A

PROJECT REPORT ON

THE STUDY OF BENEFITS OF GST TO THE BUSINESS &

GOVERNMENT.

SUBMITTED TO

IN THE PARTIAL FULFILLMENT OF

THIRD YEAR BACHELOR OF BUSINESS

ADMINISTRATION

DEGREE OF SAVITRIBAI PHULE PUNE UNIVERSITY

SUBMITTED BY
MR. OM SAHEBRAO AHER

ROLL NO. 01

GUIDED BY
PROF. SHITAL INDANI

KARMAVEER KAKASAHEB WAGH ARTS, COMMERCE,

SCIENCE & COMPUTER SCIENCE COLLEGE, NASHIK

2023-2024

KARMVEER KAKASAHEB WAGH EDUCATION SOCIETY

’ K.K.WAGH ARTS, COMMERCE, SCIENCE & COMPUTER SCIENCE

COLLEGE, SARASWATI NAGAR, ADGAON ROAD, PANCHAVATI

NASHIK-422403

1
 CERTIFICATE

This is to certify that Mr. OM SAHEBRAO AHER of

T.Y.B.B.A.

Roll no. 01 has satisfactorily completed the project report in the

partial fulfilment of University of Pune during the academic year

2023-2024

----------------------- ---------------------------

(Guided By) (HOD)

Shital Indani

------------------------- ------------------------------
Dr. S.V. Patil External Examiner

(Principal)

2
 DECLARATION

I OM SAHEBRAO AHER, the student of K. K. Wagh College, Nashik hereby declare this
project entitled “BENEFITS OF GST TO THE BUSINESS AND GOVERNMENT.”

It was carried out by me as the partial fulfilment of Bachelor of Business Administration

Course under University of Pune. This project can be undertaken as a part of academic
curriculum according to university rules & with no commercial interest & motive.

Date: Sign

Place: Nashik Name: Om Aher

3
 ACKNOWLEDGEMENT

Any accomplishment requires the effort of many people and this work is not different.
Regardless of the source, I wish to express my gratitude to those who may have contributed
to this work, even though anonymously.

First of all, I would like to express my deepest sense of gratitude to K.K. WAGH ARTS
COMMERCE SCIENCE AND COMPUTER COLLEGE for providing me with an
opportunity for training and encouragement in conducting the research work.

I would like to pay my sincere thanks to my project guide, Prof. Shital Indani under whose
guidance I was able to complete my project successfully. I have been fortunate enough to get
all the support, encouragement and guidance from her needed to explore, think new and
initiate.

My final thank goes out to my parents, family members, teachers and friends who
encouraged me countless times to persevere through this entire process.

Date: Om Sahebrao Aher

Place: Nasik (T.Y B.B.A)

4
 INDEX

Sr. Particulars Pg.

no. no.
1 Introduction 7

Objectives 9

Research Methodology 11

Scope of Study 13

Limitations 15

2 Goods and Services Tax 17

3 History of GST 19

4 Objectives of GST 21

5 Advantages and Disadvantages of GST 24

5 Benefits of GST 31

6 Findings and Conclusion 35

7 Bibliography 37

5
INTRODUCTION

6
Introduction: -
Goods & Services Tax (GST) is an indirect tax used in India on the supply of goods and
services. It is comprehensive, multi-stage, destination-based tax. Comprehensive because it
has subsumed almost all the indirect taxes expect a few state taxes. Multi-staged as it is, the
GST is imposed at every step in the production process, but is meant to be refunded to all
parties in the various stages of production other than the final consumer and as a destination-
based tax, it is collected from point of consumption and not point of origin like previous
taxes.

Goods and services are divided into 5 different tax slabs for collection of tax: 0%, 5%, 12%,
18% and 28%. However, petroleum products, alcoholic drinks and electricity are not taxed
under GST and instead are taxed separately by the individual state governments, as per the
previous tax system. There is a special rate of 0.25% on rough precious and semi-precious
stones and 3% on gold. In addition, a cess of 22% or other rates on top of 28% GST applies
on few items like aerated drinks, luxury cars and tobacco products. Pre-GST, the statutory tax
rate for most goods was about 26.5%, Post-GST, most goods are expected to be in the 18%
tax range.

