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OVERVIEW ON GOODS AND SERVICE TAX

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OVERVIEW ON GOODS AND SERVICE TAX

HISTORY OF TAX
It is Kautilya's Arthasastra , which deals with the system of taxation in a real elaborate
and planned manner. This well-known treatise on state crafts written sometime in 300 B.C.,
when the Mauryan Empire was as its glorious upwards move, is truly amazing, for its deep study
of the civilization of that time and the suggestions given which should guide a king in running
the State in a most efficient and fruitful manner. A major portion of Arthasastra is devoted by
Kautilya to statesman, the Mauryan system, so far as it applied to agriculture, was a financial
matters including financial administration. According to famous sort of state landlordism and the
collection of land revenue formed an important source of revenue to the State. The State not only
collected a part of the agricultural produce which was normally one sixth but also levied water
rates, octroi duties, tolls and customs duties. Taxes were also collected on forest produce as well
as from mining of metals etc. Salt tax was an important source of revenue and it was collected at
the place of its extraction.
Kautilya described in detail, the trade and commerce carried on with foreign countries
and the active interest of the Mauryan Empire to promote such trade. Goods were imported from
China, Ceylon and other countries and levy known as a vartanam was collected on all foreign
commodities imported in the country. There was another levy called Dvarodaya which was paid
by the concerned businessman for the import of foreign goods. In addition, ferry fees of all kinds
were levied to augment the tax collection.

WHAT IS TAX ?
A fee charged ("levied") by a government a product, income, or activity. If tax is
levied directly on personal or corporate income, then it is a direct tax. If tax is levied on
the price of good or service.

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HISTORY OF THE GST :


Goods and Services Tax (GST) was introduced in France in 1950s and has been adopted
by more than 120 countries, including all member states of the European Union (EU). Goods and
Services Tax (GST) is a percentage tax on value added (the difference between sales and the cost
of purchased material inputs) at each stage of production.

There are three basic types of value added taxes (VAT) depending on how the investment
is treated in the tax base, GDP-type GST, consumption-type GST, and income-type GST. Under
the GDP-type GST system, no deductions are allowed for capital investment and depreciation of
capital when calculating the tax base. The tax is equivalent to a sales tax applicable to both
consumer and capital goods.

Under the consumption-type GST system, capital investment is subtracted from the value
added in the year of purchase. The tax is equivalent to a sales tax applicable to consumer goods.
Under income-type GST system; the tax base excludes the depreciation of capital. The tax is
imposed on net domestic product, which is close to national income.

Almost all countries that have established the Goods and Services Tax (GST) system
adopt the consumption-type GST in which all purchases of capital goods from other firms are
deductible from a firm's sale (Shoup, 1990). However, some countries such as Argentina, Peru
and Turkey have adopted the income-type GST, and countries such as China, Finland, Morocco
and Senegal have employed a GDP-type GST. GST rates vary significantly among countries.

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Revenues from GST account for a significant portion of government revenue in many
countries. Of total central government revenue, general sales tax and GST accounted for 33.25%
in Greece in 1998, 31% in U.K.in 1999, 28% in France in 1997, 42.58% in Argentina in 2000,
35.7% in Hungary in 2000, 30.20% in Russia, and 33.7% in Ukraine.

History of GST in India :

An empowered committee was set up by The Atal Bihari Vajpayee governmenting 2000 to
streamline the GST model to be adopted and to develop the required backend infrastructure that
would be needed for its implementation

In his budget speech on 28 February 2006, P. Chidambaram, the then Finance Minister,
announced the target date for implementation of GST to be 1 April 2010 and formed another
empowered committee of State Finance Ministers to design the roadmap. The committee
submitted its report to the government in April 2008 and released its First Discussion Paper on
GST in India in 2009.

The Constitution (122nd Amendment) Bill, 2014 was introduced in the Lok Sabha by Finance
Minister Dr. Arun Jaitley on 19 December 2014, and passed by the House on 6 May 2015. In
the Rajya Sabha, the bill was referred to a Select Committee on 14 May 2015. The Select
Committee of the Rajya Sabha submitted its report on the bill on 22 July 2015. The bill was
passed by the Rajya Sabha on 3 August 2016, and the amended bill was passed by the Lok Sabha
on 8 August 2016.

Highlights of Proposed GST structures in India :

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. Accounts and GST Credit the Central GST and State
GST are to be paid to the accounts of the Centre and the States separately. It would have to be
ensured that account‐heads for all services and goods would have indication whether it relates to

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Central GST or State GST (with identification of the State to whom the tax is to be credited).
Full input credit system would operate in parallel for the Central GST and the State GST. Taxes
paid against the Central GST shall be allowed to be taken as input tax credit (ITC) for the Central
GST and could be utilized only against the payment of Central GST. The same principle will be
applicable for the State GST. A taxpayer or exporter would have to maintain separate details in
books of account for utilization or refund of credit. Further, the rules for taking and utilization of
credit for the Central GST and the State GST would be aligned. Cross utilization of input tax
credit for goods and services would be allowed. However, no credit between CGST and SGST
would be permitted, except in the case of inter‐State supply of goods and services under the
IGST model. Credit Accumulation the White Paper on GST states that refund/adjustment of
accumulated credit should be completed in a time bound manner.

GST :
Goods and Services Tax (GST) is an indirect tax reform which aims to remove tax barriers
between states and create a single market. For that to happen the constitution first needs to be amended to
remove different layers of governments’ exclusive powers to levy taxes. Once this step is taken, the tax
barriers between states, and center and states will disappear.

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

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leads to beneficial impact to the GDP growth. It is felt that the GST would serve a superior
reason to achieve the objective of streamlining indirect tax regime in India which can remove
cascading effects in supply chain till the level of final consumers only when all such above
mentioned indirect taxes are completely included in GST. It is understood that alcohol, tobacco
and petroleum products will not been closed by GST as alcohol and tobacco are considered as
Sin Goods, and governments don’t like to allow free trade on these property.

DUAL GST MODEL :


We begin by stating the dual GST model and the taxes levied on each kind of transaction.
See these abbreviations before we understand them-
1. SGST – State GST, collected by the State Govt.
2. CGST – Central GST, collected by the Central Govt.
3. IGST – Integrated GST, collected by the Central Govt.

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List of States that ratify the GST Bill :

 Assam (12 August)

 Bihar (16 August)

 Jharkhand (17 August)

 Himachal Pradesh (22 August)

 Chhattisgarh (22 August)

 Gujarat (23 August)

 Madhya Pradesh (24 August)

 Delhi (24 August)

 Nagaland (26 August)

 Maharashtra (29 August)

 Sikkim (30 August)

 Telangana (30 August)

 Mizoram (30 August)

 Goa (31 August)

 Orissa (1 September)

 Puducherry (2 September)

 Rajasthan (2 September)

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 Andhra Pradesh (8 September)

 Arunachal Pradesh (8 September)

 Meghalaya (9 September)

 Punjab (12 September)

 Tripura (26 September)

SALIENT FEATURES :
The salient features about this legislation were first time discussed in its first discussion
paper in year 2009. We will reproduce the features discussed here again to understand this act
very well.

