“IMPACT OF GOODS AND SERVICES TAX ON INDIAN ECONOMY”

A Project Submitted to

University of Mumbai for partial completion of the degree of

Master of Commerce

Under the Faculty of Commerce

By
SWATI DAYASHANKAR DUBEY

Under Guidance of

ASST PROF MR.VIJAYKUMAR KOUNDER

SMT. KAMALADEVI GAURIDUTT MITTAL COLLEGE OF ARTS &

COMMERCE

Nahar Nagar Rd, Malad, Liberty Garden, Malad West, Mumbai,

Maharashtra 400064

April 2024
 CERTIFICATE

This is to certify that SWATI DAYASHANKAR DUBEY has worked and

duly completed her / his Project Work for the Degree of Master of Commerce
under the faculty of Commerce in the subject of ““IMPACT OF GOODS AND
SERVICES TAX ON INDIAN ECONOMY ” under my supervision.

I further certify that the entire work has been done by the learner under my
guidance and that no part of it has been submitted previously for any Degree
or Diploma of any University. It is her / his own work and facts reported by
his / her personal findings and investigations.

Name of the Guide

College Seal

Name & Signature of

Guiding Teacher

Signature of External
Examiner:

Date of Submission:
 DECLARATION BY LEARNER

I the undersigned SWATI DAYASHANKAR DUBEY hereby, declare that

the work embodied in this Project work titled ““IMPACT OF GOODS AND
SERVICES TAX ON INDIAN ECONOMY ” forms my own contribution to the research
work carried out under the guidance of ASST PROF MR.VIJAYKUMAR
KOUNDER is a result of my own Research Work and has not been previously submitted to
any other University for any other Degree / Diploma to this or any other University.

Wherever reference has been made to previous works of others, it has been
clearly indicated as such and included in the Bibliography.

I, hereby further declare that all information of this document has been
obtained and presented in accordance with rules and ethical conduct.

Name and Signature of

Learner
Certified by

Name and Signature of Guiding Teacher

 ACKNOWLEDGEMENT

To list who have helped me is difficult because they are so numerous, and
the depth is so enormous.

I would like to acknowledge the following as being idealistic channels and

fresh dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me

chance to do this project.

I would like to thank my Principal, Dr. Shagun Srivastava for providing

the necessary facilities required for completion of this project.

I take this opportunity to thank our Chief Coordinator Prof. Snehal

Sharma, for her support.

I would also like to express my sincere gratitude towards my project Guide

ASST PROF MR.VIJAYKUMAR KOUNDER whose guidance and care
made the project successful.

I would like to thank my College Library, for having provided various

reference books and magazines related to my project.

Lastly, I would like to thank each and every person who directly and
directly helped me in the completion of the project especially my Parents
and Peers who supported me throughout my project.
 INDEX
CHAPTER PAGE
HEADING
NUMBER NUMBER
1. INTRODUCTION OF GST 6-14
1.1 Definition of GST 14
1.2 Objective of GST 14-15
1.3 Structure of GST 15
1.5 Historical background of GST 16-19
GST rate in OECD countries
1.6 19

2 RESEARCH METHODOLOGY 20-33

2.1 Scope of study 20
2.2 Features of GST 21-22
2.3 Significance of GST 22-27
2.4 GST rates in India 27-28
2.5 Advantages of gst 29-30
2.6 Limitation of GST 31
2.7 Types of gst 32-33

3. LITERATURE REVIEW 34-72

4. DATA ANALYSIS & INTERPRETATION 73-82

5. CONCLUSION & SUGGESTIONS 83

Appendix 84
Bibliography 85
1. INTRODUCTION OF GST

The introduction of Goods and Services Tax (GST) would be a very significant step in the field
of indirect tax reforms in India. By amalgamating a large number of Central and State taxes into a
single tax, it would mitigate cascading or double taxation in a major way and pave the way for a
common national market. From the consumer point of view, the biggest advantage would be in
25% to 30%.

Introduction of the Value Added Tax (VAT) at the Central and the State level has been
considered to be a major step – an important step forward – in the globe of indirect tax reforms in
India. If the VAT is a major improvement over the pre-existing Central excise duty at the national
level and the sales tax system at the State level, then the Goods and Services Tax (GST) will indeed
be an additional important perfection – the next logical step – towards a widespread indirect tax
reforms in the country. Initially, it was conceptualized that there would be a national level goods
and services tax, however, with the release of First

Discussion Paper by the Empowered Committee of the State Finance Ministers on 10.11.2009, it
has been made clear that there would be a ―Dual GST‖ in India, taxation power – both by the Centre
and the State to levy the taxes on the Goods and Services. Almost 150 countries have introduced
GST in some form. While countries such as Singapore and New Zealand tax virtually everything at
a single rate, Indonesia has five positive rates, a zero rate and over 30 categories of exemptions. In
China, GST applies only to goods and the provision of repairs, replacement and processing services.
 Under the GST scheme, no distinction is made between goods and services for levying of tax.
GST is a multi-tier tax where ultimate burden of tax fall on the consumer of goods/ services. It is
called as value added tax because at every stage, tax is being paid on the valueaddition.

Under the GST scheme, a person who was liable to pay tax on his output, whether for provision
of service or sale of goods, is entitled to get input tax credit (ITC) on the tax paid on its inputs.

Introduction of GST would also make Indian products competitive in the domestic and
international markets. Studies show that this would have a boosting impact on economic growth.
Last but not the least, this tax, because of its transparent and self-policing character, would be easier
to administer.
 WHYGST?

The current indirect tax system with multiplicity of taxes (Central Levy:-excise duty, Service
Tax, Various Cess and State Levies:- VAT, Entry Tax, Octroi, Luxury Tax, Entertainment taxes,
Purchase Tax etc.) - at different rates - at multiple points ( at the time of manufacture, trade,
rendering services etc.). This has led to several inefficiencies and limitation. One of the major
limitations is the cascading effect of tax. Under the current regime, Excise charged by the
manufacturer on billing to a Dealer, the credit of input cannot be claimed by a dealer, and thus
forming part of cost to dealer which leads to cascading of tax.

Under GST the credit utilization will be available across the supply chain till it reaches the end
consumer. Secondly, tax on tax is eliminated. Example:- Under the current tax regime, VAT is
charged on the assessable value plus on Excise duty.
Genesis

The idea of a nationwide GST in India was first proposed by the Kelkar Task Force on Indirect taxes in 2000. The
objective was to replace the prevailing complex and fragmented tax structure with a unified system that would
simplify compliance, reduce tax cascading, and promote economic integration. The Empowered Committee of State
Finance Ministers prepared a design and roadmap, releasing the First Discussion Paper in 2009. The Constitution
Amendment Bill was introduced in 2011 but faced challenges regarding compensation to States and other issues.
After years of deliberation and negotiations between the Central and State Governments, the Constitution (122nd
Amendment) Bill, 2014, was introduced in the Parliament. The Bill aimed to amend the Constitution to enable the
implementation of GST. The Constitution Amendment Bill was passed by the Lok Sabha in May, 2015. The Bill
with certain amendments was finally passed in the Rajya Sabha and thereafter by the Lok Sabha in August, 2016.
Further, the Bill has been ratified by the required number of States and has since received the assent of the President
on 8th September, 2016 and has been enacted as the 101st Constitution Amendment Act, 2016. The GST Council
was notified w.e.f. 12th September, 2016. For assisting the GST Council, the office of the GST Council Secretariat
was also established.
The GST Council, consisting of the Union Finance Minister and representatives from all States and Union
Territories, was established to make decisions on various aspects of GST, including tax rates, exemptions, and
administrative procedures. It played a crucial role in shaping the GST framework in India. On July 1, 2017, GST
laws were implemented, replacing a complex web of Central and State taxes.
Under the Indian GST, goods and services are categorized into different tax slabs, including 5%, 12%, 18%, and
28%. Some essential commodities are exempted from GST, Gold and job work for diamond attract low rate of
taxation. Compensation cess is being levied on demerit goods and ceratin luxury items .
To prepare for the implementation of GST, extensive efforts were made to build the necessary technological
infrastructure and train tax officials and businesses. GST Network (GSTN), a not-for-profit company, was created to
provide the IT backbone for the GST system, including taxpayer registration, return filing, and tax payments.
Since its implementation, the Indian GST has undergone various amendments and refinements based on feedback
from businesses and the evolving economic scenario. While the GST implementation initially posed challenges for
businesses in terms of understanding the new compliance requirements and adapting to the changes, it has gradually
settled into the Indian tax landscape.
It can be said that the history of GST in India showcases a monumental shift in the country's tax structure, aiming to
create a more unified, efficient, and transparent indirect tax regime for the benefit of businesses and the economy as
a whole.

1. Simpler tax structure

As multiple taxes on a goods or service are eliminated and a single tax comes into
place, the tax structure is expected to be much simpler and easier to understand and administer.
2. Eliminates cascading effect of taxes:

One of the key feature of GST is seamless availability of Input credit set-off
mechanism. This helps in eliminating the cascading effect and benefit is passed on to consumer.
3. Increased Revenue:

A simpler tax structure can bring about greater compliance, thus increasing the
number of tax payers and in turn tax revenues for the Government.
 4. Technology Driven System:

GST compliance is going to be transaction based and with cross matching concept,
where, outward supply and inward supply will be matched to determine the net tax liability for a
given dealer. Millions of dealers and Billions of transaction need to be processed and
„Technology‟ will play a pivotal role in the successful implementation and administration of compliance

GST and Centre-State Financial Relations:

The implementation of GST has brought about a fundamental shift in the financial relations between the Central
Government and the State Governments in India. GST is a unified tax system that replaced multiple indirect taxes
levied by both the Central and State Governments.
Under GST, both the Central and State Governments share the authority to levy and collect taxes on goods and
services. This has led to greater harmonization and uniformity in the tax structure across States, promoting
economic integration.
The GST system follows a dual structure, comprising Central GST (CGST) and State GST (SGST), levied
concurrently by the Central and State governments, respectively. Additionally, an Integrated GST (IGST) is levied
on interstate supplies and imports, which is collected by the Central Government but apportioned to the destination
state.
In terms of revenue distribution, the GST Council plays a crucial role. It is a joint forum consisting of the Union
Finance Minister and representatives from all States and Union Territories. The Council makes decisions on various
aspects of GST, including tax rates, exemptions, and revenue sharing between the Central and State Governments.
Except for one decision, all decisions of the Council were taken by consensus.
To ensure a smooth transition to the GST regime and address any revenue losses incurred by the States, a
compensation mechanism was established. The Central Government was committed to providing compensation to
the States for any revenue shortfall during the initial years of GST implementation. This compensation was meant to
bridge the gap between the expected revenue growth and the actual revenue collected by the States.
It has fostered greater coordination, reduced tax barriers, and streamlined the tax system, leading to improved
efficiency and competitiveness in the Indian economy.
The successful implementation of GST relies on a cooperative and consensus-based approach between the Central
and State Governments. It has transformed financial relations, ensuring greater coordination and efficiency in the
Indian tax system.

