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PROJECT REPORT

On
PROJECT STUDY
( PAPER CODE : MB – 303 )
ON THE TOPIC
GST MODEL IN INDIA AND IT’S IMPACT ON CONSUMER’S
Submitted to
THE DIRECTOR
MANAGEMENT PROGRAMME
DEPARTMENT OF APPLIED ECONOMICS & COMMERCE
PATNA UNIVERSITY, PATNA

In the partial fulfillment for the award of the degree of


MASTER OF BUSINESS ADMINISTRATION
SESSION : 2023 – 25
Under the Guidance of : Submitted By :
Prof. (Dr.) Md. Alamgir Raushan Kumar

Associate Professor & Project Co-ordinator Roll No. - 44

Dept. of Applied Economics & Commerce MBA Semester – 3

Patna University, Patna Specialization – Finance

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DEPARTMENT OF APPLIED ECONOMICS & COMMERCE , PATNA UNIVERSITY

Date:

CERTIFICATE OF THE SUPERVISOR


This is certified that Mr. Raushan Kumar , Class Roll No. – 44, Semester 3 (Session – 2023-25)
Department of Applied Economics & Commerce, Patna University, Patna has prepared the
Project Report entitled “GST Model in India & it’s Impact on Consumer’s” under my general
supervision in the partial fulfillment of the requirements of the MBA course of the Patna
University.

Signature of the Guide


Prof. (Dr.) Md. Alamgir
Associate Professor & Project Co-ordinator

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DECLARATION

I, Raushan Kumar hereby declare that the work embodied in this project work titled “GST
Model in India & it’s Impact on Consumer’s” forms my own contribution to the research work
carried out under the guidance of Prof. (Dr.) Md. Alamgir.

This is the result of my own research work & 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 references.

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

Raushan Kumar

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ACKNOWLEDGEMENT

On the successful completion of my project “GST Model in India & it’s Impact on
Consumer’s”, I take the opportunity to express my deep sense towards all those people
without whose guidance, inspiration & timely help this project would have never seen the
light of the say.

First of all I would like to thanks “Patna University” for including such kind of project in the
curriculum.

I find great pleasure in expressing my deepest sense of gratitude towards my college “Dept.
of Applied Economics & Commerce” & our Head & Director “Dr. Shashank Bhushan Lall”.

I am very thankful to my guide Dr. Md. Alamgir(Associate Professor) who made me realizes
that each of us has the potential to work independently and gave us his valuable suggestions
and support whenever required and ensured that we could do the best in the Project.

Last but not least my parents and friends who encouraged and supported me for completion
of this project and their blessings.

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INTRODUCTION

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1.1 INTRODUCTION TO THE STUDY

Goods & Services Tax or GST as it is known is all set to be a game changer for the Indian Economy
Taxation system. GST evolved an all India One Nation One Tax regime. It has now been more than a
decade since the idea of national Goods & Services Tax ( GST) was mooted by Kellae Task Force in
2004. The Task Force strongly recommended fully integrated ‘GST’ on national basis.

The Union Finance Minister Shri P. Chitambram, while presenting the Central Budget (2006-2007),
announced for the first time a proposal to introduce a national level GST by April 1, 2010. However,
GST missed several deadlines and continued to be surrounded by clouds of uncertainity. Since now the
former finance minister of India Arun Jaitley in his budget speech of 2015 has announced time and
again that the tax will be introduced on 1 April 2016. In India, there are different indirect taxes applied
on goods and services by central and state government. GST is intended to include all these taxes into
one tax with seamless Input Tax Credit and charged on both goods and services. Thus, excise duty,
special additional duty, service tax, VAT to name a few will get replaced and will be added into GST. For
this, GST will have 3 parts CGST, SGST AND IGST. The central tax like excise duty will be submitted
into CGST and state tax like VAT into SGST. For the introduction of GST in the above form, the
Government needs to get the Constitution Amendment Bill passed so that the proposed objective of
subsuming all taxes and allowing states to tax subjects in Union list and vice versa is achieved.
Without these powers, it is not legally possible to move towards GST. However, the Lok Sabha
passed the Bill on 6th May 2015 and Rajya Sabha on 3rd August 2016. Subsequent to ratification of the
Bill by more than 50%of the States, Constitution (122 Amendment) Bill, 2014 received the assent of the
President on 8th September , 2016 and become Constitution (101st Amendment) Act 2016, which
paved the way for introduction of GST in India.

In the following year, on 27th March 2017, the Central GST legislation – Central Goods and Services
Bill, 2017 Integrated Goods and Services Tax Bill, 2017, Union Territory Goods and Services Tax Bill,
2017 and Goods and Services Tax (Compensation to State)Bill, 2017 were introduced in Lok Sabha.
Lok Sabha passed these bills on 29th March 2017and with the receipt of the President’s assent on 12th
April 2017, the bills were enacted. The enactment of the Central Acts is being followed by the enactment
of the State GST laws by various State legislatures. Telengana, Rajasthan, Chhattisgarh, Punjab, Goa
and Bihar are among the first one to pass their respective State GST laws.

Government is endeavouring to roll out GST by 1st July 2017, by achiving consensus on all the issues
relating thereto. It is geared to attain July 1st deadline for implementation of GST across India. 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,
luxuary tax, entertainment tax, entry tax, etc. For successful implementation of GST, it is necessary that
the Government at both Central and State levels agree to merge all their taxes into CGST/SGST.
Further, the base for taxation for both has to be the same. The exemptions, abatements etc. under
GST need to be common for both central and all states to avoid litigation. Further
exemptions/execlutions should be minimum to avoid break of credit chain. The law needs to provide
for single point compliances, absence of multistate audits etc. for the assessee.

Conceptually GST is expected to have numerous benefits like reduction in compliances in the long run
since multiple taxes will be replaced with one tax. It is expected to bring down prices and hence the
inflation since it will remove the impact of tax on tax and enable seamless credit. It is expected to
generate revenue for the country as the tax base will increase as the GST rate will be somewhere
around 27%with both goods and services covered. It is also expected to make exports from India
competitive and India a preferred destination for foreign investment since GST is a globally accepted
tax. France was the first country to implement GST in the year1954. 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. Before the implementing GST, addressing issues faced by
the financial service industry is important. The industry is currently facing issues inter alia on
determining nature of tax liability of their incomes, input credit recovery, deciding the place of provision
of their service, issues like intermediary service income, interchange income, correspondent bank
charges income, format of the service tax returns, time limits for compliances and revision of returns,
and so on. Unless these issues are addressed the industry would face major hurdles with GST. GST is
a multi state tax with compliances expected in different states. Thus, it is imperative to address the
issue of “place of supply” with clarity before GST.

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1.2 Background of Goods and Services Tax outside India
Goods and Services also known as the Value Added Tax(VAT) or Harmonized Sales Tax. Following are
some successfully implemented GST Model in other countries:

1. France:
●Rate of GST 19.6%
●France was the first country to introduce GST in 1954.

Worldwide, almost 150 countries have introduced GST in one or the other form since now. Most
of the countries have a unified GST system. Brazil and Canada follow a dual system vis-à-vis
India is going to introduce. In China, GST applies only to goods and the provision of repairs,
replacement and processing services.
2. Australia:
●Rate of GST 10%
●GST is administrated by the Tax office on behalf of the Australian Government and is
appropriated to the states and territories.
●Every company whose turnover exceeds 75,000 dollars is liable for registration under GST
and in default 1/11th of the income and some amount is form of penalty.
●There are provisions for credit back of GST, submission of returns according to limit decided,
maintenance of records etc. There they have to keep records for 5 years for the purpose of
GST.
3. Canada:
●GST is imposed at 5%in Part 9 of the Excise Tax Act. GST is levied on goods services made
in Canada except items that are either “exempt” or “zero-rated”.
● When a supplier makes a zero-rated supply, he is eligible to recover any GST paid on
purchases but the supplier who makes supply of Exempt goods he is not eligible take input tax credit
on purchases for the purpose of making the exempt goods and services.
4. New Zealand:

• Rate of GST 12.5%.