The tax came into effect from 1 July 2017 through the implementation of the One Hundred
and First Amendment of the Constitution of India by the Indian government. The GST
replaced existing multiple taxes levied by the central and state governments.

The tax rates, rules and regulations are governed by the GST Council which consist of the
finance ministers of the central government and all the states. The GST is meant to replace a
slew of indirect taxes with a federated tax and is therefore expected to reshape the country’s
$2.4 trillion economy, but its implementation has received criticism. Positive outcomes of

7
GST includes the travel time in interstate movement, which dropped by 20%, because of
disbanding of interstate check posts.

Objectives of Study

8
Objectives: -
 To increase our knowledge about the GST.
 To know the history of GST.
 To study the objectives of GST.
 To know about the benefits of GST to the Businesses and the Government.

9
Research Methodology

10
Research Methodology: -
A research methodology is an outline of how a given piece of research is carried out. It
defines the techniques or procedures that are used to identify and analyse information
regarding a specific research topic.

Primary data is the one that has been generated by the researcher himself/herself, surveys,
interviews, experiments, specially designed for understanding and solving the research
problem at hand.

Secondary data is the data that has already been collected through primary sources and made
readily available for researchers to use for their own research.

Secondary data has been used for the research of the topic. Information has been collected
from different sites available on Google.

11
Scope of Study

12
Scope of Study: -
Scope of GST Under the Indirect Taxes, GST is a destination based tax on consumption of
goods and services. It is levied at all stages right from manufacture up to final consumption
with credit of taxes paid at previous stages available as setoff.
GST amount are collected by sellers from buyers while purchasing a product and later on
passed on to the government. It serves as a large source of revenue for both state and central
government GST is termed as one nation-one tax as it has unified the whole taxation system.
There are five tax slabs for collecting tax under this ex.0%, 5%, 12%, 18% and 28%.

13
Limitations of Study

14
Limitations of Study: -
 The data used for this project is secondary.
 The time to study and collect the data related to this project was less.
 The subject of GST is vast and it requires extensive study and research to understand
its depth.

15
Goods and Services Tax

16
GST: -
GST is known as Goods and Services Tax. It is an indirect tax which has replaced many
indirect taxes in India such as excise duty, VAT, service tax, etc. The GST act was passed in
the Parliament on 29th March 2017 and came into effect on 1st July 2017.

In other words, Goods and Services Tax (GST) is levied on the supply of goods and services.
Goods and Services Tax Law in India is a comprehensive, multi-stage, destination-based tax
that is levied on every value addition. GST is a single domestic indirect tax law for the entire
country.

Under the GST regime, the tax is levied at every point of sale. Types of GST applied are as
follows: -

1) Central Goods and Services Tax: - CGST is charged on the intra state supply of
products and services.
2) State Goods and Services Tax: - SGST, like CGST, is charged on the sale of
products or services within a state.

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3) Integrated Goods and Services Tax: - IGST is charged on inter-state transactions of
products and services.
4) Union Territory Goods and Services Tax: - UGST is levied on the supply of
products and services in any of the Union Territories in the country, viz. Andaman
and Nicobar Islands, Daman and Diu, Dadra and Nagar Haveli, Lakshadweep, and
Chandigarh. UGST is levied along with CGST.

History of GST

18
History of GST: -
The journey of GST began in the year 2000 when a committee was set up to draft law. It took
17 years from then for the Law to evolve. In 2017, the GST bill was passed in the Lok Sabha
and Rajya Sabha. On 1st July 2017, the GST Law came into force.

The journey of GST can be seen through the following chart: -

1. In the year 2000, PM Vajpayee set up a committee to draft GST Law

2. In 2004, a task force concludes GST must be implemented to improve current tax
structure.

3. In 2006, Finance Minister proposes GST introduction from April 2010.

4. In 2007 CST to be phased out. Rates reduced from 4% to 3%.

5. In 2008, EC finalises duel GST structure to have separate levy, legislation

6. In 2010, project to computerise commercial taxes launched but GST implementation

posponded.

7. In 2011, Constitution Amendment Bill to enable GST Law introduced.

8. In 2012, Standing Committee begins discussion on GST but stalled it over clause
297B.

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9. In 2013, Standing Committee tables its report on GST.