(i) The GST shall 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). Rates for
Central GST and State GST would be prescribed appropriately, reflecting revenue considerations
and acceptability. 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.

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(ii) The Central GST and the State GST would be applicable to all transactions of goods and
services made for a consideration except the exempted goods and services, goods which are
outside the purview of GST and the transactions which are below the prescribed threshold limits.

(iii) The Central GST and State GST are to be paid to the accounts of the Centre and the States
separately. It would have to be ensured that account-heads for all services and goods would have
indication whether it relates to Central GST or State GST (with identification of the State to
whom the tax is to be credited).

(iv) Since the Central GST and State GST are to be treated separately, taxes paid against the
Central GST shall be allowed to be taken as input tax credit (ITC) for the Central GST and could
be utilized only against the payment of Central GST.

(v) Cross utilization of ITC between the Central GST and the State GST would not be allowed
except in the case of inter-State supply of goods and services under the IGST model which is
explained later.

(vi) Ideally, the problem related to credit accumulation on account of refund of GST should be
avoided by both the Centre and the States except in the cases such as exports, purchase of capital
goods, input tax at higher rate than output tax etc. where, again refund/adjustment should be
completed in a time bound manner.

(vii) To the extent feasible, uniform procedure for collection of both Central GST and State GST
would be prescribed in the respective legislation for Central GST and State GST.

(viii) The administration of the Central GST to the Centre and for State GST to the States would
be given. This would imply that the Centre and the States would have concurrent jurisdiction for

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the entire value chain and for all taxpayers on the basis of thresholds for goods and services
prescribed for the States and the Centre.

(ix) The present threshold prescribed in different State VAT Acts below which VAT is not
applicable varies from State to State. A uniform State GST threshold across States is desirable
and, therefore, it is considered that a threshold of gross annual turnover of Rs.10 lakh both for
goods and services for all the States and Union Territories may be adopted with adequate
compensation for the States (particularly, the States in North-Eastern Region and Special
Category States) where lower threshold had prevailed in the VAT regime. Keeping in view the
interest of small traders and small scale industries and to avoid dual control, the States also
considered that the threshold for Central GST for goods may be kept at Rs.1.5 crore and the
threshold for Central GST for services may also be appropriately high. It may be mentioned that
even now there is a separate threshold of services (Rs. 10 lakh) and goods (Rs. 1.5 crore) in the
Service Tax and CENVAT.

(x) The States are also of the view that Composition/Compounding Scheme for the purpose of
GST should have an upper ceiling on gross annual turnover and a floor tax rate with respect to
gross annual turnover. In particular, there would be a compounding cut-off at Rs.50 lakh of gross
annual turnover and a floor rate of 0.5% across the States. The scheme would also allow option
for GST registration for dealers with turnover below the compounding cut-off.

(xi) The taxpayer would need to submit periodical returns, in common format as far as possible,
to both the Central GST authority and to the concerned State GST authorities.

(xii) Each taxpayer would be allotted a PAN-linked taxpayer identification number with a total
of 13/15 digits. This would bring the GST PAN-linked system in line with the prevailing PAN-
based system for Income tax, facilitating data exchange and taxpayer compliance.

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(xiii) Keeping in mind the need of tax payer’s convenience, functions such as assessment,
enforcement, scrutiny and audit would be undertaken by the authority which is collecting the tax,
with information sharing between the Centre and the States

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What is GST ?
The economic case for GST is straightforward: Income is taxed irrespective of source and
use; therefore, consumption should also be taxed on the same principle.

GST is one of the widely accepted indirect taxation system prevalent in more than 150 countries
across the globe. Globally, GST has been structured as a destination based comprehensive tax
levied at a specified rate on sale and consumption of goods and services within a country.

GST is a tax on goods and services with comprehensive and continuous chain of set-off benefits
from the producer’s point and service provider’s point up to the retailer’s level. It is essentially a
tax only on value addition at each stage, and a supplier at each stage is permitted to set-off,
through a tax credit mechanism, the GST paid on the purchase of goods and services as available
for set-off on the GST to be paid on the supply of goods and services. The final consumer will
thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all
the previous stages.

What is Need for GST ?


“In 2004, analyzing the structure of the prevailing indirect tax system both at the Central
and State level, the Task Force on Implementation of the Fiscal Responsibility and Budget
Management Act, 2003 observed that “high import tariffs, excises and turnover tax on domestic
goods and services have enormous cascading effects, leading to a distorted structure of
production, consumption and exports. This problem can be effectively addressed by shifting the

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tax burden from production and trade to final consumption, and from savings to consumption.
The existing tax system introduces innumerable distortions resulting in inefficient resource
allocation and adversely impacting GDP growth. It also provides an incentive to firms to engage
in political lobbying for exemptions and favorable modifications in the tax schedule. The Indian
consumerism known to be remarkably sensitive to apparently small changes in relative prices.

The goal of rational tax system is to empower households to engage in undistorted decision
making, driven by their own needs and preferences.” Accordingly, the Task Force recommended
that “a well-designed destination-based value added tax on all goods and services is the most
elegant method of eliminating distortions and taxing consumption. Under this structure, all
different stages of production and distribution can be interpreted as a mere tax pass-through, and
the tax essentially ‘sticks’ on final consumption within the taxing jurisdiction. Therefore, the
Task Force recommended the introduction of a destination based VAT type dual Goods and
Services Tax
(Hereafter referred to as ‘GST’).”

The recommendations of the Rajya Sabha Select Committee on the


GST Bill :
The contours of GST are still evolving. Key aspects of GST like the tax rate, tax base,
exemption limits, place of supply rules for services, appropriate IGST model etc. will be
finalized on passage of the Bill. In this regard, the Empowered Committee of State Finance
Ministers (EC) and the Department of Revenue, Government of India, have constituted several
working groups and committees for drafting the GST Rules and processes as follows:-
(i) Committee on Dual Control, Threshold and Exemptions in GST Regime;
(ii) Committee on IGST and GST on imports;
(iii) Committee on Revenue Neutral rates for State GST & Central GST and Place of Supply
Rules;
(iv) Committee to draft model GST Law;
(v) Committee to examine the Report of the sub-Group-I on Business Processes.

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Importance of GST to the economy


A National Council of Applied Economic Research (NCAER) study, commissioned by the
Thirteenth Finance Commission has stated that Implementation of a comprehensive GST across
goods and services is expected, ceteris paribus, to provide gains to India‘s GDP somewhere
within a range of 0.9 to 1.7 per cent. The corresponding change in absolute values of GDP over
2008-09 is expected to be between Rs.42,789crore and Rs.83,899crore, respectively. The
comparable dollar value increment is estimated to be between $ 18, 550 million, respectively.
The additional gain in GDP, originating from the GST reform, would be earned during all years
in future over and above the growth in GDP which would have been achieved otherwise. The
present value of the GST-reform induced gains in GDP may be computed as the present value of
additional income stream based on some discount rate. Assuming a discount rate as the long-
term real rate of interest at about 3 per cent, the present value of total gain in GDP has been
computed as between Rs.1,469 thousand crores and 2,881 thousand crores.
The corresponding dollar values are $325 billion and $637 billion. Gains in exports are expected
to vary between 3.2 and 6.3per cent with corresponding absolute value range as Rs.24,669crore
and Rs.48,661crore. The comparable dollar value increment is estimated to be between $5,427
million and $10,704 million, respectively. Imports are expected to gain somewhere between 2.4
and 4.7 per cent with corresponding absolute values ranging between Rs.31,173crore and
Rs.61,501crore. The comparable dollar value increment is estimated to be between $6,871
million and $13,556 million, respectively. GST would lead to efficient allocation of factors of
production.