• Exceptions are rent collected on residential rental properties, donations and
financial services.

1.3 Background of Goods and Service Tax in India


The Kelkar Task Force on implementation of FRBM23 Act, 2003 had pointed out that although
the indirect tax policy in India has been steadily progressive in the direction of VAT Principle
since 1986, the existing system of taxation of goods and services still suffers from many
problems. The tax base is fragmented between Centre and States. Keeping significance of GST
in view, an announcement was made by then our Ex – Finance Minister Mr. P. Chidambaram in
his four budget speeches.
• Budget Speech 2004-05
• Budget Speech 2005-06
• Budget Speech of 2006-07
• Similar speech given in the Budget of 2007-08

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Need for GST
Deficiencies in the existing Value-Added Taxation:
❖ In the present regime, a manufacturer of excisable goods charges excise duty and value Added
tax (VAT) on intra-State sale of goods. However, the VAT dealer on his Subsequent intra-State sale
of goods charges VAT (as per prevalent VAT rate as Applicable in the respective state) on value
comprising of (basic value + excise duty Charged by manufacturer + profit by dealer).

❖ Further, in respect of tax on services, service tax is payable on taxable services Provided. W.e.f.
1 July 2012, service tax is levied on all ‘services’ other than the Negative List of services as
provided under Section 66D of the Finance Act, 1994 or else otherwise Exempted vide the Mega
Exemption Notification No. 25/2012-ST dated 20 June 2012 (“the Mega Exemption Notification”).

❖ Presently, from 1 June 2016, service tax is levied @ 15% [Service tax @ 14%, Swachh Bharat
Cess (SBC) @ 0.5% (w.e.f. November 15, 2015) and Krishi Kalyan Cess (KKC) @ 0.5% (w.e.f.
June 1, 2016)] on specified services provided by service providers in India.

❖ The existing indirect tax framework in India suffer from various shortcomings. Under The existing
indirect tax structure, the various indirect taxes being levied are not
Necessarily mutually exclusive.

❖ To illustrate, when the goods are manufactured and sold both central excise duty (CENVAT) and
State-Level VAT are levied. Though CENVAT and State-Level VAT are Essentially value added
taxes, set off of one against the credit of another is not possible as CENVAT is a central levy and
State-Level VAT is a State levy. Moreover, CENVAT is Applicable only at manufacturing level and
not at distribution levels. The existing Sales Tax regime in India is a combination of origin based
(Central Sales Tax) and destination Based multipoint system of taxation (State-Level VAT). Service
tax is also a value added Tax and credit across the service tax and the central excise duty is
integrated at the central Level.

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LITERATURE REVIEW

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Consistent with the federal structure of the country, the GST will have two components: One levied by
the Centre (hereinafter referred to as Central GST), and the other levied by The States (hereinafter
referred to as State GST). This dual GST model would be Implemented through multiple statutes (one
for CGST and SGST statute for every State). However, the basic features of law such as
chargeability, definition of taxable event and Taxable person, measure of levy including valuation
provisions, basis of classification etc. Would be uniform across these statutes as far as practicable.
GST is also referred as Value Added tax (VAT). It is a tax government collected at the final purchase
consumption.

However, according to Hooper and Smith (1997), GST is actually collected at various stages of the
production process. Accordingly, there is output tax, a GST tax charges by The suppliers on taxable
goods and services and input tax, a tax incurred by businesses on Goods and services purchases. It
is noted that GST is not a cost to the sellers and would Not appear in financial statements as
expenditure. Recently, the government initiative to Introduce Goods and Services Tax (GST) has been
a growing topic of interest in Malaysia. Despite the increasing popularity and success of GST
implementation around the world (Hooper & Smith, 1997), Malaysian citizens are not entirely
convinced with this new tax scheme. There are debates mainly centered on the advantages and
Disadvantages derived from the new tax initiative.

As per as India is concerned Agogo Mawuli (May 2014) studied, “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.

Dr. R. Vasanth Gopal (2011) studied, “GST in India: A Big Leap in the Indirect Taxation System” and
concluded that switching to seamless GST from current complicated indirect tax system in India will be
a positive step in booming Indian economy. Success of GST will lead to its acceptance by more than
130 countries In world and a new preferred form of indirect tax system in Asia also.

Ehtisham Ahmed and Satya Poddar (2009) studied, “Goods and Service Tax Reforms and
Intergovernmental Consideration in India” and found that GST introduction will provide Simple and
transparent tax system with increase in output and productivity of economy in India. But the benefits of
GST are critically dependent on rational design of GST.

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RESEARCH
METHODOLOGY

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It is based on secondary data of articles and newspapers . Considering the objectives of
study descriptive type research design is adopted to have more accuracy and rigorous Analysis of
research study. The accessible secondary data is intensively used for research study.

DATA COLLECTION

Dual GST Model introduced in India


❖ India has adopted a dual GST which will be imposed concurrently by the Centre and States, i.e.
Centre and States will simultaneously tax goods and services. Centre will have the power to tax
intra-State sales & States will be empowered to tax services. GST wil extend to whole of India
including the state of Jammu and Kashmir.

❖ GST is a destination based tax applicable on all transactions involving supply of goods and
services for a consideration subject to exceptions thereof. GST in India will comprise Of Central
Goods and Service Tax (CGST) – levied and collected by Central Government, State Goods and
Service Tax (SGST) – levied and No CENVAT after manufacturing stage Non-inclusion of several
local levies in State VAT such as luxury tax, entertainment tax etc. Non integration of VAT & service
tax Cascading of taxes on account of (i) levy of Non-VAT able CST and (ii) inclusion of CENVAT in
the value for imposing VAT double taxation of a transaction as both goods and services collected by
State Governments/Union Territories with State Legislatures and Union Territory Goods and Service
Tax (UTGST) – levied and collected by Union Territories without State Legislatures on intra-State
supplies of taxable goods and/or services. Inter-State supplies of taxable goods and/or services will
be subject to Integrated Goods and Service Tax (IGST). IGST will approximately be a sum total of
CGST and SGST/UTGST and will be levied by Centre on all inter-State supplies.

❖ There is single legislation – CGST Act, 2017 – for levying CGST. Similarly, Union Territories
without State legislatures [Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli,
Daman and Diu and Chandigarh] will be governed by UTGST Act, 2017 for levying UTGST. States
and Union territories with their own legislatures [Delhi and Puducherry] have to enact their own GST
legislation for levying SGST. Though there would be multiple SGST legislations, the basic features
of law, such as chargeability, definition of taxable event and taxable person, classification and
valuation of goods and services, procedure for collection and levy of tax and the like would be
uniform in all the SGST legislations, as far as feasible. This would be necessary to preserve the
essence of dual GST.

❖ In GST regime, tax (i.e. CGST and SGST/UTGST for intra-State supplies and IGST for inter-State
supplies) shall be paid by every taxable person and in this regard provisions have been prescribed
in the law. However, for providing relief to small businesses, a simpler method of paying taxes and
accounting thereof is also prescribed, known as Composition Scheme. Along with providing relief to
small-scale business, the law also contains provisions for granting exemption from payment of tax
on specified goods and/or services.

❖ Input Tax Credit (ITC) of CGST and SGST/UTGST will be available throughout the Supply chain,
but cross utilization of credit of CGST and SGST/UTGST will not be Possible, i.e. CGST credit
cannot be utilized for payment of SGST/UTGST and SGST/UTGST credit cannot be utilized for
payment of CGST. However, cross utilization Will be allowed between CGST/SGST/UTGST and
IGST, i.e. credit of IGST can be utilized for the payment of CGST/SGST/UTGST and vice versa.