Formation:

The reform of India's indirect tax regime was started in 1986 by V. P. Singh, Finance Minister in Rajiv Gandhi’s
government, with the introduction of the Modified Value Added Tax (MODVAT). Subsequently, Prime Minister P.
V. Narasimha Rao and his Finance Minister Manmohan Singh, initiated early discussions on a Value Added
Tax (VAT) at the state level.
A single common "Goods and Services Tax (GST)" was proposed and given a go-ahead in 1999 during a meeting
between the Prime Minister Atal Bihari Vajpayee and his economic advisory panel, which included three former
RBI governors I. G. Patel, Bimal Jalan and C. Rangarajan. Vajpayee set up a committee headed by the Ministry of
finance of West Bengal, Asim Dasgupta to design a GST model.
The Asim Dasgupta committee which was also tasked with putting in place the back-end technology and logistics
(later came to be known as the GST Network, or GSTN), in 2015. It later came out for rolling out a uniform taxation
regime in the country. In 2002, the Vajpayee government formed a task force under Vijay Kelkar to recommend tax
reforms. In 2005, the Kelkar committee recommended rolling out GST as suggested by the Twelfth Finance
Commission.
After the defeat of the BJP-led NDA government in the 2004 Indian general election and the election of a Congress-
led UPA government, the new Finance Minister P. Chidambaram in February 2006 continued work on the same and
proposed a GST rollout by 1 April 2010. However, in 2011, with the Trinamool Congress routing CPI(M) out of
power in West Bengal, Asim Dasgupta resigned as the head of the GST committee. Dasgupta admitted in an
interview that 80% of the task had been done.
The UPA introduced the 115th Constitution Amendment Bill on 22 March 2011 in the Lok Sabha to bring about the
GST. It ran into opposition from the Bharatiya Janata Party and other parties and was referred to a Standing
Committee headed by the BJP's former Finance Minister Yashwant Sinha.
The committee submitted its report in August 2013, but in October 2013 Gujarat Chief Minister Narendra
Modi raised objections that led to the bill's indefinite postponement. The Minister for Rural Development Jairam
Ramesh attributed the GST Bill's failure to the "single handed opposition of Narendra Modi".
In the 2014 Indian general election, the Bharatiya Janata Party (BJP)-led NDA government was elected into power.
With the consequential dissolution of the 15th Lok Sabha, the GST Bill – approved by the standing committee for
reintroduction – lapsed. Seven months after the formation of the then Modi government, the new Finance
Minister Arun Jaitley introduced the GST Bill in the Lok Sabha, where the BJP had a majority. In February 2015,
Jaitley set another deadline of 1 April 2017 to implement GST.
In May 2016, the Lok Sabha passed the Constitution Amendment Bill, paving way for GST. However, the
Opposition, led by the Congress, demanded that the GST Bill be again sent back for review to the Select Committee
of the Rajya Sabha due to disagreements on several statements in the Bill relating to taxation. Finally, in August
2016, the Amendment Bill was passed.
Over the next 15 to 20 days, 18 states ratified the Constitution amendment Bill and the President Pranab
Mukherjee gave his assent to it.
A 21-member selected committee was formed to look into the proposed GST laws. GST Council approved the
Central Goods and Services Tax Bill 2017 (The CGST Bill), the Integrated Goods and Services Tax Bill 2017 (The
IGST Bill), the Union Territory Goods and Services Tax Bill 2017 (The UTGST Bill), the Goods and Services Tax
(Compensation to the States) Bill 2017 (The Compensation Bill), these Bills were passed by the Lok Sabha on 29
March 2017. The Rajya Sabha passed these Bills on 6 April 2017 which were then enacted as Acts on 12 April
2017.
Thereafter, State Legislatures of different States have passed respective State Goods and Services Tax Bills. After
the enactment of various GST laws, Goods and Services Tax was launched all over India with effect from 1 July
2017. The Jammu and Kashmir state legislature passed its GST act on 7 July 2017, thereby ensuring that the entire
nation is brought under a unified indirect taxation system. There was to be no GST on the sale and purchase of
securities. That continues to be governed by Securities Transaction Tax (STT).

Implementation:

The GST was launched at midnight on 1 July 2017 by the President of India, and the Government of India. The
launch was marked by a historic midnight (30 June – 1 July) session of both the houses of parliament convened at
the Central Hall of the Parliament. Though the session was attended by high-profile guests from the business and the
entertainment industry including Ratan Tata, it was boycotted by the opposition due to the predicted problems that it
was bound to lead for the middle and lower class Indians.
The tax was strongly opposed by the largest opposition party, the Indian National Congress. It is one of the few
midnight sessions that have been held by the parliament - the others being the declaration of India's
independence on 15 August 1947, and the silver and golden jubilees of that occasion.
After its launch, the GST rates have been modified multiple times, the latest being on 10 May 2023 where taxpayer
with over ₹5 crore turnover in any financial year from 2017 to 2018 shall issue e-invoices w.e.f. 1 August 2023.
Members of the Congress boycotted the GST launch altogether . They were joined by members of the Trinamool
Congress, Communist Parties of India and the Dravida Munnetra Kazhagam. The parties reported that they found
virtually no difference between the GST and the existing taxation system, claiming that the government was trying
to merely rebrand the current taxation system.
They also argued that the GST would increase existing rates on common daily goods while reducing rates on luxury
items, and affect many Indians adversely, especially the middle, lower middle and poorer income groups.

Taxes subsumed:

The single GST subsumed several 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 by 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.

HSN code:

India is a member of World Customs Organization (WCO) since 1971. It was originally using 6-digit HSN codes to
classify commodities for Customs and Central Excise. Later Customs and Central Excise added two more digits to
make the codes more precise, resulting in an 8 digit classification. The purpose of HSN codes is to make GST
systematic and globally accepted.
The Harmonized System of Nomenclature (HSN) code is used for classifying goods under the Goods and Services
Tax (GST) in India. The HSN code is a six-digit code that uniquely identifies a product. The first two digits of the
code identify the chapter, the next two digits identify the heading, and the last two digits identify the subheading.
HSN codes will remove the need to upload the detailed description of the goods. This will save time and make filing
easier since GST returns are automated.
If a company has turnover up to ₹15 million (US$190,000) in the preceding financial year then it need not mention
the HSN code while supplying goods on invoices. If a company has turnover more than ₹15 million (US$190,000)
but up to ₹50 million (US$630,000), then it needs to mention the first two digits of HSN code while supplying
goods on invoices.
If turnover crosses ₹50 million (US$630,000) then it needs to mention the first 4 digits of HSN code on invoices.

Rate:

The GST is imposed at variable rates on variable items. The rate of GST is 18% for soaps and 28% on washing
detergents. GST on movie tickets is based on slabs, with 18% GST for tickets that cost less than ₹100 and 28% GST
on tickets costing more than ₹100 and 28% on commercial vehicle and private 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.
Checkposts across the country were abolished ensuring free and fast movement of goods. Such efficient
transportation of goods was further ensured by subsuming octroi within the ambit of GST.
The Central Government had proposed to insulate the revenues of the States from the effects 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.

e-Way Bill:

An e-Way Bill is an electronic permit for shipping goods similar to a waybill. It is an electronic bill; there is no
requirement for a paper bill. It was made compulsory for inter-state transport of goods from 1 June 2018. It 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$630).
Registered GST Taxpayers can register in the e-Way Bill Portal using GSTIN. Unregistered Persons/ Transporters
can enroll in the e-Way Bill System by providing their PAN and Aadhaar. Supplier/ Recipient/ Transporter can
generate the e-Way Bill.
The Validity of e-Way Bill is fixed as one day for every 200 Kms or part thereof. The validity can be extended
online before the expiry.
Contents of PART - A of the Form EWB - 01 can't be edited or modified once generated. PART - B can be updated
with Vehicle details/ RR/Airway Bill etc.
Intra-State e-Way Bill The five states piloting this project are Andhra Pradesh, Gujarat, Kerala, Telangana and
Uttar Pradesh, which account for 61.8% of the inter-state e-way bills, started mandatory intrastate e-way bill from
15 April

2018 to further reduce tax evasion. It was successfully introduced in Karnataka from 1 April 2018.
The intrastate e-way bill will pave the way for a seamless, nationwide single e-way bill system. Six more states
Jharkhand, Bihar, Tripura, Madhya Pradesh, Uttarakhand and Haryana will roll it out from 20 April 18. All states
are mandated to introduce it by 30 May 2018.

Reverse Charge Mechanism:

Reverse Charge Mechanism (RCM) is a system in GST where the receiver pays the tax on behalf of unregistered,
smaller material and service suppliers. The receiver of the goods is eligible for Input Tax Credit, while the
unregistered dealer is not.
The central government released ₹352.98 billion (US$4.4 billion) to states as GST compensation. For the
implementation, this amount was given to states to compensate for the revenue.
Central government has had to face many criticisms for delays in compensation.
Goods excluded from the GST:

 Tobacco Products: Products like cigarettes and other tobacco-based items attract separate taxes.
 Alcohol for human consumption (i.e., not for commercial use).
 Petrol and petroleum products (GST will apply at a later date), i.e., petroleum crude, high-speed diesel, motor
spirit (petrol), natural gas, aviation turbine fuel.

1.1 DEFINITION OF GST:

―GST is a tax on goods and services with value addition at each stage having comprehensive and
continuous chain of set of benefits from the producer‟s / service provider‟s point up to the retailers
level where only the final consumer should bear the tax.

1.2 OBJECTIVES OF GST:

One of the main objectives of GST would be to eliminate the cascading impact of taxes on
production and distribution cost of goods and services. The exclusion of cascading effects i.e. tax on
tax will significantly improve the competitiveness of original goods and services which leads to
beneficial impact to the GDP growth.

Some of the other objective of GST are given below :

 One Country – One Tax

1. Ensuring that the cascading effect of tax on tax will be eliminated.

2. Improving the competitiveness of the original goods and services, thereby improving the GDP rate too.

3. Ensuring the availability of input credit across the value chain.

4. Reducing the complications in tax administration and compliance.

5. Making a unified law Involving all the tax bases, laws and administration procedures across the
country.

6. Decreasing the unhealthy competition among the states due to taxes and revenues.
 7. Reducing the tax slab rates to avoid further clarification issues.

8. Consumption based tax instead of Manufacturing Uniform GST Registration, payment and Input tax
Credit.

9. To eliminate the cascading effect of Indirect taxes on single transaction.

10. Subsume all indirect taxes at Centre and State Level under.

11. Reduce tax evasion and corruption.

12. Increase productivity Increase .

13. Compliance Reducing Economics distortions.

1.3 STRUCTURE OF GST:

GST is a dual concept tax system. Under this system, tax is administered, collected
and shared by both Centre and states based on the nature of transaction (Within State
or interstate).The tax components of GST are:
 TAXES SUBSUMED UNDERGST:

1.4 Historical Background Of GST:

GST was first recommended by Kelkar Task Force on implementation of Fiscal Reforms and
Budget Management Act 2004 but the First Discussion Paper on Goods and Services Tax in India
was presented by the Empowered Committee of State Finance Ministers dtd.10th Nov.10th, 2009

In 2011, the Constitution (115th Amendment) Bill, 2011 was introduced in Parliament to enable
the levy of GST. However, the Bill lapsed with the dissolution of the 15th Lok Sabha.

Subsequently, in December 2014, the Constitution (122nd Amendment) Bill, 2014 was
introduced in Lok Sabha. The Bill was passed by Lok Sabha in May 2015 and referred to a Select
Committee of Rajya Sabha for examination.

GST is a path breaking indirect tax reform which will create a common national market by
dismantling inter- State trade barriers. GST has subsumed multiple indirect taxes like excise duty,
service tax, VAT, CST, luxury tax, entertainment tax, entry tax, etc.
 France was the first country to implement GST in the year 1954. Within 62 years of its advent,
about 160 countries across the world have adopted GST because this tax has the capacity to raise
revenue in the most transparent and neutral manner.

A) NEWZEALAND

The New Zealand GST, enacted in 1988, was designed as a comprehensive tax base including
many difficult-to-tax goods and services. The New Zealand GST become an international
benchmark for indirect tax design, for instance, the Institute of Fiscal Studies of United Kingdom,
considered the New Zealand GST model as the benchmark for evaluation of the European VAT
Directives.

In New Zealand, GST governed by GST Act, 1985 is applicable on most indigenous goods and
services, most imported goods, and certain specified imported services at a rate of 15%. Goods
includes all types of personal and real property except actionable claims, money and products
transmitted by a non-resident to a resident by means of wire, cable, radio etc. and by other such
technical systems. Services covers everything other than goods or money.

B) AUSTRALIA

Implementation of New Tax System package in Australia including New Tax System (Goods
and Services Tax) Act, 1999 is considered as a landmark change to the Australian tax system. The
new GST replaced the federal wholesale sales tax and some state and territory taxes with a single
tax rate of 10% tax on supply of most goods and services with some exceptions.

The basic rule of GST in Australia is destination-based consumption tax with limited tax base
exclusions. Certain supplies such as certain food products, most medical and health services, drugs,
medical aids and appliances, most education courses, child care, exports, religious services,
international transport etc. are known as GST-free12 on which GST not payable (other counties
refer to these as zero-rated).

