DISSERTATION

(KMB-405)

Study on GST And Its Implication

SUBMITTED IN PARTIAL FULFILMENT OF THE

REQUIREMENT FOR THE AWARD DEGREE OF

Master of Business Administration

(MBA)

Submitted By Supervisor
Mohd Ifham Khan Mr.Faisal Afridi
Roll no- 1817570051 ABIMS, Aligarh

AL-BARKAAT INSTITUTE OF MANAGEMENT STUDIES

Anoopshahr Road, Aligarh
(Affiliated to AKTU, Lucknow)
2019-20

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 DECLARATION
I, Mohd Ifham Khan students of MBA, from ABIMS, Aligarh approved by AICTE
affiliated to Dr.APJ Abdul Kalam Technical University, luck now here by declared that
the Dissertation report on “Study on GST And Its Implication” further, I also declare
that I have tried my best to complete this report a most sincerely and accuracy, even
then my best to complete this report a most sincerely and accuracy, even then if any
mistake or error has been crept in, I shall most humbly request the readers to point out
those errors or omission and guide me for the removal of those errors in the future.

Mohd Ifham Khan

(4RD SEM)

ABIMS, ALIGARH

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 ACKNOWLEDGEMENT

With the deep sense of gratitude, I wish to acknowledge the support and help extended by
people, in successful completion of this project work.

I express my gratitude to my supervisor Mr.Faisal Afridi (Assistant Professor) for

consistent support, and Head of the department for his encouragement during pandemic
Situation in the country.

I would like to thanks all the faculty members who have been a strong source of
inspiration throughout the project directly or indirectly.

Regards,

Mohd Ifham Khan

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 TABLE OF CONTENT

CERTIFICATE

DECLARATION

ACKNOWLEDGEMENT

CHAPTER-1………………………………………………4-94 pages

Introduction to Goods & Service Tax

CHAPTER-2……………………………………………...95-96 pages

Objectives of the study

Research methodology

CHAPTER-3…………………………………………...97-99 pages

Findings & Suggestion

Conclusion

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 Chapter-1
Introduction
Goods & service tax
Concept and introduction of Tax
Taxation is the inherent power of the state to impose and demand contribution upon persons,
properties, or right for the purpose of generating revenues for public purposes.

Taxes are enforced proportional contributions from persons to property levied by the law
making body of the state by virtue of its sovereignty for the support of the government and all
public needs.

Tax is one of the most common financial terms.

Taxes are one of the primary sources of income for the government through which its fulfils
various projects and initiatives. They are levied by central and state governments.

A tax is a compulsory financial charge or some other type of levy imposed upon a taxpayer
(an individual or legal entity) by a governmental organization in order to fund various public
expenditures. A failure to pay, along with evasion of or resistance to taxation, is punishable
by law. Taxes consist of direct or indirect taxes and may be paid in money or as its labour
equivalent. Most countries have a tax system in place to pay for public, common or agreed
national needs and government functions. Some levy a flat percentage rate of taxation on
personal annual income, but most scale taxes based on annual income amounts. Most
countries charge a tax on an individual's income as well as on corporate income. Countries or
subunits often also impose wealth taxes, inheritance taxes, estate taxes, gift taxes, property
taxes, sales taxes, payroll taxes or tariffs.

In economic terms, taxation transfers wealth from households or businesses to the

government. This has effects which can both increase and reduce economic growth and
economic welfare. Consequently, taxation is a highly debated topic. Taxes are involuntary
fees levied on individuals or corporations and enforced by a government entity whether local,
regional or national in order to finance government activities. In economics, taxes fall on
whomever pays the burden of the tax, whether this is the entity being taxed, such as a
business, or the end consumers of the business goods. To help fund public works and
services- and to build and maintain the infrastructures used in a country the government
usually taxes its individual and corporate residents. The tax collected is used for the
betterment of the economy and all living in it.

In the U.S and many other countries in the world, taxes are applied to some form of money
could be income earned from salary, capital gains from investment appreciation, dividends
received as additional income, payment made frp goods and srvices, etc.

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 Brief History of Taxation
The first known system of taxation was in Ancient Egypt around 3000–2800 BC in the First
Dynasty of Egypt of the Old Kingdom of Egypt.[28] The earliest and most widespread form
of taxation was the corvée and tithe. The corvée was forced labour provided to the state by
peasants too poor to pay other forms of taxation (labour in ancient Egyptian is a synonym for
taxes).[29] Records from the time do

cument that the Pharaoh would conduct a biennial tour of the kingdom, collecting tithes from
the people. Other records are granary receipts on limestone flakes and papyrus.[30] Early
taxation is also described in the Bible. In Genesis (chapter 47, verse 24 – the New
International Version), it states "But when the crop comes in, give a fifth of it to Pharaoh.
The other four-fifths you may keep as seed for the fields and as food for yourselves and your
households and your children". Joseph was telling the people of Egypt how to divide their
crop, providing a portion to the Pharaoh. A share (20%) of the crop was the tax (in this case,
a special rather than an ordinary tax, as it was gathered against an expected famine) The stock
made by was returned and equally shared with the people of Egypt and traded with the
surrounding nations thus saving and elevating Egypt.

In the Persian Empire, a regulated and sustainable tax system was introduced by Darius I the
Great in 500 BC; the Persian system of taxation was tailored to each Satrapy (the area ruled
by a Satrap or provincial governor). At differing times, there were between 20 and 30
Satrapies in the Empire and each was assessed according to its supposed productivity. It was
the responsibility of the Satrap to collect the due amount and to send it to the treasury, after
deducting his expenses (the expenses and the power of deciding precisely how and from
whom to raise the money in the province, offer maximum opportunity for rich pickings). The
quantities demanded from the various provinces gave a vivid picture of their economic
potential. For instance, Babylon was assessed for the highest amount and for a startling
mixture of commodities; 1,000 silver talents and four months‘ supply of food for the army.
India, a province fabled for its gold, was to supply gold dust equal in value to the very large
amount of 4,680 silver talents. Egypt was known for the wealth of its crops; it was to be the
granary of the Persian Empire (and, later, of the Roman Empire) and was required to provide
120,000 measures of grain in addition to 700 talents of silver. This tax was exclusively levied
on Satrapies based on their lands, productive capacity and tribute levels.

The Rosetta Stone, a tax concession issued by Ptolemy V in 196 BC and written in three
languages "led to the most famous decipherment in history—the cracking of hieroglyphics".

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Islamic rulers imposed Zakat (a tax on Muslims) and Jizya (a poll tax on conquered non-
Muslims). In India this practice began in the 11th century.

Trends
Numerous records of government tax collection in Europe since at least the 17th century is
still available today. But taxation levels are hard to compare to the size and flow of the
economy since production numbers are not as readily available. Government expenditures
and revenue in France during the 17th century went from about 24.30 million livres in 1600–
10 to about 126.86 million livres in 1650–59 to about 117.99 million livres in 1700–10 when
government debt had reached 1.6 billion livres. In 1780–89, it reached 421.50 million livres.
Taxation as a percentage of production of final goods may have reached 15–20% during the
17th century in places such as France, the Netherlands, and Scandinavia. During the war-
filled years of the eighteenth and early nineteenth century, tax rates in Europe increased
dramatically as war became more expensive and governments became more centralized and
adept at gathering taxes. This increase was greatest in England, Peter Mathias and Patrick
O'Brien found that the tax burden increased by 85% over this period. Another study
confirmed this number, finding that per capita tax revenues had grown almost sixfold over
the eighteenth century, but that steady economic growth had made the real burden on each
individual only double over this period before the industrial revolution. Effective tax rates
were higher in Britain than France the years before the French Revolution, twice in per capita
income comparison, but they were mostly placed on international trade. In France, taxes were
lower but the burden was mainly on landowners, individuals, and internal trade and thus
created far more resentment.

Taxation as a percentage of GDP 2016 was 45.9% in Denmark, 45.3% in France, 33.2% in
the United Kingdom, 26% in the United States, and among all OECD members an average of
34.3%.

Forms

In monetary economies prior to fiat banking, a critical form of taxation was seignior age, the
tax on the creation of money.

Other obsolete forms of taxation include:

 Scutage, which is paid in lieu of military service; strictly speaking, it is a

commutation of a non-tax obligation rather than a tax as such but functioning as a tax
in practice.
 Tallage, a tax on feudal dependents.

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  Tithe, a tax-like payment (one tenth of one's earnings or agricultural produce), paid to
the Church (and thus too specific to be a tax in strict technical terms). This should not
be confused with the modern practice of the same name which is normally voluntary.
 (Feudal) aids, a type of tax or due that was paid by a vassal to his lord during feudal
times.
 Danegeld, a medieval land tax originally raised to pay off raiding Danes and later
used to fund military expenditures.
 Carucage, a tax which replaced the Danegeld in England.
 Tax farming, the principle of assigning the responsibility for tax revenue collection
to private citizens or groups.
 Socage, a feudal tax system based on land rent.
 Burgage, a feudal tax system based on land rent.

Some principalities taxed windows, doors, or cabinets to reduce consumption of imported

glass and hardware. Armoires, hutches, and wardrobes were employed to evade taxes on
doors and cabinets. In some circumstances, taxes are also used to enforce public policy like
congestion charge (to cut road traffic and encourage public transport) in London. In Tsarist
Russia, taxes were clamped on beards. Today, one of the most-complicated taxation systems
worldwide is in Germany. Three-quarters of the world's taxation literature refers to the
German system. Under the German system, there are 118 laws, 185 forms, and 96,000
regulations, spending €3.7 billion to collect the income tax.[citation needed] In the United
States, the IRS has about 1,177 forms and instructions, 28.4111 megabytes of Internal
Revenue Code which contained 3.8 million words as of 1 February 2010,[42] numerous tax
regulations in the Code of Federal Regulations, and supplementary material in the Internal
Revenue Bulletin. Today, governments in more advanced economies (i.e. Europe and North
America) tend to rely more on direct taxes, while developing economies (i.e. India and
several African countries) rely more on indirect taxes.

Taxation system
Tax system is system of raising money to finance government. All governments require
payment of money taxes from people.

Government use revenues to pay soldiers and police to build dams and roads, to operate
schools and hospitals, to provide food to the poor and medical care facilities etc. and also
hundreds of other purposes without taxes to fund its activities, government could not exist.
So, taxation is the most important source of revenues for modern government typically
according for 90% or more of their income.

Tax system play a vital role in most developing countries and it is a major source of revenue
for government.

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 Essential characteristics of tax
 It is an enforced contribution
 It is generally payable by money.
 It proportionate in character, usually based on ability to pay
 It is levied on person and property with the jurisdiction of the state
 It is levied for public purpose
 It is commonly required to be paid a regular intervals

Why are Taxes levied?

The reason for levy of Taxes is that they constitute the basic source of revenue to the
government Revenue so raised is utilised fro meeting the expenses of government like
defence, provision of education, health care, infrastructure facilities like roads, dams
etc.

What are the reasons of taxation?

 Provide the basic facilities fro every citizen of country.
 Finance government multiple projects and schemes
 Protection of life
 Responsibility of citizen to the nation.

Meaning of Tax:
The word tax derived from Latin word ― Taxo‖, which means to asses or estimate.

Tax can be defined in the following ways:

“The compulsory payment made to governments associated with certain activities are
called Taxes”

“A general purpose, compulsory contribution by the people to public treasury to meet

the expenditure of government is called Tax”

“Taxes are the price we pay for a civilised society”

Tax in general, is the imposition of financial charges upon an individual or a company by the
govt of India or their respective state or similar other functional equivalents in a state. The
computation and imposition of the varied taxes prevalent in the country are carried on by the
ministry of finance department of revenue.

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 Types of Taxes
There are two types of taxes namely, direct taxes and indirect taxes. The implementation of
both the taxes differs. You pay some of them directly, like the cringed income tax, corporate
tax, and wealth tax etc. while you pay some of the taxes indirectly, like sales tax, service tax,
and value added tax etc.

Tax is an obligatory contribution to the state revenue; the government of India levy on the
income of workers and business gains or added up to the cost of some transactions, goods and
services.The government levies taxes on the citizens of the country to produce income for
business projects to enhance the country‘s economy and to lift up the standard of living of the
nationals. The government‘s authority to a levy tax in our country is drawn from the
Constitution of India that deals out the supremacy to levy taxes to the State as well as Central
governments. All the taxes levied within the country require being backed by an escorting
law passed by the State Legislature or the Parliament.

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However, apart from these two traditional taxes, there are other taxes also, which has been
affected to serve a specific agenda by the country‘s Central Government. ‗Other Taxes‘ are
imposed on both the taxes, direct and indirect tax like the currently launched Swachch Bharat
Cess Tax, Infrastructure Cess Tax, and Krishi Kalyan Cess Tax among others.

Direct Tax:

What is Direct Tax?

As stated earlier, you pay these taxes directly. The government levy such taxes directly on an
individual or an entity and it cannot get transferred to any other person or entity. There is
only one such federation that winks at the direct taxes, i.e. the Central Board of Direct Taxes
(CBDT) governed by the Department of Revenue. The CBDT has, to assist it with its sense of
duties; the backup of several acts that preside over several aspects of the direct taxes.
A few of these acts are as under:

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 Income Tax Act:
Income Tax Act is also called the IT Act, 1961. Income Tax in India is governed by the rules
set by this act. The income taxed by this act can be generated from any source such as profits
received from salaries and investments, owning a property or a house, a business, etc. The IT
Act defines the tax benefit you can avail on a life insurance premium or a fixed deposit. It
also decides the savings from your income via investments and the tax slab for your income
tax.

 Wealth Tax Act:

The Wealth Tax Act came into effect in the year 1951 and is in charge of the taxation linked
with an individual‘s net wealth, a Hindu Unified Family (HUF) or a company. The easiest
computation of wealth tax was:
If the net wealth of an individual exceed Rs. 30 lakhs, then 1 per cent of the exceeded amount
is payable as a tax. It was put to an end in the budget that was announced in 2015. Since then,
it has been substituted with a surcharge of 12 per cent on the individuals that generate an
income more than Rs. 1 crore p.a. It is also pertinent to the companies, which have generated
revenue of over Rs. 10 crores p.a. The fresh guidelines radically raised the sum the
government would accumulate in taxes as disparate the amount they would accumulate via
wealth tax.

 Gift Tax Act:

This Act was brought into existence in the year 1958 and assured that if a person received
gifts or presents, valuables or monetary, he has to pay a tax on those gifts. The tax on
aforementioned gifts was sustained at 30 percent but it was put to an end in the year 1998.
Originally, if a gift was given, and it was somewhat like shares, jewellery, property etc. it was
subject to tax. As per the new rules, the present given by the members of the family like
parents, spouse, uncles, aunts, sisters and brothers are not subject to tax. Even presents you
receive from the local authorities are also exempted from such taxes. If somebody, other than
that of the exempted entities, presents you anything, which has a value beyond Rs. 50,000
then the whole gift amount is subject to tax.

 Expenditure Tax Act:

The Expenditure Tax Act came into existence in the year 1987 and cope with the expenditure
made by you, as a person, may incur whilst you avail the services of a restaurant or a hotel. It
is appropriate to the entire nation other than Jammu and Kashmir. It asserts that some
expenses are liable under the act if the amount is beyond Rs. 3,000 contingent upon a hotel
and all the expenses drawn in a restaurant.

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 Interest Tax Act:
This Act of 1974 copes with the tax, which was chargeable on interest produced in some
specific situations. In the Act‘s last amendment, it is stated that this act is not applicable to
interest earned after March 2000.
Here are a few examples of several kinds of direct taxes:

Examples of Direct Taxes:

These are a few of the direct taxes that are paid by you:

1. Income Tax:
Income Tax is one of the most popular and least implicit taxes. It is such a tax, which is
imposed on your income in a fiscal year. There are a lot of facets to the income tax, like
taxable income, reduction of the taxable income, tax slabs, tax deducted at source (TDS), etc.
This tax is pertinent to both the companies and individuals. For individuals, the amount they
pay against the tax is based on the tax bracket they breeze in. This slab or tax decides the tax
that an individual has to pay depending upon their annual income and spreading from no tax
to 30 percent for the higher income groups.
The government of India has fixed various tax slabs for different groups of people, namely
very senior citizens (people who have attained an age above 80 years), senior citizens (people
who have attained an age of 60 to 80 years), and general taxpayers.

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2. Capital Gains Tax:
Capital Gains Tax is payable whenever you get a considerable sum of money. It could be
from the sale of any property or from an investment. This is generally of two types, namely
long-term capital gains from the investment made for a period of more than 36 months and
short-term capital gains from the investments made for not more than 36 months. The tax that
is applicable for each of these is also different since short-term gains tax is computed basis
the income bracket, which you fall in and the long-term capital gain tax is 20 percent. The
interesting thing about the capital gain tax is that the profit does not always should be in the
money form. It could also happen to be barter in kind in this the worth of the exchange will
be taken into consideration for taxation.

3. Securities Transaction Tax:

It is not a tough nut to crack to know about the proper trading on the stock market, and
exchange securities, you stay still to make an extensive sum of money. This too is a mine of
income but has its own tax that is called as the Securities Transaction Tax. How is this tax
levied? This tax is levied by combining the share‘s price and the tax. This means every time
you purchase or sell a share, you make payment of this tax. All the securities traded on Indian
Stock Exchange, have this affixed with them.

4. Perquisite Tax:
Perquisites are all the privileges and perks that the employers might pull out to the
employees. These civil liberties may include a car provided for your use or a house, given by
the company. These perquisites are not just confined to big compensations such as houses or
cars; they may even include things such as compensation for phone bills or fuel. The
perquisite tax is levied by discovering how the company acquires the perk of how the
employee uses it. In case of cars, it might be so that the company provides a car and the
employee uses it for both official and personal purposes qualifies for tax while the car used
for official purposes only is not eligible for tax.

5. Corporate Tax:
The income tax a company pays from its revenue earned by it is called a corporate tax. The
corporate tax also has a slab of its own, which decides the amount of tax to be paid. For
instance, a domestic firm that earns revenue of not more than Rs. 1 crore p.a. will not have to
pay such tax. It is also made known as a surcharge and it is different for distinct revenue
brackets. This tax is also different for the international companies where this tax may be 41.2
percent of the revenue earned by the company is not more than Rs. 10 million and above.
There are four types of corporate taxes. They are:

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  Minimum Alternate Tax:
Minimum Alternative Tax (MAT) is fundamentally a means for the IT Department to get the
companies to make payment of a minimum tax that presently stands at 18.5 percent. This
type of tax came into existence when the Section 115JA of the IT Act was introduced.
Nevertheless, the companies that are involved in power sectors and infrastructure are
exempted from making payment of MAT.
Once the MAT is paid by the company, it can cart the payment forward and adjust against the
regular tax payable for the period of the succeeding five-year duration liable to be subjected
to specific conditions.