❖ Since GST is a destination based consumption tax, revenue of SGST will ordinarily accrue to the
consuming States. The inter-State supplier in the exporting State will be allowed to set off the
available credit of IGST, CGST and SGST/UTGST (in that order) against the IGST payable on inter-
State supply made by him. The buyer in the importing state will be allowed to avail the credit of
IGST paid on inter-State purchase made by him. Thus, unlike the existing scenario where the credit
chain breaks in case of inter-State Sales on account of non-VAT able CST, under GST regime there
is a seamless credit flow in case of inter-State supplies too. The revenue of inter-State sale will not
accrue to the exporting State and the exporting State will be required to transfer to the Centre the
credit of SGST/UTGST used in payment of IGST. The Centre will transfer to the importing State the
credit of IGST used in payment of SGST/UTGST. Thus, the inter- State trade of Goods and services
(IGST) would need a robust settlement mechanism amongst the States and the Centre.
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A Central Agency is needed which can act as a clearing house and verify the claims and inform the
respective Governments to transfer the funds. This is possible only with the help of a strong IT
Infrastructure.

❖ Resultantly, Goods and Services Network (GSTN) – a Special Purpose Vehicle – has been set to
provide a shared IT infrastructure and services to Central and State Governments, taxpayers and
other stakeholders for implementation of GST.

GST PORTAL

The government’s portal for GST compliance is finally live and open for business registrations. The
GST portal is hosted at https://www.gst.gov.in/ and so far, only registrations are enabled on it.
Existing taxpayers or new businesses can apply to register and submit the required documents. All
the existing registered taxpayers will be granted provisional registration initially and would be
required to submit additional documents within 6 months.

GSTIN

For any dealer registered under state VAT law, a unique TIN number is issued by the respective
state tax authorities. Similarly, a service provider is assigned a service tax registration number by
the Central Board of Excise and Custom (CBEC). Going forward, in the new GST regime, all these
taxpayers will get consolidated into one single platform for compliance and administration purposes
and will be assigned registration under a single authority. The government has set up GSTN–a
special purpose vehicle to provide the IT infrastructure necessary to support GST Digitally. It is
expected that 8 million taxpayers will be migrated from various platforms into GST. All of these
businesses will be assigned a unique Goods and Services Tax Identification Number (GSTIN). But
most are yet not aware of the new registration process and the identification number.

Proposed GST Identification Number (GSTIN)

A complete break-up of the proposed GST Identification Number. Each taxpayer will be allotted a
state-wise PAN-based 15-digit Goods and Services Taxpayer Identification Number (GSTIN).

▪ The first two digits of this number will represent the state code as per Indian Census 2011

▪ The next ten digits will be the PAN number of the taxpayer

▪ The thirteenth digit will be assigned based on the number of registration within a state

▪ The fourteenth digit will be Z by default

▪ The last digit will be for check code

A format of proposed GSTIN has been shown in the image below :

Format of GSTIN

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GST Registration

Every business carrying out a taxable supply of goods or services under GST regime and whose
turnover exceeds the threshold limit of Rs. 20 lakh/ 10 Lakh as applicable will be required to register
as a normal taxable person. This process is of registration is referred as GST registration.

Importance of GST Registration

GST registration is critical because it will enable you to avail various benefits that are available
under the GST regime. One such benefit is to avail seamless input tax credit. Multiple taxes are
being clubbed under GST and thus the cascading of taxes that is prevailing currently will no longer
be the case. Also, timely registration will help you avoid any kind of interface with tax authorities.

Casual Registration

A person who occasionally supplies goods and/or services in a territory where GST is applicable but
he does not have a fixed place of business. Such a person will be treated as a casual taxable
person as per GST.

Example: A person who has a place of business in Bangalore supplies taxable consulting services
in Pune where he has no place of business would be treated as a casual taxable person in Pune.

Composition Dealer

This is an option available to small businesses and taxpayers having a turnover less than Rs. 75
lakhs. They can opt for Composition scheme where they will tax at a nominal rate of 1% or 2.50%
(for manufacturers) CGST and SGST each (rates will be notified later). They will be required to
maintain much less detailed records and file only 1 quarterly return instead of three monthly returns.
However, they cannot issue taxable invoices, i.e., collect tax from customers, but are required to pay
the tax out of their own pocket. They cannot also claim any input tax credit. Composition levy is
available to only small businesses. It is not available to interstate sellers, e-commerce traders and
operators.

Applicability GST

It will apply when turnover of the business exceeds Rs. 20 lakhs (Limit is Rs. 10 lakhs for the North-
Eastern States). [Earlier the limit was Rs. 10lakhs and Rs. 5lakhs for NE states.]

Migration to GST

All existing Central Excise and Service Tax assessees and VAT dealers will be migrated to GST. To
migrate to GST, assessees would be provided a Provisional ID and Password by CBEC/State
Commercial Tax Departments.

Provisional IDs would be issued to only those assessees who have a valid PAN associated with
their registration. An assessee may not be provided a Provisional ID in the following cases:

1. The PAN associated with the registration is not valid

2. The PAN is registered with a State Tax authority and Provisional ID has been supplied by
the said State Tax authority.

3. There are multiple CE/ST registrations on the same PAN in a State. In this case, only 1
Provisional ID would be issued for the 1st registration in the alphabetical order provided any
of the above 2 conditions are not met.

The assessees need to use this Provisional ID and Password to login to the GST Common Portal
https://www.gst.gov.in where they would be required to fill and submit the Form 20 along with
necessary supporting documents.

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Penalties for Not Registering Under GST

An offender not paying tax or making short payments has to pay a penalty of 10% of the tax amount
due subject to a minimum of Rs. 10,000. The penalty will be high at 100% of the tax amount when
the offender has evaded i.e., where there is a deliberate fraud. However, for other genuine errors,
the penalty is 10% of the tax due.

Multiple Registrations Under GST

A person with multiple business verticals in a state may obtain a separate Registration for each
business vertical. PAN is mandatory to apply for GST registration (except for a non-resident Person
who can get GST registration on the basis of other documents). A registration which has been
rejected under CGST Act/SGST Act shall also stand rejected for the purpose of SGST/CGST act.

GST RATES COMPARISION EARLIER TAX SYSTEM V/S NEW TAXATION

GST council has made the much-awaited announcements around tax rates on various categories of
goods on day one of a two-day meeting of the said council at Srinagar. There has been a hype
around these rates for a while and now these rates are finally in the public domain.

As soon as the GST rates were announced a huge wave of curiosity hit across industry and trade
bodies. Everyone is evaluating their position as a result of this change. So, in this article, we bring
you our analysis of these GST rates.

We know that the GST slabs are pegged at 5%, 12%, 18% & 28%. According to the GST Council,
the tax structure for common-use goods are as under:

Services

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Lifestyle and Home

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Consumer Goods

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Other’s

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GST calculation

The GST shall have two components: one levied by the Centre (referred to as Central GST or
CGST), and the other levied by the States(referred to as State GST or SGST). Rates for Central
GST and State GST would be approved appropriately, reflecting revenue considerations and
acceptability.

The CGST and the SGST would be applicable to all transactions of goods and services made for a
consideration except the exempted goods and services.

Cross utilization of ITC both in case of Inputs and capital goods between the CGST and the SGST
would not be permitted except in the case of inter-State supply of goods and services (i.e. IGST).

The Centre and the States would have concurrent jurisdiction for the entire value chain and for all
taxpayers on the basis of thresholds for goods and services prescribed for the States and the
Centre.