The overall price level would go down. It is expected that the real returns to the factors of
production would go up. Our results show gains in real returns to land ranging between 0.42 and
0.82 per cent. Wage rate gains vary between 0.68 and 1.33 per cent. The real returns to capital
would gain somewhere between 0.37 and 0.74 percent. Based on certain computations, the
revenue neutral GST rate across goods and services is Expected to be positioned somewhere in
the range of 6.2 per cent and 9.4 per cent, depending on various scenarios of spectral exemptions.

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In sum, implementation of a comprehensive GST in India is expected to lead to efficient


allocation

IMPORTANCE OF GST TO THE ECONOMY


A National Council of Applied Economic Research (NCAER) study, commissioned by
the Thirteenth Finance Commission has stated that Implementation of a comprehensive GST
across goods and services is expected, ceteris paribus, to provide gains to India‘s GDP
somewhere within a range of 0.9 to 1.7 per cent. The corresponding change in absolute values of
GDP over 2008-09 is expected to be between Rs.42,789crore and Rs.83,899crore, respectively.

1. GLOBEL COMPARISON
The comparable dollar value increment is estimated to be between $ 18, 550 million,
respectively. The additional gain in GDP, originating from the GST reform, would be earned
during all years in future over and above the growth in GDP which would have been achieved
otherwise. The present value of the GST-reform induced gains in GDP may be computed as the
present value of additional income stream based on some discount rate. Assuming a discount rate
as the long-term real rate of interest at about 3 per cent, the present value of total gain in GDP
has been computed as between Rs.1,469 thousand crores and 2,881 thousand crores. The
corresponding dollar values are $325 billion and $637 billion.

2. TRADE
Gains in exports are expected to vary between 3.2 and 6.3 per cent with corresponding
absolute value range as Rs.24,669crore and Rs.48,661crore. The comparable dollar value
increment is estimated to be between $5,427 million and $10,704 million, respectively. Imports
are expected to gain somewhere between 2.4 and 4.7 per cent with corresponding absolute values
ranging betweenRs.31,173crore and Rs.61,501crore. The comparable dollar value increment is
estimated to be between $6,871 million and $13,556 million, respectively. GST would lead to

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efficient allocation of factors of production. The overall price level would go down. It is
expected that the real returns to the factors of production would go up. Our results show gains in
real returns to land ranging between 0.42 and 0.82 per cent. Wage rate gains vary between 0.68
and1.33 per cent. The real returns to capital would gain somewhere between 0.37 and 0.74
percent.

REFERENCER ON GOODS AND SERVICES TAX


When asked as to how GST would help fiscal consolidation, Dr. Vijay L. Kelkar, Ex-
Chairman, Thirteenth Finance Commission in his post-evidence replies stated as under:
“The changeover to GST is designed to be revenue neutral at existing levels of compliance.
Given the design of the flawless ‘GST, the producers and distributors will only be pass through
for the GST. Further, given the single and low rate of tax the benefit from evasion will
significantly reduce. Therefore, there will be little incentive for the producers and distributors to
evade their turnover. Accordingly, this policy initiative should witness a higher compliance and
an upsurge in revenue collections. This will also have an indirect positive impact on direct tax
collections. Further, given the fact that GST will trigger an increase in the GDP, this in turn
would yield higher revenues even at existing levels of compliance. Another important source of
gain for the Government would be the savings on account of reduction in the price levels of a
large number of goods and services consumed by the Government.

CENTRAL GOVERNMENT
However, to the extent, the Central Government will be required to incentivize the States
to adopt the GST; there will be an increase in the budgetary outgo. Given the smallness of the
Size of the compensation, it is expected that there would be a net gain in the tax revenues.
This should enable the Central Government to better manage its finances

STATE GOVERNMENT
As regards the State Governments, the design and the road map of the GST
recommended by us would lead to substantial gain in revenues. While the revenue neutral rate

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for the States is estimated to be 6 percent, we have recommended that the states should be
allowed to impose GST at the rate of 7 percent. An increase in the RNR of the States by 1
percent implies a revenue gain of Rs. 31381 crores per annum in the base year 2007-08 (i.e.,
16.67 percent increase in the revenues). This gain will be further augmented by better
compliance.

Therefore, overall the implementation of GST should enable the Government at both levels to
better meet the challenges of fiscal correction.

VARIOUS IMPACTS :
GST will positively impact the common man in many ways. Firstly, it will add to the
overall economic growth by removing economic distortions. It will create new employment
opportunities (about 20 million high end jobs over a period of time) thereby increasing the levels
of income across a large section of the society.

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Secondly, it will reduce inflation if GST is levied at the combined rate of 12 percent as
recommended by the Thirteenth Finance Commission.
Thirdly, it will decentralize production to areas enjoying comparative advantage so more jobs
can be expected to be created in rural areas. This will in turn slow down the pace of migration to
urban areas.
Fourthly, it will improve governance since the introduction of a comprehensive GST will bring
about more transparency and an end to crony capitalism.
Finally, GST can create further opportunities for relief under direct taxes over time since it is
viewed as a revenue generating machine. Alternately, it will facilitate fiscal consolidation
Thereby reducing the debt burden of citizens in general”.

Realistic beneficiary :
The above discourse shows that GST is beneficial to the Centre, States, industry,
manufacturers, the common man and the country at large since it will bring more transparency
and better compliance besides faster GDP growth and revenue collection. However the present
study highlights the positive impacts on macro-economy, manufacturers and consumers only.

a) Impact on Macro-economy: GST will boost economic growth and increase government
revenue by widening tax base.GST will reduce the overall incidence of indirect taxation by
removing the many distortions in the present indirect tax system. Flawless GST will, amongst
others, increase productivity of all factors of production and hence enhanced and it will also
cause poverty reduction. ‘Implementation of GST across goods and services is expected, ceteris
paribus to provide gains to India’s GDP somewhere within a range of 0.9 to 1.7 per cent. The
corresponding change in absolute values of GDP over 2008-09 is expected to be between

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Rs.42,789croreand Rs. 83,899crore respectively (Task Force,2009). It is argued that