Certain supplies such as financial supplies, residential rent, residential premises, precious metals,
school tuck shops and canteens and fundraising events conducted by charities etc. are known as
input-taxed supplies13 (other countries refer to these as exempt) and no GST is applicable on such
supplies.
 C) EUROPEAN UNION(UN)

European Economic Community adopted VAT throughout Europe, replacing cascading multi-
stage turnover tax, owing to the ease with which it handled cross-border transactions and facilitated
development of a common market.

Council Directive 2006/112/EC adopted in 2007 („VAT Directives‟) codifies the provisions
implementing the common system of VAT and Council Regulation (EU) No 282/2011(VAT
Implementing Regulation) lays down binding implementing measures to ensure uniform application
of the VAT Directive. The VAT Directive sets the framework for the VAT structure in the EU, but
it gives national governments freedom to set the number and level of rates they choose and transport
provisions of VAT Directives into national legislation, subject to below basic rules:

Supply of all goods and services in the course of business by a taxable person within EU is subject to VAT
at a standard rate not lower than 15%3, unless specifically exempt. EU member states can opt to apply one
or two reduced rates not less than 5%4 for supplies of goods or services, such as foodstuff, water supplies,
pharmaceutical, books, admission to cultural/amusement/sporting services social services, medical services
and equipment ‘s, agricultural input sets., listed in Annex III of the VAT Directive. Member states may
continue to charge any lower rates, including zero rates, which were in place on 1 January 1991,
though they cannot introduce any new rate under 5%.

Activities and supplies in public interest, such as medical care, services linked to welfare and
social security work by public entities or charitable organizations, certain education and cultural
services; specific financial and insurance services; certain supplies of land and buildings; export of
goods, intra-EU supplies etc.5 are exempt from VAT.

D) CANADA

In Canada, GST is applicable on supply of most goods and services including real property and
intangible personal property and is governed by Excise Tax Act. Canada has a federal government
(like in India) and a federal GST was introduced in 1991 replacing the existing federal sales tax
imposed on manufacturers and certain licensed wholesalers at a general rate of 13.5%. However, all
provinces continued with the provincial retail sales tax („PST‟) thereby having two levels of levy.

The harmonized sales tax (HST) is imposed in provinces that have harmonized their provincial
sales tax with the GST (New Brunswick, Nova Scotia, Newfoundland and Labrador, Ontario, Prince
Edward Island) and is a combination of a federal component and a provincial component (i.e., 5 %
to 8 %) applicable generally on same base of property and services as the GST. In the remaining
 provinces, GST is imposed on taxable goods and services along with provincial sales tax or a retail
sales tax. The three territories ‘(Northwest Territories, Nunavut and Yukon and Province of Alberta
charge GST at the rate of 5%.

Most goods and services supplied in or imported into Canada are taxable supplies and are subject
to GST at the rate of 5% or HST in the range of 13% to 15%.

1.6 GST RATES IN OECD COUNTRIES:

EUROPEA CANADA NEW AUSTRALIA

ZEAL
NUNION
AND
(UN)
Average Levy of GST/HST Peak rate Peak rate oftax
standard rate ranges from13%to 15% of tax is being10%
among other EU in case of provinces 15%
member states is which Have
about 21% with harmonized PST with
Hungary having federal GST. Other
the highest provincesapply GST
standard rate of at the rate of 5% along
VAT @ 27% and with PS on certain
Luxembourg goodsand services
having the lowest
standard rate
of17%. Reduced
rates are in the
range of 2.1%
to18%.

PROBLEM IDENTIFICATION:

 To enquire the impact of GST after its implementation.

 To find out difference between present indirect taxes and GST.

 To identify benefits and challenges of GST afterimplementation

 To know the benefits of introduction of Goods and ServiceTax

 To identify the challenges/hurdles to be overcome by way of implementation of Goods

and Services Tax.

 2 RESEARCH METHODOLOGY:

This study is intended to identify the impact of GST on Indian economy.

The study is descriptive in nature, based on simple random method. The primary data was collected
from the respondents (Traders, General public and Experts) about the perception of the present GST
system and their expectations in the forthcoming GST.

The Secondary data was collected through reputed Journals, Newspapers, Books, Websites. This
study brings out suggestions and inferences drawn from the analysis of both primary and secondary
data.

Primary Data Collection

The necessary primary data having dealt under various chapters of data analysis which have been
collected through survey method (questionnaire) from General public Businessmen: Here refers to
„Traders‟. It includes wholesalers, retailers and these traders deal in consumer goods, essential
goods and other goods.

General Public: This includes public of different sections of society.

On 7th October 2016 Government of India (GOI) passed Process and Flowchart of GST. Now,
the first step for each sector is to register under Central Goods and Service Tax Act (CGST) and
State Goods and Service Tax Act (SGST). If a person is bound to be registered for GST he shall
register himself under SGST Act of his respective state where he perform his business work he shall
also register under CGST Act. The Registration of GST is received within 30 days.

2.1 SCOPE OF THE STUDY:

The study was conducted to analyze the effectiveness of implementing GST. It covered
the opinions of the professionals, traders and the general public, consumers. It brought to light
the beneficial impacts of GST.
This study emphasizes the reason for transition from VAT to GST. This study was conducted
with help of different sections of society for example students, housewife, employees, self-
 employed, etc.

2.2 Features of GST:

a) Change of taxation from production to consumption: This will lead to

reduce in revenue of production states. Central government promised to cover this revenue
reduction.

b) Elimination of Cascading of taxes: as all taxes will be covered within GST, there
will be no Cascading of taxes. There will be a reduction in end consumption cost.

c) Interlocking of taxation all along the supply chain: This will enhance tax
compliance. There will be a reduction in corruption with tax inspectors etc.

d) Single indirect tax window: Almost all indirect taxes are subsumed exempting few
like custom duty etc. Until now five rates have been proposed. Zero rate for essential commodities,
5% for cosmetics of daily use like soaps, shampoos, 12%, standard 18% and 28%for single goods.

Goods and Services Tax (GST) is a comprehensive indirect tax levied on the supply of goods and services in India. Here are some of
the salient features of GST:
e) One Nation, One Tax: GST replaced multiple indirect taxes levied by the Central and State Governments,
such as excise duty, service tax, value-added tax (VAT), and others. It brought uniformity in the tax
structure across India, eliminating the cascading effect of taxes
.
f) Dual Structure: GST operates under a dual structure, comprising the Central GST (CGST) levied by the
Central Government and the State GST (SGST) levied by the State Governments. In the case of Inter-state
transactions, Integrated GST (IGST) is applicable, which is collected by the Central Government and
apportioned to the respective State. Import of goods or services would be treated as inter-state supplies and
would be subject to IGST in addition to the applicable customs duties.

g) Destination-based Tax: GST is a destination-based tax, levied at each stage of the supply chain, from the
manufacturer to the consumer. It is applied to the value addition at each stage, allowing for the seamless
flow of credits and reducing the tax burden on the end consumer.

j) Input Tax Credit (ITC): GST allows for the utilization of input tax credit, wherein businesses can claim
credit for the tax paid on inputs used in the production or provision of goods and services. This helps avoid double
taxation and reduces the overall tax liability.
GST would apply on all goods and services except Alcohol for human consumption. GST on five specified
petroleum products (Crude, Petrol, Diesel, ATF & Natural Gas) would by applicable from a date to be
recommended by the GSTC. Tobacco and tobacco products would be subject to GST. In addition, the Centre would
have the power to levy Central Excise duty on these products. Exports are zero-rated supplies. Thus, goods or
services that are exported would not suffer input taxes or taxes on finished products.
k) Threshold Exemption: Small businesses with a turnover below a specified threshold (currently, the
threshold is 20 lakhs for supplier of services/both goods & services and 40 lakhs for supplier of goods (Intra–Sate)
in India) are exempt from GST. For some special category states, the threshold varies between 10-20 lakhs for
suppliers of goods and/or services except for Jammu & Kashmir, Himachal Pradesh and Assam where the threshold
is 20 lakhs for supplier of services/both goods & services and 40 lakhs for supplier of goods (Intra–Sate). This
threshold helps in reducing the compliance burden on small-scale businesses.

l) Composition Scheme: The composition scheme is available for small taxpayers with a turnover below a
prescribed limit (currently 1.5 crores and 75 lakhs for special category state). Under this scheme, businesses
are required to pay a fixed percentage of their turnover as GST and have simplified compliance requirements

m) Online Compliance: GST introduced an online portal, the Goods and Services Tax Network (GSTN), for
registration, filing of returns, payment of taxes, and other compliance-related activities. It streamlined the
process and made it easier for taxpayers to fulfill their obligations.

n) Anti-Profiteering Measures: To ensure that the benefits of GST are passed on to the consumers, the
government established the National Anti-Profiteering Authority (NAA). The NAA monitored and ensured
that businesses do not engage in unfair pricing practices and profiteering due to the implementation of GST.
All GST anti-profiteering complaints are now dealt by the Competition Commission of India (CCI) from
December 1, 2022.

o) Increased Compliance and Transparency: GST aims to enhance tax compliance by bringing more
businesses into the formal economy. The transparent nature of the tax system, with the digitization of
processes and electronic records, helps in curbing tax evasion and increasing transparency.

p) Sector-specific Exemptions: Certain sectors, such as healthcare, education, and basic necessities like food
grains, are given either exempted from GST or have reduced tax rates to ensure affordability and accessibility.

q) Accounts would be settled periodically between the Centre and the States to ensure that the credit of SGST
used for payment of IGST is transferred by the Exporting State to the Centre. Similarly, IGST used for
payment of SGST would be transferred by the Centre to the Importing State. Further, the SGST portion of
IGST collected on B2C supplies would also be transferred by the Centre to the destination State. The transfer
of funds would be carried out on the basis of information contained in the returns filed by the taxpayers.

It's important to note that the GST framework is subject to changes and amendments are passed based on the
evolving needs of the economy and the Government's policy decisions.

2.3 Significance:

GST is the most important tax revenue for State, as exempted good are coming under taxable
goods. It is expected to bring down the incidence of harassment and corruption that trade and
industry encounter. This study consists of various sections of society.

Through this study we had check awareness among the people regarding GST.

This study help us to check to individual impact, economic impact, aggregate impact of
Indian economy

a) High GDP: GDP is more comprehensively covered in consumption-based taxation

regime and thus leads to high GDP growth.

b) High Tax to GDP ratio: as tax compliance increases, tax to GDP ratio increases.
 c) Ease Of Doing Business: complexity of taxation regime reduces and this helps in
easing business practices.

d) Common economic market: There will be no transport delays at state borders.

This will contribute to efficiency of businesses.

e) Low inflation: due to elimination of Cascading of taxes.

The process of registration for GST is different from other registrations in

different ways such as: -

1. Permission from CGST and SGST Act for registration is required.

2. If one authority rejects the process for registration there will be automatic rejection by the
other authority.

3. There shall be no rejection of application without giving a solid reason to the applicant.

4. Application shall be considered to be granted under CGST/SGST Act if the application

for registration has been granted under SGST Act/CGST Act.

5. The non-residential and casual taxable person would also require registration from GST.
 Process of monthly returns filing by Registered Taxable Person:

Every registered taxable person, other than a person opting for composition scheme, Input
Service Distributor (ISD), non-resident taxable person or person required to deduct or collect tax at
source, is required to furnish details of outward and inward supplies of goods/ services, input tax
credit availed, tax payable, tax paid etc. on a monthly basis.

The following are the steps for furnishing the said details:

STEP 1:

The taxpayer (supplier) will have to furnish details of outward supplies made during the month
in Form GSTR-1 electronically through the common portal by 10th day of the subsequent month.

Eg: The details of outward supplies made during October, 2017 shall be reported in Form GSTR-
1 which has to be furnished before 10 November,2017.

STEP 2:

The details of outward supplies furnished by the supplier in Form GSTR-1 shall be auto-
populated and made available electronically to the recipient of supplies in PART A of Form GSTR-
2A through the GST common portal after the due date of filing of Form GSTR-1.

STEP 3:

The recipient can make the corrections required i.e., addition, modification and deletion in Form
GSTR-2A and submit the final inward details in Form GSTR-2 by 15th day of the subsequent
month.

