A REPORT ON GOODS AND SERVICES TAX

SUBMITTED TO :
ADVOCATE RAKSHA AWASTHI MAAM

SUBMITTED BY :
RASHMI SINGH
SEMESTER V
BA.LLB(HONS.)
KIIT LAW SCHOOL, KIIT UNIVERSITY
BHUBANESWAR, ODISHA.
 ACKNOWLEDGEMENT

I have put efforts in this report however it would not have

been possible without the kind support of many individuals
so i sincerely thank them for sharing their knowledge with
me. This report is made under the Guidance of Advocate
Raksha Awasthi. I thank her from the deepest core of my
heart for giving me such an opportunity to know about this
topic so deeply and for her encouragement in carrying out
this report work.
 INTRODUCTION

Goods and Services Tax (GST) is said to be the most revolutionary tax reform that is
being undertaken Independence. GST is indirect tax imposed on sale, manufacturing and
usage of goods and services. It is particularly designed to replace all the indirect taxes
imposed on goods and services by the Centre and states. Its implementation has started
from 1st July, 2017. Previously Indian consumers had to pay indirect tax on goods and
services such as value added tax, service tax, excise duty, custom duty, etc. In that system,
each state has the right to levy their own tax on the goods coming into their dominion for
sale and consumption, while the centre levies taxes on manufacture of the goods. The
earlier tax system is burdened with multiple taxation on the same object with no way to
offset the taxes already paid at each stage of production-retailing-consumption. In India,
the Goods and Service Tax bill was officially introduced in 2014 as The Constitution
(one Hundred and Twenty-second Amendment) Bill, 2014. The GST bill in India
proposes the implementation of nationwide Value Added Tax on sale, manufacturing and
use of different goods and services. The GST is expected to add two percent to the
countrys GDP, besides making the movement of goods easier across states because so
far taxes have varied across states, often commercial trucks have had to go through
multiple checkpoints to obtain the necessary permits and pay several taxes to the states
they pass on their routes, which causes delays and encourages bribery. A uniform tax will
be make that movement of commercial products smoother.

GOODS AND SERVICE TAX DEFINITION

Goods and Service Tax can be defined as a kind of Value Added Tax imposed on various
goods and services by different countries. It is the indirect tax levied on Goods and
Services. It is not going to have any impact on rates or structure of Direct tax which
means Income Tax rate levy will remain same. Goods and service tax is imposed to
collect revenues for the Government. This tax is paid by the consumers and collected and
forwarded to the Government by the business entities. India is having dual GST with the
centre and states simultaneously levying it on a common tax base. India is a federal
country where both the Centre and the States have been assigned the powers to levy and
collect taxes through appropriate legislation. Both the levels of Government have distinct
responsibilities to perform according to the divisions of powers prescribed in the
Constitution for which they need to raise resources. A dual GST will, therefore, be in
keeping with the Constitutional requirement of fiscal federalism. It will be game changer
because it will replace all major indirect taxes levied by centre and the state. There are 3
parts of GST i.e. CGST, SGST and IGST. Centre will levy and administer CGST and
IGST while respective states will levy and administer SGST. The GST to be levied by the
Centre on intra-state supply of goods and services is called the Central Goods and
Services Tax (CGST) and that to be levied by the states would be called the State Goods
and Services Tax (SGST). Similarly Integrated Goods and Services Tax (IGST) will be
levied and administered by Centre on every inter-state supply of goods and services.

GST RATE SLABS

The Goods and Services Tax (GST) is levied at multiple rates ranging from 0 percent to
28 percent. GST council finalised a four-tier GST tax structure of 5%, 12%, 18% and
28%, with lower rates for essential items and the highest for luxury and demerits goods
that would also attract an additional cess. Service tax will go up from 15% to 18%. The
services being taxed at lower rates, owing to the provisions of abatement, such as train
tickets, will fall in the lower slabs. In order to control inflation, essential items including
food, which presently constitute roughly half of the consumer inflation basket, will be
taxed at zero rate. The lowest rate of 5% would be for common use items. There would
be two standard rates of 12% and 18% which would fall on the bulk of the goods and
services. This includes fast-moving consumer goods. Highest tax slab will be applicable
to items which are currently taxed at 30-31% (excise duty plus VAT). Ultra luxuries,
demerit and sin goods ( like tobacco and aerated drinks) will attract a cess for a period of
five years on top of the 28% GST. The collection from this cess as well as that of the
clean energy cess would create a revenue pool which would be used for compensating
states for any loss of revenue during the first five years of implementation of GST.
 INDIRECT TAXES SUBSUMED UNDER GST