 Fringe Benefit Tax:

Abbreviated as FBT, was a tax that was applied to nearly all the fringe benefits an employee
receives from its employer. This tax covers several aspects such as:
 Employee Accommodation, entertainment and welfare, the employer‘s expenditure on
travel (LTA)
 Employer Stock Option Plans (ESOPs)
 The contribution made by the employer to a registered retirement fund
 Any commute related expenditure or regular commute offered by an employer
The FBT was initiated under the stewardship of the Government of India from April 1, 2005.
Nevertheless, Pranab Mukherjee, the-then Finance Minister abandoned it in 2009 while the
Union Budget Session 2009.

 Dividend Distribution Tax:

This tax was brought in after the end of Union Budget 2007. It is fundamentally a tax that is
levied on the companies that depend on the dividend paid by them to their investors. The
Dividend Distribution Tax is chargeable on the net or gross income of an investor received
from the investments made by them. Presently, the DDT rate is 15 percent.

 Banking Cash Transaction Tax:

This tax is yet another type of tax, which the Government of India has scrapped. This type of
taxation was into effect from 2005 to 2009 until Mr. Pranab Mukherjee, the-then Finance
Minister, wiped out the tax. Under this tax, every bank transaction, credit or debit, would be
levied tax at a rate of 0.1 percent.

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Indirect Tax:

What is Indirect Tax?

The taxes levied on goods and services are referred to as indirect taxes. They are different
from direct taxes as they are not imposed on an individual who shells out them directly to the
Indian government, they are, as an alternative, imposed on the products and an intermediary,
the individual selling the product, collects them. The most trivial examples of the indirect
taxes are Sales Tax, Taxes levied on imported goods, Value Added Tax (VAT), etc. Such
taxes are imposed by summating them with the price of the product or service that likely to
push the price of the product up.

A few of these are as follow:-

Types of Indirect Taxes:

The most common forms of indirect taxes are as under:

1. Sales Tax:
The tax imposed on the sale of any product is called sales tax. This product can be anything
produced in India itself or imported and can also cover services provided. The sales tax is
levied on the product‘s seller who then passes it to the individual who buys the said product
with this tax summated to the product‘s price. The constraint with this tax is that such a tax is
imposed on a particular product that means if the product is re-sold; the seller cannot apply
sales tax on it.
Fundamentally, all the states in India follow their individual Sales Tax Act and a percentage
native to them is charged. Besides this, other additional charges such as works transaction
tax, turnover tax, purchase tax, and the similar taxes are levied in a few states. This is also

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one reason that sales tax was considered as one of the largest revenue producers for a number
of state governments. In addition, the sales tax is imposed under both the State and Central
Legislation.

2. Service Tax:
As sales tax, the service tax is also summated to the price of the product sold in the country.
In Budget 2015, the FM announced that the rates of service tax will be elevated to 14 percent
from 12.36 percent. It is not charged on goods but on the companies that offer services and
once every quarter or every month it is collected on the way services are offered. If the
organisation is an individual service provider then the payment of service tax is made only
once the bills are paid by the customer. However, for firms, the service tax is to be paid as
soon as the invoice is raised, heedless of the payment of the bill by the customer.
You must remember that since the service offered at restaurants is a combo of the premises,
the waiter and the food, it is tough to point to be eligible for service tax. To abolish haziness,
in this regard, there was a declaration made that the restaurants will charge service tax on 40
percent of the total bill.

Goods and Service Tax-GST:

The GST, i.e. Goods and Service Tax is the biggest reform in the structure of Indirect Tax in
India since the market began unlocking 25 years back. The goods and services tax is a
consumption-based tax because it is chargeable where the consumption is taking place. The
GST is imposed on the value-added services and goods at every stage of consumption in the
supply chain. The GST chargeable on the acquisition of the goods and services can be
redeemed against the GST chargeable on the supply of the goods and services, the vendor
will have to make payment of the GST on the applicable rate but he can claim it back via the
tax credit method.

3. Value Added Tax:

Value Added Tax (VAT), popularly known as commercial tax is not chargeable on the
commodities, which are zero rated for food and necessary drugs or those falling under
exports. VAT is imposed at all the steps of the supply chain, from manufacturers to dealers to
distributors to the end user.
The VAT was a tax imposed at the prudence of the state government of the country. Not all
the states put it into practice when it was announced. The VAT is imposed on several goods
that were sold in the state and the state itself decided the amount of tax.

4. Customs Duty and Octroi:

While you buy anything that requires being imported from abroad, you are applied a charge
on it and that is known as the customs duty. It is applied to all the products, which come in
via air, sea or land. Although you acquire products bought in different country to India, you

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will be charged a customs duty. The intention of the customs duty is to make sure the goods
that enter the country are taxes and are paid for. Like the customs duty makes sure that the
goods for different countries are levied taxes, Octroi is supposed to make sure that the goods
traversing the state borders inside India are appropriately taxed. The state government levies
this and functions in almost the same way as that of the customs duty.

5. Excise Duty:
The excise duty is such a tax that is imposed on all the manufactured goods or the produced
goods in India. This tax varies from customs duty as it is chargeable only on the things that
are produced in India and is also called the Central Value Added Tax or CENVAT. The
government collects this tax from the manufacturer of goods, also from the entities, which
receive manufactured products and provide work for people to transport the products from
manufacturer to them.
The Central Excise Rule framed by the Central Government of India suggests that every
individual that manufactures or produces any ‗excisable goods or products‘, or who stockpile
such products in a depot, will have to make payment of the duty chargeable on these goods.
Under this scheme, no excisable products, on which some duty is payable will be permitted to
move without making payment of duty from any point6, where they are manufactured or
produced.

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 Tax Structure & Taxation System in India
Tax structure in India is a three tier federal structure. The central government, state
governments, and local municipal bodies make up this structure. Article 256 of the
constitution states that ―No tax shall be levied or collected except by the authority of law‖.
Hence, each and every tax that is collected needs to back by an accompanying law.

Interestingly, the tax system in India traces its origin to the prehistoric texts such as
Arthashastra and Manusmriti. As proposed by these manuscripts, the taxes paid by farmers
and artisans in that era would be in the form of agricultural produce, silver or gold. Based on
these texts, the foundation of the modern tax system in India was conceptualised by the Sir
James Wilson during the British rule in India in the year, 1860. However, post-independence
the newly-established Indian Government then soldered the system to propel the economic
development of the country. After this period, the Indian tax structure has been subject to a
host of changes.

Tax System in India:

The tax system in India allows for two types of taxes—Direct and Indirect Tax.

The tax system in India for long was a complex one considering the length and breadth of
India. Post GST implementation, which is one of the biggest tax reforms in India, the process
has become smoother. It serves as an all-inclusive indirect tax which has helped in
eradicating the cascading effect of tax as a whole. It is simpler in nature and has led to
upgraded the productivity of logistics.

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Direct Tax:
Direct Tax is levied directly on individuals and corporate entities. This tax cannot be
transferred or borne by anybody else. Examples of direct tax include income tax, wealth tax,
gift tax, capital gains tax.

Income tax is the most popular tax within this section. Levied on individuals on the income
earned with different tax slabs for income levels. The term ‗individuals‘ includes individuals,
Hindu Undivided Family (HUF), Company, firm, Co-operative Societies, Trusts.

Indirect Tax:
Indirect taxes are taxes which are indirectly levied on the public through goods and services.
The sellers of the goods and services collect the tax which is then collected by the
government bodies.

Value Added Tax (VAT) – A sales tax levied on goods sold in the state. The rate depends on
the government.

Octroi Tax– Levied on goods which move from one state to another. The rates depend on the
state governments.

Service Tax– Government levies the tax on service providers.

Customs Duty– It is a tax levied on anything which is imported into India from a foreign
nation.

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 Tax Collection Revenue Authorities

 THE CENTRAL BOARD OF DIRECT TAXES (CBDT)

The Central Board of Direct Taxes (CBDT) is a part of the Department of Revenue under the
Ministry of Finance. This body provides inputs for policy and planning of direct taxes in
India and is also responsible for administration of direct tax laws through the Income Tax
department.

 THE CENTRAL BOARD OF EXCISE AND CUSTOMS (CBEC)

The Central Board of Excise and Customs (CBEC) is also a part of the Department of
Revenue under the Ministry of Finance. It is the nodal national agency responsible for
administering customs, central excise duty and service tax in India.

 CENTRAL BOARD OF INDIRECT TAXES & CUSTOMS(CBIC)

Under the GST regime, the CBEC has been renamed as the Central Board of Indirect Taxes
& Customs (CBIC) post legislative approval. The CBIC would supervise the work of all its
field formations and directorates and assist the government in policy making in relation to
GST, continuing central excise levy and customs functions.

The Indian taxation system in India has witnessed several modifications over the years. There
has been standardization of income tax rates with simpler governing laws enabling common
people to understand the same. This has resulted in ease of paying taxes, improved
compliance, and enhanced enforcement of the laws.

Role of the Central and State Government

The entire system is clearly demarcated with specific roles for the central and state
government. The Central Government of India levies taxes such as customs duty, income tax,
service tax, and central excise duty.

The taxation system in India empowers the state governments to levy income tax on
agricultural income, professional tax, value added tax (VAT), state excise duty, land revenue
and stamp duty. The local bodies are allowed to collect octroi, property tax, and other taxes
on various services like drainage and water supply.

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 GST - Goods & services Tax (India)
Goods and Services Tax (GST) is an indirect tax (or consumption tax) used in India on the
supply of goods and services. It is a comprehensive, multistage, destination-based tax:
comprehensive because it has subsumed almost all the indirect taxes except a few state taxes.
Multi-staged as it is, the GST is imposed at every step in the production process, but is meant
to be refunded to all parties in the various stages of production other than the final consumer
and as a destination-based tax, it is collected from point of consumption and not point of
origin like previous taxes.

The reference of GST was first made in the Indian Budget in 2006-07 by the finance minister
Mr P Chidambaram as a singles centralised indirect tax. The GST constitution (122 nd)
amendment bill 2014 was introduced on December 12, 2014 and passed on May 06, 2015 in
the lok sabha and yet to be passed in the rajya sabha.

The bill seek to amend the constitution to introduce goods and services tax vide proposed
new article 246 A. this article gives power to legislature of every state and parliament to
make laws with respect to goods and services tax where the supplies of goods or of service
take place. Recently, union minister Mr Arun Jaitley said that GST could be implemented as
early as January 1, 2016.

Goods and services are divided into five different tax slabs for collection of tax - 0%, 5%,
12%, 18% and 28%. However, petroleum products, alcoholic drinks, and electricity are not
taxed under GST and instead are taxed separately by the individual state governments, as per
the previous tax system. There is a special rate of 0.25% on rough precious and semi-precious
stones and 3% on gold. In addition a cess of 22% or other rates on top of 28% GST applies
on few items like aerated drinks, luxury cars and tobacco products. Pre-GST, the statutory tax
rate for most goods was about 26.5%, Post-GST; most goods are expected to be in the 18%
tax range.

The tax came into effect from 1 July 2017 through the implementation of the One Hundred
and First Amendment of the Constitution of India by the Indian government. The GST
replaced existing multiple taxes levied by the central and state governments.

The tax rates, rules and regulations are governed by the GST Council which consists of the
finance ministers of the central government and all the states. The GST is meant to replace a
slew of indirect taxes with a federated tax and is therefore expected to reshape the country's
2.4 trillion dollar economy, but its implementation has received criticism. Positive outcomes
of the GST includes the travel time in interstate movement, which dropped by 20%, because
of disbanding of interstate check posts.

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 Historical background of GST in India
 Amaresh Baghchi Report, 1994 suggests that the introduction of Value Added tax will
act as root for implementation of goods & Services tax in India.
 Ashim dasgupta, 2000 empowered committee, which introduces VAT system in 2005,
which has replaced old age taxation system in India.
 Vijay kelkar task force 2004, it strongly recommend that the integration of indirect
taxes in to the form of GST in India.
 Announcement of GST to be implemented by 1 st April, 2010 after successfully
implementation of VAT system in India and suggestion various committees and task
forces on GST, the union government first time in union budget 2006-07 announced
that the GST would be applicable from 1st April 2010.
 The government has formed various types joint working groups of state finance
ministers to study the impact of GST various states.
 The empowered committees of state finance ministers after various meetings reached
on amicable formula for implementation of GST in India.
 Task force of finance ministers has submitted their report in December 2009 on
structure of GST in India.
 In august, 2013 standing committee on finance tabled its report on GST bill.
 In December, 2014 revised constitution amendment bill was tabled in parliament.
 On June 14, 2016, the ministry of finance released draft model law on GST in public
domain for views and suggestions.
 GST bill passed in rajya sabha on 3rd august, 2016 the constitution amendment (122nd)
bill 2014 was passed by rajya sabha with concern amendments.
A. The changes made by Rajya Sabha were unanimously passed by Loksabha.
B. After the passage of amendment bill in Rajya Sabha and the charges
subsequently ratified and passed by the lok sabha unanimously, the bill was
adopted by a majority of state legislatures where in approval by at least 50%
of the state assembles was required.
C. The final step to the constitution (122nd) amendment bill, 2014 becoming an
act was taken when the honourable president of India gave his final assent on
September 8, 2016.
 In 2017, four GST related bills become act to following presidents assent and passage
in parliament:-
A. Central GST bill
B. Integrated GST bill
C. Union territory GST bill
D. GST (compensation to sales) bill
 In 2017 GST council finalising the GST rules and GST rates.
 When GST is applicable- Modi Govt. want to applicable before 1st july2017, due to
some legal problem GST bill is not applicable before 1st July 2017.

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 Meaning of Goods and Service Tax (GST)
Clauses 366 (12A) of the constitution Bill defines GST as ―goods and service tax‖ means
any tax on supply of goods, or services or both except taxes on the supply of the liquor for
human consumption. Further the clause 366 (26A) of the bill defines services means anything
other than goods.

Thus it can be said that GST is a comprehensive tax levy on manufacture, sale consumption
of goods and services at a national level. The proposed tax will be levied on all transactions
involving supply of goods and services, except those which are kept out of its preview.

Purpose of GST:
The 2 important purposes of GST are followings:

Single Umbrella Tax rate:

GST shall replace a number of indirect taxes being levied by union and state government.

Removing Cascading Effect:

GST is intended to remove tax on tax effect and provides to common national market fro
Goods and Services.

Types of categories under GST rate

The GST tax is levied based on revenue national rate. For the purpose of imposing GST tax
in India, the goods and services are categorized in to four.

These are four categories of goods and services are follows:

 Exempted Categories Under GST in India:

The GST and council and other GST authorities notifies list of exempted goods. Such goods
are not fallen under payment of GST tax. The authorities may modify or amend the list time
to time by adding deleting any item if required by notification to public.

 Essentials Categories Under GST in India:

Essential category of goods and services are charged very lower GST rate.Essential goods
and services under this category.

 standard goods and services for GST in India:

A major share of GST tax payers falls under this category of standard goods and service. A
standard rate is charged against the goods and services under this category.

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  Special goods and services for GST tax levy:

Under special category of this goods and services. GST rates would be high. Precious metals
including luxury items of goods and services fall under special goods and services fro GST
rate implementations.

GST rates in India at a glance:-

Exempted categories: 0

Commonly used goods and services: 5%

Standard Goods and Services fall under 1st slab: 12%

Special category of goods and services including Luxury goods: 28%

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 What is GST?
GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and
Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect
on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi-stage,
destination-based tax that is levied on every value addition.

In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of
goods and services. This law has replaced many indirect tax laws that previously existed in
India.

GST is one indirect tax for the entire country.

So, before Goods and Service Tax, the pattern of tax levy was as follows:

Under the GST regime, the tax is levied at every point of sale. In the case of intra-state sales,
Central GST and State GST are charged. Inter-state sales are chargeable to Integrated GST.

Now let us try to understand the definition of Goods and Service Tax – ―GST is a
comprehensive, multi-stage, destination-based tax that is levied on every value addition.‖

Multi-stage
There are multiple change-of-hands an item goes through along its supply chain: from
manufacture to final sale to the consumer.

Let us consider the following case:

 Purchase of raw materials

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  Production or manufacture
 Warehousing of finished goods
 Sale to wholesaler
 Sale of the product to the retailer
 Sale to the end consumer

Goods and Services Tax is levied on each of these stages which make it a multi-stage tax.

Value Addition

The manufacturer who makes biscuits buys flour, sugar and other material. The value of the
inputs increases when the sugar and flour are mixed and baked into biscuits.

The manufacturer then sells the biscuits to the warehousing agent who packs large quantities
of biscuits and labels it. That is another addition of value after which the warehouse sells it to
the retailer.

The retailer packages the biscuits in smaller quantities and invests in the marketing of the
biscuits thus increasing its value.

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GST is levied on these value additions i.e. the monetary value added at each stage to achieve
the final sale to the end customer.

Destination-Based

Consider goods manufactured in Maharashtra and are sold to the final consumer in
Karnataka. Since Goods & Service Tax is levied at the point of consumption. So, the entire
tax revenue will go to Karnataka and not Maharashtra.

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 Features of GST
 Levy of GST: The centre will levy Central GST (CGST) and the states will levy State
GST (SGST) on the supply of goods and services within a state. The centre will levy
IGST in the case of (i) inter-state supply of goods and services, (ii) imports and
exports, and (iii) supplies to and from special economic zones.

 Exemptions from GST: The centres exempt certain goods and services from the
purview of GST through a notification. This will be based on recommendations of the
GST Council.

 Turnover limit under GST and tax right over low turnover entities: GST is
applied when turnover of the business exceeds Rs 20lakhs per year (Limit is Rs
10lakhs for the North-Eastern States). Traders who would like to get input tax credit
should make a voluntary registration even if their sales are below Rs 20 lakh per year.
Traders supplying goods to other states have to register under GST, even if their sales
is less than Rs 20 lakh. There is a composition scheme for selected group of tax
payers whose turnover is up to Rs 75 lakhs a year.

 The four-tier rate structure: The GST proposes a four-tier rate structure. The tax
slabs are fixed at 5%, 12%, 18% and 28% besides the 0% tax on essentials. Gold is
taxed at 3%. The center has strictly demanded and got an additional cess on demerit
luxury goods that comes under the high 28% tax. Essential commodities like food
items are exempted from taxes under GST.Other consumer goods which are common
items will be taxed at 5%.4. The new GST seems to have two standard rates – 12%
and 18%. GST rate structure for the goods and services are fixed by considering
different factors including luxury/necessity nature.

 Tax revenue appropriation between the center and states: The center and states
will share GST tax revenues at 50:50 ratios (except the IGST). This means that if a
service is taxed at 18%, 9% will go to the center and 9% will go to the concerned
state.