‘implementation of a comprehensives in India is expected to lead to efficient allocation of factors
of production thus leading to gains in GDP and exports. This would translate into enhanced
economic welfare and returns to the factors of production, viz. land, labor and capital’ (NCAER,
2009). The differential multiple tax regimes across sectors of production are leading to
distortions in the allocation of resources as well as production inefficiencies. Complete offsets of
taxes are not being provided to exports, thus affecting their competitiveness. It is estimated that
‘the gain in exports is to vary between 3.2 and 6.3 percent with corresponding absolute value
range as Rs. 24,669croreand Rs. 48,661crore while imports are expected to gain between 2.4 per
cent and 4.7 per cent, thus improving the trade balance’ (Task Force,2009). Available
information also indicates that ‘India will gain 15 billion dollar a year if GST gets implemented.
It will divide the burden of tax between manufacturing and services’ (Phukan, 2015). In a nut
shell it may be mentioned that impact of GST on the whole economy is multidimensional.

b) Benefits for Manufacturers: The proposed GST bill is likely to reduce manufacturing cost.
With the elimination of multiple tax structure at central and state levels, manufacturing sector
would be viable and globally competitive. According to one expert, even a two per cent
reduction in production cost may help profits to rise by 20% giving enough space for reducing
prices and benefitting the end-users (Raj). If GST is introduced; the companies that face stiff
competition from the unorganized sector now would gain immensely. According to UBS Report
the biggest beneficiaries would be the sectors having a high percentage of the market occupied
by unorganized participants. Under the existing framework of GST, a company having a
turnover more than Rs. 10lakh would be liable to pay tax against Rs 1.5crore under

The existing excise duty structure. Thus GST will render more companies from the unorganized
sector into the tax net resulting in higher revenue to government as well as providing better space
for the organized players in competition as cost and taxes for the unorganized sector will
increase. The key beneficiaries of GST will be sectors such as batteries, footwear, plywood,
electrical appliance, ceramics, adhesives, fast moving consumer goods, textile industries and
paints, where the unorganized sector accounts for 35% to 70% of total market size. For instance,

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the replacement battery segment in India has a total turnover of about Rs 4,800crore – nearly50%
of this is contributed by companies in the unorganized sector (Ashutosh and Suraj, 2014).

Other big beneficiaries would be logistics companies. ‘The GST regime will make sure that
companies consolidate their warehouses into furor five big ones rather than keeping one in every
state to save on Central Sales Tax. The retail industry will gain too. The rollout of GST will help
free movement of goods across states’ (Chatterjee and Pinto, 2014). Since tax paid in a previous
state is treated as input credit, it will facilitate the easy movement of goods anywhere in the
country without tax burden. Besides transport services, GST will also improve the profitability of
power sector as well. According to tax experts, the entertainment and telecom sectors would be
big beneficiaries as the GST would eliminate a multiplicity of taxes–entertainment tax, luxury
tax, VAT and service tax.
c) Impact on Consumers: Under GST, several taxes would-be subsumed and this would eliminate
the impact of double taxation resulting in fall in prices and consequent relief for the consumers.
For example, cost of manufactured goods/excisable goods will be cheaper given the fact the
current regime of excise duty and VAT stands withdrawn (Dasgupta,2009). The prices of many
other consumer goods such as Sugar; beverages; cotton textiles; wool, silk and synthetic fiber
textiles; and textile products and wearing apparel, etc., are likely to decline (NCAER, 2009).

The implementation of the GST will result in a sharp decline in the prices of cotton textiles (by
6.44 percent), wool, silk & synthetic fiber textiles (by 11.4 percent), and textile products
including wearing Apparel (by 17.45 percent) (Task Force, 2009). All food items covered under
the public distribution system are proposed to be exempt from GST. As a result primary food
articles like rice and wheat would be exempt from GST. Like food, basic health and education
services are also intended to be fully exempt.

Cost of housing will be cheaper. The prices of goods will automatically come down when the
companies pass on the benefits to the consumers. However, the actual quantum of benefit to the
consumers can be gauged only when GST design and RNR etc. become explicit.

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Impact of Goods and Service Tax :


I. Food Industry
The application of GST to food items will have a significant impact on those who are
living under subsistence level. But at the same time, a complete exemption for food items would
drastically shrink the tax base. Food includes grains and cereals, meat, fish and poultry, milk and
dairy products, fruits and vegetables, candy and confectionary, snacks, prepared meals for home
consumption, restaurant meals and beverages. Even if the food is within the scope of GST, such
sales would largely remain exempt due to small business registration threshold. Given the
exemption of food from CENVAT and 4% VAT on food item, the GST under a single rate
would lead to a doubling of tax burden on food.

II. Housing and Construction Industry


In India, construction and Housing sector need to be included in the GST tax base
because construction sector is a significant contributor to the national economy.

III. FMCG Sector


Despite of the economic slowdown, India's Fast Moving Consumer Goods (FMCG) has
grown consistently during the past three – four year searching to $25 billion at retail sales in
2008.Implementation of proposed GST and opening of
Foreign Direct Investment (F.D.I.) are expected to fuel the growth and raise industry's size to
$95Billion by 201835

List of Exempted Goods See Section 13 (1) :


Aquatic feeds and supplements.
Description of goods Appalam Vadam and Vathal.
Artificial Limbs, shoes and such items used by physically handicapped person.
Agricultural implements manually operated or animal driven.

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Aids & implements used by handicapped persons. Animal feeds and supplements.
Animal shoenails. Atta, Maida, Suji, Besan, wheat, flour, paddy, rice and pulses.
All bangles excluding those made of precious metal.
Beehive. Betel leaves.
Books, periodicals and journals including maps, charts and globe.
Bread (Un-branded).
Cart driven by animals.
Charcoal.Charkha, Amber Charkha.
Handlooms, Handloom fabrics and Gandhi Topi.
Chalk stick Chicken products.
Coarsegrains, Condoms & Contraceptives.
Cotton & Silk yarn in hank.
Curd, Lassi, butter milk & saturated milk.
Earthen pot and clay lamps.

ADMINISTRATION
Classes of officers under the Central Goods and Services Tax Act

(1) There shall be the following classes of officers under the Central Goods and Services Tax
Act, namely;
(a) Principal Chief Commissioners of CGST or
Principal Directors General of CGST,

(b) Chief Commissioners of CGST or


Directors General of CGST,

(c) Principal Commissioners of CGST or


Principal Additional Directors General of CGST,

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(d) Commissioners of CGST or


Additional Directors General of CGST,

(e) Commissioner of CGST(Appeals)

(f) Additional Commissioners of CGST or


Additional Directors of CGST,

(g) Joint Commissioners of CGST or


Joint Directors of CGST,

(h) Deputy Commissioners of CGST or


Deputy Directors of CGST,

(i) Assistant Commissioners of CGST or


Assistant Directors of CGST

Classes of officers under the State Goods and Services Tax Act :
(1) There shall be the following classes of officers and persons under the State Goods and
Services Tax Act namely.

a) Commissioner of SGST,
b) Special Commissioners of SGST,
c) Additional Commissioners of SGST,
d) Joint Commissioners of SGST, e) Deputy Commissioners of SGST,
f) Assistant Commissioners of SGST, and g) such other class of officers and persons as may be
appointed for the purposes of this Act. [List is indicative] Page 26 of 190

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(2) The Commissioner shall have jurisdiction over the whole of the State of (….). All other
officers shall have jurisdiction over the whole of the State or over such areas as the
Commissioner may, by notification, specify.