Eg: If the supplier has shown the value of outward supply and tax thereon as INR 1000 and INR
100 respectively for the month of October, 2017 and the actual value of supply and tax thereon as
per tax invoice during that month is INR 1500 and INR 150 respectively, the recipient can modify
the said entry the credit to the extent of INR 150 by November ,2016.

STEP 4:
 The corrections done by the recipient shall be made available to the supplier in Form GSTR-
1A. The supplier has to either accept or reject the corrections by 17th day of the subsequent month.
Form GSTR-1 furnished by the supplier will be amended to the extent of correction accepted by
the supplier.
Eg: The supplier can accept the corrections made by the recipient in Form GSTR-2 for the month
of October, 2017 i.e., increase in the value of supply and tax thereon by 17 November, 2017 and on
doing so, supplier‟s original Form GSTR-1 shall amended accordingly.

STEP 5:

Form GSTR-3 containing details of outward and inward supplies will be auto-populated and will
be made available for submission along with the payment. Form GSTR-3 has to be submitted
electronically by 20th day of subsequent month.

Eg: The details of inward and outward supplies made during the month of October, 2017 shall be
reported in Form GSTR-3 which has to be furnished before 20 November, 2017.
Casual taxable person would have to file Form GSTR-1, Form GSTR-2 and Form GSTR-3 for
the period for which registration has been obtained.

Return Frequency Due date

FORM GSTR-1 Monthly 10th day of

succeeding month

FORM GSTR-2A Monthly Auto-populated

after filing of Form
GSTR-1

FORM GSTR-2 Monthly 15th day of the

succeeding month

FORM GSTR-1A Monthly Auto-populated

after filing of
Form
GSTR-2
To be approved
by supplier by
 17th day of
succeeding
month

FORM GSTR-3 B Monthly 20th day of

succeeding
month

2.4 GST RATES IN INDIA:

Table 2 shows that the percentage of taxes before and after implementation of GST, like on
package products we pay 4-5% taxes but after the implementation of GST it would be total 18%,
which shows that all package products would turn costly which will affect common man. After
package products we see that on readymade garments we also pay 4-5% of taxes but after GST it
will be 18% so our readymade garments would also be costly like this jewellery, mobile, credit
cards etc. would also turn costly but cars, home appliance etc. would be cheaper.

Here we can conclude that after BEFORE GST AFTER GST

implementation of GST common man will
suffer because he would not be able to satisfy his
wants completely but there would be no
impact on rich people. GOODS

Package Products 4-5% 18%

Readymade Garments 4-5% 18%

Jewelry 3% 18%

Mobile & Credit card 15% 18%

Cars 30-40 18%

%

Home appliance 12.5% & 14.5% 18%

(Excise & VAT)

Table 2: Tax before and after implementation of GST

Table 3 reveals the impact of GST after implementation, it can be understood clearly from the
table which shows the rate of goods increasing and decreasing after implementation of GST this
table also shows some goods on which there is no implementation of GST. The first row shows the
goods whose rate will decrease after GST and second row shows increase in rates of goods after
GST.

Thus, these were some of the items which are affected after the implementation of Goods and
Services Tax.

Decrease No GST Increase

Television Bread White and whole Mobile phone

Meal

Refrigerator Cooking oil Computer

Air Conditioner Mutton Eye – pad & tablet

Home Diesel Digital photo

theater system printing

Hair dryer Petrol Transportation of

goods

Electric fan Rice Drinking water

& toaster

Gas cooker Fresh vegetable Magazines

double burner

Electric iron Fresh fish Fish ball

Cotton bath Powdered milk Canned sardine &

towel tuna

Toothbrush Public transport Lipstick

Dettol, Motor oil Motor cycle 110cc

antiseptic

Chairs Engine oil Watches

Table 3 Expected price movement for items upon implementation of GST

2.5 ADVANTAGE OF GST:

Benefits of GST:

(A) Make in India

(i) Will help to create a unified common national market for India, giving a boost to Foreign
investment and ―Make in India ―campaign;

(ii) Will prevent cascading of taxes as Input Tax Credit will be available across goods and
services at every stage of supply.

(iii) Harmonization of laws, procedures and rates of tax.

(iv) It will boost export and manufacturing activity, generate more employment and thus
increase GDP with gainful employment leading to substantive economic growth.

(v) Ultimately it will help in poverty eradication by generating more employment and more
financial resources.

(vi) More efficient neutralization of taxes especially for exports thereby making our products
more competitive in the international market and give boost to Indian Exports.

(vii) Improve the overall investment climate in the country which will naturally benefit the
development in thistles.

(i) Uniform SGST and IGST rates will reduce the incentive for evasion by eliminating
ratearbitrage between neighboring States and that between intra and inter-state sales.
(ii) Average tax burden on companies is likely to come down which is expected to reduce
prices and lower prices mean more consumption, which in turn means more production thereby
helping in the growth of the industries . This will create India as a ‖ Manufacturing hub‖.

(B) Ease of Doing Business

(i) Simpler tax regime with fewer exemptions.

(ii) Reductions in the multiplicity of taxes that are at present governing our indirect tax system
leading to simplification and uniformity.
 (iii) Reduction in compliance costs - No multiple record keeping for a variety of taxes - so
lesser investment of resources and manpower in maintaining records.

(iv) Simplified and automated procedures for various processes such as registration, returns,
refunds, tax payments, etc.;.

(v) All interaction to be through the common GSTN portal- so less public interface between
the taxpayer and the tax administration.

(vi) Will improve environment of compliance as all returns to be filed online, input credits to
be verified online, encouraging more paper trail of transactions.

(vii) Common procedures for registration of taxpayers, refund of taxes, uniform formats of tax
return, common tax base, common system of classification of goods and services will lend greater
certainty to taxation system.

(viii) Timelines to be provided for important activities like obtaining registration, refunds, etc.

(ix) Electronic matching of input tax credits all-across India thus making the process more
transparent and accountable.

(C) Benefit to Consumers:

(i) Final price of goods is expected to be lower due to seamless flow of input tax credit
between the manufacturer, retailer and service supplier.

(ii) It is expected that a relatively large segment of small retailers will be either exempted from
tax or will suffer very low tax rates under a compounding scheme- purchases from such entities will
cost less for the consumers.

(iii) Average tax burden on companies is likely to come down which is expected to reduce
prices and lower prices mean more consumption.
 2.6 LIMITATIONS OF GST:

(i) The inherent weakness of primary source of data applies to this research studyonly.

(ii) The inadequate knowledge of the respondents about GST policies, procedures and
methods likely to affect the response of general public.
(iii) The samples and the data collection are based on the willingness and reactions of the
respondents.
(iv) The process of administration of GST. is an ongoing process and the inference and
conclusions based on collected information may not reflect the future.

(v) GST in India would impact negatively on the real estate market. It would add up to 8
percent to the cost of new homes and reduce demand by about 12percent.

(vi) The aviation industry would be affected. Service taxes on airfares without GST six to nine
percent. With GST, this rate will surpass fifteen percent and effectively double the tax rate.

(vii) The GST Act has given the control of businesses to Central and State Governments with
businessmen binding by-laws. This has given rise to complexity for many businessmen across the
nation.

(viii) As per GST, the seller requires registering in all the states that it does business in and it has
increased the complexity for the seller. The government should have created a provision for
centralized registration of State GST as this would have helped many sellers during the rollout.

(ix) The government has chosen a mid-year launch for GST and this will lead to problems in
taxation and reporting during the end of the financial year. Ideally, the government should have
launched GST at end of financial year as this would have avoided a lot of confusion during taxation
and reporting.

GST has also had an impact on discount and reward programs as well. The product is being
taxed on the rates pre-discount whereas the products were earlier taxed at post discount
prices. Most of the companies have also suspended reward programs for temporary basis
because of complexities of GST.
 2.7 Different Types Of Indirect Taxes In India

There are different types of Indirect taxes In India.

1. Goods and Service Tax

The GST was implemented in 2017 by the central and state governments. It was implemented by integrating various
taxes such as Service Tax, Central Excise Duty, VAT, central sales tax among others. But there are certain exceptions
when it comes to liquor and petroleum products as they are still taxable under excise duties and VAT.

On state level the taxes under GST include

1. State Excise Duty

2. Additional Excise Duty
3. Service Tax
4. Countervailing Duty
5. Special Additional Customs Duties

At the Central Level it covers

1. Sales Tax
2. Entertainment Tax
3. Central Sales Tax
4. Octroi and Entry Tax
5. Purchase Tax
6. Luxury Tax
7. Taxes on Lottery Gambling and Betting
2. Sales Tax:

Sales tax means tax levied on the sales of goods. The Union Government imposes this sales tax on the Inter State
sale. Intra state sale tax is levied by the state government.

3. Value Added Tax

The State Government collects the category of taxes. For instance when a person buys a product an additional tax is paid
known as Value Added Tax.

4. Custom Duty and Octroi Tax

Custom Duty is imposed on goods imported in to the country from abroad. The tax of custom duty is paid at the entry
port of a country such as the airport. Octroi is charged upon the goods entering a municipal zone.
 5. Excise Duty
Excise Duty is an indirect tax form that is charged on the goods produced inside a country. This duty is different from the
custom duty. This is also known as CVAT or Central Value Added Tax.

6. Anti-Dumping Duty
This is levied upon goods that are exported at a rate less than the standard rate by the nation to some other nation. This
tax is levied upon by the Central Government.
 3 LITERATURE REVIEW:

According to ago Maulik ―Goods and Service Tax-An Appraisal‖ and found that GST is not good
for low-income countries and does not provide broad based growth to poor countries. If still these
countries want to implement GST, then the rate of GST should be less than 10% for growth .

Research papers on GST:

1.

PUBLISHER IJISSH
PAPER TITLE A STUDY ON IMPACT OF GST AFTER ITS IMPLEMENTATION

PUBLISHED NOV 2016

ON

CONCLUSION The GST System is basically structured to simplify current

Indirect Tax system in India. A well-designed GST is an attractive
method to get rid of deformation of the existing process of multiple
taxation also government has promised that GST will reduce the
compliance burden at present there will be no distinction between
imported and Indian goods & they would be taxed at the same rate.
Many Indirect Taxes like Sales Tax, VAT etc., will be finished
because there will be one tax system i.e.
GST, that will reduce compliance present burden.
GST will face many
challenges after its implementation and will result to give many
benefits. In overall through this study, we conclude that
GST play a dynamic role in the growth and development of our
country.

2.
PUBLISHER IJSRM
PAPER TITLE Basic Concepts and Features of Good and Service Tax in India
ISSN 2321-3418
PUBLISHED Feb 2014
ON
CONCLUSION GST is leviable on all supply of goods and provision of
services as well combination thereof. All sectors of economywhether the
industry, business including Govt. departmentsand service sector shall
have to bear impact of GST. All sections of economy viz., big, medium,
small-scale units, intermediaries, importers, exporters, traders,
professionals and consumers shall be directly affected by GST. One of the
biggest taxation reforms in India
– the Goods and Service Tax (GST) -- is all set to
integrate State economies and boost overall growth.GST will
create a single, unified Indian market to make the economy
stronger.
Expert say that GST is likely to improve tax collection and
boost India ‘s economic development by breaking tax barriers
between States and integrating India through a uniform tax
rate.
 3.

PUBLISHER IJRG
PAPER TITLE GST IN INDIA: A KEY TAX REFORM
ISSN 2394-3629(P)
PUBLISHED DEC 2015
ON
CONCLUSION Due to dissilient environment of Indian economy, it is demand of
time to implement GST. Consumption and productions of goods and
services is undoubtedly increasing and because of multiplicity of taxes
in current tax regime administration complexities and compliance cost
is also accelerating.
Thus, a simplify, user -friendly and transparent tax system is
required which
can be fulfilled by implementation of GST. Its implementation
stands for a coherent tax system which will colligate most of current
indirect taxes and in long term it will lead to higher output, more
employment opportunities and flourish GDP by 1- 1.5%. It can also be
used as an effective tool for fiscal policy management if implemented
successfully due to nation-wide same tax rate.
It execution will also results in lower cost of doing business that
will make the domestic products more competitive in local and
international market. No doubt that GST will give India a world class
tax system by grabbing different treatment to manufacturing and
service sector. But all this will be subject to its rational design and
timely implementation. There are various challenges in
way of GST implementation as discussed above in paper. They
need more analytical research to resolve the battling interest
of various stake holders and accomplish the commitment for a cardinal
reform of tax structure in India.
 Some other books and articles on Impact of GST:

1. BOOK: GST Law and practice

AUTHOR: S. S. Gupta

YEAR OF PUBLICATION: 2017

CONCLUSION: Impact of gst on business are vary as per organization structure. it’s up to
the organization to determine the impact of various factor on their finance and re-arrange the
business in order to ensure that the adverse impact is minimized.