 Input tax credit: Every taxpayer while paying taxes on outputs may take credit for
taxes paid earlier by the supplier on inputs. However, this will not be applicable on
supplies related to: (i) motor vehicles when used for personal consumption, (ii) supply
of food, health services, etc. unless they are further used to make a supply.

 Taxable amount (value of supply): The GST levied on the supply of goods and
services, whose value will include: (i) price paid on the supply, (ii) taxes and duties
levied under other tax laws, (iii) interest, late fee, penalties for delayed payments,
among others.

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  Refunds and welfare fund: Any taxpayer may apply for refund of taxes in cases
including: (i) payment of excess taxes, or (ii) unutilised input tax credit. The refund
may be credited to the taxpayer, or to a Consumer Welfare Fund under certain
circumstances.

 Returns: Every taxpayer should self-assess and file tax returns on a monthly basis by
submitting: (i) details of supplies provided, (ii) details of supplies received, and (iii)
payment of tax. In addition to the monthly returns, an annual return will have to be
filed by each taxpayer.

 Apportionment of IGST revenue: The IGST collected will be apportioned between

the center and the state where the goods or services are consumed. The revenue will
be apportioned to the center at the CGST rate, and the remaining amount will be
apportioned to the consuming state.

The introduction of GST is to be a very important step in the field of indirect tax
reforms in India. It is perceived that GST would increase the competition of our
products in both Domestic and International markets. Many studies have proven that
such a situation would create an instant growth in the economy.

 According to present concept, the tax is applied on manufacture and sale of goods or
provision of services. But GST would be applicable on the supply of goods or
services.

 The GST will have a dual effect between Centre and States simultaneously levying it
on a common tax base. The GST which will be levied by the Centre on intra-State
supply of goods and/or services would be called Central GST (CGST) and that to be
levied by the States would be called State GST (SGST).

 The GST will be applicable to all goods other than alcoholic liquor for human
consumption and five petroleum products, which are petroleum crude, motor spirit
(petrol), high speed diesel, natural gas and aviation turbine fuel. It would apply to all
services barring a few to be specified.

 Tobacco and Tobacco products will be subjected to GST and the Centre can levy
Central Excise duty on these products.

 The GST will replace the following taxes currently levied and collected by the Centre:

1. Central Excise Duty

2. Duties of Excise (Medicinal and Toilet Preparations)

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 3. Additional Duties of Excise (Goods of Special Importance)

4. Additional Duties of Excise (Textiles and Textile Products)

5. Additional Duties of Customs (commonly known as CVD)

6. Special Additional Duty of Customs (SAD)

7. Service Tax

 State taxes that would be subsumed under the GST are:

8. State VAT

9. Central Sales Tax

10. Luxury Tax

11. Entry Tax in lien of octroi (ETILOO)

12. Entertainment Tax (not levied by local bodies)

13. Taxes on advertisements

14. Purchase Tax

15. Taxes on Lotteries, Betting and Gambling

16. State cesses and surcharges insofar as they relate to supply of goods and
services

*ETILOO: is a tiny tax, but difficult to comply with and inflicts enormous pain on the
economy. It divides the Indian common market and acts like a tariff on import of goods into a
local/municipal area from the rest of the country.

 An Integrated GST (IGST) would be levied and collected by the Centre on inter-State
supply of goods and services. The accounts would be settled periodically between the
Centre and the States to ensure that the SGST portion of IGST is transferred to the
destination State where the goods or services are eventually consumed.

 The tax payers shall be allowed to take credit of the taxes paid on inputs (input tax
credit) and utilize the same for payment of output tax. But no input tax credit on
account of CGST shall be utilized towards payment of SGST and vise versa. The
credit of IGST would be permitted to be utilized for payment of IGST, CGST and
SGST in that order.

 Harmonised System of Nomenclature (HSN) code will be used for classifying goods
under GST regime. Taxpayers whose turnover is higher than Rs. 1.5 Crores but below

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 Rs.5 Crores shall use 2 digit code and the taxpayers whose turnover is Rs.5 Crores
and above shall use 4 digit code.

 Exports shall be treated as zero-rated supply. No tax is payable on export goods but
credit of the input tax related to the supply shall be admissible to exporters.

 The import of goods and services would be treated as inter-State supplies and would
be subject to IGST in addition to the applicable customs duties.

 The laws, regulations and procedures for levying and collecting CGST and SGST will
be in harmony to possible extent.

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 Background of GST in India and Beyond countries
Goods and Services Tax, or GST, is a common transactional tax type globally. In this
whitepaper, we will explore the concept of GST as it applies around the world, then delve
into the specifics of how GST relates to India.

To start, let's take a look at a roundup of the GST structure of some major world economies,
including tax rates, threshold limits, exemptions, and zero-rated transactions. This provides a
foundation for understanding India's GST.

European Union (EU)

The European Economic Community (EEC) adopted VAT throughout Europe, replacing
cascading multi-stage turnover tax. VAT was implemented due to the ease with which it
handled cross-border transactions and facilitated the development of a common market.

The VAT Directive sets the framework for VAT structure in the EU, but leaves national
governments with the freedom to set the number and level of rates they choose. They may
use provisions of VAT Directives in national legislation, subject to the following basic rules:

1. Goods or services supplied in the course of business by a taxable person within the
EU are subject to VAT at a standard rate not lower than 15%, unless specifically
exempt.

2. EU member states can opt to apply one or two reduced rates of not less than 5%.

3. Member states may subject certain goods or services listed in Annex III of the VAT
Directive, such as food, water, pharmaceuticals, books, admission to
cultural/amusement/sporting events, social services, medical services and equipment,
agricultural inputs, to lower rates, including zero rates, which were in place on Jan. 1,
1991, though they cannot introduce any new rate under 5%.

4. Goods and services in the public interest, such as medical care, services linked to
welfare and social security work by public entities or charitable organizations, certain
education and cultural services, specific financial and insurance services, certain
supplies of land and buildings, export of goods, and shipments of intra-EU supplies
are exempt from VAT.

Canada
In Canada, GST is applicable on supply of most goods and services, including real property
and intangible personal property, and is governed by the Excise Tax Act. Canada has a
federal government (like India's), and a federal GST was introduced in 1991 to replace the
existing federal sales tax imposed on manufacturers and certain licensed wholesalers at a
general rate of 13.5%. However, all provinces continued with the provincial retail sales tax
('PST'), thereby having two levels of tax levied. The harmonized sales tax (HST) is imposed
in provinces that have harmonized their provincial sales tax with the GST (New Brunswick,

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Nova Scotia, Newfoundland and Labrador, Ontario, Prince Edward Island) and is a
combination of a federal component and a provincial component (5-8%) applicable generally
on the same base of property and services as the GST.

In the remaining provinces, GST is imposed on taxable goods and services, along with
provincial sales tax or a retail sales tax.

The three territories (Northwest Territories, Nunavut, and Yukon), as well as the province of
Alberta, charge GST at the rate of 5%. Most goods and services supplied in or imported into
Canada are considered taxable supplies, and are subject to GST at the rate of 5% or HST in
the range of 13% to 15% (federal component of 5% and provincial component of 8 to 10%),
with certain exceptions based on policy decisions, such as:

 Exports and supplies of goods and services relating to basic needs of individuals, such
as drugs and biologicals, medical and assistive devices, basic groceries, agriculture
and fishing, transportation and travel etc. are taxed at the rate of 0% (zero-rated).

 Supplies of goods and services supporting public needs such as certain real property,
healthcare, educational, child and personal care, legal aid, public sector bodies,
financial services, ferry/road/bridge tolls etc. are exempted from GST/HST.

New Zealand
The New Zealand GST, enacted in 1988, was designed as a comprehensive tax base including
many difficult-to-tax goods and services. The New Zealand GST became an international
benchmark for indirect tax design. For instance, the Institute of Fiscal Studies of United
Kingdom considered the New Zealand GST model as the benchmark for evaluation of
European VAT Directives.

In New Zealand, GST is governed by the GST Act of1985 and is applicable on most
indigenous goods and services, most imported goods, and certain specified imported services
at a rate of 15%.

The "Goods" category includes all types of personal and real property except actionable
claims, money, and products transmitted by a non-resident to a resident by means of wire,
cable, radio or other technical systems. The "Services" category covers everything other than
goods or money.

When supplying certain goods and services, such as exported goods and services or
telecommunication services, the supplier is governed by a territorial authority. Proceeds from
the local authorities, sales of going concern (slump sale), and sale of land are subject to GST
at the rate of 0%.

Supply of certain goods and services, such as private property (car or home not used for
business), financial services such as interest payment on loan or bank fees, donated products
and services sold by nonprofit organizations, rentals of residential property, and penalty
interest are all exempt from GST.

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Australia
The implementation of New Tax System package in Australia, including New Tax System
(Goods and Services Tax) Act of 1999, was considered a landmark change to the Australian
tax system. The new GST replaced the federal wholesale sales tax and some state and
territory taxes with a single tax rate of 10% on the supply of most goods and services, with
some exceptions.

 The basic rule of GST in Australia is destination-based consumption tax, with limited
tax base exclusions.

 Certain supplies, such as certain food products, most medical and health services,
drugs, medical aids and appliances, most education courses, childcare, exports,
religious services, and international transport are known as GST-free (other counties
refer to these as zero-rated).

 Certain supplies, such as financial supplies, residential rent, residential premises,

precious metals, school shops and canteens and fundraising events conducted by
charities are known as input-taxed supplies (other countries refer to these as exempt)
and no GST is applicable on such supplies.

Observations from VAT/GST in Other Jurisdictions

A trend can be observed from the VAT/GST legislation and provisions in the aforementioned
jurisdictions. VAT/GST are destination-based, and therefore apply to consumption taking
place in the respective country/region. These taxes, therefore, exempt exports and tax
imports.

Furthermore, input tax credits can be claimed for the cost of procuring and producing, in the
case of zero-rated supplies, and cannot be claimed in case of exempted supplies.

VAT/GST has emerged as the successful choice among other forms of indirect taxation.
Jurisdictions using these taxes work continuously toward reforming structural issues. An
example of this occurred in December 2010, when the European Commission published a
Green Paper on the future of VAT, arguing that there were "numerous shortcomings in the
current VAT system which create obstacles to the Internal Market, cause burdens for
businesses and prevent Member States from benefiting from the true potential of this tax".
The paper also pointed out the system is susceptible to fraud.

Businesses report finding the EU VAT model very complicated, due to its complicated
exemption application rules. Reduced rates among member states cause competitive
distortion and create additional compliance costs borne by businesses conducting cross-
border trade when compared to businesses that only trade domestically. In Canada,
businesses face challenges under GST/HST due to interpretation issues and the variation of
tax rates between provinces. Although British Columbia harmonized its PST with the GST in
July 2010, it re-implemented PST in 2013. In all jurisdictions, even New Zealand and

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Australia, compliance costs under VAT/GST have been reported to burden small businesses
more.

Global scenario and GST

More than 150 countries have introduced GST/National VAT in some form. It has been a part
of the tax system in Europe for the past 50 years and is the preferred form of the indirect tax
in the Asia-Pacific region. There are different models of GST currently in force, each with its
own peculiarities. While country such as Singapore virtually taxes everything at a single rate,
some countries have more than one rate (a zero rate, certain exemptions and higher and lower
rates). In some countries it is recoverable only on goods used in the production process and
specified service. The standard GST rates in most of the countries ranges between 15-20%
which is shown in the Table: 3.1. In Scandinavian countries (north Europe) where social
security coverage is higher, it ranges between 22-25 percent.

Global GST Rates:

Country Standard Country Standard Country Standard

Rate Rate Rate
Austria 20% Greece 18% Norway 25%

Belgium 21% Argentina 21% Denmark 25%

Portugal 19% Chile 19% Sweden 25%

Ireland 21% Spain 16% Finland 22%

Poland 22% Romania 19% Italy 20%

France 19.6% Luxembourg 15% Switzerland 7.6%

Germany 16% Netherland 19% U.K 17.5%

Australia 10% Columbia 16% Maldova 20%

Barbados 15% Japan 5% Indonesia 10%

Canada 7% Mexico 15% China 16%

Botswana 10% Latvia 18% South 14%

Africa

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 Indian GST Model Compares With GST in Other Countries
Goods and service tax is taking India by the storm. GST will bring in ―One nation one tax‖ to
unite indirect taxes under one umbrella and facilitate Indian businesses to be globally
competitive. The Indian GST case is structured for efficient tax collection, reduction in
corruption, easy inter-state movement of goods etc.
France was the first country to implement GST to reduce tax- evasion. Since then, more
than 140 countries have implemented GST with some countries having Dual-GST (e.g.
Brazil, Canada etc. model. India has chosen the Canadian model of dual GST.

Particulars India (proposed) Canada UK

Name of GST Goods and Service tax Federal Goods and Value Added Tax
in the country Service Tax &
Harmonized Sales Tax

Standard Rate 0% (for food staples), 5%, GST 5% and HST varies 20 %
12%, 18% and 28%(+cess from 0% to 15% Reduced rates- 5 %,
for luxury items) exempt, zero rated

Threshold 20 lakhs (10 lakhs for NE Canadian $ 30,000 £ 73,000

exemption states) (Approx Rs. 15.6 lakhs in (Approx Rs. 61.32
Limit INR) lakhs)

Liability arises Accrual basis: Issue of Accrual basis: The date of Accrual Basis: Invoice
on invoice OR issue of invoice OR the OR Payment
Receipt of payment date of receipt OR Supply
-earlier of payment- earlier. -earliest
Cash basis (T/O upto
1.35mn): Payment

Returns and Monthly and 1 annual Monthly, quarterly or Usually quarterly.

payments return annually based on Small business option-
turnover annual

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 Particulars India (proposed) Canada UK

Reverse charge Apply on goods (new) as Reverse charge applies to Applicable

Mechanism well as services (currently importation of services
under Service tax) and
intangible properties.

Exempt Manufacture of Real estate, Financial Medical, Education,

services exempted goods or Services, Finance, Insurance,
Provision of exempted Rent (Residence), Postal services
services (to be notified) Charities, Health,
Education

Particulars India (proposed) Singapore Malaysia

Name of GST Goods and Service tax Goods and Service Tax Goods And Services Tax
in the country

Standard Rate 0% (for food staples), 7% Reduced rates- Zero 6%

5%, 12%, 18% and rated, exempt
28%(+cess for luxury
items)

Threshold 20 lakhs (10 lakhs for Singapore $ 1 million MYR 500,000

exemption NE states) (Approx Rs. 4.8 crore) (Approx Rs. 75 lakhs)
Limit

Liability arises Accrual basis: Issue of Accrual Basis: Issue of Accrual Basis: Delivery of
on invoice OR invoice OR Receipt of goods OR Issue of invoice
Receipt of payment payment OR Supply – OR Receipt of payment
-earlier earliest

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 Particulars India (proposed) Singapore Malaysia

Returns and Monthly and 1 annual Usually quarterly Large organsations-

payments return Business option- Monthly
Monthly
returns.

Reverse Apply on goods (new) as Reverse charge applies Reverse charge applies to
charge well as services to supply of services imported services
Mechanism (currently under Service
tax)

Exempt Manufacture of Real estate, Financial Basic food,Health

services exempted goods or services, Residential Transportation, Residential
Provision of exempted rental property, Agricultural land
services (to be notified)

**USA does not have GST as it ensures high autonomy for the states**
Thus we find GST model across the commonwealth countries are similar with some
variations. Unlike India, other countries have a much higher threshold for GST applicability
thus reducing the burden for small businesses. This will bring in challenges for our SMEs.
Earlier countries implemented GST and faced many problems post-implementation.

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 THE UTTAR PRADESH GOODS AND SERVICES TAX ACT, 2017
(U.P. Act no. 1 of 2017)
[As passed by the Uttar Pradesh Legislature]
AN
ACT
to make a provision for levy and collection of tax on infra-State supply of goods or
services or both by the State of Uttar Pradesh and the matters connected therewith or
incidental thereto.
If IS HEREBY enacted in the Sixty-eighth Year of the Republic of India as follows:-
CHAPTER I
PRELIMINARY
1. Short title, extent and commencement.
(1) This Act may he called the Uttar Pradesh Goods and Services Tax Act, 2017.
(2) It extends to the whole of the Uttar Pradesh.
(3) It shall come into force on such date as the State Government may, by notification
in the Gazette, appoint:
Provided that different dates may be appointed for different provisions of this Act and
any reference in any such provision to the commencement of this Act shall be
construed as a reference to the coming into force of that provision.

2. Definitions
In this Act, unless the context otherwise requires,—
(1) ―actionable claim‖ shall have the same meaning as assigned to it in section 3 of
the Transfer of Property Act, 1882; 1882
(2) ―address of delivery‖ means the address of the recipient of goods or services or
both indicated on the tax invoice issued by a registered person for delivery of such
goods or services or both;
(3) ―address on record‖ means the address of the recipient as available in the records
of the supplier;
(4) ―adjudicating authority‖ means any authority, appointed or authorized to pass any
order or decision under this Act, but does not include the Commissioner, Revisional
Authority, the Authority for Advance Ruling, the Appellate Authority for Advance
Ruling, the Appellate Authority and the Appellate Tribunal;
(5) ―agent‖ means a person, including a factor, broker. commission agent, arhatia, del
credere agent, an auctioneer or any other mercantile agent, by whatever name called,
who carries on the business of supply or receipt of goods or services or both on behalf
of another;
(6) ―aggregate turnover‖ means the aggregate value of all taxable supplies (excluding
the value of inward supplies on which tax is payable by a person on reverse charge
basis), exempt supplies. exports of goods or services or both and inter-State supplies
of persons having the same Permanent Account Number, to be computed on all India
basis but excludes central tax, State tax, Union territory tax, integrated tax and cess;

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 (7) ―agriculturist‖ means an individual or a Hindu Undivided Family who undertakes
cultivation of land-
(a) by own labor, or
(b) by the labor of family, or
(c) by servants on wages payable in cash or kind or by hired labor under personal
supervision or the personal supervision of any member of the family;

Content of Uttar Pradesh Goods and Services Tax Act, 2017

Chapter: I

PRELIMINARY

Section 1 : Short title, extent and commencement.

Section 2 : Definitions.

Chapter: II

ADMINISTRATION

Section 3 : Officers under this Act.

Section 4 : Appointment of officers.

Section 5 : Powers of officers.

Section 6 : Authorisation of officers of central tax as proper officer in certain

circumstances.

Chapter: III

LEVY AND COLLECTION OF TAX

Section 7 : Scope of supply.

Section 8 : Tax liability on composite and mixed supplies.

Section 9 : Levy and collection.

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 Section 10 : Composition levy.

Section 11 : Power to grant exemption from tax.

Chapter: IV

TIME AND VALUE OF SUPPLY

Section 12 : Time of supply of goods

Section 13 : Time of supply of services.

Section 14 : Change in rate of tax in respect of supply of goods or services.