Implementation :
1. It will prevent tax cascading means the effective tax paid by a consumer on goods and services
will be lower which would result in lowering manufacturing cost. Which would further give
companies the opportunities to lower the existing prices on goods and services .This would result
in to encouraging the competition and increasing competition will always going to benefit the
consumers.

2. Further, the simplified rules of taxation in India would encourage the more investment,
startups and manufacturing which would further increase the supply of goods and services and
new market players may be innovative and may use more cost effective methods and may further
increase quality of products .whatever happens but These new players in market would more
likely to be beneficial for consumer.

3. It would help to setup a national wise market in our country so the prices of goods and
services would be (bit more or less), equal throughout the country. This will be beneficial both
the producers and consumers.
4. Study shows that it would increase tax base and further increase the GDP nearly 0.9-1.7%
.More GDP means govt. will have more money which will further increase the social sector
expenditure which will again going to benefit the common people.

All these factors are not directly related to the common public. They are mainly market reforms
to increase manufacturing. Now if the purpose of attracting investment and manufacturing get
fulfilled through GST it would affect positively on us, the lower/middle class company.

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GST is also beneficial for companies. Following are the key benefits:

 GST will slash the number of taxes under the current system like VAT, excise duty, service
tax, sale tax, entertainment tax, luxury tax etc. Single tax will be applied on both Goods and
Services. This will save the administrative cost for companies.
 The current indirect system is so cumbersome that the trucks have to stop at check posts and
tool plazas for weeks to get the clearance to enter the state which substantially reduce their
average distance travelled per day. With the implementation of the GST, the trucks need not
to stop on check posts. Therefore, it will reduce the buffer stock. Thus, it will increase the
operating efficiency of the companies.

Country :
The government of India is claiming that GST will boost Indian GDP by 2%. With the
implementation of GST, consumers will have more money to spend because of lower tax rates.
Therefore, GST will boost the economy. However, some states are fearing that they will lose the
revenue. The government has promised to compensate the revenue loss by the states for 3 years.
The GST rates will be decided by the GST council and a third-fourth majority is required to
change the GST rate.

Disadvantages of GST :
Some opposition arising from flaws within the system whereas other arising from
problems that will arise in the implementing process. A few of these criticisms are: There comes
a trade off when choosing between a single rate and a multiple rate GST. If multiple tax rates are
used by lowering the tax rate on necessities and imposing high rate in luxury goods the
administration cost may increase and lead to reduced revenue. Conversely if government uses a
single rate on a broader base which is what the government is proposing it will reduce the
administration costs and increase revenue but at the same time affect the poorest in the country

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as they consume a large amount of the untaxed goods that are brought into the taxnet. This
system disregards the differences in expenditure pattern and differences between highlevel and
lower income earners in the country. It is not easy to set the tax rate at a standard rate without
affecting equity and social welfare in the country. In light of the above it is noted that Malaysia
is a developing nation and hence has a significant percentage of informal sectors. In order
to combat the problem of the heavy burden. Faced by the informal sector, the government has
proposed different rates, i.e. a large number of goods will be exempt or zero rated. This move
may shift expenditure on to informal sector products increasing their demand and thus leading to
a higher price yet avoiding paying tax. Whereas the formal sector producer of a close substitute
may get lower profits and bear tax. This affects the equity in the country and causes only
greater disparity between the poor and the rich, and lead to reduced social welfare. Furthermore
it is important to mention GST is a broad-based tax and exemptions and zero ratings must be
scrutinized very carefully. Too many exemptions would result in the erosion of the tax base.
There is a need for efficient and effective computerization of the relevant department which will
be administering the tax. The change will obviously require a computerized system that is
tailored to the profile of the business and the Malaysian GST law. GST implementation is not as
simple as merely activating accounting software’s GST module.

The transition will be costly. In addition much more administrative and documentation
requirements arise from the introduction of GST. Most small businessmen do not have good
accounting systems therefore compliance costs for the general public will arise. And inadequate
information can have adverse effects for taxpayers since they may not be able to determine the
exemption threshold for the businesses. Furthermore lack of documentation will make it difficult
for the government to perform audits and investigation. There is need for the administrators to be
equipped with trained personnel to operate the computerization system. The personnel should
also be knowledgeable about the GST since in the initial period, the public which does not very
familiar with the new tax system will need extra guidance from the administrators.

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SITUATIONS WHERE REFUNDS WOULD ARISE:


In the taxation administration, refund refers to any amount that is due to the tax payer
from the tax administration. In the present taxation system it is considered as a strained area,
both for the taxpayer and the tax administration. So in order to establish an effective and
efficient tax administration system it is essential that issues on which refund arises ought to be
kept at minimum and be clearly defined in the law. Since GST is going to subsume many of the
existing taxation laws such as Central Excise, Service Tax, VAT, CST, etc., the situations under
which refund arise under these laws are as follows:
(A) Excess payment of tax due to mistake or inadvertence.
(B) Export (including deemed export) of goods / services under claim of rebate or Refund of
accumulated input credit of duty / tax when goods / services are exported.
(C) Finalization of provisional assessment.

MINIMUM AMOUNT BELOW WHICH REFUND SHALL NOT BE


GRANTED:
Filing of refund application and processing of the same involves investment of
resources, in terms of time, money and manpower, by both Page 32 of 49 the applicant and tax
administration. Therefore the amount should not be meager enough to create uneconomical
burden on the applicant as well as tax administration. Looking at the rising inflation, it is
recommended that an amount in the range of Rs.500-1000/- may be fixed below which refund
shall not be granted. This limit should be uniform for both CGST/IGST and SGST.

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TAX TREATEMENT :
1.Tax on items containing Alcohol:
Alcoholic beverages would be kept out of the purview of GST. Sales Tax/VAT can be
continued to be levied on alcoholic beverages as per the existing practice. In case it has been
made Viable by some States, there is no objection to that. Excise Duty, which is presently being
levied by the States, may not be also affected. Tax on Tobacco products: Tobacco products
would be subjected to GST with ITC. Centre may be allowed to levy excise duty on tobacco
products over and above GST without ITC. Tax on
2.Petroleum Products:
As far as petroleum products are concerned, it was decided that the basket of
petroleum products, i.e. crude, motor spirit (including 21 ATF) and HSD would be kept outside
GST as is the prevailing practice in India. Sales Tax could continue to be levied by the States on
these products with prevailing floor rate. Similarly, Centre could also continue its levies. A final
view whether Natural Gas should be kept outside the GST will be taken after further
deliberations.

3.Taxation of Services:
As indicated earlier, both the Centre and the States will have concurrent power to levy
tax on all goods and services. In the case of States, the principle for taxation of intra-State and
inter-State has already been formulated by the Working Group of Principal
Secretaries/Secretaries of Finance/Taxation and Commissioners of Trade Taxes with senior
representatives of Department of Revenue, Government of India. For inter-State transactions
an innovative model of Integrated GST will be adopted by appropriately aligning and integrating
CGST and SGST. The working of this model is elaborated below.

