STUDY ON GOODS AND SERVICES TAX

SUBMITTED TO:
Dr. Tilak Raj
Assistant Professor
University Business School,
Panjab University,
Chandigarh.
SUBMITTED BY:
Nikita Bamel Roll No: 18
Pooja Miglani Roll No: 22
S.NO. CONTENT
1) INTRODUCTION
2) OBJECTIVES OF THE STUDY
3) WHAT IS GST?
4) BENEFITS OF GST
5) TAX STRUCTURE
6) RULES TO REFORM GST
7) ROAD TO GST
8) GST RATES REVISION (2019)
9) HOW DOES GST WORKS?
10) CONSUMER’S PERCEPTION ON GST
11) IMPACT OF GST ON INDIAN ECONOMY
12) CONCLUSION
13) REFERENCES
INTRODUCTION

MAN BEHIND GST

It has been a 17-year long journey for the GST and several brains of economic
brilliance and acute political acumen to bring about the changes in tax regime in
the country. GST as a concept is nothing new but it was during a meeting between
the then Prime Minister late Atal Bihari Vajpayee and his advisors, including three
former RBI governors IG Patel, Bimal Jalan and C.Rangarajan where the concept
of GST was proposed. But then the finance minister of West Bengal Asim
Dasgupta was given the work to formulize the uniform tax system for India.
Current Prime Minister Narendra Modi and former Finance Minister late Arun
Jaitley were very new faces to join the years long journey of GST. Although they
have very important role in implementing this historical concept, but they are not
the man behind GST.

101st Amendment act of constitution

According to the ministry of law and justice, GST act was passed on 8th september
2016 under one hundred and one, constitutional amendment act 2016. Under this
act, Article 261(a) was added to Indian constitution inserting special provisions for
goods and services tax.

GST : A Historical Reform

Previously, every good faced an excise tax levied by centre and state VAT. There
was atleast 8-10 rate of excises and 3-4 of state VATs, and later potentially
different across states. So the structure of multiple rates has been reduced to 6
rates.
Previously, different states could impose different taxes on any given products and
they can be different from taxes levied by the centre. But GST brought uniformity
in taxes on the basis of “one country, one tax” all over India.
GST COUNCIL OF INDIA
Goods and services council consists these ministers
1) The union Finance Minister…...Chairperson
2) The union minister of state in charge of revenue or finance…..Member
3) The minister in charge of finance or taxation or any other minister
nominated by each state government…..Member

● The GST council, the key decision making body that will take all important
decisions regarding the GST, will have representation from central
government as well as the state governments.

● The goods & services tax council (GST Council) has been created in
september 2016 under article 279 -A , of the constitution of india . The main
objective of GST is to develop a harmonized national market of goods and
services . it has its Secretariat office in New Delhi.
OBJECTIVES OF THE STUDY
● To analyze the working of Goods and services tax.
● To study the convergence in rates of GST.
● To study the benefits and drawbacks of GST.
● To analyze the customer perception regarding GST.
● To study the impact of GST in Indian Economy.
WHAT IS GST?
● GST is the amalgamation of central and state tax.
● It brings together most of the taxes under one single banner.
● It was levied by the Indian Government on July 1, 2017.
● It is a comprehensive form of tax which is payable only at the final point of
consumption.
● It is imposed on goods and services at every stage of the production and
distribution chain.

BENEFITS OF GST
FROM GOVERNMENT’S VIEW POINT
● A unified common national market to boost foreign investment and “Make
in India” campaign.
 ● Boost to export/manufacturing activity, generation of more employment,
leading to reduce poverty and increased GDP growth.
● Uniform IGST and SGST to reduce the incentive of tax invasion.
● Reduction in compliance record has no requirement for multiple record
keeping.

FROM CITIZEN’S VIEW POINT

● Simple tax system.
● Uniform price throughout the country.
● Transparency in taxation method.

FROM TRADER’S/INDUSTRIALISTS VIEW POINT

● Reduction in multiplicity of taxes.
● Mitigation of double taxes.
● Development of common national market.
● Simpler tax regimes- fewer rates and exemptions.
BENEFITS OF GST TO INDIAN ECONOMY
● Removal of bundled indirect taxes such as VAT, CST, Service tax, CAD,
SAD, and Excise.
● Less tax compliance and a simplified tax policy compared to current tax
structure.
● Removal of cascading effect of taxes i.e. removes tax on tax.
● 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.
● 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.
● Increased demand and consumption of goods.
● Increased demand will lead to increase supply. Hence, this will ultimately
lead to rise in the production of goods.
● Control of black money circulation as the system normally followed by
traders and shopkeepers will be put to a mandatory check.
● Boost to the Indian economy in the long run.
TAX STRUCTURE
POWER AND RULES TO REFORM THE GST LAWS
Legislature of every state, have power to make laws with respect to goods and
services tax imposed by the union or by such state
Parliament has exclusive powers to make laws with respect to GST where the
supply of goods, or of services, or both takes place in the course of interstate trade
or commerce.