10. In 2014, GST bill reintroduced in the parliament by Finance Minister.

11. In 2015, GST bill passed in Lok Sabha but not passed in Rajya Sabha.

12. In 2016, GSTN goes live.

13. In 2016, Amended Model GST Law passed in both Houses and President gives
assent.

14. In 2017, 4 supplementary GST bill passed in Lok Sabha and approved by Cabinet.

15. Rajya Sabha passes 4 supplementary GST bill. Final GST to implemented on July 1,
2017

16. GST is launched on 1st July 2017.

Objective of GST

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Objective of GST: -

1)To achieve the ideology of ‘One Nation One Tax’: -

GST has replaced multiple indirect taxes, which were existing under the previous tax regime.
The advantage of having one single tax means every state follows the same rate for a
particular product or service. Tax administration is easier with the Central Government
deciding the rates and policies. Common laws can be introduced such as e-way bills for
goods transport and e-invoicing for transaction reporting. Tax payers are not bogged down
with multiple return forms and deadlines.

2)To subsume a majority of the indirect taxes in India: -

India had several erstwhile indirect taxes such as service tax, Value Added Tax (VAT),
Central Excise, etc, which used to be levied at multiple supply chain stages. Some taxes were
governed by the states and some by the Centre. There was no unified and centralised tax on
both goods and services. Hence, GST was introduced. Under GST, all the major indirect

21
taxes were subsumed into one. It has greatly reduced the compliance burden on taxpayers and
eased tax administration for the government.

3)To eliminate the cascading effect of taxes: -

One of the primary objectives of GST was to remove the cascading effect of taxes.
Previously, due to different indirect tax laws, taxpayers could not set off the tax credits of one
tax against the other. For example, the excise duties paid during manufacture could not be set
off against the VAT payable during the sale. This led to a cascading effect of taxes.

Under GST, the tax levy is only on the net value added at each stage of the supply chain. This
has helped eliminate the cascading effect of taxes and contributed to the seamless flow of
input tax credits across both goods and services.

4)To curb tax evasion: -

GST laws in India are far more stringent compared to any of the erstwhile indirect tax laws.
Under GST, taxpayers can claim an input tax credit only on invoices uploaded by their
respective suppliers. This way, the chances of claiming input tax credits on fake invoices are
minimal.

Also, due to GST being a nationwide tax and having a centralised surveillance system, the
clampdown on defaulters is quicker and far more efficient.

5)To increase the taxpayer base: -

GST has helped in widening the tax base in India. Previously, each of the tax laws had a
different threshold limit for registration based on turnover. As GST is a consolidated tax
levied on both goods and services, it has increased tax-registered businesses. Besides, the
stricter laws surrounding input tax credits have helped bring certain unorganised sectors
under the tax net. For example, the construction industry in India.

6)Online procedures for ease of doing business: -

Previously, taxpayers faced a lot of hardships dealing with different tax authorities under
each tax law. Besides, while return filing was online, most of the assessment and refund
procedures took place offline.

Now, GST procedures are carried out almost entirely online. Everything is done with a click
of a button, from registration to return filing to refunds to e-way bill generation. It has
contributed to the overall ease of doing business in India and simplified taxpayer compliance
to a massive extent.

7)An improved logistics and distribution system: -

22
A single indirect tax system reduces the need for multiple documentation for the supply of
goods. GST minimises transportation cycle times, improves supply chain and turnaround
time and leads to warehouse consolidation, among other benefits. With the e-way bill system
under GST, the removal of interstate checkpoints is most beneficial to the sector in improving
transit and destination efficiency. Ultimately, it helps in cutting down the high logistics and
warehousing costs.

8)To promote competitive pricing and increase consumption: -

Introducing GST has also led to an increase in consumption and indirect tax revenues. Due to
the cascading effect of taxes under the previous regime, the prices of goods in India were
higher than in global markets. Even between states, the lower VAT rates in certain states led
to an imbalance of purchases in these states.

Having uniform GST rates have contributed to overall competitive pricing across India and
on the global front. This has hence increased consumption and led to higher revenues, which
has been another important objective achieved.