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Roadmap :
 Since the Bill has been passed in Rajya Sabha, the Bill will be needed to be passed by
Lok Sabha and ratified by minimum of 15 States in their respective assemblies before the
President can give its assent for its enactment.

 GST Council consisting of representatives from the Centre as well as State will be
formed within 60 days of the enactment of the Bill. The council will
make recommendations to the Union and the States on model Goods & Service Tax laws,
the rates including floor rates with bands of goods & service tax, the Place of Supply
rules and any other matter relating to GST as the Council may decideReports of Joint
Committee constituted by Empowered Committee of the State Finance Ministers on
business processes of payment, registration refund and return under GST have been
released and put in public domain for suggestions.

 The draft model GST Law was released and put in public domain in June 2016.

 GST Network, an IT backbone of GST, which will facilitate online registration, tax
payment and return filing will be launched.

 States will frame their respective GST Legislations to enable them to implement GST. It
will be in line with the Central GST Legislation

Current rate:
Goods and Services Tax (GST) is an indirect tax which was introduced in India on 1 July 2017 and
was applicable throughout India which replaced multiple cascading taxes levied by
the central and state governments. It was introduced as The Constitution (One Hundred and
First Amendment) Act 2017, following the passage of Constitution 122nd Amendment Bill. The
GST is governed by a GST Council and its Chairman is the Finance Minister of India. Under GST,
goods and services are taxed at the following rates, 0%, 5%, 12% ,18% and 28%.There is a
special rate of 0.25% on rough precious and semi-precious stones and 3% on gold.[3] In
addition a Cess of 15% or other rates on top of 28% GST applies on few items like aerated

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drinks, luxury cars and tobacco products.[4] GST was initially proposed to replace a slew of
indirect taxes with a unified tax and was therefore set to dramatically reshape the country's 2
trillion dollar economy. The rate of GST in India is between double to four times that levied in
other countries like Singapore.

View of GST in long and short run :


In the short run, GST is not going to help anyone. From government to common man, everyone is going
to face issues:
 In the initial run, GST would kick up the rate of inflation as has been seen in all the counties
which implemented GST.
 For government, it is going to create a havoc as new database shall have to be created,
procedural compliances shall have to be specified and all the concerned officers shall have
to be trained.
 For the industrialists and entrepreneurs, a whole new system of indirect taxation shall have
to be designed and it is never going to be easy to shift from individual taxes to a
consolidated taxation system.
 But in the long, once all the above mentioned difficulties are dealt with, it is going to
benefit everyone.
 After a period of heavy inflation, inflation is going to reduce and subsequently stabilize.
There is not going to be any cascading effect of taxes and therefore, it is certainly going to
give a positive impact on the pocket of a common man.
 Once brought into practice, the accounting system under GST is going to be the easiest it
has ever been.
 With the increase in indirect tax base, dependency on direct taxes shall reduce and it is
anticipated that the government may grant additional benefits to direct tax assesses which
include a major portion of salaried employees attributing to middle class.

The above changes have been seen in the economies which implemented GST and hence, the
same can be expected in our economy. However, Change is Inevitable. At the most, we can only
hope for the Best REPORTS OF VARIOUS STATE ON IMPLEMENTATION

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CHALLENGES FOR GST :

 It is difficult to estimate accurately gain for States from service tax and loss on account of
removal of cascading effects, payment of input tax credit and phasing out of CST.
 Estimate for Compensation to states on A/c of loss of Purchase Tax.
 How to tackle existing multiple rate structure.
 Constitutional Amendments for empowering the
o Centre to levy tax on sale of goods,
o States for levy of service tax and tax on imports,
o Approvals from State Legislatures for Debiting Consolidated Funds-283(2) of
Constitution)

Article 278 and Article 288 of the Constitution to be amended to enable levy of GST on
supply of electricity to Government at all levels like any other normal goods.

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REPORTS AND IMPLEMENTATION

1.Report on implementation of GST in Assam


GUWAHATI: Assam became the first State in the country to ratify the Constitution
Amendment Bill on Goods and Services Tax (GST) with the State Assembly passing the Bill
unanimously on April 01.

The Bill was approved by the Cabinet before it was placed in the Assembly, official sources said.

“A historic resolution was passed in Assam Assembly as Assam became the first State to ratify
the Constitutional Amendment Bill relating to GST,” Chief Minister Sarbananda Sonowal
tweeted.

“I am sure Assam will benefit from the GST through higher economic growth and better revenue
collection,” he added.

In a telephonic conversation, Prime Minister Narendra Modi congratulated Sonowal for GST
ratification by Assam Legislative Assembly.

Minister for Finance Himanta Biswa Sarma said Sonowal had wanted Assam to become the
first State to pass the amendment as this would send a positive signal to the industry.

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“This is a historic occasion for us to become the first State to pass this Bill. I would like to thank
the Speaker for allowing us to introduce it today (Friday) after we informed him on Thursday
night,” Sarmasaid. Of the Central GST portion, 42 per cent tax will be given back to the State.
The GST will also have a special concession option for Northeast and the Himalayan States if
they request reduction of taxes for any reason. Besides, these States can collect special tax during
any natural calamity or disaster subject to approval by GST Council.

2. Report on implementation of GST in Bihar


Patna: Bihar, being a consumer state, is set to be a gainer once the destination-based
Goods and Services Tax (GST) is implemented in the country, claimed 14th Finance
Commission member M Govind Rao at a meeting of various stakeholders at Asian
Development Research Institute (ADRI) here to discuss 'GST: Implementation strategy and
implications for Bihar' on Wednesday.

"Bihar will need to prevent the domination of producing states and gear up its administration and
information system if it wants to benefit from GST. The government should revisit tax
exemption list and keep it to minimum," Rao said, adding that tax structure should also be
rationalized and there was no need to wait for GST implementation for that.

"The government needs to decide threshold, exemptions and rate structure, place of supply rules,
deal with e-commerce, technology, training and taxpayer service and modalities to deal with
present infirmities such as work contracts and area-based incentives," Rao said.

The economist said implementation of any reform takes 10-20 years and added, "GST is
important in the context of Make in India. Though it is not a game-changer, it is still an
important arsenal in the fiscal armory."

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3. Report on implementation of GST in Jharkhand


Jharkhand on Wednesday became the third State to ratify the Goods and Services Tax
Amendment Bill at a special session of the Legislative Assembly.

Thanking all the MLAs of the House for rising above party lines to ratify the Bill, Chief Minister
Raghubar Das said that the unanimity demonstrated by the legislators on initiating one country,
one tax was exemplary.

The GST Bill, described as India’s biggest tax reform, needs to be ratified by at least 15 State
legislatures before the President can notify the GST Council which will decide the tax rate.

The Central has set a deadline of April 2017 for its rollout.

Assam was the first state to ratify the Bill.

The Telangana government has also decided to call an Assembly session this month to pass the
GST Bill, Telangana Finance Minister Etela Rajender said on Wednesday.