3. BOOK: GST in INDIA - A Comprehensive Guide Book by Clear Tax.

AUTHOR:-

YEAR OF PUBLICATION : 2017

CONCLUSION : This eBook will help me understand the basics of GST, important
terminologies and concepts, and how this might affect business in the long run.

Articles on Impact of GST:

Article 1 - FM Jaitley Hints at Further Rejig of GST Linking GST Changes to Gujarat Polls
'Juvenile Politics', Says Arun Jaitley. Also rejecting the Congress's one-tax demand, Arun Jaitley
said while there is scope for further rationalization, it could be decided only by the revenues that
flow in. Also stated that next round team will focus on 5% and 12% slaps, which have about 250
items each.
 ARTICLE 1

Article 2 - fivestar hotel revenue come down over 20%. Luxury hotel owner in leisure
destination and chains are anticipating a drop in occupancies this winter vacation. Reason being the
28% GST slab on rooms with tariffs of ₹7500 and above. Tariffs in peak season go up by us much
as 65% for some luxury chains. Hotel chains like Oberoi Group , ITC Hotel , Welcome Hotels ,
GRT Hotel and resorts are expecting a dip due to the levy . Booking down as the highest GST slab
of 28% on rooms with tariff of ₹ 7500 and above keeps tourist away, say hoteliers.
ARTICLE. 2
 Article 3 - Bond yield nears 7% as alarm bells ring on crude, GST fears .

Indian government bond yields flirted with a 7 per cent yield for the first time since September
2016 as the fears of higher oil price crimping growth and the government likely slipping on fiscal
deficit due to lower revenues after the GST rate cuts made investors nervous.

The benchmark bond yield closed at 6.97 per cent, a level not seen since May 4 this year. It has
climbed 11 basis points since the beginning of the month while it is a surge of about 54 basis points
compared to July levels.
 ARTICLE .3

Article 4 - Sensex, Nifty take huge tumble; crude price, GST revamp in focus.

Stocks fell sharply on Monday as investors worried over the extent of slippage in the country‟s
fiscal deficit for the year due to additional costs from rising crude and a possible dip in revenues
from a revamp of the five-month old goods and services tax (GST).

The Nifty fell 96.80 points, or 0.94%, to close below a key technical mark at 10,224.95. The
BSE Sensex tumbled 281 points.
 ARTICLE .4

Article 5 - India to overtake Japan to become third largest economy by

2028: Report HIGHLIGHTS:-

India has already overtaken Brazil and Russia to emerge as the second largest BRIC economy
after China:
Bank of America Merrill Lynch report

'Falling dependency ratios, financial maturity and increasing incomes and affordability are the
three key drivers for the country to stand among the large emerging economies'.

India is likely to achieve strong growth over the next decade and will overtake Japan in nominal
GDP by 2028, to emerge as the world's third largest economy, says a foreign brokerage report.

The country has already overtaken Brazil and Russia to emerge as the second largest BRIC
economy after China and is well on track to cross France and Britain to emerge as the second largest
BRIC economy after China and is well on track to cross France and Britain to emerge as the world's
fifth largest economy after Germany by 2019.
 ARTICLE .5
Article 6 - poor execution has earned GST bad name . Goods and services tax (GST) a good
tax that has acquired a Bad name due to poor implementation , formar finance minister Yashwant
Sinha on 14th November said it was pushed into action without much thought .

ARTICLE .6
 Article 7- Eating out may become cheaper from 15th November 2017.

Ordering the extra starter or dessert at restaurant may not leave a large dent in our wallet from today
, as central government had announce it would reduce the GST from 12% and 18% to 5% .

ARTICLE .7
 Article 8

India adopts a national Goods and Services Tax

… sort of

ARTICLE .8

Authors: Mandar Oak and Peter Mayer, University of Adelaide

The distance between India‘s mega-cities Kolkata and Mumbai is about the same as from
Brisbane to Adelaide in Australia — roughly 2000 kilometers. Goods shipped by road from
Brisbane usually reach Adelaide in three days. A few years ago, The Economist reported
that goods covering that distance in India can take eight days.

The reason for the difference was not cows on the roads, potholes or even communist insurgents.

It was taxation.

When a truck travelled from Kolkata to Mumbai, it faced multiple long queues upon passing
every state, border, waiting to pay the entry tax imposed on the value of the goods on board by
each state and waiting again to have it reimbursed upon leaving. On passing through numerous
cities, the truck would also have to pay another form of entry tax —
the octroi.

In its destination state of Maharashtra, the truck would have been stopped and inspected 12 times
before it reached Mumbai, averaging 11 kilometers per hour and spending approximately 32 hours
waiting in queues.

On 1 July 2017, India introduced a Goods and Services Tax (GST) with the objective of
replacing the dense thicket of national, state and local taxes on consumption with a single tax. If
it is successful, it may have created what some term a ‗single national market‘ in India for the
first time.

It took nearly 16 years from conception to implementation to get to the GST regime that
was unveiled in July 2017. Discussions about it were first flagged in 2000, during the
Bharatiya Janata Party-led National Democratic Alliance government under then prime
minister Atal Bihari Vajpayee.

The original deadline of 1 April 2010 for implementation was missed by seven years, mainly
because of the failure to get states on board to enact a constitutional amendment. Under
India‘s federal structure, moving from state taxes to a consolidated GST meant that the national
government needed the power to tax the sale of goods — a states‘ list item. Such an amendment
required (in addition to a special majority in the federal parliament) assent from at least 50 per
cent of thestates.

The constitutional amendment bill that was recently passed makes some important
concessions to the states. In particular, it protects the states for up to five years against
revenue loss that may occur due to the new tax regime.

Implementing a GST in India — a country with millions of very poor citizens and a legacy of
multiple consumption taxes — has produced a tax of great complexity. Goods and services are
taxed in various ways, ranging from a tax of 5 per cent on snack foods to 48 per cent on large
cars. This is in stark contrast to the GST in New Zealand and Australia, which taxes all goods
and services at a single rate, with a few exceptions.

The implementation of the GST will be governed by the GST Council, which has the power to

change or revise the tax rates applicable to different goods and to create exclusions. The
Council has met once since the roll out and has already revised rates on certain commodities.

Three major items of consumption are currently outside the GST ‘s scope —

petroleum products, alcohol and real estate. Taxes on petroleum raise about one third of
Indian states ‘revenues, while those on alcohol bring in another 25 per cent. The states are
unwilling to give up such significant income sources to the national government.

For the hundreds of thousands of small shop owners in India who have kept traditional hand-
written ledgers in their mother tongue, the new GST is something of a nightmare. They are
now required to file their GST reports online, so in addition to suddenly having to become
computer-literate, they face the challenge of navigating the tax portal in English. The burden
on service providers who operate in multiple states is also greatly increased by the new
GST, since they have to file separate reports for each state.

And in a society where tax-avoidance is something of a national sport, there are reports of
small traders finding ways to dodge the new tax. For example, if a pair of shoes costs less
than Rs 500 (US$8), they are taxed at 5 per cent, while more expensive shoes are taxed at
18 per cent. Some stores are selling shoes individually to bring the cost below Rs 500.

To bring a reform as complex as the GST into being within Indian federalism, the
government had to overcome formidable obstacles. Difficulties and anomalies have
inevitably exposed it to criticism.
6. RECENT UPDATE ON GST:

GST Council keeps only 50 items out of 227 in highest slab; 177 items to become cheaper By
Zee Media Bureau | Last Updated: Friday, November 10, 2017 03:49 PM IST

The all-powerful GST Council pruned the list of items attracting the top 28 percent tax rate to
just 50 from 227 previously.
New Delhi: The GST Council on Friday decided to cut tax rate on a wide range of daily-use
items - from chewing gums to detergents -- to 18 percent while keeping only 50 items, mostly
demerit, sin and luxury goods in top 28 percent bracket, Bihar Deputy Chief Minister Sushil Kumar
Modi said.
The all-powerful Council pruned the list of items attracting the top 28 percent tax rate to just 50

from 227 previously. In effect, the Council, in its 23rd meet today, cut rates on 177 goods.

"There were 227 items in the 28 percent slab. The fitment committee had recommended that it
should be pruned to 62 items. But the GST Council has further pruned 12 more items," Sushil Modi
told reporters on the sidelines of the ongoing Council meeting.
He said all types of chewing gum, chocolates, preparation for facial make-up, shaving and after-
shave items, shampoo deodorants, washing powder detergent and granite and marble will attract
lower 18 percent tax rate.
"There was unanimity that in 28 percent category there should be only sin and demerit goods.
So, today the GST Council took a historic decision, that in the 28 percent slab there will be only
50 items and the remaining items have been brought down to 18 percent," hesaid.
Paints and cement have been retained in the 28 percent tax bracket, he said. "Luxury goods like
washing machines and air conditioners have been retained at 28 percent."
The decision taken by the GST Council will have a revenue implication of Rs 20,000 crore
annually.
The Govt. had earlier suggested slashing tax rate to 1 percent for manufacturers and restaurants
opting for the scheme from 2 percent and 5 percent, respectively.
It was in favor of doing away with the tax rate distinction between AC and non-AC restaurants,
those which are not covered under the composition scheme and tax them at a flat 12percent.
Currently, non-AC restaurants are taxed at 18 percent.

It also suggested that eating out at hotels that have room tariff of more than RS.7500 should attract a ,

Uniform 18 percent rate instead of any separate category for 5-star which currently falls under the 28

Percent bracket.
Article 9:
The biggest package of tax concessions after took effect .

Over 200 common /daily use items as well as product predominantly made by small medium
Enterprise (SMEs) shifted to lower tax bracket from 15th November 2017.

From 28% to 18% GST brackets - 178 items of wide of common use product use in every
household ect .

From 18% to 12% GST brackets - 13 items including condensed milk , refined sugar , diabetic
food , hand bags , medical origen , etc.

From 18% to 5% - puff rice chikki, flour of potatoes, chutney powder, Sulphur recovered andfly
ash.

From 5% to Nil - six items including ghar meal, hop cone certain dried vegetable, un workcoconut
shell and fish.

Eating out food in restaurant and ordering it much more affordable.

Food service or takeaway in all stand - alone restaurant, including restaurant in hotel premises
having room tariff of less than ₹ 7500 per unit day, Attract 5% GST without ITC.

Relief in compliance: process made easier and simpler.

All tax payers to file simple return in form GSTR-3B with payment up to 20th of succeeding
month for a period till March, 2018.

All tax payers need to submit GSTR-1 only till March, 2018 without required filling of GSTS-2
& GSTR-3
.

Time limit for filling GSTR-2 & GSTR-3 would be notified later on. Benefits to service

providers:-

All service providers having aggregate turnover below ₹20 lakhs weather supplying service intra
- state, inter -state or through e- commerce operator, exempted from obtaining GST registration.
ARTICLE. 9

ARTICLE .9

MESSAGE FROM HIS HOLINESS

DR. SRI SRI SRI SHIVAKUMARA SWAMIJI

 It gives me immense pleasure to write a Message for the proceedings of the National Conference,
―Introducing GST and Its Impact on Indian Economy‖, organized by Tumkur University, Tumakuru.

I take this opportunity to congratulate the Tumkur University for organizing academic events
which throw light on contemporary socio-economic problems. The present theme of the conference
is one such attempt which makes all of us to think critically about our economy and tax paying
system. Besides, I am pleased to see the educational service this University has been providing to
Tumkuru region. I wish the University all the best in its future endeavors.