Advantages and Disadvantages of GST

23
ADVANTAGES OF GST:

Goods and Service tax(GST) was approved by the Indian Parliament in 2016, effective from
1 July 2017. The GST Act was passed in Jammu and Kashmir on 8 July 2017. It is the
world's biggest indirect tax reform since Independence. On its implementation, the Indian
economy received a boost by reducing the price of most of the products. It encouraged
consumer purchasing behavior. GST is a destination-based tax applicable on all transactions
involving the supply of goods and services for consideration subject to certain exceptions.

GST attempts to create a common national market. GST is an all-in-one indirect tax that has
replaced indirect taxes like excise duty, service tax, VAT, CST, luxury tax, entertainment tax,
entry tax, etc.

24
Advantages of GST
The introduction of GST has replaced the multiple indirect tax systems previously in place.
GST is a win-win situation for the entire country. It brings benefits to all the stakeholders of
the industry and businesses across the country.

There are several benefits for businesses to be GST- ready. Following are the merits of
GST for businesses across the country:

1. Inclusive Growth And Ease of Doing Business -

GST enables India to move towards an inclusive economy, especially in the smaller towns of
the country. As GST has replaced various indirect taxes on goods and services, it not only
leads to greater ease of doing business, it will also ensure better tax compliance among
businesses.

It also enables higher investments and growth. A simpler tax system with fewer exemptions
under GST has led to simplification and uniformity in the tax structure. The uniformity in
laws, procedures and tax rates across the country makes doing business easier.

25
2. Tax Transparency -

GST helps to promote transparency and accountability in the tax regime. Goods and Services
Tax is not only applicable to the company but is also being applied to all the products and
services that the company is selling in the market.

It has also brought positive changes, by bringing more clarity and making the system more
organized. With the replacement of the previous multiple tax system and the introduction of
a single combined tax, things are clearer and without confusion. No tax has to be paid in
different categories at different times. This is an advantage of GST.

3. Lower Transportation Costs -

Although traders are still adapting to make their products GST- compliant, there is already
some cost reduction due to the decline in the transportation rates. It is another advantage of
GST. As prices go down, manufacturers and producers are able to purchase raw materials
from various sources at a cheap price, and this will eventually lead to a reduction in costs for
the businesses and in prices for the consumers.

4. Certainty In Tax Administration -

An internationally accepted product coding system used for classifying the goods under GST
was introduced by the government called the Harmonised System of Nomenclature ( HSN ).
A similar product coding system is used for services called SAC (Servicing Accounting
Code).

The HSN/SAC Code is used by a taxpayer according to the category and on the basis of their
turnover. The classification of goods or services needs to be declared under the tax invoice
and also has to be reported while filing the GST returns. When goods and services are
recognized by their specific HSN/SAC codes, which are globally accepted, the identification
of goods becomes easy, and possibilities of misinterpretation tend to reduce.

A common system of classification of goods and services across the country simplifies tax
administration and makes it easy for the taxpayers by ensuring certainty in it across India.

5. IT- Friendly

There are simplified and automated procedures for various processes such as registration,
returns, refunds, tax payments, etc. All interaction is through the common GSTN Portal, and
there is barely any public interaction between the taxpayer and tax administration .

Over 80% of the taxpayers have an online accounting software setup. Goods
and Services Tax simplifies the accounting and invoicing systems and helps
improve the tax-compliance. Hence, companies that use digital software for their daily
operations are well-placed to make the transition to GST.

26
6. Regular Compliance and Reduction In Compliance Costs-

As businesses prepare to adopt GST, compliance becomes crucial. Making it a part of the
day-to-day operations of the company will enable businesses to ease the compliance burden
on their management.

Further due to GST, businesses will be eligible to set off GST paid on purchases of goods and
services. They can set it off towards their GST liability on outward supply, or in other words,
sales. Thus enabling businesses to manage their working capital efficiently.

The compliance cost is lesser under GST as multiple recordkeeping for a variety of taxes is
not needed. Therefore, there is a lesser investment of resources and manpower in maintaining
records. The uniformity in laws, procedures and tax rates across the country goes a long way
in reducing the compliance cost.

7. Widening of Tax Base -

GST has provided greater trade and industry freedom through the wide integration of
multiple indirect taxes under previous systems. Several taxes levied by the Centre and States
have been brought into GST.