Every decision of the GST council shall be taken at a meeting by a majority of not
less than three fourth of the weighted votes of the members present and voting, in
accordance with the following principles, namely:
a) The vote of the central government shall have a weightage of one thord of
the total votes cast.
b) The votes of all the state government taken together shall have a weightage
of two third of the total votes cast.
ROAD TO GOODS AND SERVICES TAX
GST Rates in 2019 – List of Goods and Service Tax Rates,
Slab & Revision

GST Rate revision in 37th GST council meeting

GST Council had its 37th meet held at Goa on Friday (20th September 2019).
The following are the rate cuts announced at the 36th GST Council meeting:
GST Rate Revision effective from 1 October 2019

Item Current New Rate

Rate

Plates and cups made of flowers, leaves and bark 5% Nil

Caffeinated Beverages 18% 28%+12%

cess

Supplies of Railways wagons & coaches (without refund of 5% 12%

accumulated ITC)

Outdoor Catering (without ITC) 18% 5%

Diamond Job work 5% 1.50%

Other Job work 18% 12%

Hotels (Room Tariff of Rs.7501 or above) 28% 18%

Hotels (Room Tariff from Rs 1,001 to Rs 7,500) 18% 12%

 Woven/ Non-woven Polyethylene Packaging bags 18% 12%

Marine fuel 18% 5%

Almond Milk 18%

Slide fasteners 18% 12%

Wet grinders (consisting of stone as a grinder) 12% 5%

Dried Tamarind 5% Nil

Semi-precious stones- cut & polished 3% 0.25%

Specified goods for petroleum operation under HELP* Applicable 5%

Rate

*Hydrocarbon Exploration Licensing Policy

Item Current New

Rate Rate

Cess on Petrol Motor Vehicles (Capacity of 10-13 passengers) 15% 1%

Cess on Diesel Motor Vehicles (Capacity of 10-13 passengers) 15% 3%

GST Exemption available for:

● Supplies to FIFA- specified persons for the Under-17 Women’s Football World Cup in
India
● Supply to the Food and Agriculture Organisation (FAO) for specified projects in India
● Imports of certain defence goods not made indigenously (up to 2024)
● Supply of silver/platinum by specified agencies (Diamond India Ltd) for export
● Import of Silver or Platinum by specified agencies (Diamond India Ltd)
 HOW DOES GST WORKS?

CONSUMER’S PERCEPTION REGARDING GST

IMPACT OF GST ON INDIAN ECONOMY
● Reduces tax burden on producers and fosters growth through more
production. The current taxation structure, pumped with myriad tax
clauses, prevents manufacturers from producing to their optimum
 capacity and retards growth. GST will take care of this problem by
providing tax credit to the manufacturers.
● 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
roadblock.
● 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.
● GST will add to the government revenues by extending the tax base.
● GST will provide credit for the taxes paid by producers in the goods or
services chain. This is expected to encourage producers to buy raw
material from different registered dealers and is hoped to bring in more
vendors and suppliers under the purview of taxation.
● GST will remove the custom duties applicable on exports. The nation’s
competitiveness in foreign markets will increase on account of lower
costs of transaction.

What hasn’t worked?

● Compliance process needs improvement.
● Cumbersome registration system.
● New cesses cropped up(compensation cess).
● Refund problem for exports.

CONCLUSION

The proposed GST regime is a half- hearted attempt to rationalize indirect tax
structure. More than 150 countries have implemented GST. The government of
India studied the GST regime set up by various countries and also their fallouts
before implementing it. At the same time, the government made an attempt to
insulate the vast poor population of India against the likely inflation due to
implementation of GST. No doubt, GST has simplified existing indirect tax
system and helped to remove inefficiencies created by the existing current
heterogeneous taxation system only if there is a clear consensus of overissues of
threshold limit, revenue rate and inclusion of petroleum products, electricity,
liquor and real estate. Until the consensus is reached, the government should
resist from implementing such regime.

Next on the agenda

● Expansion of tax base

● Tax slab rationalisation
● Lower tax rate
● GST returns simplification
● More data analytics
● Anti profiteering agency

REFERENCES

● Thapar Karan.(2017,Sept1) After demonitisation. The Hindu.

● Ranade Ajit.(2017, May 24) The GST train chugs along. The Hindu.
● Bhargava Yuthika.(2017,May 20) GST council finalises rates for services.
The Hindu.
● Jayant Sinha, Minister of state in the ministry of finance. (2015, July 31)
sharing of GST revenue with states. Press Release.
● CBIC data retrieved from www.cbic.in
 ● https://www.deskera.in/gst-benefits-and-impact-on-indian-economy/
● https://www.paisabazaar.com/tax/gst-rates/

It has been a 17-year-long journey for the GST and