Section 15 : Value of taxable supply

Chapter: V

INPUT TAX CREDIT

Section 16 : Eligibility and conditions for taking input tax credit.

Section 17 : Apportionment of credit and blocked credits.

Section 18 : Availability of credit in special circumstances.

Section 19 : Taking input tax credit in respect of inputs and capital goods sent for
work.

Section 20 : Manner of distribution of credit by Input Service Distributor.

Section 21 : Manner of recovery of credit distributed in excess.

Chapter: VI

REGISTRATION

Section 22 : Persons liable for registration.

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 Section 23 : Persons not liable for registration.

Section 24 : Compulsory registration in certain cases.

Section 25 : Procedure for registration.

Section 26 : Deemed registration.

Section 27 : Special provisions relating to casual taxable person and non-resident

taxable person.

Section 28 : Amendment of registration.

Section 29 : Cancellation of registration.

Section 30 : Revocation of cancellation of registration.

Chapter: VII

TAX INVOICE, CREDIT AND DEBIT NOTES

Section 31 : Tax invoice.

Section 32 : Prohibition of unauthorised collection of tax.

Section 33 : Amount of tax to be indicated in tax invoice and other documents.

Section 34 : Credit and debit notes.

Chapter: VIII

ACCOUNTS AND RECORDS

Section 35 : Accounts and other records.

Section 36 : Period of retention of accounts.

Chapter: IX

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 RETURNS

Section 37 : Furnishing details of outward supplies.

Section 38 : Furnishing details of inward supplies.

Section 39 : Furnishing of returns.

Section 40 : First Return.

Section 41 : Claim of input tax credit and provisional acceptance thereof.

Section 42 : Matching, reversal and reclaim of input tax credit.

Section 43 : Matching, reversal and reclaim of reduction in output tax liability.

Section 44 : Annual return.

Section 45 : Final return.

Section 46 : Notice to return defaulters.

Section 47 : Levy of late fee.

Section 48 : Goods and services tax practitioners.

Chapter: X

PAYMENT OF TAX

Section 49 : Payment of tax, interest, penalty and other amounts.

Section 50 : Interest on delayed payment of tax.

Section 51 : Tax deduction at source.

Section 52 : Collection of tax at source.

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 Section 53 : Transfer of input tax credit.

Chapter: XI

REFUNDS

Section 54 : Refund of tax.

Section 55 : Refund in certain cases.

Section 56 : Interest on delayed refunds.

Section 57 : Consumer Welfare Fund.

Section 58 : Utilisation of Fund.

Chapter: XII

ASSESSMENT

Section 59 : Self-assessment.

Section 60 : Provisional assessment.

Section 61 : Scrutiny of returns.

Section 62 : Assessment of non-filers of returns.

Section 63 : Assessment of unregistered persons.

Section 64 : Summary assessment in certain special cases.

Chapter: XIII

AUDIT

Section 65 : Audit by tax authorities.

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 Section 66 : Special audit.

Chapter: XIV

INSPECTION, SEARCH, SEIZURE AND ARREST

Section 67 : Power of inspection, search and seizure.

Section 68 : Inspection of goods in movement.

Section 69 : Power to arrest.

Section 70 : Power to summon persons to give evidence and produce documents.

Section 71 : Access to business premises.

Section 72 : Officers to assist proper officers.

Chapter: XV

DEMANDS AND RECOVERY

Section 73 : Determination of tax not paid or short paid or erroneously refunded o

input tax credit wrongly availed or utilised for any reason other than
fraud or any wilful misstatement or suppression of facts.

Section 74 : Determination of tax not paid or short paid or erroneously refunded o

input tax credit wrongly availed or utilised by reason of fraud or any
wilful misstatement or suppression of facts.

Section 75 : General provisions relating to determination of tax.

Section 76 : Tax collected but not paid to Government.

Section 77 : Tax wrongfully collected and paid to Central Government or State

Government.

Section 78 : Initiation of recovery proceedings.

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 Section 79 : Recovery of tax.

Section 80 : Payment of tax and other amount in instalments.

Section 81 : Transfer of property to be void in certain cases.

Section 82 : Tax to be first charge on property.

Section 83 : Provisional attachment to protect revenue in certain cases

Section 84 : Continuation and validation of certain recovery proceedings.

Chapter: XVI

LIABILITY TO PAY IN CERTAIN CASES

Section 85 : Liability in case of transfer of business.

Section 86 : Liability of agent and principal.

Section 87 : Liability in case of amalgamation or merger of companies.

Section 88 : Liability in case of company in liquidation (Act no. 31 of 2016).

Section 89 : Liability of directors of private company.

Section 90 : Liability of partners of firm to pay tax.

Section 91 : Liability of guardians, trustees etc.

Section 92 : Liability of Court of Wards, etc.

Section 93 : Special provisions regarding liability to pay tax, interest or penalty in

certain cases.

Section 94 : Liability in other cases.

Chapter: XVII

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 ADVANCE RULING

Section 95 : Definitions.

Section 96 : Constitution of Authority for Advance Ruling.

Section 97 : Application for advance ruling.

Section 98 : Procedure on receipt of application.

Section 99 : Constitution of Appellate Authority for Advance Ruling.

Section 100 : Appeal to the Appellate Authority.

Section 101 : Orders of Appellate Authority.

Section 102 : Rectification of advance ruling.

Section 103 : Applicability of advance ruling.

Section 104 : Advance ruling to be void in certain circumstances.

Section 105 : Powers of Authority and Appellate Authority.

Section 106 : Procedure of Authority and Appellate Authority.

Chapter: XVIII

APPEALS AND REVISION

Section 107 : Appeals to Appellate Authority.

Section 108 : Powers of Revisional Authority.

Section 109 : Appellate Tribunal and Benches thereof.

Section 110 : President and Members of Appellate Tribunal, their qualification,

appointment, conditions of service, etc.

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 Section 111 : Procedure before Appellate Tribunal.

Section 112 : Appeals to Appellate Tribunal.

Section 113 : Orders of Appellate Tribunal.

Section 114 : Financial and administrative powers of State President.

Section 115 : Interest on refund of amount paid for admission of appeal.

Section 116 : Appearance by authorised representative.

Section 117 : Appeal to High Court.

Section 118 : Appeal to Supreme Court.

Section 119 : Sums due to be paid notwithstanding appeal etc.

Section 120 : Appeal not to be filed in certain cases.

Section 121 : Non appealable decisions and orders.

Chapter: XIX

OFFENCES AND PENALTIES

Section 122 : Penalty for certain offences.

Section 123 : Penalty for failure to furnish information return.

Section 124 : Fine for failure to furnish statistics.

Section 125 : General penalty.

Section 126 : General disciplines related to penalty.

Section 127 : Power to impose penalty in certain cases.

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 Section 128 : Power to waive penalty or fee or both.

Section 129 : Detention, seizure and release of goods and conveyances in transit.

Section 130 : Confiscation of goods or conveyances and levy of penalty.

Section 131 : Confiscation or penalty not to interfere with other punishments.

Section 132 : Punishment for certain offences.

Section 133 : Liability of officers and certain other persons.

Section 134 : Cognizance of offences.

Section 135 : Presumption of culpable mental state.

Section 136 : Relevancy of statements under certain circumstances.

Section 137 : Offences by Companies.

Section 138 : Compounding of offences.

Chapter: XX

TRANSITIONAL PROVISIONS

Section 139 : Migration of existing taxpayers.

Section 140 : Transitional arrangements for input tax credit.

Section 141 : Transitional provisions relating to job work.

Section 142 : Miscellaneous transitional provisions.

Chapter: XXI

MISCELLANEOUS

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 Section 143 : Job work procedure.

Section 144 : Presumption as to documents in certain cases.

Section 145 : Admissibility of micro films, facsimile copies of documents and

computer printouts as documents and as evidence.

Section 146 : Common Portal.

Section 147 : Deemed Exports.

Section 148 : Special procedure for certain processes.

Section 149 : Goods and services tax compliance rating.

Section 150 : Obligation to furnish information return.

Section 151 : Power to collect statistics.

Section 152 : Bar on disclosure of information.

Section 153 : Taking assistance from an expert.

Section 154 : Power to take samples.

Section 155 : Burden of Proof.

Section 156 : Persons deemed to be public servants.

Section 157 : Protection of action taken under this Act.

Section 158 : Disclosure of information by a public servant.

Section 159 : Publication of information in respect of persons in certain cases.

Section 160 : Assessment proceedings, etc. not to be invalid on certain grounds.

Section 161 : Rectification of errors apparent on the face of record.

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 Section 162 : Bar on jurisdiction of civil courts.

Section 163 : Levy of fee.

Section 164 : Power of Government to make rules.

Section 165 : Power to make regulations.

Section 166 : Laying of rules, regulations and notifications.

Section 167 : Delegation of powers.

Section 168 : Power to issue instructions or directions.

Section 169 : Service of notice in certain circumstances.

Section 170 : Rounding off of tax etc.

Section 171 : Anti-profiteering measure.

Section 172 : Removal of difficulties.

Section 173 : Amendment of certain Acts.

Section 174 : Repeal and savings.

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 GST Tax Structure

The GST tax structure will bring about a drastic change in the current indirect tax system.
Currently, tax barriers have created a fragmented Indian market.

This has resulted in a cascading effect of taxes on cost making indigenous manufacture less
profitable. Also, the complex multiple taxes have raised the cost of compliance considerably.

The GST tax structure will comprise of the Central Goods and Services Tax (CGST), State
Goods and Services Tax (SGST) and Integrated Goods and Service Tax (IGST).

The four slab tiers of the GST tax structure will be 5 per cent, 12 per cent, 18 per cent and 28
per cent. The lowest rates will be applicable for essential items and the highest for luxury
and demerit goods. Moreover, these include SUVs, luxury cars and tobacco products. GST
may go up to 40 per cent after the GST Council proposed raising the peak rate.
Service tax will increase from its current levels of 14.5 per cent which will be negative for
service industries like airlines, telecom and insurance.

Currently, FMCGs pay about 24 to 25 per cent on excise duty, VAT and entry tax. Under the
GST tax structure, this may be reduced to 18 per cent, but at 28 per cent this may disappoint
the market. Also, telecom will be affected with a rate of 18 per cent from the current 15 per
cent.

An additional tax up to 1% will be levied on the inter-state supply of goods. Therefore, these
goods do not come under VAT and have no input tax credit.

Central taxes to be absorbed under GST are:

 Central Excise Duty

 Additional Excise Duties

 Service Tax

 Additional Customs Duty (Countervailing Duty)

 Special Additional Duty of Customs – 4% (SAD)

 Central Surcharges and Cesses in the nature of taxes on goods/services like cess on rubber,
tea, coffee and national calamity contingent duty

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 State taxes to be absorbed under GST are:
 State VAT/Sales tax

 Entertainment tax

 Luxury tax

 Taxes on lottery

 Betting and gambling

 Tax on advertisements

 State cesses

 Surcharges in the nature of taxes on goods/ services, Octroi and entry tax and purchase tax
Excise and service taxes will be replaced with CGST, Local VAT and other state taxes will
be replaced with SGST. CST will be replaced with IGST. Therefore, IGST is the total of
CGST and SGST.

Alcohol and tobacco will have a separate excise duty in addition to GST. Petroleum and
petroleum products will continue to be taxed under existing laws and will be incorporated
into GST at a future date.

GST has the potential to boost India‘s GDP by as much as 2 per cent and has been considered
an unprecedented reform in the history of modern global tax.

Taxpayers will not have the burden of multiple compliances under various states. With the
GST tax structure, there will be a single registration and single return.

This will help build and expand upon the Make in India initiative by the Government of India
by attracting FDI and reducing costs. Hence, these costs are manufacturing costs in the form
of reduced compliance cost and taxes.

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Similar to the GST law, the CGST, SGST and UTGST laws will be addressed and
strengthened at the levels of the Centre, States and Union Territories. Hence, the centre will
introduce the CGST Bill and SGST bill shortly in the Legislative Assemblies.

Central and State officials will determine which goods and services will fall in which tax
brackets and will be carried forward to the GST Council for approval. Also, they will decide
which goods and services would attract a cess on top of the peak rate.

This will compensate states for any revenue lost due to the implementation of GST in the first
five years. Moreover, the government intends to roll out GST from 1 July, 2017. Therefore,
GST will help with removing trade barriers and facilitating the ease of doing business

GST CONCERN IN NEW REGIME

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 Types of GST
Goods and Services Tax (GST) is single comprehensive tax applicable for the entire nation.
It has replaced a number of indirect taxes in India, including central excise duty, state VAT,
additional duties of customs and entertainment tax. Two of its characteristic features are:

1. It is added at every step of value addition along the supply chain. Thus, it is
multistage in nature. However the cascading effect of tax is prevented by the
implementation of input tax credit.

2. It depends on the destination of consumption. For instance, if a good is

manufactured in state A but consumed in state B, then the revenue generated through
GST collection is accredited to the state of consumption (state B) and not to the state
of production (state A). To compensate for the possible losses to the manufacturing-
heavy states, GST compensation cess is levied.

There are 3 types of GST are as follow:

 SGST (State Goods and service tax)

 CGST (central Goods and service tax)
 IGST (Integrated Goods and service tax)

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  SGST (State Goods and Services Tax)
The State Goods and Services Tax or SGST is a tax under the GST regime which is
applicable on intrastate (within the same state) transactions. In case of intrastate supply of
goods and/or services, both State GST and Central GST are levied. However, the State GST
or SGST is levied by the state on the goods and/or services that are purchased or sold within
the state. It is governed by the SGST Act. The revenue earned through SGST is solely
claimed by the respective state government. For instance, if a trader from West Bengal has
sold goods to a customer in West Bengal worth Rs.5,000, then the GST applicable on the
transaction will be partly CGST and partly SGST. If the rate of GST charged is 18%, it will
be divided equally in the form of 9% CGST and 9% SGST. The total amount to be charged
by the trader, in this case, will be Rs.5,900. Out of the revenue earned from GST under the
head of SGST, i.e. Rs.450, will go to the West Bengal state government in the form of SGST.

 CGST (Central Goods and Services Tax)

Just like State GST, the Central Goods and Services Tax of CGST is a tax under the GST
regime which is applicable on intrastate (within the same state) transactions. The CGST is
governed by the CGST Act. The revenue earned from CGST is collected by the Central
Government. As mentioned in the above instance, if a trader from West Bengal has sold
goods to a customer in West Bengal worth Rs.5,000, then the GST applicable on the
transaction will be partly CGST and partly SGST. If the rate of GST charged is 18%, it will
be divided equally in the form of 9% CGST and 9% SGST. The total amount to be charged
by the trader, in this case, will be Rs.5,900. Out of the revenue earned from GST under the
head of CGST, i.e. Rs.450, will go to the Central Government in the form of CGST.

 IGST (Integrated Goods and Services Tax)

The Integrated Goods and Services Tax or IGST is a tax under the GST regime that is applied
on the interstate (between 2 states) supply of goods and/or services as well as on imports and
exports. The IGST is governed by the IGST Act. Under IGST, the body responsible for
collecting the taxes is the Central Government. After the collection of taxes, it is further
divided among the respective states by the Central Government. For instance, if a trader from
West Bengal has sold goods to a customer in Karnataka worth Rs.5,000, then IGST will be
applicable as the transaction is an interstate transaction. If the rate of GST charged on the
goods is 18%, the trader will charge Rs.5,900 for the goods. The IGST collected is Rs.900,
which will be going to the Central Government.

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What determines if CGST, SGST or IGST is applicable?
To determine whether Central Goods & Services Tax (CGST), State Goods & Services Tax
(SGST) or Integrated Goods & Services Tax (IGST) will be applicable in a taxable
transaction, it is important to first know if the transaction is an Intra State or an Inter-State
supply.

 Intra-State supply of goods or services is when the location of the supplier and the
place of supply i.e., location of the buyer are in the same state. In Intra-State
transactions, a seller has to collect both CGST and SGST from the buyer. The CGST
gets deposited with Central Government and SGST gets deposited with State
Government.

 Inter-State supply of goods or services is when the location of the supplier and the
place of supply are in different states. Also, in cases of export or import of goods or
services or when the supply of goods or services is made to or by a SEZ unit, the
transaction is assumed to be Inter-State. In an Inter-State transaction, a seller has to
collect IGST from the buyer.

Why the split into SGST, CGST, and IGST?

India is a federal country where both the Centre and the States have been assigned the powers
to levy and collect taxes. Both the Governments have distinct responsibilities to perform, as
per the Constitution, for which they need to raise tax revenue.

The Centre and States are simultaneously levying GST.

The three types tax structure is implemented to help taxpayers take the credit against each
other, thus ensuring ―One Nation, One Tax‖.

Difference Between CGST, SGST and IGST

CGST SGST IGST

This is the portion of the
GST that is levied by the
Centre on the intra-state
supply of goods and/or
services.
SGST is the share of the
GST that is levied by the
state governments on intra-
state supply of goods and/or
services.
The Integrated GST comes
into play when there is
supply of goods and/or
services to other states
different from where these
goods and/or services are
originating.

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The existing taxes
subsumed within the CGST
include Central Excise
Duty, Central Sales Tax,
Service Tax, and surcharges
and excesses such as
Additional Excise Duties,
Additional Customs Duty –
Countervailing Duty, and
Special Additional Duty of
Customs (SAD).
The tax revenue garnered
under CGST is meant for
the Central government.
The input tax credit of the
CGST can be used against
the CGST or IGST, but not
under SGST.
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The SGST subsumed taxes The IGST is collected by
including the State Sales the Centre and also applies
Tax, VAT, Luxury Tax, to imports.
Entertainment Tax as well
as taxes levied on lottery,
betting and gambling, and
other Entry Taxes and State
Cesses and Surcharges in so
far as they related to the
supply of goods and/or
services.
The input tax credit of While trade within the state
SGST can be used by results in the GST being
dealers, against SGST or split up into the CGST and
IGST. the SGST, IGST goes
directly to the Centre in
case of transaction of sale
conducted between
different states.
The SGST credit cannot be However, the input tax
used against CGST. credit of IGST can be used
against either the CGST,
SGST or IGST.
 The challenges of implementing GST

The introduction of Goods and Services Tax (GST) is one of the biggest tax reforms for
India. GST is not just a tax change but it will benefit the economy as a whole and have far-
reaching impact on businesses.

The current challenges:

• GST is meant to simplify the Indian indirect tax regime by replacing a host of taxes by a
single unified tax, thereby subsuming central excise, service tax, VAT, entry tax, etc.
However, there is a plethora of challenges before the government for its successful
implementation. Some of these are highlighted below:

– The GST Constitutional Amendment Bill was passed by the Lok Sabha in May 2015.
However, the government faced tremendous political set-backs and failed to get it passed in
the Rajya Sabha during the monsoon and the winter sessions last year.