Bihar on Tuesday became the first non-NDA State to ratify the Constitution Amendment Bill on
GST after Chief Minister Nitish Kumar counted virtues of the tax reform.

With all the major parties in the State including the JD (U), RJD, Congress and the BJP in favor
of the tax legislation, the House approved the GST Bill through a voice vote. PTI

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4.Report on implementation of GST in Himachal Pradesh

Himachal Pradesh and Chhattisgarh assemblies yesterday ratified Goods and Services
Tax Constitutional amendment bill.
The Himachal Pradesh assembly unanimously ratified the constitutional amendment bill on
Goods and Services Tax (GST), passed by the Parliament this month. The bill was introduced by
Chief Minister Virbhadra Singh on the first day of five-day monsoon session that began in
Shimla Monday afternoon.

It was ratified by the assembly without any discussion and with thumping of benches, both by
the treasury and the opposition BJP. The Himachal Pradesh became the fourth state after Assam,
Bihar and Jharkhand to ratify the bill.
Later talking to AIR Correspondent Chief Minister Virbhadra Singh said that the GST bill
would help the country especially states like Himachal Pradesh in particular. On the other hand
opposition Leader Prem Kumar Dhumal express happiness over ratification and also thanked all
the members to pass the amendment bill.

Chhattisgarh Vidhansabha also unanimously ratified the Goods and Service Tax constitutional
amendment Bill today after a marathon debate during the one day special session.

Both ruling BJP and Congress members participated in the debate after which the house
unanimously ratified the GST Bill by voice vote.

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5.Report on implementation of GST in Chhattisgarh

The Chhattisgarh state assembly unanimously ratified the Goods and Service Tax (GST)
Bill during its special one day session on Monday after a six hour forty five minutes-long
discussion.

Chhattisgarh became the fifth State to ratify the Constitution One Hundred and Twenty-Second
Amendment Bill (GST) after Assam, Bihar, Jharkhand and Himachal Pradesh which also ratified
the bill on Monday.

Calling the unanimous ratification of the bill as a “moment of proud” for Chhattisgarh Assembly,
Chief Minister Raman Singh said, “I would like to thank the leader of opposition in the
assembly, all the MLAs of the Congress, the BSP and independent MLA and our MLAs and
ministers, who participated in this fruitful six hour forty five minutes long discussion and made
some excellent suggestions.”

“Sixteen various types of taxes have been made into one simple taxation system. This will
strengthen our economy and service sector,” the chief minister added.

The Bill was tabled in the House by the Minister for Commercial Taxes Amar Agrawal.

Mr. Singh also thanked the Prime Minister Narendra Modi and union finance minister Arun
Jaitly for “displaying strong will by bringing everyone on the same stage for the GST."

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6.Report on implementation of GST in Gujarat :

The Gujarat Assembly on Tuesday passed the Goods and Service Tax (GST) Constitution
Amendment Bill, becoming the sixth state to pass the bill.
The ratification of the bill comes in quick succession after the Chhattisgarh assembly passed it
unanimously on Monday.
Himachal, Assam, Jharkhand and Bihar state assemblies have also passed the Bill.

The state assembly of Gujarat had convened a special session to ratify the Bill that was passed by
Parliament earlier this month.
In New Delhi, the Aam Aadmi Party government only last week said it will place the GST Bill
for ratification before the Delhi Assembly during its 4-day session beginning August 22 if it
receives official communication about the Bill from the Centre.
The Constitution (122nd Amendment) Bill for the roll-out of the Goods and Services Tax (GST)
was passed by the Lok Sabha earlier in August, with 443 members present in the House voting in
favor of the legislation. Arun Jaitley had, earlier in August, announced that the deadline for the
rollout of the bill was April 1, 2017.
The GST bill, seen as single biggest tax reform in a long time, needs to be ratified by at least 15
state legislatures before the President can notify the GST council which will decide the new tax
rate and other issues.
The government had been working overtime to get states on board over the GST following the
passage of the bill in Parliament.

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7. Report on implementation of GST in Madhya Pradesh


The Madhya Pradesh Assembly on Wednesday ratified the Constitution Amendment Bill
on Goods and Service Tax, reported ANI. Chief Minister Shivraj Singh Chouhan said the Bill
will lead to higher gross domestic product and help curb corruption in the country. This comes
only a day after Prime Minister Narendra Modi's home state Gujarat ratified the Bill.

The BharatiyaJanata Party government in the state convened a one-day sitting of the Assembly to
ratify the Bill that will pave way for a new indirect tax regime in the country. Chouhan said the
Bill will lead to economic integration of the country, and its implementation will help generate
jobs, reported PTI. The state's finance minister, Jayant Malaiya, said Madhya Pradesh will
especially benefit from the Bill as it is a consumer state.

Congress leaders put forward several suggestions, such as the GST council should be given
constitutional status, and petroleum products should be brought under the purview of the Bill,
among others, reported Indian Express. This is the seventh state to ratify the Bill after Assam,
Bihar, Jharkhand, Chhattisgarh, Gujarat and Himachal Pradesh.

The Bill was passed by the Rajya Sabha on August 3

8.Report on implementation of GST in Delhi

9Delhi's current share in central taxes is about 300crores and will substantially increase
once GST is implemented; the cash-strapped state is eager to help roll it out soonest.

However, BJP-ruled Goa could become the first state to clear GST this week, if the bill reaches it
before it ends its monsoon session on Friday, August 12. Senior Goa BJP leaders have met PM
Modi and also discussed extending the session by a few days for GST if needed.

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The center has said it expects 16 states to clear GST in the next 30 days. The BJP governs nine
states on its own and four along with allies and these states are expected to call special sittings of
their assemblies.

Bihar chief minister Nitish Kumar too has offered a special sitting of his state's assembly to clear
GST and the West Bengal government is expected to clear the bill in a session it has called later
this month.

9.Report on implementation of GST in Nagaland


KOHIMA: The Nagaland Legislative Assembly today ratified the Goods and Service
Tax (GST) Constitution Amendment Bill.

The bill was endorsed by the House by a voice vote following a brief discussion.

Introducing the bill, Minister for Parliamentary Affairs KiyaniliePeseyie said the revenue of the
state would go up as tax evasion would be checked due to transparency and broadening of tax
base.

"A purely consuming state like Nagaland will benefit even more since GST is based on the
destination principle," he said, adding, tax administration would improve since most of the
activity would be online.

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Report of the Joint Committee on Business Processes for GST on


Registration Processes in GST Regime :
Introduction During the Empowered Committee meeting held on 10th March, 2014, it
was decided that a Joint Committee under the co-convener ship of the Additional Secretary
(Revenue), Government of India and the Member Secretary, Empowered Committee should be
constituted to look into the Report of the Sub-Group-I on Business Processes for GST and make
suitable recommendations for Registration and Return to the Empowered Committee. It was also
decided that the Joint Committee should also keep in view the Registration and Return
requirements necessary for IGST Model. Accordingly, a Joint Committee, in consultation with
the Government of India, was constituted on 7th April, 2014 (Annexure-I).