GST has replaced various Indirect taxes as mentioned below :

Taxes levied and collected by the Centre :
Central Excise duty
Duties of Excise (Medicinal and toilet preparations)
Additional Duties of Excise (Goods of Special Importance)
Additional Duties of Excise (textiles and textiles products)
Additional duties of Customs (commonly known as CVD)
Special Additional duty of Customs (SAD)
Service tax
Central Surcharges and Cesses so far as they relate to supply of goods and services.
State taxes that would be subsumed under the GST :
State VAT
Central Sales Tax
Luxury Tax
Entry tax (all forms)
Entertainment and Amusement Tax ( except when levied by the local bodies)
Purchase tax
Taxes on lotteries, betting and gambling
State surcharges and cesses so far as they relate to supply of goods and services

The GST council shall make recommendations to the Union and States on the taxes,
cesses and surcharges levied by the Centre, the States and the local bodies which may be
subsumed in the GST. A GST Council would be constituted comprising the Union
Finance Minister (who will be the chairman of the council), the Minister of State
(Revenue) and the state finance/taxation Ministers to make recommendations to the
Union and the States.

WHO IS LIABLE TO PAY GST UNDER THE PROPOSED GST

 REGIME

Under the GST Regime, tax is payable by the taxable person on the supply of goods
and/or services. Liability to pay tax arises when the taxable person crosses the threshold
exemption, i.e. Rs. 10 lakhs (Rs. 5 lakhs for NE States) except in certain specified cases
where the taxable person is liable to pay GST even though he has not crossed the
threshold limit. The CGST/SGST is payable on all intra-state supply of goods and/or
services and IGST is payable on all inter-state supply of goods and/or services. The
CGST/SGST and IGST are payable at the rates specified in the schedules to the
respective Acts.
Tax payers with an aggregate turnover in a financial year up to Rs. 10 lakhs would be
exempt from tax. Aggregate turnover shall be computed on all India basis. For NE states,
the exemption threshold shall be Rs. 5 Lakhs . All tax payers eligible for threshold
exemption will have the option of paying tax with input tax credit (ITC) benefits.
Taxpayers making inter-state supplies or paying tax on reverse charge basis shall not be
eligible for threshold exemption.

ADVANTAGES OF GST

1. This is a federal law, which means that the states will no longer have the right to
make new laws on taxation towards goods and services.
2. It simplifies the tax system and makes it easier to understand as well as cheaper to
implement at various levels.
3. It will be cheaper to buy input goods and services for production from other states.
4. The consumer will get the end-product at cheaper rates because of elimination of
multiple taxes and the tax cascade.
5. Different tax barriers such as check posts and toll plazas, lead to wastage of unpreserved
items being transported. This penalty transforms into major costs due to higher needs of
buffer stock and warehousing costs. A single taxation system will eliminate this road
block.
6. There will be more transparency in the system as the customers will know exactly how
 much taxes they are being charged and on what base.
7. GST will add to the government revenues by extending the tax base.
8. GST will remove the custom duties applicable on exports. The nations competitiveness in
foreign markets will increase on account of lower costs of transaction.

DISADVANTAGES OF GST

1. Some Economist say that 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 12 percent.

2. Some Experts says that CGST(Central GST), SGST(State GST) are nothing but new
names for Central Excise/Service Tax, VAT and CST. Hence, there is no major reduction
in the number of tax layers.

3. Some retail products currently have only four percent tax on them. After GST,
garments and clothes could become more expensive.

4. The aviation industry would be affected. Service taxes on airfares currently range from
six to nine percent. With GST, this rate will surpass fifteen percent and effectively double
the tax rate.