– Once this is achieved, another Herculean task would be to get the GST Bill passed by the
respective state governments in state assemblies. The government would also be required to
put the GST bill in the public domain and give sufficient time to all stakeholders to
comprehend and give their views on the bill.

– A large part of the success of GST depends on two prominent factors – ‗RNR‘ and
‗threshold limit‘ for GST. RNR, ie the Revenue Neutral Rate, is the rate at which there will
be no revenue loss to the government after implementation of GST. Needless to mention,
RNR will impact India Inc adversely, if it is unduly higher than the present tax structure.
Based on the study conducted by National Institute of Public Finance and Policy (NIPFP),
RNR was decided at 27 percent. However, recently the Economic Advisor Panel
recommended an RNR of 15 percent to 15.5 percent, ie a lower tax rate of 12 percent and a
standard tax rate of 17 percent to 19 percent.

– Further, the threshold limit of turnover for dealers under GST is another bone of contention
between the government and the Empowered Committee, aiming to broaden the tax base
under GST.

– Another factor that will impact the success of GST is the robust IT backbone connecting all
state governments, trade and industry, banks and other stakeholders on a real-time basis. The
government has already incorporated an SPV viz. – Goods and Services Tax Network
(GSTN), which has to develop a GST portal – front-end system for trade and industry and
back-end system for all government agencies. GSTN will ensure technology support for
registration, return filing, tax payment, IGST settlement, MIS and other dashboards on GST
portal to all the stakeholders.

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– GST is quite different from the existing indirect taxation system in the country. For
effective implementation of GST, tax administration staff – both at central and state levels –
would require to be trained properly in terms of concept, legislation and procedure. The tax
administration staff would also need to change their mindset, approach and attitude towards
the tax payers. And for this, they would have to ‗learn, unlearn, and relearn‘ the GST not only
in letter but in spirit too.

– As per the Constitutional Amendment Bill placed in the Lok Sabha, it was proposed that
states would be allowed to levy an additional 1 percent non-vatable tax on inter-state supply
of goods for the initial two years, in order to compensate the states for loss of revenue while
moving to GST. This was supported by a few states, while a few others criticised the same.
However, recently the Empowered Committee recommended abolition of the additional tax.
There is no clarity on the same yet.

– The taxing events of ‗manufacture under central excise‘, ‗sale under VAT‘ and ‗provision
of service under service tax‘ will converge into one taxing event of ‗supply‘ under GST, ie
GST will be levied on the event of supply of goods or services. The ‗Place of Supply Rules‘
will thus form an important factor to determine the place of provision of goods or services.

• These are some of the major challenges before the government and the industry, ahead of
the actual implementation of GST.

What change is expected in this budget:

• In the previous budget, the government indicated the date of April 1 2016 for the
implementation of GST. However, given the set-backs suffered in the Parliamentary sessions
in 2015, this date is far from reality.

• The bill is pending to be passed and no concrete instructions have been issued on the
structure, draft, scheduling of implementation and procedural aspects of the law rendering
lack of clarity among the stakeholders. Therefore, it is imperative that the government
provides a clear line of sight in the upcoming budget for the draft structure of the statute
enabling the industry to commence preparation for the same.

The impact:

• GST will be a welcome change for the economy since it is expected to simplify the indirect
tax structure in India. However, it is expected to have far-reaching impact on businesses.
While the Constitution Amendment Bill has not yet been passed, at this stage, the businesses
should prepare for GST by undertaking GST impact assessment study and have a high-level
plan for the GST transition.

• A study by the National Council of Applied Economic Research (NCAER) had estimated
that roll out of GST would boost the India‘s GDP growth by 1 percent to 2 percent. Crisil had
also reported that GST is the best way to mobilise revenue and reduce the fiscal deficit. GST
has been commonly accepted by more than 140 countries in the world. Looking at the

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magnitude, GST is going to impact all sections of the society – from small time businessmen
to huge conglomerates and from a developing state to a developed state in this country. The
implementation of GST will give a boost to the growth engine pursued by the government.

Threshold
Limit in
GST
Robust
Clubbing
IT
Taxes
Network

GST
challenges Extensive
Determing training to Tax
GST Rates administration
Staff

Defining Framework
Inter-State for
Transaction Disputes

 With respect to Tax Threshold The threshold limit for turnover above which GST
would be levied will be one area which would have to be strictly looked at. First of
all, the threshold limit should not be so low to bother small scale traders and service
providers. It also increases the allocation of government resources for such a petty
amount of revenue which may be much more costly than the amount of revenue
collected. The first impact of setting higher tax threshold would naturally lead to less
revenue to the government as the margin of tax base shrinks, second it may have on
such small and not so developed states which have set low threshold limit under
current VAT regime.

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  With respect to nature of taxes The taxes that are generally included in GST would be
excise duty, countervailing duty, cess, service tax, and state level VATs among
others. Interestingly, there are numerous other states and union taxes that would be
still out of GST.
 With respect to number of enactments of statutes There will two types of GST laws,
one at a center level called ‗Central GST (CGST)‘ and the other one at the state level -
‗State GST (SGST)‘. As there seems to have different tax rates for goods and services
at the Central Level and at the State Level, and further division based on necessary
and other property based on the need, location, geography and resources of each state.
 With respect to Rates of taxation It is true that a tax rate should be devised in
accordance with the state‘s necessity of funds. Whenever states feel that they need to
raise greater revenues to fund the increased expenditure, then, ideally, they should
have power to decide how to increase the revenue.
 With respect to tax management and Infrastructure It depends on the states and the
union how they are going to make GST a simple one. Success of any tax reform
policy or managerial measures depends on the inherent simplifications of the system,
which leads to the high conformity with the administrative measures and policies.
 Uncertainty regarding MRP-regime goods: Goods falling within the scope of the
Legal Metrology regime are currently taxed on their declared retail or sale
price under the existing Excise regime. For this purpose, the government
provided abatement in respect of many goods to control the negative cost
impact of Excise duty. With the Model Law departing from the MRP-based
valuation in favor of a “transaction value” regime, it is critical that businesses
involved in the manufacturing of MRP-regime goods undertake a thorough
assessment of their cost impact. This issue is specifically critical for
businesses involved in sectors such as retail, consumer goods, electronics,
and automotive components.
 Anti-profiteering clause: The revised Model GST Law (Model Law) as promulgated
by the government has introduced an anti-profiteering mechanism. This has been
introduced to ensure that the benefit of the reduced input cost on account of tax
efficiencies is shared with consumers and not retained as excess profits. Though the
anti-profiteering measure has been introduced with the pious intent of benefiting a
consumer and controlling the inflationary impact of GST, it is likely that this may
result in an ―inspector raj‖ and excessive scrutiny of business policies.
 Restructuring related party transactions: Departing from the existing principle of
taxing the sale of goods or the provision of services by one person to another, GST
would be charged on their supply. Accordingly, all intra-group or related party
transactions, including those between the branches of the same legal entity, would
now be chargeable to GST. Thus, it is critical that all intra-group or related party
transactions are revisited in light of the proposed regime to undertake the necessary
alignment in business practices to minimize the increased demands on working
capital.

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 Opportunities of GST
GST is a widely adopted consumption tax that promises to simplify indirect tax
administration in India by unifying the plethora of taxes and levies imposed by the Central
and state governments and allowing seamless credit throughout the supply chain in
transactions pertaining to goods and services.

Keeping in mind the federal nature of our constitution, GST has been proposed to be a dual
levy consisting of Central GST (CGST) and State GST (SGST) which would be appropriated
by the Central and state governments, respectively. In case of inter-state supply, transactions
would attract levy of Integrated GST (IGST) which would be equivalent to the aggregate of
SGST and CGST.

Though GST has spurred much debate, discussions and prognostication and has become a
ubiquitous part of our trade and commerce lexicon, the proposed regime essentially seeks to
resolve the four major issues that are critical for the growth of the economy:

• Creation of a one-market economy:

The present legal framework permits the fragmentation of markets due to the differential
treatment of intra-state and inter-state transactions. This, coupled with the several tariff and
non-tariff incentive schemes offered by states to attract investments, resulted in the
structuring of supply chain models based on the optimization of indirect tax costs rather than
other economic factors and best practices.

• Improved transparency with seamless input tax credit:

GST is a value-added tax that will apply at each stage of value addition in a business value
chain. However, to avoid any cascading impact, the regime would allow an input tax credit of
the amount paid toward GST at the previous stage. This seamless credit availability is likely
to improve the transparency between stakeholders (i.e., an assessee and authorities) and lead
to the substantial simplification of compliances. In addition, the uniformity in classification
and reduction in tax exemptions are likely to reduce classification disputes that are a regular
cause of litigation between an assessee and the revenue department under the present regime.

• Rationalization of cost of goods and services:

With a unified levy and seamless input tax credit under the proposed GST regime, the
government seeks to resolve the distortionary effect of multiple non-creditable taxes levied
across the business value chain and helps in the reduction of associated costs.

• Simplified compliance:

The unification of several indirect taxes would substantially cut down compliances required
in comparison with the present regime and reduce costs associated with them.

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• To Broaden the Tax Base:

The important gain from the GST reform are that it is expected to broaden the tax base,
reduce distortions in the economy through a more comprehensive input tax credit, enhance
export competitiveness by comprehensively relieving domestic consumption taxes on
exports, ensure greater regional equity by getting rid of inter-state sales tax and having a
destination-based tax, and help create a seamless national market by removing inter-state
trade barriers.

• Reducing Cost for Taxpayers:

Reform is likely to reduce the compliance cost for taxpayers by simplifying and harmonizing
the tax structure and by making the administration uniform across states.

• To End Cascading Effects:

It will be the major contribution of GST for the business. Currently, there are different state
level and centre level indirect tax levies that are compulsory one after another on the supply
chain till the time of its utilization.

• To Develop Harmonization:

Constitutional provision does not allow both the Central and State Governments to tax both
goods and services in an inclusive manner. The government has therefore recognized the
need for harmonization of goods and services tax so that both can be levied in a
comprehensive and rational manner in a new taxation regime – namely, Goods and Services
Tax (GST).

• Terminate Multiple Chain of Taxation:

The main benefit of Goods and Services tax is to eliminate multiple chain of the taxation. The
terminate in the number of taxation applicable in a chain of transaction will help to clean up
the current mess that is brought by existing indirect tax laws

The Goods and Services Tax in India has been one of the most contentious issues in the
sphere of indirect taxation in the country. The indirect taxation structure of the country was
an extremely complicated and time-consuming affair. Various types of indirect taxes had
been levied by various agencies around the country, each with their own systems and
collection methods. This created a severe lag in the economy, particularly hampering smaller
businesses. The kind of taxes that existed pre-GST, which were subsumed, are local levies,
various cesses, value-added taxes, etc. With the advent of the GST, all that has changed and
now, a centralized body, the GST council, can collect all the subsumed taxes – amalgamated
into one tax – GST.

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 GST – Vast Opportunities for the Profession

There is a famous quote that says, ―opportunities knock only once at your door‖. Indeed,
GST is that one knocks in terms of opportunity to serve, learn and earn for us professionals.
GST in India has been termed as ―the biggest indirect tax reform since independence‖. Since
tax professionals – Chartered Accountants, are at the heart of the tax compliance system, they
are bound to be impacted by this big-ticket reform. This has further special significance and
opportunities for the CA profession, as elucidated further.

Expansion of the Services Landscape

Increase in Tax Payers – It is estimated that there are around 9.5 million registered tax
payers in the country today in the field of indirect taxes – Central Excise, Service Tax and
VAT. Being a tax on ‗supply of goods and/or services‘ with minimal number of exemptions
and exempted sectors, the coverage of GST will be extensive – to virtually cover the entire
business environment of the country. With a threshold limit of Rs 20 lakhs, that goes down to
Rs 10 lakhs in North Eastern States, coupled with the definition of Aggregate Turnover
which, inter alia, includes taxable supply, exempt supply, exports etc., even small businesses,
professionals, kiranas, other brick and mortar retail will be impacted. Most of the businesses
in composition scheme (up to Rs. 50 lacs turnover) will also have quarterly compliances,
while a large part may not go for composition as their B2B customers will lose set off
otherwise and also due to the restrictive coverage of assesses in composition scheme. Further,
the reverse charge with its added complications of applicability in case of purchases from
unregistered persons, will further push maximum businesses to be GST registered.

Increase in Compliance Needs - Statutory requirements like submission of audited accounts

by taxpayers with turnover of +Rs 1 crore and an Annual Report reconciled with the audited
balance sheet and profit and loss account will bring in significant amount of convergence
between GST and indirect compliances accentuating the role of CA professionals. This
statutory convergence will further be integrated as the compliance systems under both the
Income Tax and GST go online and the databases get linked. The buzz word these days is
360degree profiling. Tax compliances and tax accounts can no longer remain in separate silos
for the two system of taxes. The responsibilities of tax professionals, particularly chartered
accountants, will thus inevitably expand.

Further, the system of compliances being put in place, that involves minimum of three
monthly returns, uploading invoice wise supply details both on sales and purchase side,
matching of invoices and denial of input tax credits even on account of minor mismatches,
that will have the potential of impacting the bottom lines by 18% of the value of purchases
involved, underlines the work and opportunities that lie in store for tax professionals in the
new regime. They will be expected to hand hold businesses almost on daily basis.

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Synergy between Audit and Tax Practice

Automation, Reconciliation, Accounting – Mandatory requirement for

timely/prereconciliation, scenarios impacting availment of Input Tax Credit (ITC), ASPs
providing reconciliations in line with GSTN database by real time accept/reject/modify all
will lead to a need for making, tracking and in turn matching with the accounting records.
There could be a need to create provisions or pass corresponding debit/credit notes to keep
the two statutory records in sync. This too will be best done with help, guidance and
supervision of a CA.

Complementary Practice – As an auditor, the audit, analysis and reconciliation between two
records will be mandatory. This is best done by taking up the tax compliance work i.e. up
front guidance, supervision or audit thus reaping the optimum synergies.

Advisory services Opportunity

Transition related advice and hand holding - This would entail activities like impact
assessment, planning optimizations, taking a look at competition, renegotiation of contracts,
analysing business scenarios, finalizing business processes etc. each of which involves an
important role for a tax advisor or a tax professional. Along with that the professionals having
knowledge about tax, accounting, IT and costing will be best suited to assist the organisations
in pricing revisions which seems to be likely after GST is implemented.

Re-designing of Business Structure - Present indirect taxes in India have driven businesses
to structure and model their supply chain and systems owing to multiplicity of taxes and costs
involved therein. GST will be a big game changing reform for Indian economy by developing
a common Indian market and reducing the cascading effect of taxes on the cost of goods and
services. The GST will change how India will do business. With advent of such big reforms
the businesses also need to be in line with GST. GST will have far reaching consequences on
almost all the realms of the business operations and will impact the tax structure, its incidence
and computation, credit availment and utilization, compliance and other reporting aspects,
leading to a complete overhaul of the current indirect tax system. Complete supply chain will
see a radical change. Now, with the final law in place, the current supply chain has to be
relooked and re-structured. Tax professionals will be needed in such restructuring and
reengineering exercises.

Other Similar Opportunities - Apart from this, there are many areas in which indirect tax
professionals have new opportunities under the GST regime which include Tax structuring,
Representation before revenue authorities in respect to SCN/Appeal, Legal opinions and
procedural Guidance to clients, Handling compliance verification processes like audits and
scrutiny, Handling legacy issues like past assessments/audits.

Litigation post GST will also have extended arms with the subjective and inclusive definition
of term ‗Supply‘, being the trigger point i.e. taxable event in GST, alongside others loose
ends of drafting in GST Law.

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 Impact of GST on Different Sectors of Indian Economy

Goods and Services Tax (GST) was introduced in the Indian Constitution through the 101st
(Hundred and One) Constitutional Amendment Act, 2016. After the enforcement of Goods
and Services Tax (GST), many sectors faced some positive effects as well as negative
effects.The enforcement of the tax was for the long term benefit. There were very few sectors
that received an immediate benefit from the implementation of Goods and Services Tax
(GST). The long term benefit requires the patience of citizens. Where one sector in the
country faces a positive aspect, on the other hand, the other sector faced the negative aspect.
It is very important to know how and to whom the Goods and Services Tax (GST) had
impacted. In a country where the population is 133.92 crores, [Source: World Bank, United
States Census Bureau], implementation of a new tax regime was not less a big hurdle. It was
required that the authority first understand the concept then it will be easy for the citizens to
under the concept of ― One Nation One Tax‖.

Some of the major sectors that have been affected by the implementation of GST are –

1. Export-Import sector
2. Automobile sector
3. Real estate
4. Iron and steel
5. Energy sector
6. Entertainment industry
7. Hotel and tourism
8. Education sector
9. Banking sector
10. Textile sector
11. Manufacturing sector
12. Information technology sector

Impact on Export and Import Sector

Before the enforcement of the Goods and Services Tax (GST), Export and Import were
governed by the Service Tax, Value Added Tax, Excise Duty and Customs Duty. These were
imposed on the Import and Export goods and services. When Goods and Services Tax (GST)
was introduced all these taxes were merged into one. But the Basic Customs Duty (BCD)
continues to work on the import bills.

Impact of GST on import

When any goods and services are imported then it is the duty of the importer to pay the
Integrated Goods and Service Tax (IGST) and Customs Duty.

Integrated Goods and Services Tax (IGST) is a tax that is imposed on the supply of Goods
and Services which takes place Inter-State. IGST Act governed these transactions. Integrated
Goods and Services Tax (IGST) applies to the supply of goods and services which are
imported to India as well as which are exported by India.

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Note: The import of goods and services are Inter-State supplies and therefore a person is
responsible for paying the Integrated Goods and Services Tax (IGST) and Basic Custom
Duty (BCD)

Integrated Goods and Services Tax (IGST) is substituted by all the taxes which were
governing the imports of goods and services before the GST. Those taxes were:-

1. Special Additional Duty (SAD)

2. Countervailing Duty (CVD)

IGST, which is applied to the imported goods and services, is based on the rate of tax which
is applicable to the imported goods in India. Importer of goods has the power to claim all the
Input Tax Credit of IGST which is paid by him on the import of goods and services, but in
such case tax credit on the paid custom duty will not be obtainable and the cost will be borne
by the importer.

When Integrated Goods and Services Tax (IGST) is applied, then:-

1. The exports will be zero-rated

2. The Central Government and the State Government will share the tax.

Impact of GST on export

The goods and services which are imported in the country are inter-state supplies, therefore, a
person who is importing the goods and services is liable to pay the Integrated Goods and
Services Tax (IGST). It will be paid on the reverse charge basis by the importer of goods and
supplies. There shall be no imposition of Goods and Services Tax (GST) on the goods and
services which are exported. However, when there is the export of raw materials and input of
those goods which are exempted from the Goods and Services Tax (GST), then the person
exporting the raw material and input are liable to pay the tax.