Further, the organizers of the conference and the editorial team have brought out the proceedings
of the conference in an academically befitting way. The papers handpicked for publication here, I am
sure, illuminate our understanding of the Goods and Services Tax Bill. The deliberations of the
Conference will definitely serve as guiding principles for the policy makes, and the delegates and
research scholars will gain critical knowledge in the domain of tax and commerce studies, I believe.

I wish the Conference all the best.

Sree Siddagangamath
1. Impact of GST on Various Sectors:

1.1 Fast moving consumer goods sector:

The Indian FMCG sector is the fastest growing sector in the economy. FMCG sector is the
major contributor in both direct and indirect taxes in the economy. Implementation of Goods
and services tax will majorly influence Indian economy. The current rate of taxation in
FMCG sector is around 22 to 25% and after GST rate is expected to be much lower
which will result in reduction of prices of consumer goods.

1.2 Traders:

The impact of tax on the wholesaler or retailer would be limited to the value addition. The
tax paid at earlier stages (except SGST of other states) would be available as set off for
payment of GST on supplies. Therefore, traders would prefer to buy/ receive supplies with
invoice. The tax payable as a percentage of the supply value would be small whereby the
compliance would be more cost effective than evasion. Cost of products and services would
reduce due to the cascading effect of tax being reduced. Traders in GST regime can concentrate
on growth into large entities instead of remaining small and fragmented.

1.3 Manufacturers:

The manufacturing sector in India is not only plagued with concerns ranging from decline
in exports and infrastructure spending but also with the burden of complying with a complex
indirect taxation system. Multiple indirect tax legislations have led to significant compliance
and administrative costs, classification and valuation disputes and generally impaired the
ease of doing business in this sector.

The implementation of GST will significantly improve the competitiveness and performance of

India's manufacturing sector.

For most industrial products, GST rates have been slated at 18%. Today a manufacturer
pays about 28-30% as taxes, so this means an average saving of around10%.
GST will affect the manufacturing sector in the following ways:
State Incentives & Area based incentives
Presently, companies have set up their manufacturing units with significant investment
outlays based on incentives offered by states under their respective investment promotion
policies.
However, under the GST regime, such flexibility given to the states is likely to be curtailed to
achieve the intended effect of uniformity.

Further, GST will only be credited to the state where the supplies are consumed, as
opposed to the present situation where the producer state is credited with central sales tax on
inter- state sales. This would lead to a loss of revenue for the producer states and therefore
such states may not be in a financial position to continue offering such incentives.

In addition to above, manufacturing units enjoy exemption of taxes based on their location
in specified backward areas, capital investment etc. There is no clarity under the GST on the
treatment of such area-based exemptions resulting in loss of unutilized portion of such
incentives.
Increased working capital
Impact on working capital may be significant for the manufacturing sector. Currently,
stock transfers are not subject to tax. However, under the GST regime, stock transfers are
deemed to be supplies and are subject to GST. Though GST paid at this stage would be
available as credit, realization of this GST would only occur when the final supply is
concluded. This would likely result in cash flow blockages and therefore companies would
have to rethink their supply chain management strategies to minimize this impact on their
cashflows.

Free supplies & Discounts

Under the present indirect tax regime, free supply of goods is not subject to VAT. GST law
stipulates that specific transactions without consideration would also be treated as supplies.
Accordingly, free samples may be subject to GST, leading to increase in overall costs.

Since GST law stipulates that post supply discounts are to be excluded from the
transaction value, provided such discounts are known at or before the time of supply of goods
and are linked to the invoices for such supply. Thus, companies may also need to analyze
existing post supply discounts/incentive schemes where the quantum of discount is not
known at the supply stage.

Supply chain restructuring:

Currently, the supply and distribution models are structured to optimize indirect tax
impact arising at various levels of value addition. Transition to GST will result in such
decisions being taken to optimize business efficiency (as opposed to indirect tax efficiency).
Currently, firms spend a high 5-8% as product distribution and warehousing cost. GST
would lead to lower transportation and distribution costs.

With the advent of GST, it is hoped that such warehousing and logistics decision would be
based on economic efficiency such as costs and locational advantages vis-a-vis key customers.

Also, with overall reduction of cascading effect of taxes, especially on the post-
manufacture stage of the supply chain, manufacturing sector stands to benefit significantly
and have a positive effect on the cost of manufactured products in the hands of consumers.
However, concerns remain on specific issues such as the additional 1% origin tax, increased
cash flow issues on account of GST payable on stock transfers and increased costs owing to
exclusion of petroleum fuels from the ambit of GST.

Yet the lower taxes, simplified tax structure, seamless tax credit facility and technology
driven easy tax compliance system offered by GST provide an ideal platform to increase
manufacturing ‘s share of GDP from the current 17.4% to 25% by 2025.
There would be a saving in taxes absorbed at various stages of manufactures thereby
reducing the cost of goods sold. This would make them more competitive both in
domestic and international markets. The exports would be cheaper as taxes paid at earlier
stages could be refunded. The difference between large manufactures and small would reduce.
The indignity of harassments and bribe for honest manufacturers would substantially reduce
over a period of time.
7.4 E-COMMERCE:

Currently, the federal indirect tax structure with different tax regimes in various states has
led to confusion and uncertainty on the tax treatment of online marketplaces and aggregators.
GST will help remove the ambiguity that currently exists in this sector and insulate such
operators from ad hoc laws and arbitrary levies imposed by state governments. However, it
may result in higher compliance challenges for the e- commerce sector.

Compliance costs

Under the new regime, every electronic commerce operator would need to collect tax at
source and deposit applicable GST when payments are to be made to the supplier.

In the current regime, e-commerce players are treated only as service providers and are
therefore required to comply with only one central service tax legislation. Under GST, with
the burden of TCS @ 1%, such electronic commerce operators will also be required to
undertake additional compliances in states where the supplier is located.

However, it has been kept at 1%, which is the lowest. Thus, E-commerce consumers are
likely to remain unaffected once GST sets even as players like Flipkart and Amazon prepare
to deduct 1% of the payment it makes to sellers under the new tax regime. This will not
significantly increase the onus and compliance burden on electronic commerce operators.

Stock transfers to be taxed

Under the GST Law, specified transactions without consideration would also be treated as
supplies. Intra-state and inter-state stock transfers, between branches or warehouses of a single
e- commerce entity, would be deemed to be supplies, subject to GST. Though the tax paid
would be available as credit to the entity, this may result in cash flow blockages.

Credit available only when tax is paid

Credit can only be claimed on taxes which have been paid to the credit of the government.
However, removal of cascading effect and consolidation of taxes could bring in significant
benefits such as unrestrictive cross utilization of credits of service tax paid on input services
like
warehousing, logistics, commission of marketplace. The GST will therefore facilitate
seamless credit across supply chains, with tax set offs available across the production value
chain, both for goods and services, therefore bringing down the overall cost of supplies. This
cost benefit would be ultimately passed on to the customers or help in increasing the books
of the companies.

7.5 REAL ESTATE:

Indian real estate sector is estimated to account for about 5% of India's gross domestic
product and is considered the second-largest employer in the country.

Real estate sector is already subject to multiple taxation, the implementation of GST is
theoretically expected to help the consumers and builders.

The GST regime will be a game changer for real estate sector and the 12% GST on
construction projects meant for sale to buyers will boost the sector.

Ambit of GST under real estate is likely to result in more transparency, which will
significantly reduce tax evasion through more efficient transaction-tracking methods and
improved enforcement and compliance. Since GST may be levied on a single value, the
current issue of levying tax on tax (VAT on central excise duty) is likely to be removed.

Transfer of (completed) properties may continue to be outside the purview of GST and
be liable only to applicable stamp duties. However, on procurement of materials for civil
construction, GST will be applicable.

At present, developers pay various non- creditable taxes on supplies like excise
duty,customs duty, CST, entry tax etc. on the procurement side, and the buyers pay service tax
and VAT on purchase of residential units when booked prior to their completion. GST will
replace these multiple taxes with a single tax and all the developers will get the input credit on
the material they are using in construction, thus ensuring a smooth flow of credits through the
chain which in turn will reduce costs for all players.

Also, the present tax laws provide’s an abatement of 75% on service tax to be paid for
propertyvaluing less than one crore, whereas properties valuing more than one crore allows
only 70% of abatement resulting in a pay out of service tax at the rate of 4.50%. In addition to
above, applicability of VAT & stamp duty is also there. However, abatements will be removed
and stamp duty will continue under GST, increasing the overall tax liability.

Affordable housing will continue to be exempted from service tax under GST.
The heavily taxed real estate sector welcomes a single stable 12% GST rate, inclusive of
the value of land and with full input tax credits. Thus, the actual tax incidence under GST will
be lower than the existing multiple indirect taxes on the sector. Also, the GST rate for work
contracts will also be offset by input credits thereby providing a seamless and simplified tax
policy.

The implementation of GST will broadly benefit real estate sector by ensuring a uniform
tax structure and improve tax compliance by developers. It looks at bringing in greater
transparency for the sector and may minimize unscrupulous transactions. GST will have a
cascading effect for the home buyers, as developers with more margins in their hands will be
able to restructure the cost of the products in favour of consumers thereby reducing the
property prices.
7.6 BANKING:

Bank have always been a huge pillar of the Indian economy and taxpayers are literally
banking on them for financial needs.

In India, most of the banking and financial services are exposed to service tax, at the rate of
15%. Under the new tax regime, GST rate for financial services transactions, such as banking,
mutual funds, insurance and stock broking has been increased to 18% from 15% earlier. Thus,
financial services transactions to become marginally costlier.

GST applies to all services wherein there is a supply of services for consideration. So, in
banking transactions such as credit card payments, fund transfer, ATM transactions,
processing fees on loans etc., where the banks are levying charges, increased tax rates would
apply. This would have a slight inflationary impact.

Also, Interest on loans, trading in securities, foreign currency and retail services will also
fall within the ambit of GST. Thus, it appears that imposing GST on banking and financial
services will make the financial services costly.

However, interest on fixed deposits, bank account deposits etc. which do not attract a
charge will remain so even under the new regime.

Since GST is a destination-based tax, it might be a challenge to determine the destination

 of certain services (at present, services are taxed at the place of rendering the service). This
may lead to a difficulty in determining state GST, central GST or inter-state GST on B2B and
B2C transactions.

7.7 AUTOMOBILES:

Buyers of passenger vehicles in the premium segment will be key beneficiaries of GST,
which will reduce the effective duty on such models. Prices of small cars will more or less
remain the same as their will only be a minor hike in the duty under the GST.

Cars will be taxed at the top rate of 28% plus a cess in the range of 1% to 15%. Small cars
will be charged 1% cess on top of 28% tax, mid- sized cars will attract 3% cess and luxury
cars 15% cess on top of the peakrate.
 A current levy of Indirect taxes on cars varies from 30% to 45%. The rates of GST are as
per the expectations of the industry and almost all segments of the industry have benefitted by
way of a reduced overall tax burden in varying degree.

Moreover, elimination of cascading effect and offset of input tax credit at every stage
of value chain will reduce the cost. By and large, the impact of GST may be positive for
car segment of automobile sector. There will be several key beneficiaries of GST
including some really giant companies.

Industry experts opine that GST will lead to the dropping of on road price of vehicles by
8%. Lower prices can be construed as indirect stimulus to boost volumes. Key beneficiaries
would be Maruti Suzuki, M&M and Eicher Motors.

However, demand for commercial vehicles may be hit in the medium term. GST will
subsume local taxes, reduce time at check-posts and ease logistics hurdles. With fleet
productivity increasing, operators may not feel the need to expand mid-term.

Further, GST will also enable the auto dealers to get input tax credit for the GST paid by
them at the time of acquiring the vehicles from the OEMs. Similar benefit will accrue to them
on the spare part/service businesses.

A reduced overall tax burden will pave the way for stimulating demand and strengthening the
automotive market in the country.
 7.8 AGRICULTURE:

The implementation of GST would boost the economic growth by the means of wider tax
base, compliance in tax payment and by pushing balance of trade on favorable side.

One of the most radical decisions taken at the GST council meet was to fix the applicable
GST rate at zero per cent for most of the primary farm produce.