THE FOLLOWING COMPARISION SHOW THE BENEFIT OF GST:


Comparison between Multiple Indirect tax laws and proposed one law

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Notes: - Input tax credit available to wholesaler is Rs.980 and Rs.
1,680 in case of without GST and with GST respectively.

Likewise Input tax credit available to Retailer is Rs. 1,078 and Rs.
1,848 in case of without GST and with GST respectively.

In case, VAT rate is also considered to be 12%, the saving to consumer


would be 1.15%.

GST benefits to common man

The basis of Goods and Services Tax is the seamless flow of Input Tax Credit (ITC) along the entire
value addition chain. At every step of the manufacturing process, businesses will have the option to
claim the tax already paid in the previous transaction. Understanding this process is crucial for
businesses. A detailed explanation here. To understand this, let us first understand what is Input
Tax Credit. It is the credit an individual receives for the tax paid on the inputs used in manufacturing
the product. So, if there is a 10% tax that the individual must submit to the government, he can
subtract the amount he has paid in taxes at the time of purchase and submit the balance amount to
the government.

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Understand this with a hypothetical numerical example :

Say a shirt manufacturer pays Rs. 100 to buy raw materials. If the rate of taxes is
set at 10%, and there is no profit or loss involved, then he has to pay Rs. 10 as tax.
So, the final cost of the shirt now becomes Rs (100+10=) 110.

At the next stage, the wholesaler buys the shirt from the manufacturer at Rs. 110,
and adds labels to it. When he is adding labels, he is adding value. Therefore, his
cost increases by say Rs. 40. On top of this, he has to pay a 10% tax, and the final
cost therefore becomes Rs. (110+40=) 150 + 10% tax = Rs. 165. Now, the retailer
pays Rs. 165 to buy the shirt from the wholesaler because the tax liability had
passed on to him. He has to package the shirt, and when he does that, he is adding
value again. This time, let’s say his value add is Rs. 30. Now when he sells the
shirt, he adds this value (plus the VAT he has to pay the government) to the final
cost. So, the cost of the shirt becomes Rs. 214.5 Let us see a breakup for this:
Cost = Rs. 165 + Value add = Rs. 30 + 10% tax = Rs. 195 + Rs. 19.5 = Rs. 214.5

So, the customer pays Rs. 214.5 for a shirt the cost price of which was basically
only Rs. 170 (Rs 110 + Rs. 40 + Rs. 30). Along the way the tax liability was passed
on at every stage of transaction and the final liability comes to rest with the
customer. This is called the Cascading Effect of Taxes where a tax is paid on tax
and the value of the item keeps increasing every time this happens.

In the case of Goods and Services Tax, there is a way to claim credit for tax paid in acquiring input.
What happens in this case is, the individual who has paid a tax already can claim credit for this tax
when he submits his taxes.

In our example, when the wholesaler buys from the manufacturer, he pays a 10% tax on his Cost
Price because the liability has been passed on to him. Then he adds value of Rs. 40 on his Cost
Price of Rs. 100 and this brings up his cost to Rs. 140. Now he has to pay 10% of this price to the
government as tax. But he has already paid one tax to the manufacturer. So, this time what he does
is, instead of paying Rs (10% of 140=) 14 to the government as tax, he subtracts the amount he has
paid already. So, he deducts the Rs. 10 he paid on his purchase from his new liability of Rs. 14, and
pays only Rs. 4 to the government. So, the Rs. 10 becomes his input credit.

When he pays Rs. 4 to the government, he can pass on its liability to the retailer. So, the retailer
pays Rs. (140+14=) 154 to him to buy the shirt. At the next stage, the retailer adds value of Rs. 30
to his cost price and has to pay a 10% tax on it to the government.

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When he adds value, his price becomes Rs. 170. Now, if he had to pay 10% tax on it, he would
pass on the liability to the customer. But he already has input credit because he has paid Rs.14 to
the wholesaler as the latter’s tax. So, now he reduces Rs. 14 from his tax liability of Rs. (10% of
170=) 17 and has to pay only Rs. 3 to the government. And therefore, he can now sell the shirt for
Rs. (140+30+17) 187 to the customer.

In the end, every time an individual was able to claim input tax credit, the sale price for him reduced
and the cost price for the person buying his product reduced because of a lower tax liability. The
final value of the shirt also therefore reduced from Rs. 214.5 to Rs. 187, thus reducing the tax
burden on the final customer.

So essentially, Goods & Services Tax is going to have a two-pronged benefit. One, it will reduce the
cascading effect of taxes, and second, by allowing input tax credit, it will reduce the burden of taxes
and hopefully price.

Impact of GST

OVERALL GST IMPACT:-

a) Change in law and procedure: Since it is a major indirect tax reform in India, there would be new
legislations and procedures. The entire indirect tax code would be a new one.

b) Change in tax-rates: The standard rate of 12.5 % for central excise, Service tax, along with
residuary rate of VAT at 12.5-14.5% brings the overall rate to 25%-30%. But, post GST, the
general rate will be 18%; a net gain of almost 7%-12%. Most of the dealers and consumers
would experience the change in tax rates, either significantly or marginally. When the tax rates
are increased for some products it could lead to tax evasion as well.

c) GST based on HSN: The central excise tariff based classification would no longer be applicable.
It would reduce the interpretational issues in respect of class of commodities.

d) Availment of tax credit: GST would facilitate near seamless credit across the entire supply chain
and across all States under a common tax base. At present no cross credits are available
across central excise/service tax to local VAT/sales tax. Under the GST law, the Input Tax
Credit (ITC) (set off) would be given for Central GST against CGST and the States would give
Input tax credit (ITC) SGST to SGST. Cross utilization of credit between Central GST and State
GST would not be allowed.

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e) Credit availment based on vendor’s invoices: The credit of excise duty paid is available based
on the excise invoice raised by manufacturer or service provider. The credit is available under
the Service Tax law when the invoice amount is paid within 3 months of the invoice date. In
respect of joint charge and reverse charge, based on receipt of payment on the basis of
payment challans of the assessee. Under State VAT law, credit is allowable on the basis of tax
invoice. Under GST the credits could be availed based on the invoices of vendors under CGST
and SGST. But the onus may shift onto the assessee to ensure that the amount of the
CGST/SGST has been deposited in the respective Government treasury by the vendor. This
provision has been added to bring in tax discipline but smaller businesses may find transaction
cost increasing due to this.

f) Avoidance of Double Taxation: Presently, several transactions suffer VAT as well as Service
Tax such as works contract or licensing of software. This could be resolved under the GST
Regime by redefining what is goods and service.

g) Changes in the Accounting Software: Dealers and service providers need to modify/replace the
accounting and taxation software. Initially there could be investment costs, costs of training in
GST of people at each level starting from junior/mid to higher level managerial staff,
management group/stakeholders

h) Training: Comprehensive training would be required to the staff members of the business
community, both at senior level and also at junior level across the purchase, sales and finance
functions. VAT + CE/ ST officers would also need to understand the law well.

i) Competent Professionals: There are specialized consultants for Excise Duty, Service Tax and
VAT. With the GST, only a single consultant maybe required who can handle all GST natters.
Compliance for the SME may necessitate competent tax preparers.

j) Amending existing contracts: Assessees have to incorporate an extra clause in the existing
Contracts to collect CGST and SGST as applicable.

ON INDIA:-

Goods and Services Tax (GST) is expected to provide the much-needed stimulant for economic
growth in India by transforming the existing basis of indirect taxation towards free flow of goods and
services within the economy and also eliminating the cascading effect of tax on tax. In view of the
important role that India is expected to play in the world economy in the years to come, the
expectation of GST being introduced is high not only within the country, but also in neighbouring
countries and in developed economies of the world.