Exporters may claim the Integrated Goods and Services Tax (IGST) and other taxes which
are paid by then in the inputs. They may claim IGST when it is paid by the exporter in the
input tax credit scheme.

When Goods and Services Tax (GST) was introduced in India it relaxed the Export Tax.
Relaxation of tax on the export helped in decreasing the product cost. There is also a
relaxation in the availability of input credits on all related services. Ultimately this will help
the country to grow in the economic sector as the export industries will flourish due to
relaxation in the export tax.

Impact of GST on Business

Goods and Services Tax (GST) has a huge impact on the medium and small enterprises.
Business owners of the small and medium-sized are under liability to pay the various taxes.
They have to approach the numerous departments to accomplish the work or documentation
related to the tax.

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Owners of the small and medium enterprises are under liability to pay the tax up to 32%
which was the total tax charged or collected by the Central Government and the State
Government. When Goods and Services Tax (GST) was imposed or implemented the small
and medium enterprises are now accountable to pay 18 to 22 percent of tax which is much
lessened to the previous tax. Also, the owner of small and medium enterprises do not have to
visit the distinct departments for the purpose of paying the various taxes.

Direct impact on the medium and small enterprises

1. Goods and Services Tax (GST) is building a platform for the new business in the
country. It gives an opportunity to start a new work or business. Before the
implementation of the Goods and Services Tax (GST), there is a requirement of Value
Added Tax (VAT) registration for all the business. The Value Added Tax (VAT)
registration was different in every state. As the registration was different in all the
states, the rules and regulations were also different. The entire process was quite
disoriented.

However, after the imposition of Goods and Services Tax (GST), there is a requirement of
only one registration and that too with Goods and Service Tax (GST) which is controlled by
the Central, same as service tax.

2. It is compulsory on the part of every business to pay the Value Added Tax (VAT) if the
annual turn comes out to be more than five lakh in some states and in some other states it is
more than 10 lakh. The different Value Added Tax (VAT) creates confusion for the business.

After Goods and Services Tax (GST), businesses are not required to pay the
Goods and Services Tax (GST) or to register when the annual turnover of the business is 10
lakh. The provision is applicable to all the states. The provision is helpful for all the small or
medium businesses, having a turnover between 5 lakh to 10 lakh, to avert applying for the
return of Goods and Services Tax (GST).

3. Goods and Services Tax (GST) provides a platform for small and medium-sized businesses
to work in India by applying their ability. There is less confusion or complexity after the
Goods and Services Tax (GST) provision. Now, there will be no difference between the
goods and services and at last, this will help in making the compliance easy.

Impact of GST on Indian Economy

Goods and Services Tax (GST) is extremely useful for the economy of India for a long term
basis. The reason for the benefit of the Good and Services Tax (GST) is due to the uniformity
of taxes. It merges all the indirect taxes which was prevailing in India during the Value
Added Tax (VAT).

Goods and Services Tax (GST) helps the business sector to grow and to become strong by
bringing transparency. When the business sector will flourish it will help in creating further
employment which will ultimately lead to reducing the burden of the tax.

Goods and Services Tax (GST) have a consistent scheme of the tax for the goods and services
across India, i.e. 0%, 5%, 12%, 18%, and 28%. The tax rate of some goods or products is

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different from the rest such a gold, precious stones and semi-precious stones. Special rates of
taxes are levied in such products. Things such as luxury cars, tobacco, carbonated beverages,
etc, are subjected to 22% of the additional cess.

Goods and Services Tax (GST) in comparison to the previous indirect laws relating to the
taxes provided a broader base for the taxes. The Central Excise Law exempts the small scale
units i.e. SSI having a turnover up to Rs. 1.5 crore from levy the duty. Exemption under the
service tax law was given when the previous financial year has accumulated turnover up to
Rs. 10 lakh. The lower limit for the purpose of levying the Value Added Tax (VAT) varies
from one state to another state i.e. between Rs. 5 lakh to Rs. 20 lakh.

But in the Goods and Services Tax (GST) scheme, the lower limit for the purpose of levying
the Goods and Services Tax (GST) was set or settled at Rs. 20 lakh. But in some
circumstances i.e. for special category States, the lower limit is fixed at Rs. 10 lakh. Goods
and Services Tax (GST) had included within it all the small suppliers. It was observed that
many suppliers had registered themselves intentionally and freely so that they may avail all
the benefits relating to the input tax credit.

Micro, Small and Medium Enterprises (MSME’s) has suffered some sort of complications
with the new tax regime i.e. Goods and Services Tax (GST). All the Micro, Small, and
Medium Enterprises (MSME’s) are suffering problems to conduct their business as there is a
requirement of registration in every state from where the MSMEs are formulating a supply.
Goods and Services Tax (GST) is helping the Micro, Small and Medium Enterprises
(MSME’s) in developing the ability for the purpose of maintaining the account book.
Maintenance of the account book will ultimately help the enterpriser to get a loan from any
bank or financial institution. This will help them to increase their business. They will now
borrow the money from the formal sector and will no longer rely on the informal sector for
obtaining the loan. The country like India really demands a strong Micro, Small and Medium
Enterprises (MSME’s) which helps in creating more employment.

Goods and Services Tax (GST) helps in controlling the tax evasion. Permanent Account
Number (PAN) which is issued by the income tax department is linked with the Goods and
Services Tax (GST) number i.e. GSTN. This helped in establishing a relationship between
indirect taxes and direct taxes. This ultimately aid or support in reducing the evasion of tax to
an enormous extent. During the regime prior to the Goods and Services Tax (GST), there
were many cases of tax evasion. When the taxpayers disclose their turnover under the indirect
tax law and the direct tax law both differed from each other, which gives a path to the evasion
of tax.

After the implementation of the Goods and Services Tax (GST), there is an expectation of an
increase in the tax Gross Domestic Product (GDP) ratio. The expectation is that the basis
points (bps) will increase up to thirty in the financial year of 2018-2019 each and 2019-2020.
This was stated by the table of medium-term expenditure framework (MTEF) in the lower
house i.e. Lok Sabha. The databases of the indirect tax and the direct tax are linked together,
it helps the data analytical tools to remove all the inconsistency and also helps the authorities
of revenue to take a mandatory action.

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Summing up the whole, an increase in the ratio of Gross Domestic Product (GDP) will
overall helps in lowering the rate of tax in India. Goods and Services Tax (GST) will help the
Indian economy on a long term basis.

Impact of GST on Real Estate

The imposition of Goods and Services Tax (GST) has some positive impact on the property
and real estate. Property buyers are in profit due to the Goods and Services Tax (GST). 12%
Goods and Services Tax (GST) charges of property value are liable on all under-construction
properties. It does not include the stamp duty and the charges on the registration. Previously
this provision was applied in the properties which are prepared or ready.

There is an increase in the profit for the builders and the developers due to the input tax
credit. This will additionally pass the profit to homebuyers.

According to changed tax scheme, the under-construction properties i.e. flats and buildings
will be charged 18% Goods and Services Tax (GST) in which 9% will be State Goods and
Services Tax (SGST) and 9% will be Central Goods and Services Tax (CGST). The
government has the power to deduct the land value equal to the 1/3rd of the total amount
which is charged by the builder. It will make the efficient rate of tax as 12%.

Note:- In the real estate sector, a 12% tax rate is for building materials there will be no effect
on the value of the flat.

Sr. Value Added Tax Goods and Services Tax

Substance or Material
No. (VAT) (GST)
1. Iron pillars and iron rods 20% 18%
2. Fly ash bricks and Sand lime bricks 6% 5%
3. Cement 20 to 24% 28%
Ceramic tiles, plaster, wallpaper, wall
4. 20 to 25% 18%
fittings, paint

Positive impact on buyers

Goods and Services Tax (GST) have some positive impact on the prices of the property. It
makes the tax system easy for all the buyers. Before Goods and Services Tax (GST), buyers
were accountable to pay the taxes which depends upon the property‘s construction status and
the state in which the property is located.

Buyers were also liable to pay the Value Added Tax (VAT), stamp duty, service tax, and
registration charges when they buy the under-construction property. But when they buy the
property which was ready or completed, they are liable to pay registration charges and stamp
duty. The state has the power to levy the stamp duty, Value Added Tax (VAT) and
Registration Charges and all the figures of tax differ from state to state. Central has the power
to levy the service tax and it was charged upon the construction. This makes the tax scheme
very much complicated for all the buyers, but Goods and Services Tax (GST) had made this
simpler.

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Under Goods and Services Tax (GST) regime, tax is charged upon all the under-construction
properties are at 12% of the value of the property. It does not include the registration charges
and stamp duty. There was no imposition of indirect tax on the sale of property which is
ready-to-move that is why there is no applicability of Goods and Services Tax (GST) on sale
of the ready-to-move properties.

Positive impact on Builders

Before the enforcement of the Goods and Services Tax (GST), a developer or builder had to
pay Value Added Tax (VAT), Central Excise Duty and Entry taxes which was the state
domain, the state was collecting those taxes on the cost of construction material. Developer
and the builder were also liable to pay the tax at 15% for services such as approval charges,
architect fees, labor, legal character, etc.

After the Goods and Services Tax (GST), there was not much variation in the construction
costs. In addition, logistics reduced cost will lead to a lessening of the expenses. To increase
the profit, the input tax credit is helpful.

Impact on Iron and Steel

Tax Laws relating to the Iron and Steel

Three types of taxes are applied or imposed on the manufacturing of iron and steel. Those
taxes are:-

1. 12.5% of Excise Duty

2. 5% of the Average Value Added Tax (VAT)
3. 2% Central Sales Tax (CST)

When we see, there is a total of 19.5% net tax which is imposed upon the iron and steel. If
there is an article which is manufactured of iron and steel are charged at the rate of
19.5%. The rate of the tax charged is similar to the tax rate for manufacturing iron and steel.
In Punjab, the Value Added Tax (VAT) is 2.5% for the substances or commodities which are
of iron and steel there the pattern of tax charged is not the same in whole India.

Impact after Goods and Services Tax (GST)

Materials like iron and steel are very useful and utilized in everyday life. Goods and Services
Tax (GST) has a positive impact on the iron and steel and material made up of these. Kitchen
utensils that are useful in day to day life become cheaper than the previous. Utensils like pan,
stainless steel cooker and many more are now charged with 12% of Goods and Services Tax
(GST). Tt is charged 7.5% less than the current tax laws. There are benefits for all the steel-
related companies as there is a 5% low tax rate on all the large inputs used by them under the
Goods and Services Tax (GST). These inputs are iron ore, coal, etc.

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All the industries relating to the Iron and Steel are getting benefits with the introduction of
the Goods and Services Tax (GST). There is an expectation that it will help in furthermore
benefits by reducing or lowering the input tax and logistics.

Impact on Entertainment Industry

Before the enforcement of Goods and Services Tax (GST), the entertainment section pays
many taxes. They are not limited to one tax. They pay the central tax, state tax and also tax
imposed by the local authorities. But, when Goods and Services Tax (GST) was imposed they
were liable to pay only one tax.

Before the implication of Goods and Services Tax (GST)

Before the enforcement of the Goods and Services Tax Act, 2017, entertainment tax was
imposed on different entertainment services. Value Added Tax (VAT) and service tax were
imposed in various services of the entertainment i.e. nutriment provided in the Cinemas. The
Value Added Tax (VAT) charged was 14.5% and the service tax charged was 15%. The
entertainment sector was enjoying a subsidy of 60% on the service tax and therefore they
were required to pay the service tax at the rate of 6% i.e. 40% of the 15%. The entertainment
sector was paying the 20.5% tax along with the entertainment tax.

After the implication of Goods and Services Tax (GST)

After the enforcement of the Goods and Services Tax (GST), all the scattered taxes upon the
entertainment sector was subsumed in one i.e GST.

Goods and Services Tax (GST) were ranging between 18% to 28%. The tax rate was totally
dependent upon the kinds of the Entertainment Services.

Things within the 18% Goods and Services Tax (GST)

1. Circus
2. Television and DTH services
3. Theatre
4. Movie Tickets (Tickets costing up to Rs.100 have GST 12% and tickets costing more
than Rs. 100 have GST 18%)

Things within the 28% Goods and Services Tax (GST)

1. Racing
2. Casinos
3. Amusement parks
4. Movie events and festivals
5. Sporting event

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Impact of Goods and Services Tax (GST) on consumers

Goods and Services Tax (GST) has given an overall profit to the entertainment sector. The
tax on the movie ticket was 30% and there was 20.5% of the Value Added Tax (VAT) along
with the service tax on the foods which a person buys from the theatre. But, after Goods and
Services Tax (GST), a tax imposed upon the ticket was 28% and tax on the foods in the
cinemas are charged at 18%.

But here we see different results relating to the impact of Goods and Services Tax (GST) on
the entertainment sector. Reason for various consequences are:-

 Low tax on entertainment service in some states.

 No tax on entertainment services in some state.

When Goods and Services Tax (GST) was imposed in these states, they suffer a rise in the tax
on the entertainment sector. However, it was low for those states where the tax on
entertainment services was high. But, if we compare, Goods and Services Tax (GST) was
quite low in comparison to the tax system, i.e. Value Added System (VAT) and Service Tax,
which was prevailing before GST.

State also has the power to include or charge Local Body Tax (LBT) in addition to the tax
which was discussed above under Goods and Services Tax (GST). Local bodies also have the
power to impose a further charge, under Goods and Services Tax (GST), on the entertainment
services in their respective area.

Impact of Goods and Services Tax (GST) on Owner of Entertainment Service

According to the Goods and Services Tax (GST) regime, the owner of the entertainment
service is also liable to pay the tax for the services in entertainment. They will also pay the
tax on the sale of the tickets, food, etc.

Impact of GST on Hotel and Tourism

Income generated from the hotel and tourism plays a vital role in the Indian economy. They
help in increasing the Gross Domestic Product (GDP) of India. This is why every State
Government keeps on promoting the tourism of there state by various advertisements. Rate of
Goods and Services Tax (GST) differs for the hotels because of the tariffs.

1. If the tariffs range Rs 1000 and less then there will be no Goods and Services Tax
(GST).
2. If the tariff range between Rs. 1000 to Rs. 2500 then Goods and Services Tax (GST)
will be 12%.
3. If the tariff range between Rs. 2500 to Rs. 7500 then Goods and Services Tax (GST)
will be 18%.
4. If the tariff is more than Rs. 7500 then Goods and Services Tax (GST) will be 28%.

There is 5% of Goods and Services Tax (GST) on the person who operates the tour. But there
is an expectation that as the Goods and Services Tax (GST) had lower the tax rate on the
operators of the tour the price of the tour packages will also show the down graph.

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Impact of GST on Banking Sector

With the imposition of Goods and Services Tax (GST), the banking sector became more
expensive. Previously, the tax on all the services relating to the banking was 15% but after
the enforcement of Goods and Services Tax (GST), the tax rate on all the banking service
was increased to 18%. These are some of the impacts of Goods and Services Tax (GST) on
banking sector:-

 Each branch of Banks must have separate registration

After the implementation of the Goods and Services Tax (GST), every bank is required to
obtain a separate registration for all the branches within them. Before Goods and Services
Tax (GST), all the employees working in the banks are getting out of their relief mode
because there was a concept of ―single centralized registration‖ for all the branches of banks.
It was a complex task to be done in a country like India because there were excessive
numbers of banks having a more excessive number of branches prevailing in India.

 The transaction between banks is not free

After the implication of Goods and Services Tax (GST), the money transaction, whether it
was internally or externally, between the two different banks where done by imposing the tax.
Before the GST, it was free.

 Dependency upon CGST and SGST

Under Goods and Services Tax (GST), there are two different kinds of taxes prevailing in
India. First, Central Goods and Services Tax (CGST) and second is State Goods and Services
Tax (SGST). CGST is the domain of Government and SGST is the domain of State
Government. With the advent of these two types of Goods and Services Tax (GST) the whole
code or protocol of the banks and relating sector are altered in a stipulation of the service
which they provide to all consumers.

 Point of supply identification

Every consumer or customer having their account in any bank has been offered a ―point of
supply identification”. This helps the customers in the transfer of money in any part of India.
If a person has an account in a remote area, he will easily transfer the money with the
limitation of amount subjected to the rules stated by the Reserve Bank of India (RBI).

 Input Tax Credit in GST

Before the imposition of Goods and Services Tax (GST), the input tax credit was not granted
in accordance with the Central Value Added Tax (CENVAT) protocols or code. However,
after the Goods and Services Tax (GST), the input credit tax is acknowledged to all the banks
which will ultimately reduce the evasion of tax when there are external supply funds.

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  Growth of transaction

After Goods and Services Tax (GST), the banking sector has approached in the whole of
India and even in the acquaintance countries for the purpose of ensuring the continuous and
steady business. The sudden growing and spreading of business will lead to increasing the
claim of funds. And as the demand for funds will increase this will ultimately benefit the
banks because of expansion in the number of transactions.

 Distinctiveness in services

Every bank gives a variety of services to all of its customers or consumers such as credit card,
debit card, internet banking, etc. When Goods and Services Tax (GST) came into force, there
was an amendment in the rules and regulations relating to the banks and this emerged as the
up-gradation of all the system including the Automated Teller Machine (ATM) and all the
systems related to the transaction as demanded by the department of IT.

Impact of GST on Supply Chain

Supply Chain

It is a type of web or chain which lies between a corporation or company and its supplier for
production and distribution of a particular product to an ultimate buyer or purchaser. It
represents the process that was taken from receiving the product from its original character to
the consumer.The supply of chain is necessary for the purpose of proper running of trade and
business which is producing and circulating the product and material. There is some impact
on this sector after the implementation of Goods and Services Tax (GST) which are:-

1. Enhancement and advancement of the stock points.

2. Reduction in the channel inventories.

Channel Inventories means average product left in the retail store‘s ―shelves‖ which is not
sold or taken by the end consumer,

1. There will be a straight or direct benefit for the procurement out of state.
2. Benefit in the logistic cost.

Now a day, the logistics industry is considered as the backbone of the Indian Economy.
When Goods and Services Tax (GST) was imposed as a new tax regime for the Indian
economy system the logistics sector was improvised as the activities like corruption was
reduced. Now, there is less transportation time as Goods and Services Tax (GST) had made
the time catching clearance procedure much easier. The revenue related to the business was
increased and the total logistic cost is also reduced by the Goods and Services Tax (GST).

Impact of GST on Textile Sector

Goods and Services Tax (GST) has shown its positive impact upon the textile and readymade
garments. They are benefited from this new scheme of tax. Some of the benefits which Goods
and Services Tax (GST) provided to the textile sector are:-

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 1. The input credit system or chain is now broken
2. The price for the manufacturing of goods is now lower in comparison to the previous
tax regime.
3. Input credit is now granted in the capital goods

After the implementation of Goods and Services Tax (GST), all readymade garments which
range up to Rs. 1000 are exempted from the terms and clause of the Goods and Services Tax
(GST) and where the garments are branded ranging above Rs. 1000 then 12% of tax will be
levied upon them.