The central government currently taxes neither production/sale of farm produce nor
agricultural incomes. Under GST also, there will be no VAT and the cases too are supposed to
be subsumed within the zero per cent GST. Thus, there will be no impact of GST on the
farming community.

However, the rates on fruit and vegetable juices, jam, sauces, purees, mixes, concentrates
and a host of processed foods have been set at 12 to18%.

Taking into consideration food consumed by the poor, food grain and milk have been
exempted from taxes. Cereals will be taxed at 5%. Under the new GST law, dairy farming,
poultry farming and stock breeding are kept out of the definition of agriculture. Therefore,
these will be taxable under GST.

The main impact of GST in agriculture would bring is the inflation with currently 4% VAT
being increased to 8% on many food items including cereals and grains as the exemption
under VAT is limited to unprocessed food. The most affected from the inflation would be the
consumers living below poverty line.

Also, the incidence of taxation on agroprocessing industry would also help in reducing
thecost of heavy machinery required for producing agricultural commodities.

Implementation of GST is essential to improve the transparency, reliability, timeline of

supply chain mechanism. Since most of the agricultural commodities are perishable in nature.
An improved supply chain mechanism due to GST would reduce the time taken for inter-state

Transportation and would ensure reduction in wastage and cost for the farmers/ retailers.

GST system seeks to replace multiple taxes and tariffs and has set free the decisions on
warehousing and distribution from tax considerations. Under GST, the logistics and
transportation will be more cost and time efficient, thereby curtailing the wastage of precious
food as well.

Moreover, with the ease of availing tax credit under GST regime, it is expected to boost
inter- state trade leading to achieving the objectives of National Agricultural Market. Both
CGST and SGST will be levied on import of goods and services into the country. Exports,
however, will be zero-rated, meaning exporters of goods and services need not pay GST on
their exports.

About its implications on agricultural sector, it could be concluded that though the overall
tax burden on consumers will be less in new tax regime, but certainly it would have
inflationary pressure on the food articles especially processed one which may lead to
restoring the consumption towards fresh farm products.

The implementation of GST is going to benefit a lot, the farmers/ distributors in the long
run as there will be a single unified national agriculture market which will help them to sell
their produce for the best available prices.

7.9 Pharmaceuticals:
 The Indian pharmaceutical industry is the principal supplier of generic drugs all over the
world, with 80% of all AIDS drugs produced in India. The UN has provided licenses to six
Indian pharmaceutical labs to make generic anti-AIDS medicine for all the developing
nations. Indian pharmaceutical companies manufacture 20% of all generic drugs used around
the world.
GST in India is likely to have a far-reaching impact on several aspects of business
including pricing of products and services, supply chain, IT systems, accounting, tax
compliance framework & re-skilling of talent.

The pharmaceutical industry was hoping the GST rate on life-saving drugs would be zero,
even as it has been capped at 5% and that of all other formulations at 12%. The rates in the
GST regime are slightly higher than what prevail now.

In the GST regime, essential drugs that treat malaria, HIV-AIDS, tuberculosis, and
diabetes fall in the 5% bracket. Almost all other drugs are in the 12% net.

Nicotine polacrilex gum is the only pharmaceutical product to be charged at the rate of
18%. Cipla, the brand which produces nicotine gums, will probably be impacted from the rate
fixed at 18%. More than the tax rate, the bigger worry for the companies is the disruption the
new tax regime will bring.

Medicines to be get costlier as active pharmaceutical ingredient, or raw materials, will be

taxed at 18%.

Distributors and stockiest are upset at the loss they might have to incur with the increase in
the effective tax rate. The effective tax rate on formulations, now 9%, has been increased to
12% and trader margins have been built into the tax rate.

Under the current tax laws on pharmaceutical products, in many states VAT is on
maximum retail price, which is on a single point. Due to this, the distribution channel does not
pay VAT. Thus, for them paying tax under GST coupled with three returns a month is a
humongous task.

Earlier, ayurvedic drugs or medicines were charged an average VAT of 4% and excise of
1.5% due to the excise free manufacturing zone benefit. Under GST, ayurvedic medicines
could get costlier as they would be taxed at the rate of 12%.

No clarification has been provided by the government on the issue of manufacturers

operating in excise-free manufacturing zones paying more tax under GST. Most of these
manufacturers are competitive in the pharmaceutical industry is due to the excise benefit as
they are situated in remote places.
 The Pharma industry also GST specifically provides for refund of accumulated credit
resulting out of increased rate for inputs vis-a- vis reduced rate of output. This is positive
news for the
Pharma industry, which has been struggling with a high amount of blocked credit in the
current regime. Also, special provisions for duty-free movement of goods under job work
model, which is prevalent in the pharmaceutical industry and fundamental to its operations,
have been provided in the new regime.

GST law also provides seamless transition of entire credit balance as on the cut over
date under the present indirect tax laws.

Also, continuity of the area-based indirect tax benefits under the GST regime is critical as
this may also indirectly impact the cost of medicines and ultimate price to be paid by the
patients.

Since GST on inter-state sale of goods would be creditable, there is an opportunity to remodel
current supply chain structure to ensure lower logistics cost and bring in significant operational
efficiency which should have a positive impact on the profitability of the companies.

The sector is hopeful of making refund process fast and simple, this coupled with savings in
warehousing and logistics cost may anticipate a positive impact.

A lot of the times, medicines are provided without bills in India. GST would curb
such practices as providing medicine without the bill would not be beneficial for
anyone in the distribution chain.

The government needs to still provide clarification on the inclusion of the current benefit
for the manufacturers under excise for operating from the excise free manufacturing zones.
The pharmaceutical industry is also asking for more information on the implementation of
GST on the MRP of pharmaceutical products.
7.10 FMCG & Retail:

GST would have significant impact on the way businesses operate and one of the sectors
which would be significantly impacted by GST is the retail sector. Its impact on FMCG firms
will depend on their product mix, given that the tax rates have gone up for some products and
have fallen for others.

The tax fitments announced by the GST council has evoked a mixed response from the FMCG
sector, with some viewing it as positive, while many others have expressed disappointment.

Beverage companies, for instance, said the effective tax rate of 40% on sweetened aerated
water and flavored water under GST was against the stated policy of maintaining parity with
the existing weighted average tax, which is significantly below 40%. Aerated beverages have
been placed in the highest tax slab of 28% and in addition will attract a cess of 12%.

Apart from driving supply chain efficiencies, bringing untaxed players into the tax net, a
large section of the industry still operates in the unorganized segment, thus GST will level the
playing field for the larger, established players in the industry.

However, the GST rate structure shows that not all FMCG companies stand to benefit from
the new regime.
 The rates for various FMCG segments have mostly been along expected lines. Items of
mass consumption like toothpaste, soaps, hair oil etc. have been put under the 18% tax slab,
significantly lower than the 22-24% tax rate they have been paying. This is in accordance with
the government ‘s stance of keeping tax rates low for mass consumption products. In fact, the
GST rate schedule indicates that nearly 81% of all items are in the 18% tax bracket or below.
The remaining 19% fall in the 28% tax slab.

The FMCG companies, whose tax incidence has come down under the GST regime, are
likely to pass it on to the consumers in the form of lower prices. Lower prices could
potentially support volume growth for certain products, particularly in the rural segment. It is
believed that it could result in a faster consumption shift from unbranded to branded products,
spurring volume growth for FMCG companies. Simultaneously, it will also bring operational
efficiency with rationalization of supply chain by removing bottlenecks. Analysts also point
out that tax exemption provided to several critical products required for food processing like
jaggery, cereals and milk would benefit this industry.

However, surprisingly some of the widely consumed products have been placed under the
highest tax slab of 28% which is slightly higher than the rate levied earlier. Higher tax rate in
paints, baby food, detergents and shampoo is a real dampener since these are daily-use, mass
consumption items. Manufacturers will have to pass on the higher tax incidence to consumers
in the form of higher prices of these goods.

Most of the items belonging to the premium category have been put under the highest tax
slab of 28%. These include health supplements, skin care, aerated drinks, and liquid soap,
among other goods. But this is not going to have a particularly negative impact on
manufacturers as they had been paying similar taxes earlier.

For most other FMCG majors, the GST rate structure is likely to be neutral or marginally
positive, as their broad portfolios would see a mixed impact. In case of HUL, for instance, tax
incidence has reduced for soap, toothpaste and tea, but increased for detergent, shampoo and
skin care. For Godrej consumer products, lower tax incidence on soaps and insecticides is a
positive, but higher tax rate for hair dye is a negative.

In addition to the above, following are to be considered:

Increased availability of input tax credit

However, the GST charged on the aforementioned transactions would be creditable. This
would eliminate the cascading effect of taxes and could lead to reduction in effective tax cost
for various products.

But, a higher rate of GST on certain products could offset the benefit of increased credit
availability mentioned above and lead to higher tax cost.

Promotion schemes

Retailers currently offer various marketing schemes such as ―Buy one get one free‖, free
samples, etc. to customers. At present, the products given free of cost are not liable to sales tax.
However, in the GST regime, supply of goods by one person to another without consideration
could also be liable for taxation. This would lead to increased cost of promotion and also pose a
challenge as regards the valuation to be adopted for calculating GST on such goods.

Further, FMCG companies could generate substantial savings in logistics and distribution
costs as the need for multiple sales depots will be eliminated. Currently, FMCG companies
pay nearly 24-25% including excise duty, VAT and entry tax and a lower rate of 18% will
 yield significant reduction in taxes. Also, warehouse rationalization and reduction of overall
tax rates is expected to generate saving.

Thus, several of the rapidly moving consumer goods companies such as HUL, ITC, P&G
will benefit immensely by this tax structure of a GST rate equaling to 18%. Also, much relies
on the exemptions which are being retained along with the excise benefits. Benefits aren‘t
expected to be huge and will happen slowly as per several of the analysts.

At present, the CVD on import of goods, excise duty on goods manufactured in India, CST
on inter-state procurement of goods and service tax on input services, are a cost to the
retailers.

7.11 ENERGY:

The energy sector is a key driver for economic growth but remains plagued by policy and
regulatory bottlenecks. Lack of pass through of indirect taxes contributes to the inefficiencies that
have crept into this sector. Unfortunately, this legacy issue is set to continue under the new GST
regime, with generation and sale of electricity being kept outside the purview of GST but capital
goods and services used in the energy sector being brought within the GST net.

New GST rate slabs for coal and capital goods are expected to bring cheer to the power sector.
Coal, the key raw material for about 60% of the power produced in the country, has been placed
under the 5% slab, while capital goods and intermediate industries will be under the 18% slab.
 Thus, the 5% rate for coal, down from 11.7% in the current tax regime is a major breather as it
would help reduce the final tariff which would be passed on to the consumers.

At the same time, capital goods falling in the 18% tax slab would also help the power project
developers to reduce their cost and hence the capacity charge will reduce.

Currently, tax concessions and exemptions, both at the central and state level are available on
specified goods and services which are used in the energy sector. However, with the GST regime
generally set to trim such exemptions and concessions, the effect on the energy sector may be
significant.

Increased cost of energy projects

While goods and services required for setting up energy projects will be subject to GST, they
will not be creditable for the generating entity leading to a cascading of indirect taxes. Also, there is
no clarity on whether the various concessions/ exemptions available for setting up energy projects
will continue under the GST regime.

Moreover, removal of concessional rate for inter-state procurement for EPC contracts would not
allow the project owners to structure their procurements as inter-state sales to reduce tax costs.

In the absence of such tax exemptions and concessions, there is a possibility of a significant
increase in project costs.

Impact on renewable energy

With a view to encourage clean energy, multiple tax concessions and exemptions have been
extended to the renewable energy sector. As a result, green energy is generally available at reduced
tariff rates. However, there is no clarity on whether such benefits would be extended under the GST
regime. It is necessary that the government continues to offer tax breaks to the renewable energy
sector, for it to remain a competitive option to conventional fuel-based energy.

Therefore, a lower tax rate of 5% on renewable energy equipment would not result in any
increase in the renewable energy costs and the cost of energy projects in India. This would remove
GST incidence at the terminal stage, and also enable suppliers to obtain tax refunds of their own
input costs.