A very clear and comprehensive series of deductions lead to an increased tax base and better
tax compliance. It also leads to a reduction in the tax burden on small and medium-sized
businesses.

8.Changing Results of Administrative Taxes -

GST replaced the previous multiple indirect taxes system and combined them into one. The
set-off allowed by using the input tax credit against the output tax has eliminated the
cascading (tax on tax) effect of taxes. It improves competition and improves financial
performance.

9. Benefits To Small Traders and Entrepreneurs -

GST provides a boost to small businesses with a single tax structure. The idea of having a
unified tax is, in fact, to make business-to-business taxation simpler for both small and large
enterprises. GST makes compliance easier for small businesses as the compliance process of
a single tax remains the same across the country and, hence, is significantly easier for small
business owners to comply.

Small businesses do not have to file separate sales returns for each state as they had to in the
earlier system. The sale of the property has become entirely tax-free as the Rs 20 lakh
exemption limit for this section is almost doubled. It has led to a significant cut in input costs
for businesses. Some of this benefit has been passed on to consumers too.

GST has, in fact, significantly reduced the time taken to do business. Businesses are now
required to procure only a single set of sales returns and file it online in the portal of the tax
department. This single tax return reduces the number of documents required for GST
compliance from 12 to just two.

27
These factors make GST an ideal tax regime for the small and medium businesses that have
been grappling with a complex system that lacked transparency for their products and
services. The ease with which goods and services can be legally supplied has helped small
businesses. Also, the penalties imposed on violations are no longer a constraint to small
businesses.

10. Maximum Registration Limit-

Previously, in the VAT structure, any business with a profit of more than Rs 5 lakh (in most
states) was obliged to pay VAT. Please note that this limit varies from state to state. Also,
service tax was exempt from service providers for a profit of less than Rs 10 lakh. Under the
GST regime, the limit has been increased to Rs 20 lakh, which frees many small retailers and
service providers.

11. Post- GST Incentives -

The government has given incentives of 0% credit for payment of tax for July. The pre-GST
laws imposed an incentive on the capital paid for the goods or services. But post-GST, the tax
rate has been removed. This means those businesses, who paid taxes during July but did not
submit their forms and paid taxes in the subsequent months, are eligible for a refuse

Disadvantages Of GST

1. Very High Tax Burden on SMEs

As per the structure of the previous tax system, only those businesses whose yearly sales were more
than Rs.1.5 crore were required to pay excise duty. But as per the new tax structure, it is mandatory
for all businesses whose annual sales are more than Rs.40 lakh to pay GST.

2. Compliance Burden

GST compliance is quite high due to the filing of 3 tax returns every single month. Besides,

now it is mandatory for the companies to register for the GST in all states wherever they

perform business.

The whole procedure of registering with the regulatory body, producing GST-compliant

invoices, maintaining digital records, and filing returns have put a huge stress burden

on SME’s and others.

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3. Increased Costs

It is seen that GST compels businesses to convert their present accounting software to ERP or

GST-compliant software with a view to keeping their operations running. But one also has to

remember that the businesses may incur substantial expenses for buying, installing, and then

training employees to use GST-compliant software.

In addition to this, the costs of doing business have increased considerably not only for big

businesses but also for small ones since they have to hire tax professionals in order to become

GST-compliant.

4. IT Software Expenditure

Keeping in view the GST regime, all businesses either have to update their current

accounting software or ERP software to make it GST compliant or purchase new GST

software to prop up their businesses. This results in an increase in IT expenses of the

businesses in terms of purchasing the GST software and training the staff to use the software

efficiently. However, Masters India, a firm that is one of the leading GST Suvidha

Providers(GSP) has successfully developed customized GST software and APIs in order to

ease the compliance procedures for different business users.

29
Benefit of GST

30
Benefits of GST

A. To Businesses: -

1)Convenient Filing: -
For small business owners, one of the best parts of the GST is its convenience. In the old
system, companies had to pay and track a variety of taxes, including Service Tax, Central
Excise Duty, Purchase Tax, Luxury Tax and Countervailing duty.

With GST, they only need to pay a single tax, making your monthly and annual returns much
easier. That means you can stay compliant without spending money on a tax professional.