5. Adoption and migration to the new GST system would involve teething troubles and
learning for the entire ecosystem.

GOODS AND SERVICES TAX BILL

For a long time the GST Bill has been a topic of discussion mainly due to its power to
revolutionize the entire tax system and also its ability to make life a lot simpler for
taxpayers. On 29th march, 2017 the country came a little closer to this sales tax regime
after the lok sabha agreed to pass four important GST bills. GST is believed to change the
entire landscape of tax payment and charges in the country. The four GST Bills that were
passed are Central Goods and Services Tax Bill or CGST bill, Compensation GST Bill,
Integrated GST Bill and Union Territory GST Bill. The very idea behind the possible
implementation of the GST bill is to unify taxes that we pay on goods and services into
one single entity. Goods are essentially every product that is used by individuals and with
the current tax system, citizens end up paying not just one type of tax for a product but
many for just one product or service. The goal of this bill is to streamline these multiple
taxes into one single system.
According to Arun Jaitley, the finance minister of India, GST will have a significant
impact in curbing excessive inflation. Services and products such as beauty, electronics
attract different types of taxes depending on the state that the consumer is staying in, but
the implementation of this bill will remove ambiguity. Another objective of this GST bill
is to remove the possibility of excessive taxation on individuals.
As of now, the state and the centre calculate and levy taxes based not on the original cost
of the service or product but on the layers of tax that are already being levied on the same
service or product. This will have an adverse effect on the GDP or Gross Domestic
product of the nation. Through this bill, tax evasion will also be checked and business
operations will become simpler. Essential products such as food grains and agricultural
products will not be taxed so as to keep an eye on inflation.

IMPACT OF GST

1. Removal of bundled indirect taxes such as VAT, CST, Service tax, CAD, SAD and
Excise.
2. Less tax compliance and a simplified tax policy compared to the previous tax
structure.
3. Removal of cascading effect of taxes i.e. Removes tax on tax.
4. Reduction of manufacturing costs due to lower burden of taxes on the
manufacturing sector. Hence prices of consumer goods will be likely to come
down.
5. Lower the burden on the common man i.e. Public will have to shed less money to
 buy the same products that were costly earlier.
6. Increased demand and consumption of goods.
7. Increased demand will lead to increase in supply. Hence this will ultimately lead to
rise in the production of goods.
8. Control of black money circulation as the system normally followed by traders and
shopkeepers will be put to a mandatory check.
9. Boost to the Indian economy in the long run.

WHAT WILL BECOME CHEAPER

Expect many goods and purchases to become cheaper with the exception of fuel, liquor
and tobacco. While several industries are expected to be beneficiaries, the entertainment
industry may be a big winner as it will significantly bring down the 27% entertainment
tax . Heres how going to the movies will become cheaper and the central and state taxes
come to about Rs. 66 on a Rs. 300 movie ticket. The tax could come down to about Rs.
46. Stocks of Pvr cinema have shot up in recent weeks. Another beneficiary is the
construction and building materials industry, which means the housing sector may also be
a big winner with things like paints and cement becoming cheaper.

WHY IS GST SO IMPORTANT

The GST is expected to add 2% to the countrys GDP, besides making the movement of
goods easier across states because so far taxes have varied across states, often
commercial trucks have had to go through the multiple checkpoints to obtain the
necessary permits and pay several taxes to the states they pass on their routes, which
causes delays and encourages bribery. A uniform tax will make that movement of
commercial products smoother.

NON APPLICABILITY OF IGST AND CGST PROVISIONS TO

JAMMU AND KASHMIR

The provisions of IGST Bill, 2017 and CGST Bill, 2017 shall not apply to the state of
Jammu and Kashmir (J&K). These would have wide ramifications on transactions from
and to a person located in J&K. At present, there is no clarity provided in the law on the
treatment of supply of goods and services by a person in India to a person in J&K and
vice-versa. Industry needs to adopt a wait and watch approach for developments related
to J&K. The state may have to pass a special law to make the GST applicabale, persuant
to which the current bill may be amended to include the state within its ambit.