Further, energy is a core sector in any economy since power is a key requirement for every
commercial activity. Any tax distortion faced by this sector on account of electricity being outside
the ambit of GST, will have a cascading effect on the rest of the economy, negating some of the
very benefits sought to be brought about by the introduction of GST. Accordingly, it is felt that the
Government has missed an opportunity by not integrating generation and distribution of electricity
 with other supplies which interact with it, under the umbrella of GST.
Therefore, the viability of the energy sector, under the current GST regime, would depend upon the exemptions and

concessionary tax which may be put in place to counter the impact of different tax regimes on the input and output

side. Exemptions in renewable will need to be grandfathered for this sub-sector to remain viable.

7.12 TELECOM:

From the conventional belief of being a communication service provider to providing multiple
streams of value added services, the telecommunication (telecom) sector has become one of India‘s
core economic drivers.

Presently, the telecom industry faces several shortcomings such as cascading effect of taxes,
issues with the classification of services, etc. that hamper the growth of this sector.

One of the major concerns for telecom service providers is the denial of cenvat credit on telecom
towers. However, under the GST regime, telecom would be allowed to avail such input tax credit for
utilization against output GST liability.

In order to achieve the desired goal of expanding the telecom business and accomplishing socio-
economic development, it is essential that the cost of the telecom service provider goes down, which
will result in lower tariff rates and broader consumer base. Considering an overall objective, the
proposed GST framework seems to have addressed the concerns of the telecom sector.
 The seamless flow of credit under the GST regime will help reduce the overall cost and
eventually the benefit can be passed on to the end-user by lowering tariff rates. There would be
pertinent increase in free cash flow which can be used in business development opportunities.

All service-related sectors are expected to be negatively-affected as the service tax rate is 15%
currently and GST rate on telecom has been fixed at 18%. Even a moderate rise in tax could hit
demand and profits. Given the data volumes are slowing and with the launch of Reliance Jio, the
times ahead for telecom companies are going to be tough and this will be reflected in their stock
prices as well.

Also, most telecoms have obtained centralized service tax registration certificate and undertake
centralized compliances. However, under the GST Law, separate registration would be required in
each state from where the services are rendered leading to increased compliance requirements as
compared to the current regime. Telecoms would still need to advocate with the Government for

Unresolved issues under GST such as double taxation on account of free supplies to
service provider, absence of provision for transition of input tax credit, lack of clarity on
telecom‘s eligibility to claim credit relating to passive infrastructure etc.

The telecom sector is vibrant, price-sensitive and has a high growth potential. Strong policy
support from the government under GST is crucial for overall development.

2.7 Transportation Industry:

GST on transport sector will result in more efficient cross state transportation. It will bring down
the logistics cost, reduced times for transportation. Currently all the 29 states of India collect taxes
at different rates on goods that move across the state borders that‟s why the tax on transportation is
collected multiple times. This will make long delays at different interstate checkpoints for reviewing
by state authorities who checks for the application of relevant taxes and other levies. This causes the
delays for an average of 6 to 7 hours. GST would replace around 15 state and federal taxes and
tariffs for a single tax at the point of sale of goods.

2.8 Textiles Industry:

It is expected that the tax rate in GST would be higher in textile industry as per the current tax
rate. Cotton and wool fibre which are currently exempted from tax would come under tax in GST
but the textile industry may be beneficial from GST as manufacturing costs ,may be reduced due to
subsume of various taxes like octroi, entry tax, luxury tax etc. There will be few drawbacks also but
GST will support the industry in long run.
 4 ANALYSIS AND PRESENTATION OF DATA:

Following questions are responded while doing survey and their responses are as
follows :

1. Do you now /aware about GST?

A) Yes B) No

Response: - all 16-respondent stated that they are aware about GST.

2. Dose you affected by GST?

A) Yes B) No

Response: - 11 respondent stated yes and 5 are no.

3. What you think, life get simpler due to GST?

4. A) Yes B) No

Response: - 10 respondent stated that yes and 5 are no and 1 was not sure .

5. Impact of GST on your life?

A) Bad B)Good

C) Better D) Best

Response: - 4 sated bad impact, 6 good impact ,4 better, & 2 are not sure about that.
 140%

120%

100%

80%

60%

40%

20%

0%
Question 1 Question 2 Question 3 Question 4

yes/Badimpact No/Goodimpact Notsure Better

GRAPH A
6. What you think, to follow GST is difficult task?

A) Strongly agree

B) Agree

C) Dis-agree

D) Strongly Dis-agree

Response:- 2 go with Strongly agree , 8 are agree , 5 are dis agree and 1 was not sure.

7. What you think GST has more positive effect than negative?

A) Strongly agree
 B) Agree

C) Disagree

D) Strongly Disagree

Response :- 2 respondent stated strongly Agree , 8 are agree , 5 are dis agree , no
one go with Strongly Disagree and 1 was not sure.

Q5 & Q6

Strongly agree Agree Disagree Strongly disagree

Graph B
8. Impact of GST on GDP I.e. Gross Domestic Project .

A) Bad

B) Good

C) Better

D) Best

Response :- 2 go with bad , 10 with good , 1 with better , 0 with best and 3 was not sure

8) What will see effect of GST on export and import?

A) Bad

B) Good

C) Better

D) Best

Response :- 3 respondent stated bad , 9 stated good , 1 better , 1 best and 2 ware not sure .

70

60

50

40

30

20

10

0
Category 1 Category 2

Bad Good Better Best

9. What you think about process to file return of GST?

 A) Easy

B) Very easy

C) Difficult

D) Most difficult

Response :- 4 respondent go with easy , 3 go with very easy , 3 go with difficult , 7

go with most difficult.

Q .9

Easy(25%) very easy(18.75%) Difficult(18.75%)

Graph D

10. What you think about impact of GST on indian economy?

A) Positive
B) Negative

C) Not sure

Response :- 9 respondent stated that positive and 5 State that negative and 2 were not
sure.

Q.10

Positive(56.25) Negative(31.25) Not sure(12.5)

Graph E

11 Give rating to GST out of 5 star.

D) 1Star

E) 2Star

F) 3Star

G) 4star

H) 5Star
 Response :- 1 respondent given 1 star , 4 respondent given 2 star , 5 respondent
given 3 star , 5 respondent given 4 star and only 1 respondent given 5 star .

Q 11

1 STAR (6.25) 2 STAR(2.5) 3 STAR(31.25) 4 STAR 5 STAR(6.25)

Graph F
1. EXAMPLE OF GST:

EXAMPLE 1.
Let us examine this with an example of car as a product with overall rate of tax being considered
same under existing and under GST regime – to illustrate elimination of tax on tax.

Previous Tax Structure:

Example of Car: Existing

Cost of Manufactures 4,00,000
Excise + Infrastructure cess @ 10 40,000
%
Dealer Cost 440000
Margin @ 10 % 44,000
Sale Price for dealer 4,84,000
VAT 12% 58,080
Price to customer 5,42,080

Table. A
Here, the Dealer Cost is Rs.4,40,000/-, including excise duty and infrastructure cess of
Rs.40,000/-. The law does not permit excise duty and cess paid on purchases to be set off against the
dealer‟s liability, adding to the overall cost. Rs. 40,000 is included while determining the sale price
(10% margin is added), and taxed once again when the sale is affected. This results in tax cascading
down to the end customer, and an increase in the cost of the car.

GST Tax Structure:

Example of Car: GST

Cost of Manufactures 4,00,000
Margin @ 10 % 44,000
Sale Price for delear 4,44,000
CGST@11% 48,400
SGST@11% 48,400
Price to customer 5,36,800
Tax liability :
Saving to Consumer 5,280
 In the example, the taxes paid by dealer (CGST + SGST) to manufacturer is not added to cost.
This is because GST allows the dealer to set off the tax liability of CGST+SGST. This is one of the
fundamental features of GST, which allows seamless credit from manufacturer to dealer, and
eliminates the cascading effect.

EXAMPLE 2. Let us examine TAX structure with an example of Mobile phone as a product
with overall rate of tax being considered same under existing and under GST regime – to illustrate
elimination of tax on tax.

Particulars Without With GST (RS)

GST(RS)
Manufacture to
Wholesaler
Cost of Production 5000.00 5000.00

Add: Profit Margin 2 2000.00 2000.00

Manufacturer Price 7000.00 7000.00

Add: ExciseDuty @ 12% 840.00 -

Total Value(a) 7840.00 7000.00

Add: VAT @12.5% 980.00 -

Add: CGST @12% - 840.00

Add: SGST @ 12% - 840.00

Invoice Value 8820.00 8680.00

Wholesaler to Retailer

COG to 7840.00 7000.00

Wholesaler(a)
Add: Profit 784.00 700.00
Margin@10%
Total Value(b) 8624.00 7700.00
Add: VAT @12.5% 1078.00 -

Add: CGST @12% - 924.00

Add: SGST @12% - 924.00

 Invoice Value 9702.00 9548.00
Retailer to
Consumer:
COG to Retailer 8,624.00 7700.00
(b)
Add: Profit Margin 862.40 770.00

Total Value(c) 9486.40 8470.00

Add: VAT @ 1185.80 -
12.5%
Add: CGST @ 12% - 1016.40

Add: SGST @ - 1016.40

12%
Total Price to the Final 10,672.20 10,502.80
consumer
Cost saving to - 169.40
consumer
% Cost Saving - 1.59%

Notes:

(i) Input tax credit available to wholesaler is Rs.980 and Rs.1,680 in case of without GST and
with GST respectively.
(ii) Likewise Input tax credit available to Retailer is Rs.1,078 and Rs.1,848 in case of without
GST and with GST respectively.
(iii) In case, VAT rate is also considered to be 12%, the saving to consumer would be1.15%.
 CONCLUSION AND SUGGESTIONS

As per my observation and study on GST shows that impact of GST on Indian economy has
more positive than negative. As, per producer point of view, because of GST Indian product became
more comparative in the market which help to face competition and earn more profit .as per
customer point of view, GST reduced overall tax burden on goods which is currently estimate 25%
to 30% which help them to access goods at lower price.

Since GST is new in India so initially public facing certain issue to understand new law.
Business man and service provider news to appoint experts for smoothing business activity which
will ultimately increase cost. Business need, to bring new software or update software as per new
system.

Slowly and gradually all these issues are resolve and have more scope in future for growth. GST
will grow up Indian economy, as per HSBS expected increase in GDP up to 0.80% and NCAER
expect increase in GDP up to 0.9% - 1.7%.

As people facing problem at initial stage stages, understand new law and their provisions &
technology. So, my suggestion their issues are, there should be various seminars and lecture need to
conduct for general awareness. Government introduced various technique and technology for
registration and updating purpose but while doing survey some people stated that registration sites
and software not working properly. Hence government should look in to their points also so that
implementation and application of GST go smoothly in India.

"ONE NATION ONE TAX" Will provide benefits to me, to my family, to my city, to

my state, to my nation and economy as hole.

GST has both positive as well as negative impacts on the economy. It facilitates economic growth by
being transparent and creates loss over a few sectors by the increased prices of the commodity but the ease of doing
business has been helped by a unified taxation system in the country. Thus, how GST is viewed in terms of the
Indian economy depends on person to person.

Indirect taxes are subject to changes and it depends on the economy and various factors based on which the Government
of India can decide to cut or increase the tax rates. It has both advantages and disadvantages but no one can deny that
they are important to generate revenue. While direct taxes can be collected from the rich, direct taxes give an opportunity
to the poor to contribute in their own small way.
 APPENDIX

 Amalgamating: combine or unite to form one organization or structure

 GST: goods and services tax
 IJISSH: International Journal of Innovative Studies in Sociology and Humanities
 IJSRM: International Journal of scientific research and management
 IJRT: International Journal of Research InTechnology
 OCED: The Organization for Economic Co-operation and Development
 OCTROI, ENRTY TAX: These tax are applicable in Maharashtra and Gujarat and the charges
fluctuate as per the Government regulations. We tried, but were unable to confirm the exact amount.
 BIBLIOGRAPHY:

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Books :

Goods and Services Tax (GST) in India: ASSOCHAM GST Law and practice –

s. s. Gupta GST in INDIA - A Comprehensive Guide Book by Clear Tax