has created confused customer / Businessmen
Strongly Agree 5 16
Agree 20 66
Neither agree nor Disagree 0 0
Disagree 5 16
Total 30 100
Graph No: 4.23
70 66
60
50
40
30
20 16 16
10
0 0
0
Strongly Agree Agree Neither agree nor DisagreeDisagree Strongly Disagree

The above table and graph showing that, 16% of the Respondents are strongly agreed
that Introduction of GST has created confused customer / Businessmen,
Businessmen 66% of the
Respondents are agreed that Introduction of GST has created confused customer /
Businessmen and 16% of the Respondents are disagreed that Introduction of GST has
Its interpreted that majority of the respondents are agreed that Introduction of GST
has created confused customer / Businessmen (66%)

Table No: 4.24 Table showing the respondents belongs to think GST will reduce
the evasion of tax
Strongly Agree 10 33
Agree 18 60
Neither agree nor Disagree 0 0
Disagree 2 7
Total 30 100
Graph No: 4.24
70
60
60
50
40
33
30
20
10 7
0 0
0
Strongly Agree Agree Neither agree Disagree Strongly
nor Disagree Disagree

The above table and graph showing that, 33% of the Respondents are strongly agreed
that GST will reduce the evasion of tax,
tax, 60% of the Respondents are agreed that GST
will reduce the evasion of tax and 7% of the Respondents are disagreed that GST will
reduce the evasion of tax
Its interpreted that majority of the respondents are agreed that GST will reduce the
evasion of tax (60%)

Chapter – 5
Findings, Suggestions and Conclusion
5.1 Findings
5.2 Suggestions
5.3 Conclusion

Findings, Suggestions and Conclusion

5.1 Findings
• Majority of the respondents are Female (54%).
• Majority of the respondents are Unmarried (63%).
• Majority of the respondents Age group is Between 21-30 (49%).
• Majority of the respondents are Post graduates (34%).
• Majority of the respondents are living in Urban Area (54%).
• Majority of the Respondents are serving in other Industry they didn’t
mentioned specific category (44%).
• Majority of the respondents are opined that they support GST (90%).
• Majority of the respondents opined that GST Positively effect on the

Automobile Industry in India (70%).
• Majority of the respondents are opined that Vat & CST is beneficial both
Government and People (90%).
• Majority of the respondents agreed GST will Burden the people or Consumer
(63%).
• Majority of the Respondents Opined that the introduction of GST in India has
positively affected the demand for the product / service (66%).
• Majority of the Respondents are opined that Present GST Slab Rate is good.
(73%).
• Majority of the Respondents are opined that Transition of GST Regime is
(53%).
• Majority of the respondents opined that GST influence in their Consumption
behavior (73%).
• Majority of the Respondents are opined that GST will effect on consumption
behavior to consumes goods more (56%).
• Majority of the respondents opined that Luxury goods expenditure will be
affected most by GST (60%).

• Majority of the respondents are opined that observation after the

implementation of GST with regard to prices of the products have increased
(44%)
• Majority of the respondents agreed that introduction of GST will result in
better input tax credits for your business resulting in better profitability (74%).
• Majority of the respondents agreed that GST improves the revenue growth to
the state and country. (46%)
• Majority of the respondents opined that IT/ systems changes is the biggest
challenge for business during the transition to GST regime (57%).
• Majority of the Respondents are opined that One single common rate for
CGST & SGST across India
• Majority of the respondents are opined yes GST will get result in better input
tax credits for business resulting in better profitability (74%).
• Majority of the respondents are agreed that Introduction of GST has created
confused customer / Businessmen (66%)
• Majority of the respondents are agreed that GST will reduce the evasion of tax
(60%)

5.2 Suggestions
• The industry wants the Government to lend a hand by giving it an atmosphere

that promotes development. It is the duty of the Government to move with
lower rates as this will help in increasing volumes and gather extra duty
income. Increase in duty rates and costs of vehicles have an upsetting impact
of decrease in volumes.
• The Government has to encourage in order to develop car industry by making
positive arrangements. Because of change in assess rates of vehicles each year;
numerous worldwide organizations are planning to shift to other developing
markets, for example Brazil and China.
• The government should have slowly moved towards the implementation of
GST which would not lead to the certain economic boom in the market.
• Proper education and awareness about GST was required before its
implementation so that each and every citizen would have understood its
concept.
• GST is at very initial stage in India and will surely take some time to give
positive effects in the economy.
• Well maintenance of the GSTN portal is required to enable proper flow.
• Suggestions and changes according to each state should be applied for the
betterment of GST.

