ABSTRACT:

The main aim of this project paper is to discuss the historical background and implications of the
Goods & Services Tax (GST) in India. The paper include how income tax and GST were
implemented and the difference between Sales & Service Tax & GST. The GST was
implemented by Indian Government to correct imbalance and to streamline the countrys tax
system so that it would be more efficient, transparent and business friendly. The GST was
implemented at every stage of considered as a new tax system for India has a significant impact
on every stage of a company production and distribution chain

KEYWORD : Goods & Service Tax, India, Implication.

INTRODUCTION :

The Goods & Services Bill (GST Bill) was passed in the Rajya Sabha earlier in August
2016. The GST Bill, which is considered as one of the biggest tax reforms in the country since
Independence, proposes to eliminate all indirect taxes on goods and services and levy a single
rate.

Taxes are a difficult subject for the working class, especially for those who are unaware
of its jumbled calculus. It looks like a maze of legalese and math, signifying nothing much. With
the GST, the government is aiming to simplify it for the public. The government explains the
GST in simple terms in the recently-published frequently asked questions.

GST is one indirect tax for the whole nation, which will make India 1 unified common
market. GST is a single tax on the supply of goods and services, right from the manufacturer to
the consumer. Simply, the amount that we expend for goods and services has the taxes embedded
in them. Mostly, the consumers are not even aware of or ignore the tax they pay for things they
buy. Amendment of the bill is going to give a relief from the high percentage of taxes.

In a recent meeting, the GST council has agreed on rate structure as 0 per cent, 5 per
cent, 12 per cent, 18 per cent and 28 per cent. Having a slab rate structure in GST is a departure
from popular international practice of having one rate of tax for all goods and services. The
council has not announced the schedule of goods and services under each slab rate. The Minister
of Finance (ARUN JAITLEY) has mentioned that highest tax slab rate applicable to items
currently taxed at 30 per cent to 31 per cent (excise duty plus VAT) will be taxed at a lower rate
of 28 per cent. Some of the goods taxed at 28 per cent will be charged with an additional cess for
five years. This will make the life of Indians much simpler as the GST bill eliminates 17 indirect
taxes. Manufacturing will get more competitive as GST addresses cascading of tax, inter-state
tax, high logistics costs, creating a boost in the retail industry.

Minister of Finance Arun Jaitely explained why the decision was taken to compensate
states with a cess. "As per our calculation, Rs 50,000 crore will be needed in the first year for
compensation. If we have to raise this by way of tax, we will need Rs 1,72,000 crore," he said.
"Luxury cars, tobacco, aerated drinks will be levied with a cess, which along with clean energy
cess on usage of coal, will be used to compensate states for loss of revenue," he added. The
Finance Minister also said that the compensation to states will have a sunset clause of five years,
even as the council will take a call every year to see if the same needed to be continued.

Benefits of the GST Bill

The final consumer will bear only the GST charged by the last dealer in the supply chain,
with set-off benefits at all the previous stages.

Minister of Finance Arun Jaitley had earlier said that GST will be beneficial to the
Centre, states, industrialists, manufacturers, the common man and the country at large since it
will bring more transparency, better compliance, increase in GDP growth and revenue
collections.

Logistics firms believe that GST will help them and result in lowering the product prices
by up to 10 per cent. This will affect the MRP very effectively, increasing sales and revenue.

GST will also generate growth for sectors like auto, consumer durables and fast-moving
consumer goods (FMCG) while in effect of these sectors to pass on impact of lower taxes on
goods to consumers.

Impacts of GST on an average Indians life:

Fair Pricing :

The price of each item will be justified because of the organized taxes. These taxes are in
turn taken from the end consumer and if this system reduces the cost of each item, unjustified
inflation will be harnessed.

Greater Transparency :

Right now, we pay about 30-35% in taxes and it becomes up to 50%, indirectly, in some
goods. GST will ensure that you know exactly how much tax you are paying comprehensively
and for what item. You will pay exactly 18% tax for each item with no hidden charges being
taken out of your pocket.

Economic Boost :

Manufacturing sector will save both time and money with this change. GDP is predicted
to increase by 1-2% as India will become a one nation, one tax.This boost might have some rise
in costs of everyday items for 3-4 years but once the change stabilizes, we will money as the
indirect taxes going out of our pocket will be absent.

Significant Changes in Prices :

Packaged food products, Jewelry, Ready-made Garments and Telephone Bills will
observe an increase in the price because the current taxes for these items are significantly less
than 18%. Jewelry Sector will observe the most difference, amounting to 18% from the current
3-4%. All this will lead to increased expenditure for the common man.

Electrical Appliances, Property and Cars will have a dip in the market price with the advent of
this new law. Restaurant Food being currently taxed with an array of different taxes with VAT
varying in each state, will get uniformity after this law.

Important Facts about GST Bill :

The current GST Bill committee headed by Mr.Arvind Subramaniam and it has
recommended a three-rate setup for rolling out GST Bill into the government successfully.

The three tier structure is as follows.

1. The goods meant for the poor should be taxed at 12%.

2. 18% tax on all common items.
3. 40% tax on luxury items.

Alcohol, Petroleum and its products have been exempted from the initial structure of taxes.

There will be two major divisions of the GST Bill, namely, SGST(State) and CGST(Central).

CGST is doing away with indirect taxes such Central Excise Duty, Service Tax, Addl. Customs
Duty, Special Addl. Customs Duty as well as Addl. Excise Duty. These indirect taxes are those
that are collected by the Centre.

SGST will remove indirect taxes on goods and services which are charged by the State such as
VAT, Entertainment Tax, Purchase Tax, Octroi, Luxury Tax and Entry Tax.
The States that have ratified GST are:

Assam (August 12), Bihar (August 16), Jharkhand (August 17), Chhattisgarh (August 22),
Himachal Pradesh (August 22), Gujarat (August 23), Madhya Pradesh and Delhi (August 24),
Nagaland (August 24), Maharashtra, Haryana, Sikkim (August 29), Mizoram, Telangana (August
30), Goa (August 31) and Odisa (September 1).

Conclusion:
The macroeconomic impact of a change to the introduction of the GST is significant in
terms of growth effects, price effects, current account effects and the effect on the budget
balance. A change in the tax mix from income to consumption-based taxes is likely to provide a
fruitful source of revenue. The aggregate consumer price impact of the introduction of the GST
in India on the macro-economy was both limited and temporary.

The Goods and Service Tax (GST) is a new form of indirect tax which will replace others
like service tax, sales tax, octroi, central and state sales tax imposed under the current multi-tax
system. It was expected to be a single tax levied by the central government on the production of
goods and services. Currently, each state imposes a different tax. So, each state was counted as a
different market by businesses. It is a huge task to move goods from one state to another due to
differential taxes. GST will remove such demarcation and create a unified market. This is
expected to help ease movement of goods across states and reduce costs for businesses.

BIBLOGRAPHY:

www.cbec.gov.in

www.gstindia.com

www.gstn.org