Impact of GST on E-Commerce Marketplace Sellers

India‘s e-commerce market is estimated to have crossed Rs. 211,005 crore in December 2016
as per the study conducted by Internet and Mobile Association of India. The report further
claim that India is expected to generate $100 billion online retail revenue by the year
2020.The uprising of Electronic Commerce in India has also resulted in conception of online
marketplaces. A Marketplace is an e-commerce platform owned by the E-commerce Operator
such as Flipkart, Snapdeal and Amazon. Some of the features of a marketplace model are-

 Marketplace enables third-party sellers to register and sell online on their platform.
 Marketplace charges a subscription fees/ commission on sale value from listed sellers.
 Third-party sellers under this model gain access to a larger customer base, registered
with marketplace.
 Customer on the other hand gain access to multiple sellers and competitive prices for
desired products.
 Items purchased on such marketplaces are either shipped by Merchant/Third-party
seller directly or through the fulfillment center managed by Marketplace Operator.

Government has also allowed Foreign Direct Investments under such model to promote e-
commerce marketplace business model in India.

Marketplaces has provided retailers with additional channel of sales and reach which was
unimaginable for an offline seller. Major marketplaces claim to have lacs of sellers affiliated
with their platform with millions of SKUs. While the number of sellers and their business
have increased significantly, GST has specifically taken up marketplaces and has come out
with rules & regulations specific to this segment.

Introduction of these regulations requirements has compelled the online seller

community to embrace GST regime. Some of these compliance are:

No threshold for GST registration: Government has specified a threshold limit for all the
businesses. A business is liable to register for Goods and Services Tax once such threshold
limit is breached. Click here to read more about threshold limits under GST. However such
limit is not applicable in case of E-Commerce sellers*.

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No Benefit under Composition Scheme: Most of these sellers registered with marketplace
operators are small and medium businesses. Government has introduced composition scheme
under GST law. This scheme is primarily aimed to reduce the burden of compliance for small
and medium businesses. Under this scheme, businesses are required to file returns quarterly
instead of monthly and pay taxes at nominal rates up to 2%. To know more about
Composition Scheme, Click here.

However GST law has explicitly excluded e-commerce businesses from this scheme.

Tax Collection at Source by Marketplace Operator: Under the new tax regime,
marketplace operators are mandatorily required to deduct a percentage amount as the GST
liability of seller and deposit it with government. This mechanism is being termed as ―Tax
Collection at Source (TCS)‖ under the GST law. Eventually the marketplace seller will have
to file monthly return under GST to claim the credit of TCS collected by the marketplace
operator. This will also impact the liquidity and cash flow of these sellers.

While all the marketplace operator have already completed the first level analysis of impact
of GST on their operations, marketplace sellers are still unaware of these rules.

Need of the hour is to keep themselves aware of the changes that are going to come. Also
such sellers should now start planning their transition strategy for GST regime.

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 Benefits of GST

Goods and Services Tax (GST) aims to make India a common market with common tax rates
and procedures and remove the economic barriers, thus paving the way for an integrated
economy at the national level.

GST is largely technology driven. It will reduce the human interface to a great extent and
this would lead to speedy decisions.

Goods and Services Tax (GST) aims to make India a common market with common tax rates
and procedures and remove the economic barriers, thus paving the way for an integrated
economy at the national level. By subsuming most of the Central and State taxes into a
single tax and by allowing a set-off of prior-stage taxes for the transactions across the entire
value chain, it would mitigate the ill effects of cascading, improve competitiveness and
improve liquidity of the businesses.

Here are some of its major benefits:

1. GST is a win-win situation for the entire country. It brings benefits to all the stakeholders
of industry, government and the consumer. It will lower the cost of goods and services, give
a boost to the economy and make the products and services globally competitive. GST aims
to make India a common market with common tax rates and procedures and remove the
economic barriers, thus paving the way for an integrated economy at the national level.

By subsuming most of the Central and State taxes into a single tax and by allowing a set-off
of prior-stage taxes for the transactions across the entire value chain, it would mitigate the
ill effects of cascading, improve competitiveness and improve liquidity of the businesses.
GST is a destination-based tax. It follows a multi-stage collection mechanism. In this, tax is
collected at every stage and the credit of tax paid at the previous stage is available as a set
off at the next stage of transaction. This shifts the tax incidence near to the consumer and
benefits the industry through better cash flows and better working capital management.

2. GST is largely technology driven. It will reduce the human interface to a great extent and
this would lead to speedy decisions.

3. GST will give a major boost to the ‘Make in India’ initiative of the Government of India by
making goods and services produced in India competitive in the National as well as
International market. Also all imported goods will be charged integrated tax (IGST) which is
equivalent to Central GST + State GST. This will bring equality with taxation on local
products.

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4. Under the GST regime, exports will be zero-rated in entirety unlike the present system
where refund of some taxes may not take place due to fragmented nature of indirect taxes
between the Centre and the States. This will boost Indian exports in the international
market thus improving the balance of payments position. Exporters with clean track record
will be rewarded by getting immediate refund of 90% of their claims arising on account of
exports, within seven days.

5. GST is expected to bring buoyancy to the Government Revenue by widening the tax base
and improving the taxpayer compliance. GST is likely improve India’s ranking in the Ease of
Doing Business Index and is estimated to increase the GDP growth by 1.5 to 2%.

6. GST will bring more transparency to indirect tax laws. Since the whole supply chain will be
taxed at every stage with credit of taxes paid at the previous stage being available for set off
at the next stage of supply, the economics and tax value of supplies will be easily
distinguishable. This will help the industry to take credit and the government to verify the
correctness of taxes paid and the consumer to know the exact amount of taxes paid.

7. The taxpayers would not be required to maintain records and show compliance with a
myriad of indirect tax laws of the Central Government and the State Governments like
Central Excise, Service Tax, VAT, Central Sales Tax, Octroi, Entry Tax, Luxury Tax,
Entertainment Tax, etc. They would only need to maintain records and show compliance in
respect of Central Goods and Services Tax Act and State (or Union Territory) Goods and
Services Tax Act for all intra-State supplies (which are almost identical laws) and with
Integrated Goods and Services Tax for all inter-State supplies (which also has most of its
basic features derived from the CGST and the SGST Act).

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 How to File GST Return?
There are a whole lot of activities that form a part of the process of Returns under GST.
These include:

1. Filing different types of GST returns electronically

2. Uploading invoice wise details
3. Auto-population of details with regards to input tax credit from returns filed by
suppliers to return filed by recipients
4. Matching of invoice information
5. Automatic reversal of ITC in the event of mismatch of the invoice information

Taxpayers registered under GST are required to follow the return procedure to be able to file
returns easily and take the benefit of Input Tax Credit (ITC). A regular taxpayer under GST is
required to file two monthly returns and one annual return. However, there are special
category taxpayers registered under GST who need to furnish separate returns. These
taxpayers include:

1. Non-resident taxable persons

2. Taxpayers registered under the Composition Scheme
3. Persons allotted with Unique Identification Number (UIN)
4. Input Service Distributors
5. Persons required to deduct TDS or collect TCS under GST

What is Return Under GST?

Every registered person paying GST is required to furnish an electronic return every calendar
month. A ―Tax Return‖ is a document that showcases the income of a registered taxpayer.
Such a document needs to be filed with the tax authorities in order to pay tax to the
government. The tax to be paid by a registered dealer depends upon the income declared by
such a person in the tax return filed with the tax authorities.

Under the initial GST Return filing procedure, the different types of GST returns demanded
the taxpayer to disclose the following details:

 Outward Supplies (Sales)

 Inward Supplies (Purchases)
 GST On Output
 GST on Input (Input Tax Credit)
 Other Particulars (As May be Prescribed in the Document)

***Note: However, the current system of GST Return filing requires a taxpayer to update
outward supplies information in GSTR 1. And then file a summary return in GSTR 3B. All
the other forms like GSTR 2 and GSTR 3 have been suspended for the time being.

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As mentioned above, from April 1, 2019, the incumbent government is planning to
implement the new GST Return design. This simplified version of return would require the
taxpayers having an annual turnover of over Rs 5 Crores to file one monthly return only.
Thus, small business owners,having an annual turnover of upto Rs 5 Crores would have the
option to file quarterly return.

Types Of GST Returns?

1. GSTR – 1: Return for Outward Supplies

GSTR-1 is a monthly return of outward supplies undertaken by a normal registered taxpayer

under GST. In other words, this monthly return showcases the sales transactions of a business
in a particular month.

Who Needs To File GSTR-1?

Every normal registered taxpayer under GST is required to file GSTR-1 each month. This
return showcases details of 1) invoices, 2) debit notes, 3) credit notes and 4) revised invoices
issued pertaining to your outward supplies.

Due Date for Filing GSTR-1

The standard date for filing GSTR-1 is 10 days from the end of the month for which such a
return is to be filed. However, the due date to file GSTR 1 can be extended for any class of
persons beyond the tenth of the succeeding month by the Commissioner. The reasons for
such an extension would be notified.

2. GSTR – 2: Return for Inward Supplies

GSTR-2 is a monthly return of inward supply of goods and services as agreed by the recipient
of the goods and services. In other words, GSTR-2 contains details with regards to the
purchases made by the recipient in a particular month. The information contained in GSTR-2
is auto-populated with the details contained in GSTR-2A.

Who Needs To File GSTR-2?

Every normal registered taxpayer under GST is required to provide details regarding inward
supplies or purchases made for each month in GSTR-2. This return showcases details with
regards to purchases made from registered and unregistered taxable persons, debit notes and
credit notes issued with respect to the inward purchases etc.

Hence, the recipient makes use of the details auto-populated in Form GSTR-2A with details
uploaded by supplier in GSTR-1. The recipient makes necessary changes if required in
GSTR-2 after verifying the information auto-populated in GSTR-2A.

Due Date for Filing GSTR-2

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The process of making changes and filing GSTR-2 is required to be undertaken between 11th
and 15th day of the succeeding month for which return is to be filed.

3. GSTR – 2A: Read Only Document

GSTR-2A is a read only document. This document gets auto-populated once the supplier
uploads the details in GSTR-1. In other words, GSTR-2A enables the recipient to verify the
details uploaded by the supplier in GSTR 1. Also the recipient could accept, reject, modify or
keep the invoices pending using the said details. However, such changes are made by the
recipient in GSTR 2.

Who Needs To File GSTR-2A?

GSTR-2A is made available to every normal registered taxpayer filing return under GST.
This is because it is a read only document that gets auto-populated with details uploaded by
supplier in GSTR-1.

Due Date for Filing GSTR-2A

GSTR-2A is a read-only document used by the recipient to match the details uploaded by the
supplier in GSTR-1. Thus, the recipient can accept, reject, modify or keep the invoices
pending in case there is any mismatch. However, the recipient can make actual changes, if
any, only in Form GSTR 2. This process of making changes and filing GSTR-2 is to be
undertaken between 11th and 15th day of the month succeeding the month for which such a
return is to be filed.

4. GSTR – 3B: Summary of Inward and Outward Supplies

GSTR 3B is a simplified monthly summary return of inward and outward supplies. It is a self
declaration showcasing the summary of GST liabilities of the taxpayer for the tax period in
question. Moreover, it helps the taxpayer to discharge the tax liabilities in a timely manner.

GSTR-3B is a form that cannot be revised. Furthermore, this form does not require the
compliance of comparing invoices between supplier and purchaser. That means both the
suppliers and the recipients file the GSTR-3B form separately. Therefore, such a facility does
not cause delays in filing of returns which would consequently attract late fees and interest.

Who Needs To File GSTR-3B?

Every normal registered taxpayer filing GST Returns is required to file GSTR-3B. GSTR-3B
is also filed during the tax periods for which the tax liability is zero. That is, a taxpayer needs
to file a Nil Return in case there are no outward or inward transactions during a particular
month.

Due Date for Filing GSTR-3B

The GSTR-3B must be submitted by the 20th of the month succeeding the tax period for
which GST is filed. In case no transactions have been undertaken in a particular month, the
registered person needs to file a NIL return for that period.

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5. GSTR – 4: Return For Composition Dealers

GSTR-4 is a quarterly return that needs to be filed by a registered taxpayer who has signed up
for the Composition Scheme. Under this scheme, small taxpayers having a turnover of upto
Rs 1.5 Crores need to pay tax at a fixed rate and file quarterly return. This is unlike the
normal registered dealer who files three returns every month including GSTR-1, GSTR-2 and
GSTR-3B.

Who Needs To File GSTR-4?

The Composition Scheme was introduced under GST in order to reduce the compliance
burden on small taxpayers. Every registered taxpayer opting for Composition Scheme is
required to file quarterly return in GSTR-4.

Due Date for Filing GSTR-4

The due date for filing GSTR-4 is 18th of every month following the quarter for which such a
return needs to be filed. Say for instance, Kapoor Pvt Ltd is a composition dealer who needs
to file his GST return for the quarter January – March 2019. The due date for filing GSTR-4
therefore would be April 18, 2019.

6. GSTR – 5: Return For Non-Resident Taxable Persons

GSTR-5 is a monthly return filed by every non-resident taxable person. This return includes
details pertaining to:

 inward supplies
 outward supplies
 any interest, penalty, fees
 tax payable or tax paid or
 any other amount payable under the act

Furthermore, this is the only return to be filed by a non-resident taxable person. This means, a
non-resident taxable person is not required to file any annual return.

Who Needs To File GSTR-5?

Unlike a normal registered taxpayer, a non-resident taxable person is required to File monthly
return in For GSTR-5. A non-resident taxable person means a person who supplies goods or
services occasionally. This person does not have a fixed place of business or residence in
India. Moreover, he can supply goods or services either as a principal or an agent or in any
other capacity.

Due Date for Filing GSTR-5

The details in GSTR 5 need to be filed within a time period that is earlier of:

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  within 20 days after the end of the calendar month or within
 7 days after the last date of validity of the registration

7. GSTR – 6: Return For Input Service Distributors

GSTR 6 is a monthly return that an Input Service Distributor files every calendar month. This
return provides information of all the invoices on which credit has been received and are
issued by an ISD. This means that it gives a summary of the total input tax credit available
for distribution during a particular month. Thus, the details of the invoices that an ISD
furnishes in form GSTR 6 are made available to every recipient of the credit. These details
are visible to the recipient in part B of form GSTR 2A.

What is GSTR-6A?

GSTR 6A is an auto drafted, read only form. This form is generated automatically based on
the details furnished by the suppliers of an ISD in form GSTR 1. This form contains details
pertaining to the supplies against which credit is received for distribution. It also includes the
details pertaining to the debit notes and credit notes received during the current tax period.

Due Date for Filing GSTR-6

GSTR-6 needs to be filed on the thirteenth day of the month succeeding the month for which
tax is to be paid. Say for instance, Kapoor Pvt Ltd is registered as an ISD in Mumbai having
branches in Mumbai, Hyderabad, Bangalore and Gurgaon. Kapoor Pvt Ltd needs to file ISD
return for the month November 2018. Hence, the last date to file GSTR 6 for Kapoor Pvt Ltd
is December 13, 2018.

8. GSTR – 7: Return For Taxpayers Deducting TDS

GSTR 7 is a monthly return that is required to be filed by the deductors who are required to
deduct TDS under GST. Such a return consists of the details regarding:

 tax deducted at source,

 the liability towards TDS,
 TDS Refund claimed if any
 Interest, late fees etc. paid or payable

What is GSTR-7A?

GSTR-7A is an auto-generated form. The form gets generated once the deductor furnishes
details in Form GSTR-7 on the common portal. If the details furnished by the deductor are
accepted by the deductee, then a TDS certificate is made available to the deductee
electronically.

Due Date for Filing GSTR-7

GSTR-7 is required to be filed by the deductor within 10 days after the end of the month in
which the deduction was made. For example, the due date for filing GSTR-7 for the month of
June 2018 would be 10th July, 2018.

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9. GSTR – 8: Return For E-Commerce Operators Collecting TCS

GSTR 8 is a monthly return furnished by every electronic commerce operator who is required
to deduct Tax Collected at Source under GST. This return reflects details of the supplies
made through e-commerce portal and the amount of tax collected from suppliers of goods and
services. Furthermore, the operator can also make changes to the details of supplies furnished
in any of the earlier period statements.

Due Date for Filing GSTR-8

The last date to file GSTR 8 is the 10th day of the month succeeding the month for which
TCS is to be collected. Thus, the amount of tax that the operator collects also needs to be
deposited by the 10th day of the following month during which such a collection is made.
Furthermore, the operator is also required to file an annual statement in the prescribed format
in GSTR 9B. This return needs to be filed by 31st December following the end of each
financial year.

10. GSTR – 9: Annual Return For Normal Registered Taxpayer Under GST

Section 44(1) requires that:

Every registered person shall furnish electronically an annual return for every financial year
in the prescribed form, except the following:

 Input Service Distributor

 Person paying tax under section 51 or section 52,
 Casual taxable person
 Non-resident taxable person

Furthermore, persons registered under GST but having no transactions during the year are
still required to file a Nil Annual Return.

Due Date for Filing GSTR-9

Such a return needs to be furnished on or before the 31st day of December following the end
of such financial year. To further add to this, Rule 80(1) of the CGST Rules, 2017 states that
such registered person shall furnish an annual return electronically in Form GSTR-9. This
return needs to be filed through the common portal either directly or through a Facilitation
Centre notified by the Commissioner.

11. GSTR – 9A: Annual Return For Composition Dealers

GSTR 9A is the annual return that every registered person opting for composition levy needs
to file every financial year. This return is in addition to the quarterly returns filed by a
composition dealer during a financial year. Thus, GSTR 9A is an annual return filed by a
composition dealer containing details that relate to the quarterly returns filed by him during

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the year. This return contains details with regards to supplies made by the taxpayer during the
year under composition scheme. These details include:

 inward and outward supplies,

 tax paid,
 input credit availed or reversed,
 tax refunds,
 late fee etc

Due Date for Filing GSTR-9A

The due date to file GSTR 9A is on or before December 31 succeeding the close of a
particular financial year for which the return needs to be filed. For instance, Mr. Kapoor is a
composition taxpayer who needs to file his annual return for the financial year 2017 – 2018.
Thus, Mr. Kapoor needs to file his annual return in form GSTR 9A on or before December
31, 2019. However, this date can be extended by a proper officer through a notification.

12. GSTR – 9B: Annual Return For E-Commerce Operators Collecting TCS

Every electronic commerce operator required to collect tax at source under section 52 shall
furnish annual statement in FORM GSTR -9B. This return includes all the information
furnished by the e-commerce operators in the monthly returns filed during the financial year.