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Assumptions :
The business process proposed in this document is based on the following assumptions:
(1) A legal person without GST registration can neither collect GST from his customers nor
claim any input tax credit of GST paid by him. (2) There will be a threshold of Gross Annual
Turnover including exports and exempted supplies (to be calculated on all-India basis1 ) below
which any person engaged in supply of Goods or Services or both will not be required to take
registration. Once a dealer crosses the required threshold or he starts a new business, registration
application must be filed within 30 days from the date of the dealer’s liability for obtaining such
registration. Effective date of registration would be the date of application in all cases i.e.
whether the application has been filed within prescribed time limit of 30 days or otherwise. The
taxpayer would be eligible for ITC in respect of all his purchases from the date of application in
case application for registration has been filed within 30 days. The taxpayer would, however, not
be eligible for ITC in respect of his purchases prior to the date of registration in case the
registration application is not filed within the prescribed time limit of 30 days, although Centre is
of the view that such a provision may not stand the test of judicial scrutiny. On the other hand
States, based on their experience under VAT, were of the view that having relevant provision in
the GST law has helped them contest cases in courts. GST Law Drafting Committee to make
provision relating to eligibility for ITC accordingly as well as for levying penalty in case of a
dealer failing to register within the stipulated time period.

Cancellation/Surrender of registration 10.1 In the following cases, the registration can be either
surrendered by the registrant or cancelled by the tax authorities: (1) Closure of business of tax
payer; (2) Gross Annual Turnover including exports and exempted supplies (to be calculated on
all-India basis) falling below threshold for registration; (3) Transfer of business for any reason
including due to death of the proprietor of a proprietorship firm; (4) Amalgamation of taxable
person with other legal entities or de-merger; (5) Non commencement of business by the tax
payer within the stipulated time period prescribed under the GST laws (Suitable provision to be
made in the GST law). 10.2 In case of surrender, the system will send an acknowledgment by
SMS and e-Mail to the applicant regarding his surrender of registration and he will be deemed to

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OVERVIEW ON GOODS AND SERVICE TAX

be unregistered from the date of such acknowledgement. There will be a provision in the system
to prompt such surrendered registrants to update their address and mobile number at a prescribed
periodicity till all dues are cleared/refunds made. Application form for Surrender / Cancellation
of registration is annexed as Annexure-IV.

GST in other countries :


Internationally, countries are moving towards simplification of tax structures

 South Korea replaced eight indirect taxes representing 40% of revenue by GST
 Other countries such as Japan Australia, New Zealand, Singapore and South Africa have
strived to achieve a world class GST.

“GST is one of the widely accepted indirect taxation system prevalent in more than 150Countries
across the globe. Globally, GST has been structured as a destination based Comprehensive tax
levied at a specified rate on sale and consumption of goods and services within a country. It
facilitates creation of national tax standards with consumers paying Uniformrates of GST,
thereby enabling flow of seamless credit across the supply chain. In Countries where GST has
been adopted, producers (Manufacturers, wholesalers, retailers and service providers) charge
GST at the specified rate on price of the goods and services andclaims input credits for GST
included in the price paid by them on procurement of goods and services (raw material).
Technically, sellers or service providers collect GST from their customer (who may or may not
be their final consumer) and prior to depositing this with the exchequer, deduct the tax (GST)
paid by them.
The ultimate cost is borne by the final consumer who cannot claim GST credit. In the sense, it is
and indirect tax – not borne by manufacturers and service providers. The net effect is that the
seller or service provider charges GST but does not retain it and pays GST but receives a credit
for it, making him a pseudo collecting agent for the government. On most of the goods and
services, the tax rate is uniform, but depending upon the circumstances in a country, certain
goods and services can be declared ‘exempted’ or charged at lower rate.

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OVERVIEW ON GOODS AND SERVICE TAX

MODELS :
There are several models of GST, each with its own merit and demerit. A look at some of the
models in circulation:
1. Australian Model: In Australia GST is a federal tax, collected by the Centre and
distributed to the states. But India is a heterogeneous country and there is no chance that
states may

REFERENCER ON GOODS AND SERVICES TAX 46allows the Centre


to collect all the taxes while they become just spending institutions;

2. Canadian Model: The GST in Canada is dual between the Centre and the states and has
three varieties. Federal GST and provincial retail sales taxes (PST) administered
separately followed by the largest majority;

i. Joint federal and provincial VATs administered federally (Harmonious Sales


Tax-HST); and
ii. Separate federal and provincial VAT administered provincially (QST) – only for
Quebec as it is like a breakaway province. The first variety is fundamentally the
Canadian model, which is similar (though not the same) to the existing situation
in India.

3. Kelkar-Shah Model: This model of a unified GST, is based on a grand bargain to merge
central excise, service tax and state VAT into one common base. Two different rates of
tax are to be levied by the Centre and the states. The collection may be by the Centre.
This is like the HST model in Canada;
4. Bagchi-PoddarModel: This model, just like Kelker- Shahs, envisages a combination of
central excise, service tax and VAT to make it a common base of GST to be levied both
by the Centre and the states separately. This means that the Central Excise Act, 1944
maybe abolished and the goods tax may be only on the sale of goods. It may merge in it

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OVERVIEW ON GOODS AND SERVICE TAX

the service tax. To put this in legal lingo, the taxable event for the GST may be the act of
sale of goods and services. The concept of manufacture may simply vanish. The
difference between the Bagchi-Poddar and Kelker-Shah models is that in the former, the
collection is at two levels, by the Centre and the states, while in the latter the collection is
only by the Centre. So while the Kelker-Shah model is like the Canadian HST, the
Bagchi-Poddarone is like the Quebec model. Although the model says that it is based on
the Quebec model, it is actually not fully so as this model envisages collection both by
the Centre as well as the states, whereas the Quebec model envisages collection only by
the state of Quebec. The Bagchi-Poddar model also clearly envisages that a
Constitutional amendment is necessary to bring the taxing powers on goods and services
under the concurrent list and to abolish the present division of taxing powers between the
Centre and the states

Conclusion :
The target date for introduction of GST is 1st April 2017. Introduction of this
transformational tax reform is expected to broaden the tax base, increase tax compliance and
reduce economic distortions caused by inter-State variations in taxes. GST will boost economic
activity and will benefit everyone. It will streamline the tax administration, avoid harassment of
the business and result in higher revenue collection for the Centre and States. Compliance costs
for the industry will go down. Last but not the least, it will create more jobs. In sum, it would be
a win-win situation for everyone i.e. taxpayers, governments, consumers, etc.

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BIBILOGRAPHY

 BOOKS

1. Goods and service tax “An Insight Into “ by C.A.Chitresh Gupta.


2. G.S.T: The Gamer Changer (Future Taxation System in India).

 WEBSITE
1.http:// ctax.kar./nil/.in
2. http://Govt of Karnataka.commerical/tax department/.in
3. www.slideshart.com
4. www.investopedia.com

 LIBRARY

1.The National Degree College, Basavanagudi, Bangalore.

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