Some of the imp impacts are:-

a) Increased FDI: The flow of Foreign Direct Investments may increase once GST is implemented
as the present complicated/ multiple tax laws are one of the reasons foreign Companies are
wary of coming to India in addition to widespread corruption.

b) Growth in overall revenue: It is estimated that India could get revenue of $15 billion per annum
by implementing the Goods and Services Tax as it would promote exports, raise employment
and boost growth. Over a period, the dilution of the principles may see that only part of this is
accruing.

c) Growth in overall revenue: It is estimated that India could get revenue of $15 billion per annum
by implementing the Goods and Services Tax as it would promote exports, raise employment
and boost growth. Over a period, the dilution of the principles may see that only part of this is
accruing.

d) Simplified tax laws: This reduces litigation and waste of time of the judiciary and the assessee
due to frivolous proceedings at various levels of adjudication and appellate authorities. Present
law appears to be much worse and an amalgam of the bad parts of VAT/ ST/ CE.

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e) Increase in exports and employment: GST could also result in increased employment,
promotion of exports and consequently a significant boost to overall economic growth and
factors of production –land, labour and capital.

ON INDIAN ECONOMY:-

• Reduce tax burden on producers and foster growth through more production. This double taxation
prevents manufacturers from producing to their optimum capacity and retards growth. GST would
take care of this problem by providing tax credit to the manufacturer.

• Various tax barriers such as check posts and toll plazas lead to a lot of wastage for perishable
items being transported, a loss that translated into major costs through higher need of buffer stocks
and warehousing costs as well. A single taxation system could eliminate this roadblock for them.

• A single taxation on producers would also translate into a lower final selling price for the consumer.

• Also, there will be more transparency in the system as the customers would know exactly how
much taxes they are being charged and on what base.

• GST would add to government revenues by widening the tax base.

• GST provides credits for the taxes paid by producers earlier in the goods/services chain. This
would encourage these producers to buy raw material from different registered dealers and would
bring in more and more vendors and suppliers under the purview of taxation.

• The proposed GST regime, which will subsume most central and state-level taxes, is expected to
have a single unified list of concessions/exemptions as against the current mammoth exemptions
and concessions available across goods and services.

The introduction of Goods and Services Tax would be a very noteworthy 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 alleviate 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 terms of
reduction in the overall tax burden on goods and services. Introduction of GST would also make
Indian products competitive in the domestic and international markets. Last but not the least, this
tax, because of its transparent character, would be easier to administer. However, once
implemented, the system holds great promise in terms of sustaining growth for the Indian economy.

Negative list under GST

Schedule III: -Activities or transactions which shall be treated neither as a supply of goods nor a
Supply of services .

1. Services by an employee to the employer in the course of or in relation to his employment.

2. Services by any Court or Tribunal established under any law for the time being in force.

3. Functions performed by the MPs, MLAs, Members of municipality and Member of other local
authorities.

4. Duties performed by any person who holds any constitutional post.

5. Duties performed by any person as a Chairperson or a Member or a Director in a body


established by the Central Government or a State Government or local authority and who is not
deemed as an employee before the commencement of this clause.

6. Services of funeral, burial, crematorium or mortuary including transportation of the deceased.

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7. Sale of land and sale of building where entire consideration has been received after issuance of
completion certificate.

8. Actionable claims other than lottery, betting and gambling.

Positive and Negative impact of GST on various services and goods

GST will turn India into one common market, leading to greater ease of doing business and big
savings in logistics costs from companies across all sectors. Some companies will gain more as the
GST rate will be lower than the current tax rates they pay, others will lose as the rate will be higher
than the present effective rate. While the rate of GST is yet to be decided, industry observers have
assumed an 18% rate recommended by a government panel in making their impact calculations. ET
looks at the likely impact across sectors .

TECH

Positive – GST will eliminate multiple levies. It will also allow deeper penetration of digital services.

Negative – IT companies can have several delivery centers and offices working together to service
a single contract. With GST, companies might require each centers to generate a separate invoice
to every contracting party. Duty on manufactured goods is going to go up from existing 14-15% to
18%, which means the cost of electronics from mobile phones to laptops- will rise.

FMCG

Positive – Companies could generate substantial savings in logistics and distribution costs as the
need for multiple sales depots will be eliminated. FMCG companies pay nearly 24-25% including
excise duty, VAT and entry tax. GST at 17-19% could yield significant reduction in taxes.
Warehouse rationalization and reduction of overall tax rates, is expected to generate saving which
could cumulatively range between 200-300bps. Key beneficiaries: Hindustan Unilever, Colgate,
GSK, Asian Paints .

Negative – If the recommended 40% “sin/demerit” GST for aerated beverages and tobacco
products is levied, then prices may increase by over 20%. Food companies: many see increase in
effective tax as many companies enjoy concessional rate of excise.

E – COMMERCE

Positive – GST will help create a single unified market across India and allow free movement and
supply of goods in every part of the country. It will also eliminate the cascading effect of taxes on
customers which will bring efficiency in product cost.

Negative – The tax collection at source (TCS) guidelines in the GST regime will increase
administration, documentation workload for ecommerce firms and push up costs.

TELECOM

Positive – Handset prices likely to come down/even out across states. Manufacturers are also
likely to pass on to consumers cost benefits they will get from consolidating their warehouses and
efficiently managing inventory for handset makers, GST will bring in ease of doing business as they
may no longer need to set up state specific entities and transfer stocks to them and invest heavily
into logistics of creating warehouses in each state across the country.

Negative – Call charges, data rates will go up if tax rate in the GST regime exceeds 15%. Tower
firms won’t be able to set off their input duty liabilities if petro-products continue to stay outside GST
framework. Negative for Bharti Airtel, Idea and Reliance Comm.

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AUTOMOBILES

Positive – On-road price of vehicles could drop by 8%, as per a report by Motilal Oswal Securities.
Lower prices can be construed as indirect stimulus to boost volumes. Key beneficiaries: Maruti
Suzuki, M&M; Eicher Motors’ margins may expand.

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

MEDIA

Positive – DTH, film producers and multiplex players are levied service tax as well as
entertainment tax, GST will bring major change and uniformity in businesses. Taxes could go down
by 2-4%. Multiplex chains will save on revenues as there will be a more uniform tax, unlike current
high rate of entertainment tax levied by different states. It may lower the average ticket price, and
increase the footfalls in multiplexes.

GST will be a big boon to film producers and studios that currently pay service tax on most of their
cost, but cannot charge input credit on creative services (payments to artists etc) as they fall under
the negative list. Under GST, they will be able to claim credit of these services also, which will help
is lowering the overall cost.

INSURANCE

Negative – INSURANCE policies: life, health and motor will begin to cost more from April 2017 as
taxes will go up by up to 300 basis points.

AIRLINES

Negative – Flying to become expensive, as service tax will be replaced by GST. Service tax on
fares currently range between 6% and 9% (depending on the class of travel). With GST, the rate will
surpass 15%, if not 18%, effectively doubling the tax rate.

CEMENT

Positive – The effective rate of tax for cement companies is now 25%. If GST rates are fixed at 18-
20% then the overall tax incidence will be lower GST IS expected to lead to savings in transportation
cost, which currently comprises up to 20-25% of total revenue. One common market will bring down
the number of depots in the country. Ultratech states that its depots will come down to 100 from 550
at present.

How GST impacts consumer goods (FMCG) industry

The new Goods and Services Tax (GST) regime will bring several benefits for the economy, and
could particularly vitalise the fast-moving consumer goods (FMCG) industry.

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— 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.

Products to be taxed at higher rate

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GST beneficiaries

The rates for various FMCG segments have mostly been along expected lines. Items of mass
consumption— Toothpaste, soaps, hair oil—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.

Products to be taxed at lower rate

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. “With the anti-profiteering clause in place,
companies would be required to pass on the benefit of tax rates to the consumer in the form of lower
prices,” says Sanjay Manyal, Analyst, ICICI Securities.