5.3 Conclusion
This study concludes that there has been a reduction in the tax rates of luxury cars
which would probably increase the sale of luxury cars. While in the case of small
vehicles it has an opposite effect. GST may have a positive impact on automobile
industry in long run, since government has already revived the tax rate in the current
financial budget. There are chances of the same to happen in future which will bring a
positive growth in automobile industry
Automobile industry has now become a prominent industry which contributes to the
growth and development of Indian economy. The automobile industry’s turnover is
estimated to be 7.2% of total GDP. The automobile industry provides employment to
about 29 million people and contributes to 13% of excise revenue for the government.
The industry has tuned an investment of Rs 50,000 crores in last three financial years.
Removal of various indirect taxes will increase in the sale of the cars. It provided
various employment opportunities in the sector. A uniform taxation system helped to
stop people from tax invasion. GST will lead to a corruption free administration.
Direct taxation has discouraged people to evade from paying the tax to government.
In short run it has affected the economy but as increase in tax payers will lead to
increase in GDP and economic growth and development of the country and will also
increase the revenue to the government.

QUESTIONNAIRE
Respected Sir / Madam,
I am pleased to introduce myself as Sanjay C. 4th semester M.Com student
of Department of Post Graduation Studies in Commerce, PESIAMS, Shivamogga
As a part of curriculum I have under taken Project work on “A Study on
Impact of GST on Automobile Industry in Shivamogga”. I kindly request you to
spend few minutes in filling this questionnaire. So that you will be helping me to
complete my project work. The information that you provided will be used for
academic purpose only and will be kept confidential.
Thanking you
Yours faithfully
(Sanjay. C)
1. Name:
Address:…………………………………………………………………
…………………………………………………………………..
…………………………………………………………………..
a) Gender
i) Male [ ]
ii) Female [ ]
b) Marital status:
i) Married [ ]
ii) Unmarried [ ]
c) Age:
i) Below 20 [ ]
ii) Between 21 - 30 [ ]
iii) Between 31 – 40 [ ]
iv) Above 41 [ ]
d) Educational qualification

i) Matriculation [ ]
ii) PUC [ ]
iii) Graduate [ ]
iv) Post Graduate [ ]
v) Others [ ]
e) Area belongs to
i) Rural [ ]
ii) Urban [ ]
2. Category of Serving
i) Automobile [ ]
ii) Trading [ ]
iii) Service [ ]
iv) Others [ ]
3. Do you support GST?
i) Yes [ ]
ii) No [ ]
• If yes answer the Question 3(a)
• If no answer the question 3(b)
3 (a) Why do you support GST
i) Broaden India’s tax base [ ]

ii) Provide stable tax income for Indian Govt. [ ]
iii) Retain more government resource for forecasting India [ ]
iv) Improve Indian Economy in long run [ ]
v) Others [ ]
3 (b) Why Don’t you support GST
i) GST is an Online Transaction System [ ]

ii) It came into effect in the middle of the financial year [ ]
iii) It will have a higher tax burden [ ]
iv) GST Will mean an increase in operational cost [ ]

4. What will be the effect of GST on the automobile Industry in India?

i) Positively [ ]
ii) Negatively [ ]
iii) No Impact [ ]
iv) Can’t say [ ]
5. Which system do you think is more beneficial both Government and People?
i) Vat & CST [ ]
ii) Goods & Service Tax [ ]
6. Do you think GST will Burden the people or Consumer?
i) Strongly Agree [ ]
ii) Agree [ ]
iii) Disagree [ ]
iv) Strongly disagree [ ]
7. Do you feel that the introduction of GST in India has affected the demand for the
product / service?
i) Positively [ ]
ii) Negatively [ ]
iii) No Impact [ ]
8. What is your opinion on present GST Slab Rate?
i) Very Good [ ]
ii) Good [ ]
iii) Bad [ ]
iv) Very Bad [ ]
9. Transition of GST Regime Was
i) Easy [ ]
ii) Very Easy [ ]
iii) Difficult [ ]
iv) Very Difficult [ ]
10. Will GST influence your Consumption behavior?
i) Yes [ ]

ii) No [ ]
11. How GST will affect your consumption behaviour?
i) Consumes goods more [ ]
ii) Consumes goods less [ ]
12. Which kinds of expenditure will be affected most by GST?
i) Necessary goods [ ]
ii) Luxury goods [ ]
iii) Entertainment [ ]
iv) Other [ ]
13. What is your observation after the implementation of GST with regard to prices of
the products
i) Price have increased [ ]
ii) Price have decreased [ ]
iii) No changes in price [ ]
iv) Fair and uniform [ ]
14. Do you believe that introduction of GST will result in better input tax credits for
your business resulting in better profitability
i) Yes [ ]
ii) No [ ]
15. GST improves the revenue growth to the state and country?
ii) Agree [ ]
iii) Neither agree nor disagree [ ]
iv) Disagree [ ]
v) Strongly disagree [ ]
16. What is the biggest challenge for business during the transition to GST regime
i) Supply chain restructuring [ ]
ii) IT/ Systems changes [ ]
iii) Product pricing [ ]
iv) Other (please specify) [ ]