Even better, they can use the online GST portal to handle every step of the tax process, from
registering for GSTIN to paying your monthly tax bill, so businesses never need to worry
about saving paper copies of their returns. If they ever need the reference of past return, they
just have to log in to the GST Portal and pull up a copy.

2)Reduced Trade Barriers: -

One of the most exciting benefits of GST is the reduced trade barriers between states in India.
Before GST, selling to customers in the other states was difficult because of the complicated
state, interstate and national taxes involved. To make the matter worse, each state had
different rules. For the small and newly established businesses, this extra burden was often
impossible to bear, resulting in a limited customer base.

Because GST eliminates all the varied state taxes, it opens up the whole India for business.
With GST, businesses can ship products anywhere in the country and still pay the same tax
rate.

3)Better Tax Credits: -

One of the biggest problems with the India’s old tax regime was cascading taxes. Because of
the many different levies, businesses were often forced to pay tax on tax.

To reduce this problem, GST created Input Tax Credit (ITC), which extends seamlessly
through the businesses supply chain.

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4)Easy Shipping: -
Before GST, shipping the products between states was often hassle. Tax checkpoints at the
borders often forced truckers to wait in line for hours to pay interstate taxes and other state
and local taxes. This process drove up the prices for fuel and created an extremely inefficient
shipping system.

The GST regime aims to solve these problems. Because the tax gets rid of the various
national and state taxes, drivers don’t need to stop to pay tax. As part of GST, the government
is eliminating border checkpoints, which saves time and fuel and helps the businesses to
deliver the products on time.

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 B. To Government: -
I. A unified common national market to boost Foreign Investment and “Make in India”
campaign.
II. Boost to export/manufacturing activity, generation of more employment, leading to
reduced poverty and increased GDP growth.
III. Improving the overall investment climate in the country which will benefit the
development of states.
IV. Uniform SGST and IGST rates to reduce the incentive for tax evasion.
V. Reduction in compliance costs as no requirement of multiple record keeping.
VI. Simple and easy to administer: - GST replaces multiple indirect taxes at the Central and
State levels. Backed with a robust end-to-end IT system, GST would be simpler and easier
to administer than all other indirect taxes of the Centre and State. All the management of
GST would be handled by the GSTN.
VII. Better control on leakage: - Because of the Advanced IT platform, it would be difficult to
evade GST. The system of GST also promotes the tax payment. A businessman can claim
tax credit only if it has the tax invoice for the purchase. If it doesn’t have tax invoice of a
purchase, It has to bear whole tax. Thus, a retailer would ask tax invoice from the dealer
and in return dealer would ask tax invoice from the manufacturer. The in-built mechanism
in the design of GST incentivizes tax compliance by the traders.
VIII. Higher revenue efficiency: - GST is expected to decrease the cost of tax collection. It will
lead to higher revenue efficiency. The duplication of indirect tax collection would end
after the GST. It would finally decrease the cost of revenue collection. Both, the center and
state government would benefit.
IX. Foreign investments Goods and Services Tax (GST) was launched with the motto of
‘One Tax One Nation’. Common and accountable markets help attract foreign
investment and promotes Indian products at an international platform.
X. Boost in the import & export Industry Attracting foreign investment will not only help
Indian products and services reach a global platform, but also give a boost to the
Import and export industry. The more trade takes place the better job opportunities are
created. The unemployed of the country will get jobs and newer businesses will enter
the Market. The overall economic situation in the country will improve.

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Finding and Conclusion

34
Findings and Conclusions: -
In this study we came to know that, the tax system which was used earlier was very
complicated. The businesses had to pay tax on tax. Different tax rates were applied in each
state on every transaction. Data collection and documentation was also very difficult for both
businesses and government.

But since the GST is applied in the place of old tax system, the tax rate in every state is fixed
on every transaction carried out by businesses. The complexity of the earlier tax system got
eliminated. Tax collection got easier for the Government.

So at the end we can say that, GST has definitely proven Beneficial for both Business as well
as Government.

35
Bibliography

36
Bibliography: -
1. https://www.bankbazaar.com/tax/gst.html
2. https://cleartax.in/s/gst-law-goods-and-services-tax
3. https://en.wikipedia.org/wiki/Goods_and_Services_Tax_(India)

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