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Lower prices could potentially support volume growth for certain products, particularly in the rural
segment. “We believe 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,” says Manyal.
Analysts also point out that tax exemption provided to several critical products required for food
processing—jaggery,cereals and milk— would benefit this industry.

So, which are the companies that stand to gain from a benign tax regime? The extent of impact
would depend on the product mix of the companies. Oral care major Colgate Palmolive is likely to
emerge as the biggest beneficiary. “Colgate pays an effective tax of 25-26%. The new 18% tax on
toothpastes (make up 80% of the company’s sales) is a positive, particularly as it levels the playing
field against Dabur and Patanjali, who enjoy tax benefits,” says a Motilal Oswal report. Hair and
edible oil companies too will benefit. “Marginally lower rates in hair oil with no increase in edible oil
rates will benefit Marico,” says an Axis Capital report.

Adversely impacted Firms


Surprisingly, some of the widely consumed products have been placed under the highest tax slab of
28%— slightly higher than the rate levied earlier. “Higher tax rate in paints and possibly baby food
will marginally impact Asian Paints and Nestle,” says the Axis Capital report. Higher tax rate for
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.

However, it will not have much impact on the sale volumes, say analysts. 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, 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. The increase, in some cases, is only marginal.

However, the firms who were focusing on premiumisation of their product mix to drive profitability,
could be hurt because of the higher taxes. These firms may have to rethink strategy and realign
their portfolio. Ayurvedic Products—a segment that is seeing increased focus from leading FMCG
players—are to be taxed at 12%, slightly higher than the prevailing rate. This may hurt Dabur, which
has a wide portfolio of ayurvedic products. Emami too could come under pressure. Ayurvedic
players were expecting the tax rate to go down, given the government’s thrust on popularising
traditional Indian medicine.

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.

How will GST affect my taxation as a common man ?

With the Rajya Sabha set to pass the long-awaited Goods and Services Tax (GST) bill, country’s
most transformative tax reform in decades is likely to affect in the common man in numerous ways.

1. Eating out to get expensive - For eating out, if you spend Rs. 1000. Currently you pay on
an average 18.5 per cent as service tax and VAT. So apart from the service charge, you usually
have to bear the burden of Rs.1185. Under the GST regime, its expected that the rates can be
fixed at 18 per cent or above. Accordingly at 20 per cent approximate tax rate, your bill is set-to
go up, to at least 1200 rupees. “Services will get more expensive if GST is implemented as
states will now have the services under their net andhence it will mean they can fix higher
rates,” said dk pant, chief economist, India ratings-fitch ratings.

2. Phone bills to get expensive - As the states are expected also to decide service tax rates,
your phone bill could see escalation of taxes. So on a bill of Rs 1000 on which you pay service
tax of 15 percent and finally pay Rs 1150. Post the GST, if the tax rate is fixed at 18 per cent
then you will have to shell at least Rs 1180. Rajan Mathews, cellular operators association of
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India told India today, “Under the GST, the tax rate is bound to go up and the telecom operators
will have to pass it on to the consumers, we can look at internet packs and call rates getting
higher.”

3. Readymade garments to get cheaper - Buying clothes and fashion brands will be
cheaper, as the effective excise duty (7.5per cent) and VAT of average 5 per cent will be
subsumed in GST slab. So if you pick up a Rs 1000 t-shirt today, you pay 1125 including
various taxes. But if GST is kept at 12 percent, then your final bill will be Rs 1120.

4. Buying car is cheaper – Buying a car will not only be easier in different states with price
similarity between manufacturing and non-manufacturing states but tax experts believe it will be
cheaper as well. For example, a Rs 5 lakh car attracts excise duty of 12.5 per cent, and along
with vat roughly comes to Rs 6.25 lakh. Now under the GST it is expected to go down as much
as Rs 35,000 if the rate is fixed at 18per cent, so for you the price will be Rs 5.9 lakh rupees.
“We will see more tax competitive rates and will reduce prices for consumers. We are looking
forward to the GST”, Roland Folger, Mercedes-Benzes India told India Today.

5. Buying phones to get expensive – If you planning to buy an imported phone from the
market the countervailing duty and vat comes to 12.8 per cent. So if the GST council decides to
peg the rate at 18 percent, then for a Rs 10,000 phone for which you pay Rs 11,280 currently,
you will have to shell out Rs 11,800.

6. Led TVs to get cheaper – But watching TV could get cheaper, as part of the make in
India initiative, the GST is expected to be lower. So at present for Rs 20,000 led TV you pay
around 24.5 per cent tax shelling out Rs 24,900 eventually. As the GST rate is expected to be at
18 per cent, for you the cost will come down to Rs 23,600.

7. Jewellery to get expensive – Tax experts have pointed how currently only 2 per cent of
effective taxes is passed on to the consumers but as per the GST model, at least 6 per cent
rates could be imposed, impacting the jewellery purchase.

8. Online buying – Buying bags, shoes, electronics online will be getting more expensive as
the e-commerce industry comes into a tax net and will have to pay tax deducted at source for
every purchase from its sellers. So E-Commerce companies which will see shrinking of profit
margins & increase tax compliance net could slas discounts & freebies that they offer. “E-
Commerce will see revision of its tax compliance and its time we understand the industry in
India. But consumers can benefit from lower logistical cost and faster delivery. Overall tax
collection will be a challenge, Harishankar Subramaniam, national leader, indirect tax.

Impact of GST on Consumer’s/Common Man

In the GST system, taxes for both Centre and State will be collected at the point of sale. Both
will be charged on the manufacturing cost. Individuals will be benefited by this as prices are
likely to come down and lower prices mean more consumption, and more consumption means
more production, thereby helping in the growth of the companies.

➢ In the long run, the lower tax burden could translate into lower prices on goods for
consumers. The tax structure will be made lean and simple.
➢ All Indirect taxes will cut down to one tax , good for common man to understand and to
follow .It can bring more transparency.
➢ Fall in Prices of some of Goods: removing such layered taxation, prices of some goods
are likely to come down. However, this benefit generally doesn’t reach the ultimate
consumer as sellers tend to raise underlying prices and increase their profit which
offsets the gain due to lower taxes. But I hope that some benefit will definitely reach the
consumer.
➢ Less corruption – Number of departments will reduce which in turn may lead to less
corruption.

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CONCEPTUAL FRAMEWORK

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The country will positive impact immensely in three ways from the GST:

First: - The GST will greatly boost the GDP. Lesser taxes leads, to lower prices of goods and
services. Lower prices lead, to increased purchasing power of the consumers. Increased purchasing
power leads to more demand of the goods and services. More demands lead to more production.
More production leads to Higher GDP. Hence, GST will boost the GDP.

Second: - The GST will facilitate ‘Make in India’ by converting the geographical landscape of the
country into a single market. Despite being one country, India is a union of 30 or more markets. Too
many taxes in the current system like the Central Sales Tax (CST) on inter-state sales of goods;
numerous intra-state taxes; and the extensive nature of countervailing duty exemptions, favour
imports over domestic production. GST would get rid of the CST and subsume most of the other
taxes. And since, it will also be applicable on imports, the major tax factor working against ‘making
in India’ will disappear, greatly boosting the production and in turn exports. This will ultimately help
bridge the current account deficit.

Third: - The GST would improve tax governance in two ways. One, like the value added tax (VAT),
it is a self-collecting and self-enforcing tax. What it essentially means is that the companies buying
supplies from outside parties will insist on tax payment on goods supplied as without this they can’t
get setoffs on their own final product sales. Two, due to the dual monitoring structure of the GST –
one by the states and another by the Centre – it is difficult to evade tax. Even if one set of tax
authorities overlooks or fails to detect evasion, there is the possibility that the other overseeing
authority may not. To reap these benefits, it is important that the GST is well-designed and the
revenue-neutral rate is such that protects revenue, simplifies administration, encourages
compliance, avoids adding to inflationary pressures, and keeps India in the range of countries with
reasonable levels of indirect taxes.