17. What should be the rate structure ?

i) One single common rate for CGST & SGST across India
ii) One single rate for CGST and Common Standard rate for SGST Across all
state
iii) One single rate for CGST and Multiple rates for SGST across all states
18. A tax payer may have accumulated credit in one state and a liability in another
state therefore whether a mechanism to transfer credit from one state to another
should be built into the GST Regime?
i) Yes [ ]
ii) No [ ]
19. Introduction of GST has created confused customer / businessmen?
ii) Agree [ ]
iv) Disagree [ ]
20. Do you think GST Will reduce the evasion of Tax?
ii) Agree [ ]
iv) Disagree [ ]

Bibliography
K.Neelavathi, Mrs. Rachana Sharma,(2015) -" Impact of GST on Automobile
Industry " IOSR Journal of Business and Management (IOSR-JBM)
www.iosrjournals.org
Akshara Mahesh ,Karthika K ,(2017) - "Impact of GST on Automobile Industry in
India" IOSR Journal of Business and Management (IOSR-JBM)
www.iosrjournals.org
Dr. P. Mahender,(2017) -" GST Effect on Manufacturing Industry – India "
International Journal of Managerial Studies and Research (IJMSR) Volume 5, Issue 1,
www.arcjournals.org
Tarunika Jain Agrawal ,C.A. Aashna Goyal ,(2017) -" Impact Of Gst On Real
Estate And Automobiles Sector " IMPACT: International Journal of Research in
Business Management Vol. 5, Issue 6,
Pooja Jha , F.B. Singh ,(2017) -"A Study On Implementation Of Gst And Its
Repercussion On Indian Automobile Sector" Global Journal of Multidisciplinary
Studies.
Mr.S D Kharde, ,(2017) -" Impact Of Gst On Indian Automobile Industry " Journal
of Emerging Technologies and Innovative Research (JETIR) www.jetir.org Volume
4, Issue 11
Dr. Ashok Sharma ,(2018) -"Impact of GST on Automobile Industry in India"
International Research Journal of Management Science & Technology Vol 9 Issue 3
Songara Manoj ,(2019) - " Goods and Services Tax (GST) in India – An Overview
and impact " Journal of advanced Management Research, Vol. 12 (1)
Charumathi S,(2019) -" Gst Implication On Sales Of Automobile Industry With
Reference To Tata Motors " International Journal of Mechanical Engineering and
Technology (IJMET) Volume 10, Issue 01,
Rachana Sharma, (2019) -" Impact of GST Automotive Sector "
http://gstinindia.in/GST-on-Automobiles-sector.aspx

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KUVEMPU UNIVERSITY

Under the Guidance of

Dr. S.R Nagaraja

PES Institute of Advanced Management Studies,

indirectly in completing my dissertation work.

I would like to express my sincere and special thanks of gratitude to

Coordinator, P.G Department of Commerce, PESIAMS, Shivamogga who gave me the

opportunity to do this project and supporting me throughout the project study.

so encouraging and supportive throughout the study.

operation my Endeavour would not have been success.

I am pleased to my beloved parents for their affection and love throughout my

Place: Shivamogga Mr. Sanjay. C

Chapter Chapter name Page no

2 Automobile Industry Profile 11 - 18

3 Conceptual Frame Work 19 - 42

4 Analysis of Data and Interpretation 43 - 67

Findings, Suggestions and

PESIAMS, Shivamogga Page 1

PESIAMS, Shivamogga Page 2

PESIAMS, Shivamogga Page 3

1.2 Review of Literature

PESIAMS, Shivamogga Page 4

PESIAMS, Shivamogga Page 5

PESIAMS, Shivamogga Page 6

1.3 Statement of the Problem

PESIAMS, Shivamogga Page 7

1.4 Objectives of the Study

1.5 Scope of the Study

1.6 Research Methodology

The research design is probability research design and is descriptive research.

PESIAMS, Shivamogga Page 8

1.7 Sampling Technique

1.8 Limitations of the Study

• The present study is restricted to Shivamogga District

1.9 Chapter Scheme

PESIAMS, Shivamogga Page 9

Third chapter include conceptual framework of GST on Automobile

PESIAMS, Shivamogga Page 10

PESIAMS, Shivamogga Page 11

Automobile Industry Profile

PESIAMS, Shivamogga Page 12

• Fifth largest commercial vehicle market

2.2 Market Size

PESIAMS, Shivamogga Page 13

2.4 Government Initiatives

PESIAMS, Shivamogga Page 14

• The Ministry of Heavy Industries, Government of India has shortlisted 11

2.6 Road Ahead

The automobile industry is supported by various factors such as availability of skilled

PESIAMS, Shivamogga Page 15

Indian automotive industry (including component manufacturing) is expected to reach

2.7 Factors that will drive growth in the sector

2.9 Scope of Indian Automobile Sector

PESIAMS, Shivamogga Page 16

2.10 Important of auto mobiles

2.11 India's Position in World's Production

PESIAMS, Shivamogga Page 17

• Ninth largest car manufacturer in world

PESIAMS, Shivamogga Page 18

PESIAMS, Shivamogga Page 19