Due Date for Filing GSTR-9B

All the e-commerce taxpayers are required to file GSTR-9B on or before 31st December
following the close of the financial year.

13. GSTR – 9C: Return For Registered Persons Getting Accounts Audited
From CA

Every registered person having an aggregate turnover of more than Rs. 2 crores during a
financial year must get his accounts audited by a CA or cost account. Furthermore, he needs
to submit the annual return, a copy of the audited accounts and a reconciliation statement.
This reconciliation statement is in Form GSTR 9C. So basically, GSTR 9C is a reconciliation
statement reconciling value of supplies declared in annual return with the audited annual
accounts.

Due Date for Filing GSTR-9C

The due date for filing GSTR-9C is the same as that for filing annual returns in GSTR-9.
Hence, GSTR-9C shall be submitted on or before 31st December of the year subsequent to
the relevant FY under audit. For instance, the due date for filing GSTR-9C for the FY 2017-
2018 shall be 31st December 2018.

14. GSTR – 10: Return For Registered Person Whose GST Registration Gets
Cancelled

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GSTR-10 is a final return required to be filed by a registered person whose GST Registration
gets cancelled. Such a registered person does not include:

 Input Service Distributor

 Person paying tax under composition scheme
 Non-resident taxable person
 Person collecting TDS or TCS

Further, Form GSTR-10 is filed electronically through the common portal either directly or
via a facilitation centre as prescribed by the Commissioner. The intent of filing this final
return is to make sure that the taxpayer pays of any liability outstanding. This liability may
include an amount equivalent to the amount that is higher of:

 input tax related to stock of finished and semi-finished goods, capital goods or plant
and machinery or
 output tax payable on such goods

Due Date for Filing GSTR-10

The registered person whose GST Registration has been cancelled is required to file final
return in Form GSTR-10 within a period which is later of:

 3 months from the date of cancellation or

 Date of order of cancellation.

15. GSTR – 11: Return For UIN (Unique Identification Number) Holders

GSTR-11 is a return to be furnished by a person who has been allotted a Unique

Identification Number (UIN). UIN is issued so that the registered person obtaining the same
can claim refunds for GST paid on goods and services purchased by them in India.

Who Can Apply For UIN?

UIN is allotted to foreign embassies and diplomatic missions who are not required to pay
taxes in India. This number is issued so that these organizations can claim a refund for the
amount of tax paid to the Indian Tax Authorities. In order to claim the refund on GST paid,
these organizations need to file GSTR-11.

The organizations that can apply for UIN include:

 Specialized agency of the United Nations Organization

 A consulate or embassy of foreign countries
 Multilateral financial institution and organization notified under the United Nations
(Privileges and Immunities) Act, 1947
 Any other person or class of persons as may be specified by the Commissioner

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Due Date for Filing GSTR-11

The due date for filing GSTR-11 is 28th of the month succeeding the month in which inward
supplies are received by the UIN holders. This means, GSTR-11 is not filed on a monthly
basis. Rather, this form is filed on case-to-case basis as and when the supplies are made.

Penalty For Filing Late Returns

In case, a taxpayer fails to furnish the details relating to outward supplies, a penalty is
charged for the same. The fine amounts to a sum of Rs 200 (Rs 100 for CGST and Rs 100 for
SGST) for each day of continuing default. This is subject to a maximum of Rs 5,000 only.
However, there is no late fee for IGST. Also, interest is charged at 18% per annum. This
interest is calculated by the registered taxpayer on the amount of tax liability outstanding.
Furthermore, the interest is calculated from the day succeeding the due date for filing the
GST return until the date of payment of tax by the taxpayer.

Below Table Shows Types of GST Returns

1 GSTR – 1: Return for Outward Supplies

2 GSTR – 2: Return for Inward Supplies
3 GSTR – 2A: Read Only Document
4 GSTR – 3B: Summary of Inward and Outward Supplies
5 GSTR – 4: Return For Composition Dealers
6 GSTR – 5: Return For Non-Resident Taxable Persons
7 GSTR – 6: Return For Input Service Distributors
8 GSTR – 7: Return For Taxpayers Deducting TDS
9 GSTR – 8: Return For E-Commerce Operators Collecting TCS
10 GSTR – 9: Annual Return For Normal Registered Taxpayer Under GST
11 GSTR – 9A: Annual Return For Composition Dealers
12 GSTR – 9B: Annual Return For E-Commerce Operators Collecting TCS
13 GSTR – 9C: Return For Registered Persons Getting Accounts Audited From CA
14 GSTR – 10: Return For Registered Person Whose GST Registration Gets Cancelled
15 GSTR – 11: Return For UIN (Unique Identification Number) Holders

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 GST Slabs of Tax Rates

Ever since GST or Goods and Services Tax regime was announced, there has been a wide
speculation about the GST rates bracket. The GST Council is the body that decides the rate
slabs and the GST Council has been periodically revising the list of goods and services for
each rate slab.It‘s clear that the Government‘s intentions are to have lower tax rate for goods
and services which are essential needs and higher tax rates for goods and services that are
considered as luxury supplies.Here‘s a curated a list of GST rates structure for various goods
and services, classified across the different GST tax slabs –

GST Exemption List - Goods & Services

Goods Services
Hotel Services priced at
Poultry Products – Fresh Meat, Fish, Chicken, Eggs
less than INR 1000
Dairy Products – Milk, Curd, Butter Milk, Jaggery (Gur), Lassi, Education (exemption
unpacked Paneer continued from before)
Healthcare (exemption
Fresh Fruits & Vegetables
continued from before)
Food Items – Natural Honey, Flour (Atta & Maida), Pulses, Basmati
Rice, Gram Flour (Besan), Bread, Vegetable Oil, Religious Sweets
(Prasad), Common Salt
Cosmetics & Accessories – Bindi, Vermillion (Sindoor), Bangles
Stationery – Stamps, Judicial Papers, Printed Books, Newspapers
Handloom Products
Textile – Jute, Silk
Contraceptives

Essential Goods & Services at 5% GST slab

Goods Services
Dairy Products – Skimmed Milk Powder, Milk food for babies,
Railway Travel
Condensed milk, Packaged Paneer, Cream
Economy Class Air
Frozen Vegetables
Travel
Food Items – Sugar, Spices, Edible Oil, Pizza Bread, Rusk, Sweets, Cab Aggregators (e.g.
Fish Fillets, Tapioca (sabu daana) Uber & Ola)
Beverages – Coffee, Tea, Juices
Apparel – below 1000 INR
Footwear – below 500 INR
Fuel – Kerosene, LPG, Coal
Solar Panels
Common Utilities - Broom
Medical Goods - Medicines, Stents
Newsprint

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Lifeboats
Textile – Cotton, Natural Fibre and yarns
Incense Sticks (Agarbatti)

Standard Goods & Services at 12% GST slab

Goods Services
Non-AC Hotels &
Dairy Products – Butter, Cheese, Ghee
Restaurants
Business Class Air
Packaged Dry Fruits
Travel
Food Items – Snacks (Namkeen & Bhujia), Packaged Chicken,
Sausages, Jams, Sauces
Beverages – Fruit Juices, Packed Coconut Water
Apparel – above 1000 INR
Personal Hygiene – Tooth Powder
Stationery – Exercise Books, Notebooks
Common Utilities – Sewing Machine, Umbrella
Ayurvedic Medicine
Mobile Phones

Standard Goods & Services at 18% GST slab

Goods Services
Accommodation at hotels with tariff of
Dairy Products – Ice Cream more than 2500 INR but less than 7500
INR
Supply of food / drinks in AC / 5 star and
Preserved Vegetables
above rated restaurants
Food Items – Flavoured refined sugar, Pasta, Corn
Flakes, Pastries, Cakes, Soups, Instant Food Mixes, Telecom Services
Processed Foods
Beverages – Mineral Water IT Services
Branded Garments Financial Services
Footwear – above 500 INR Works Contract
Personal Hygiene – Tissues, Toilet Paper, Hair Oil,
Cinema Tickets worth 100 INR or les
Soap Bars, Toothpaste
Stationery – Envelopes, Fountain Pens
Electronic Equipment – Printed Circuits, Monitors
Iron & Steel Products
Biri wrapper leaves (Tendu Patta)
Biscuits
Textile – Man-made fibre and yarn

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 Special / Luxury Goods & Services at 28% GST slab

Goods Services
Accommodation at hotels with
Food Items – Chocolates, Chewing Gum, Custard Powder
tariff of more than 7500 INR
Beverages – Aerated Water Race course betting
Personal Hygiene – Deodorants, Shaving Cream, After
Cinema Tickets worth more than
Shave, Hair Shampoo, Dye, Sunscreen, Perfume, Face
100 INR
Creams, Detergents
White Goods – Vacuum Cleaner, Shavers, Hair Clippers,
Washing Machines, Dish Washers, Water Heaters & other
Home Appliances
Speakers
Cameras
Automobiles & Motor Vehicles*
Housing Materials – Paint, Wallpaper, Ceramic Tiles,
Cement
Weighing Machines, Vending Machines, ATM
Fireworks
Luxury / Demerit Goods* - Pan Masala, Tobacco, Bidis,
Aerated Drinks & Motor Vehicles
*Note – Luxury / Demerit Goods as listed above will also attract a compensation cess over
and above the GST rate of 28%

Articles outside the GST Tax Rate Slabs

 Gold, gems, jewellery – 3%

 Rough Precious & Semi – Precious Stones – 0.25%

Treatment of Luxury / Demerit Goods

In addition to the rates which have been fixed for major categories of goods and services, the
GST council has approved the compensation rates for 5 luxury / demerit items. The proceeds
of this cess will go into the compensation fund which would be used to bridge any tax
revenue gap for states in the first five years of GST. The items that will be levied with the
compensation cess, over and above the GST tax rates which are applicable on them are as
follows:

GST Rate Approved Cess Cess

Items
Applicable Range Ceiling
INR 400 /
Coal 5% INR 400 / tonne
tonne
Pan Masala 28% 60% 135%
INR 4170
Tobacco 28% 61% - 204%
/ thousand
Aerated Drinks 28% 12% 15%
Motor Vehicles 28% 1% – 15% 15%

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Covid-19 Impacts onIndian economy
The economic impact of the 2020 coronavirus pandemic in India has been largely disruptive.
India's growth in the fourth quarter of the fiscal year 2020 went down to 3.1% according to
the Ministry of Statistics. The Chief Economic Adviser to the Government of India said that
this drop is mainly due to the coronavirus pandemic effect on the Indian economy. Notably
India had also been witnessing a pre-pandemic slowdown, and according to the World Bank,
the current pandemic has "magnified pre-existing risks to India's economic outlook".

The World Bank and rating agencies had initially revised India's growth for FY2021 with the
lowest figures India has seen in three decades since India's economic liberalization in the
1990s. However after the announcement of the economic package in mid-May, India's GDP
estimates were downgraded even more to negative figures, signalling a deep recession. (The
ratings of over 30 countries have been downgraded during this period.) On 26 May, CRISIL
announced that this will perhaps be India's worst recession since independence. State Bank of
India research estimates a contraction of over 40% in the GDP in Q1 FY21. The contraction
will not be uniform, rather it will differ according to various parameters such as state and
sector.

Unemployment rose from 6.7% on 15 March to 26% on 19 April and then back down to pre-
lockdown levels by mid-June. During the lockdown, an estimated 14 crore (140 million)
people lost employment while salaries were cut for many others. More than 45% of
households across the nation have reported an income drop as compared to the previous year.
The Indian economy was expected to lose over ₹32,000 crore (US$4.5 billion) every day
during the first 21-days of complete lockdown, which was declared following the coronavirus
outbreak. Under complete lockdown, less than a quarter of India's $2.8 trillion economic
movement was functional. Up to 53% of businesses in the country were projected to be
significantly affected. Supply chains have been put under stress with the lockdown
restrictions in place; initially, there was a lack of clarity in streamlining what an "essential" is
and what is not. Those in the informal sectors and daily wage groups have been at the most
risk. A large number of farmers around the country who grow perishables also faced
uncertainty.

Vendor of greens, essential supply chains and logistics. Life under lockdown. Bangalore
spring 2020.

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Major companies in India such as Larsen & Toubro, Bharat Forge, UltraTech Cement,
Grasim Industries, Aditya Birla Group, BHEL and Tata Motors have temporarily suspended
or significantly reduced operations. Young startups have been impacted as funding has fallen.
Fast-moving consumer goods companies in the country have significantly reduced operations
and are focusing on essentials. Stock markets in India posted their worst loses in history on
23 March 2020. However, on 25 March, one day after a complete 21-day lockdown was
announced by the Prime Minister, SENSEX and NIFTY posted their biggest gains in 11
years.

Indices: S&P BSE 500 (1 January 2015 to 9 May 2020)

The Government of India announced a variety of measures to tackle the situation, from food
security and extra funds for healthcare and for the states, to sector related incentives and tax
deadline extensions. On 26 March a number of economic relief measures for the poor were
announced totaling over ₹170,000 crore (US$24 billion). The next day the Reserve Bank of
India also announced a number of measures which would make available ₹374,000 crore
(US$52 billion) to the country's financial system. The World Bank and Asian Development
Bank approved support to India to tackle the coronavirus pandemic.

The different phases of India's lockdown upto the "first unlock" on 1 June had varying
degrees of the opening of the economy. On 17 April, the RBI Governor announced more
measures to counter the economic impact of the pandemic including ₹50,000 crore
(US$7.0 billion) special finance to NABARD, SIDBI, and NHB.[16] On 18 April, to protect
Indian companies during the pandemic, the government changed India's foreign direct
investment policy. The Department of Military Affairs put on hold all capital acquisitions for
the beginning of the financial year. The Chief of Defence Staff has announced that India
should minimize costly defense imports and give a chance to domestic production; also
making sure not to "misrepresent operational requirements".

On 12 May the Prime Minister announced an overall economic package worth ₹20 lakh crore
(US$280 billion),10% of India's GDP, with emphasis on India as a self-reliant nation. During
the next five days the Finance Minister announced the details of the economic package. Two
days later the Cabinet cleared a number of proposals in the economic package including a
free food grains package. By 2 July 2020, a number of economic indicators showed signs of
rebound and recovery. On 24 July the Finance Secretary of India said the economy is
showing signs of recovery at a faster rate than anticipated, while the Economic Affairs
Secretary said that he expects a v-shaped recovery for India. In July the Union Council of
Ministers passed the National Educational Policy 2020 aimed at strengthening the economy.

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 Chapter-2

Objectives of the study

 To understand taxation system and structure of Goods and

Service Tax.
 To asses customer view regarding Goods and Service tax.

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 Research Methodology
Data has been collected through secondary method.

Secondary Method:

Various portals,

 www.taxguru.in
 www.gst.gov.in
 www.investopedia.com
 www.wikipedia.com

Financial newspaper, Economic Times.

Books:-

 GST acts ,rules &forms with Referencer by Ashok Batra

 Goods & services Tax by H C Mehrotra

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 Chapter-3

Findings and Suggestions

 Tax revenue as a proportion of GDP in India is lower than the world average. As per
the world bank reports, the tax GDP ratio of India is 10.4% (for 20111-12) which is
less than the world average of 14.6% and much lower than 17.6% in case of European
zone.
 The share of direct tax revenue in total tax revenue of India has shown better
performance in post-globalisation period against pre-globalization period. Through
the indirect taxes have been contributing a larger amount, as a percentage the share
has decreased during post-globalisation period.
 As a per cent of GDP the share of direct taxes has significantly improved during post-
liberalisation period from 2.54% in 1991-92 to 5.69% in 2012-13. On the other hand
of share of indirect taxes has decreased from 13.22% in 1991-92 to 11.54% in 2012-
13.
 The total tax collection as a percentage of GDP of India has increased from 6.22% in
1950-51 to 15.40%in 1990-91. Whereas, the same was increased from 15.76% in
1991-92 to 17.24% in 2012-13. This shows a slowdown in the pace of tax collection
during post-globalised period as compared to pre-globalised period.
 India is lagging far behind in revenue mobilisation through tax sources as compared
to the EU zone countries. The key reason for lower tax collection is that the
proportion of direct tax in total taxes is very low in India as compared to the European
countries. In spite of reasonable efforts by the Indian government, revenue through
direct taxes could not be mobilised in desired way.
 The share of indirect taxes in total tax revenue during pre-liberalisation period
increased from 63.2% in 1950-51 to 86% in 1990-91. Whereas, the same as decreased
during post-liberalisation period from 83.9% in 1991-92 to 64.6% in 2010-11. As a
consequence, the share of direct taxes in total tax revenues declined during pre-
liberalisation period from 36.8% in 1950-51 to around 14 in 1990-91 and picked up
during post-liberalisation period from 16.1% in 1991-92 and reached to 35.4% in
2010-11. The post-liberalisation picture shows that the share of direct taxes in the
total tax revenue has been continuously increasing and the direct taxes are widened its
based over indirect taxes.
 Direct taxes revenue growth rate has shown better performance in post-globalised
period. Whereas, not much difference has been noticed in case of indirect taxes
growth rate. Overall, a significant volatility has been seen in both direct as well as
indirect taxes growth rates.

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  The growth rate of personal income tax (PIT) was more volatile compared to other
components among direct and indirect taxes in both pre and post-globalised period.
 In India, huge money is being spent for various subsidy schemes. New measures to
control these subsidies to be implemented at all levels of administration for effective
utilisation of tax money.
 The government should make an effort to identify the sectors where more black
money is being pumped. For instance, the real estate sector in India is getting untaxed
effectively, where turnover of black money is much higher. Hence, strict measures
should be implemented to monitor such transactions.
 Banking Secrecy aspect should be revisited at international level. Information of bank
account holders with content should be easily accessible to the government of the
country to which depositors belong. India initiation and leadership in this matter is
necessary because of economic, political and social reasons connected to it.
 Retrospective amendments are putting off investor‘s mind-set. Uncertainty about tax
laws, poor tax administration and frequent changes are discouraging foreign investors.
Hence, the government should restrain and stop retrospective amendments to the
maximum extent.
 The government should provide long-term legal framework along with adopting long-
term fiscal policy and stale tax regime for the growth of the economy. Clear signal
should go to domestic and foreign investors by simplifying the relevant taxation
provisions and providing efficient single window mechanism.

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 Conclusion
GST will bring in transparent and corruption-free tax administration, removing the current
shortcomings in indirect tax structure. GST is business friendly as well as consumer
friendly.GST in India is poised to drastically improve the positions of each of these
stakeholders. We need a change in the taxation system which is better than earlier taxation.
This need for change leads us to ‗need for GST‘.

GST will allow India to better negotiate its terms in the international trade forums.GST aimed
at increasing the taxpayer base by bringing SMEs and the unorganized sector under its
compliance. This will make the Indian market more stable than before and Indian companies
can compete with foreign companies.

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