Some other elementary benefits of GST Model in INDIA

Uniform GST Registration: - The model legislation for the introduction of Goods and Services Tax
(GST) will have a provision for registration of individuals and companies which pay the tax. The
registration will be done through a uniform PAN-linked business identification number. The
Department of Revenue in the Ministry of Finance had recently sent a proposal to state
governments for making the 10-digit Permanent Account Number (PAN) the starting point for
registering GST payees.

Input Tax Credit in GST: - Input Tax Credit Mechanism is available to you when you are covered
under the GST Act. Which means if you are a manufacturer, supplier, agent, e-commerce operator,
aggregator or any of the persons mentioned here, registered under GST, you are eligible to claim
INPUT TAX CREDIT for tax paid by you on your purchases.

Growth of Revenue in States and Union: - It is expected that the introduction of GST will increase
the tax base but lowers down the tax rates and also removes the multiple point taxation. This will
lead to higher amount of revenue to both the states and the union. Reduces transaction costs and
unnecessary wastages: - If government works in an efficient mode, it may be also possible that a
single registration and a single compliance will suffice for both SGST and CGST provided
government produces effective IT Infrastructure and integration of states level with the union.

Reduces Average Tax burdens: - Under GST mechanism, the cost of tax that consumers have to
bear will be certain and it is expected that GST would reduce the average tax burdens on the
consumers.

Reduces the corruption: - It is one of the major problems that India is overwhelmed with. We cannot
expect anything substantial unless there exists a political will to root it out. This will be a step
towards corruption free Indian Revenue Services. Present CST will be removed and need not to be
paid. At present, there is no input tax credit available for CST. There are many indirect taxes in state
and central level currently, which will be included by GST. i.e. you need to pay a single GST instead
of all of them. Uniformity of tax rates across the states Ensure better compliance due to aggregate
tax rate reduces. By reducing the tax burden, the competitiveness of Indian products in international
market is expected to increase and there by development of the nation. Prices of goods are
expected to reduce in the long run as the benefits of less tax burden would be passed on to the
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consumer.

Negative Impacts:

1. Higher Tax on Certain Services: The service tax rate increased from 15% (pre-GST) to 18%,
increasing costs for consumers of telecom, banking, and other services.

2. Initial Inflationary Pressures: Post-GST implementation, there was temporary inflation due to
realignment of tax rates and supply chain adjustments.

3. Compliance Costs Passed to Consumers: Small businesses’ increased compliance costs under
GST are sometimes passed on to end consumers.

4. Complex Tax Structure: Multiple tax slabs and exemptions add complexity, sometimes leading
to misclassification and higher costs for specific goods.

Simplification of Various Terms of GST

Intra-State Movement: - An intra-State supply if the goods remain within the same state. A supply of
Services shall be – (a) An inter-State supply if the service provider and the service recipient are
located in different States. (b) An intra-State supply if the service provider and the service recipient
are located in the same State.

Inter- State Movement: - An inter-State supply if the supply involves the movement of goods from
one state to another.

Explanation: Where the movement of goods commences and terminates in the same state it shall
not be deemed to be a movement of goods from one State to another by reason merely of the fact
that in the course of such movement the goods pass through the territory of any other State.

CGST: - CGST means Central Goods and Service Tax. CGST is a part of Goods and Service Tax. It
is covered under Central Goods and Service Tax Act 2016. Taxes collected under Central Goods
and Service tax will be the revenue for central Government. Present Central Taxes like Central
excise duty, Additional Excise duty, Special Excise Duty, Central Sales Tax, Service Tax etc. will be
subsumed under Central Goods and Service Tax.

SGST: - SGST means State Goods and Service Tax. It is covered under State Goods and Service
Tax Act 2016. A collection of SGST will be the revenue for State Government. The introduction of
SGST all the state taxes like Value Added Tax, Entertainment Tax, Luxury Tax, Entry Tax etc. will
be merged under SGST. For example, if goods are sold or services are provided within the State
then SGST will be levied on such transaction.

IGST: - IGST means Integrated Goods and Service Tax. IGST falls under Integrated Goods and
Service Tax Act 2016. Revenue collected from IGST will be divided between Central Government
and State Government as per the rates specified by the government. IGST will be charged on
transfer of goods and services from one state to another state. Import of Goods and Services will
also be deemed to be covered under Inter-state transactions so IGST will be levied on such
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transactions. For example, if Goods or services are transferred from Rajasthan to Maharashtra then
the transaction will attract IGST.

UTGST: - The full form of UTGST is Union Territory Goods and Service Tax. UTGST is a part of
Goods and Service Tax in India. GST under supply of goods and services takes place in Union
Territories like Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and
Diu, Delhi (National Capital Territory of Delhi), Lakshadweep, Puducherry etc. is accounted under
UTGST. A separate Act is being implemented for Union Territory states to impose and administer
GST in India in the name of UTGST Act. Under UTGST Act, the details of GST rates payable
against the movement of goods and services in Union territories are explained. The UTGST bill is
presented in respective states government to implement as UTGST Act.The above information is
about the meaning of UTGST under GST in India, the mechanism of UTGST under GST system in
India and union territory states falls under UTGST.

SCOPE OF THE GST

The scope of the study limits up to the study of GST under Indirect Tax System. GST shall cover all
goods and services, except alcoholic liquor for human consumption, for the levy of goods and
services tax. In case of petroleum and petroleum products, it has been provided that these goods
shall not be subject to the levy of Goods and Services Tax till a date notified on the recommendation
of the Goods and Services Tax Council.

All goods and services are covered under GST Regime except Alcoholic liquor for Human
Consumption, Tobacco Products subject to levy of GST and Centre may also levy Excise duty GST
Council yet to decide the incidence and levy of GST on following;
a) Crude Petroleum

b) High Speed Diesel (HSD)

c) Motor Spirit (Petrol)

d) Natural Gas

f) Aviation Turbine Fuel

Also how Implementation of GST would impact the consumer’s . With the Indirect Tax like GST
consumer’s would be more aware of the percentage of tax charged on the goods they consume
than earlier imposition of taxes which wouldn’t be noticed by them .

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DATA ANALYSIS
&
INTERPRETATION

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INTRODUCTION TO ANALYSIS:

In order to extract meaningful information from the data them. The analysis can be conducted by
using simple statistical tools like percentages, averages and measures of dispersion. Alternatively,
the collected data may be analysed, the data analysis is carried out. The data are first edited, coded
and tabulated for analysing by using diagrams, graphs, charts, pictures etc. Data analysis is the
process of planning the data in an ordered form, combining them with the existing information and
extracting from them. Interpretation is the process of drawing conclusions from the gathered data in
the study. In this research the researcher has analysed the data using percentages and graphs.

DATA ANALYSIS TOOLS USED:

In this research the data analysis tools used are percentages and graphs. The various attributes
were analysed separately and the importance to each was calculated on the basis of the
percentage. The rank having the maximum percentage was taken to be preferred importance to the
particular attribute. After looking at each attribute separately, all the attributes were considered
together to develop a map on the most preferred rank for all the attributes

TABLE 1

AGE OF RESPONDENTS

SOURCE: - SURVEY DATA

INFERENCE: The above table classified the respondents according to their age group. The majority
of the respondents belong to the age group 29 to 38 years with 40% and the age group 19-28 and
39-48 both with second majority of 30% each .

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GRAPH 1

AGE OF RESPONDENTS

TABLE 2
DIFFERENCIATION OF RESPONDENTS INTO MALE & FEMALE

SOURCE: - SURVEY DATA


INFERENCE: This table helps us to understand that there are equal
number of male and female respondent with 50% each .
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GRAPH 2
DIFFERENCIATION OF RESPONDENTS INTO MALE & FEMALE

TABLE 3

DIFFERENCIATION OF RESPONDENTS BASED ON THEIR OCCUPATION

SOURCE :- SURVEY DATA

INFERENCE: It could be seen that majority of consumers of are


Working People with 50% & Housewife with 40%, followed by Students.

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GRAPH 3

DIFFERENCIATION OF RESPONDENTS BASED ON THEIR OCCUPATION

TABLE 4

SOURCES FROM WERE YOU GOT TO KNOW ABOUT GST IMPLEMENTATION FIRST

SOURCE: - SURVEY DATA


INFERENCE:The majority of people got to know about GST
implementation through MASS MEDIA with 60% , followed by FAMILY
with 20% latter by FRIENDS and OTHER SOURCES with 10% each .
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GRAPH 4
SOURCES FROM WERE YOU GOT TO KNOW ABOUT GST IMPLEMENTATION FIRST

TABLE 5
HAS GST IMPLEMENTATION CAUSED PRICE HIKE

SOURCE: - SURVEY DATA


INFERENCE: The majority people agree to GST implementation led to price hike of the
Goods with 60% , followed by neutral reaction with 30% and the last group of people with
5% disagree of the GST implementation affecting the price hike .
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GRAPH 5
HAS GST IMPLEMENTATION CAUSED PRICE HIKE

TABLE 6
WHICH SYSTEM IS MORE BENEFICIAL TO PEOPLE

SOURCE: - SURVEY DATA

INFERENCE: The majority people prefer SALES AND SERVICE TAX is beneficial
with 60% than GOOD’S AND SERVICE TAX with only 40%

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GRAPH 6

WHICH SYSTEM IS MORE BENEFICIAL TO PEOPLE

TABLE 7

SERVICE ITEM AFFECTED DUE TO GST

SOURCE: - SURVEY DATA

INFERENCE:- The majority of service item affected due to GST is FIVE STAR
RESTRAUNT with 40% , followed by TELECOM and AC, ALCOHOL – SERVING
RESTRAUNT with 30% each .
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GRAPH 7

SERVICE ITEM AFFECTED DUE TO GST

TABLE 8

CONSUMPTION OF LIFESTYLE AND HOME ITEMS IMPACTED DUE TO GS

SOURCE: - SURVEY DATA

INFERENCE:- The majority of LIFESTYLE AND HOME ITEMS affected due to


GST are CELL PHONES with 50% followed by WRISTWATCHES 30% and
LEATHER BAG’S 20% .
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GRAPH8

CONSUMPTION OF LIFESTYLE AND HOME ITEMS IMPACTED DUE TO GST

TABLE 9

CONSUMPTION OF LIFESTYLE & HOME ITEMS NOT IMPACTED DUE TO GST

SOURCE: - SURVEY DATA

INFERENCE: The majority of LIFESTYLE AND HOME ITEMS NOT IMPACTED


DUE TO GST are FURNITURE with 40% , then REFRIGERATORS with 30%
followed by AIR CONDITIONERS 20% and VEDIO GAMES 10%

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GRAPH 9
CONSUMPTION OF LIFESTYLE & HOME ITEMS NOT IMPACTED DUE TO GST

TABLE 10
LIFESTYLE & HOME ITEMS ON WHICH GST PERCENTAGE CHARGED IS
LESSER THAN THE EARLIER RATES

SOURCE: - SURVEY DATA


INFERENCE: The majority of LIFESTYLE & HOME ITEMS ON WHICH GST
PERCENTAGE CHARGED IS LESSER THAN THE EARLIER RATE are STEEL
UTENSILS with 40% followed by PROTEINS AND FITNESS SUPPLEMENTS with
30% . Latter with SPORT’S GOODS 20% and BICYCLES 10%
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GRAPH 10
LIFESTYLE & HOME ITEMS ON WHICH GST PERCENTAGE CHARGED IS
LESSER THAN THE EARLIER RATES

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FINDINGS , CONCLUSIONS & SUGGESTIONS

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FINDINGS

(a)The majority of the respondents belong to the age group 29 to 38 years With
40% and the age group 19-28 and 39-48 both with second majority of 30% each .

(b)There are equal number of male and female respondent with 50% each .

(c) It majority of consumers of are working people with 50% and Housewife with
40%, followed by students .

(d)The majority of people got to know about GST implementation through MASS
MEDIA with 60% , followed by FAMILY with 20% latter by FRIENDS and OTHER
SOURCES with 10% each .

(e) The majority people agree to GST implementation led to price hike of the goods
with 60% , followed by neutral reaction with 30% and the last group of people with
5% disagree of the GST implementation affecting the price hike .

(f) The majority people prefer SALES AND SERVICE TAX is beneficial with 60%
than GOOD’S AND SERVICE TAX with only 40% .

(g)The service item affected due to GST is FIVE STAR RESTRAUNT with 40% ,
followed by TELECOM and AC, ALCOHOL – SERVING RESTRAUNT with 30%
each .

(h)The majority of LIFESTYLE AND HOME ITEMS affected due to GST are CELL
PHONES with 50% followed by WRISTWATCHES 30% and LEATHER BAG’S
20% .

(i)The majority of LIFESTYLE AND HOME ITEMS NOT IMPACTED DUE TO GST
are FURNITURE with 40% , then REFRIGERATORS with 30% followed by AIR
CONDITIONERS20% and VEDIO GAMES 10% .

(j)The majority of LIFESTYLE AND HOME ITEMS ON WHICH GST


PERCENTAGE CHARGED IS LESSER THAN THE EARLIER RATE are STEEL
UTENSILS with 40% , followed by PROTEINS AND FITNESS SUPPLEMENTS
with 30% . Latter with SPORT’S GOODS 20% and BICYCLES 10% .

(k)The majority of CONSUMER GOODS like DRY FRUITS are reduced by 40%
with PRESERVED VEGETABLES 30% , BRANDED PANEER 20% and
AGARBATTI 10% .

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CONCLUSIONS

From the above discussion, it is clear that GST is basically an indirect tax that brings most
of the taxes imposed on most goods and services, on manufacture, sale and consumption
of goods and services, under a single domain at the national level. In the present system,
taxes are levied separately on goods and services. The GST is a consolidated tax based
on a uniform rate of tax fixed for both goods and services and it is payable at the final point
of consumption. At each stage of sale or purchase in the supply chain, this tax is collected
on value added goods and services, through a tax credit mechanism introduction of the
Value Added Tax (VAT) at the Central and the State level has been considered to be a
major step – an important breakthrough – in the sphere 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 a further significant improvement – the next logical step – towards a
comprehensive indirect tax reforms in the country.

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SUGGESTIONS

Some suggestions for better administrative way to handle and implement of Goods and
Service Tax Act in India are:

• Standardization of systems and procedure


• Uniform dispute settlement procedure
• Adequate training for both tax payers and tax enforcers
• Re-organization of administrative machinery for GST implementation
• Building information technology backbone – the single most important initiative for GST
Implementation
• Uniform implementation of GST should be ensured across all states (unlike the staggered
Implementation of VAT) as many issues might arise in case of transactions between states
Who comply with GST and states who are not complying with GST.

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REFRENCES

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REFRENCES

• Girish Garg, (2014), “Basic Concepts and Features of Good and Service Tax in India.

• Nitin Kumar (2014), “Goods and Service Tax in India-A Way Forward”, “Global Journal of
Multidisciplinary Studies”, Vol 3, Issue 6, May 2014.

• https://cleartax.in/s/gst-law-goods-and-services-tax

•http://www.thehindubusinessline.com/multimedia/archive/03166/GST_rate_sc_hedule_3166
109a.pdf

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