THE BHAWANIPUR EDUCATION SOCIETY COLLEGE

A MINORITY RUN COLLEGE. AFFILIATED TO UNIVERSITY OF CALCUTTA

RECOGNISED UNDER SECTION 2(F) & 12 (B) OF THE UGC ACT, 1956

Cover Page

Project Report
(Submitted for the Degree of B.Com. Honours in Accounting and Finance under the
University of Calcutta)

Title of the Project

Goods And Services Tax

Submitted by

Name of the Candidate ...Simran Sharma

Registration No. 017-1211-0597-17

CU Roll No:- 171017-11-0800

Name of the College :- The Bhawanipur Education society college

College UID. 0101170950

Supervised by
Name of the Supervisor: Prof. Rebecca Gasper

Name of the College : Bhawanipure Educational Society College

 1. Annexure- IA

Supervisor’s Certificate

This is to Certify that a student of B.com Honors in Accounting and Finance under the
University of Calcutta has worked according to my guidelines and supervision for the
project work and prepared with the title Goods and Services Tax (GST).
The Project Report which she is submitting is her genuine and original work to the best of
my knowledge.

PLACE: Kolkata. SIGNATURE:

DATE: 22nd September, 2020
NAME: Prof. Rebecca Gasper.
DESIGNATION: Lecturer
COLLEGE: The Bhawanipur Education Society College.
 Students Declaration

I hereby declare that the project work with title GST submitted by me for the partial fulfillment of the
degree of B. Com Honors in Accounting & Finance under the University of Calcutta is my original work
and has not been submitted earlier to any other University for the fulfillment of the requirement for any
course of study I also declare that no chapter of this manuscript in whole or in part has been
incorporated in this report from any earlier work done by others or by me.

Place:-Kolkata. Signature:-
Date:- 22nd September, 2020
Name of the Student: -Simran Sharma
Registration No:-017-1211-0597-17
Name of College: - The Bhawanipur Education Society College.
CU Roll No:-171017-11-0800
UID:- 0101170950
 And
Its Impact on Indian Economy
 TABLE OF CONTENTS

CHAPTER PARTICULARS PAGE

NO.
CHAPTER 1 INTRODUCTION 6
1.1 BACKGROUND 7
1.2 LITERATURE REVIEW 8
1.3 Objectives/Need for the study 9
1.4 Research methodology 10
1.5 Limitations 11
CHAPTER 2 Conceptual Framework/International 12
Scenario
2.1 Definition,concepts and terms 13-15
2.2 National Scenario 16-19
2.3 International Scenario 20-24
CHAPTER 3 Presentation of data,Analysis 25
And Findings
3.1 Presentation of data,analysis and 26-47
interpretation
3.2 Findings 48
CHAPTER 4 Conclusion, Recommendations and 49
Bibliography
4.1 Conclusion 50
4.2 Recommendations 51
4.3 Bibliography 52
4.4 Questionnarie 53-55
 CHAPTER 1
Introduction

1.1 BACKGROUND

Goods and Services Tax (GST) is an indirect tax which was introduced in India on 1 July 2017
and was applicable throughout India which replaced multiple cascading taxes levied by the central
and state governments. It was introduced as The Constitution (One Hundred and First Amendment)
Act 2017,following the passage of Constitution 122nd Amendment Act Bill. The GST is governed by a
GST Council and its Chairman is the Finance Minister of India. Under GST, goods and services are
taxed at the following rates, 0%,5%,12%,18% and 28%. There is a special rate of 0.25% on rough
precious and semi-precious stones and 3% on gold. 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.GST
replaced a slew of indirect taxes with a unified tax and is therefore set to dramatically reshape the
country's 2 trillion dollar economy. The Goods and Services Tax was launched at midnight on 1 July
2017 by the former President of India, Pranab Mukherjee, and Prime Minister of India, Narendra
Modi. The launch was marked by a historic midnight (30 June – 1 July) session of both the houses
of parliament convened at the Central Hall of the Parliament. Though the session was
attended by high-profile guests from the business and the entertainment industry
including RatanTata

This paper focuses on the process of introducing the Goods and Services Tax (GST), bringing out the
perspectives of different stakeholders and the contentious issues. The GST was expected to subsume a
variety of taxes and simplify the indirect tax regime. The Empowered Committee (EC) was mandated in
2007, to bring about consensus among the States to move towards GST. The important stakeholders in
the process were the Government of India (GoI), individual States, industry and the committees
commissioned by the GoI or EC. However, the EC faced challenges since there were issues of control
between the Centre and States, perceived loss of revenue by some States, extent of uniformity across
various commodities and their tax rates, input credit mechanism and dispute settlement. The deadline for
the introduction of GST kept getting postponed due to the slow resolution of the challenging issues.
Finally, it was tabled in the Parliament as the 122nd Constitutional Amendment Bill (CAB) in December
2014.
Given the passage of the Constitution (122nd) Amendment Bill, 2014 for Goods and Services Tax (GST)
in the LokSabha on 6th May, 2015, the Government of India seems committed to replace all the indirect
taxes levied on goods and services by the Centre and States and implement GST by 2016. With GST, it
is anticipated that the tax base will be comprehensive, as virtually all goods and services will be taxable,
with minimum exemptions.
 1.2 Literature Review

The study has reviewed the prior literature on tax reforms and GST to synthesize the research
findings and to direct the future research avenues. Literature on tax reform has attained momentum
in developing countries since last two decades and in India when it has decided to implement GST
from 2017-18. Adopting the Systematic Literature Review technique by accessing the academic e-
journals of selective publishers and applying a filtering process, the study has reviewed 119 sample
papers published during 2002-2006 by focusing objectives and results of those cited papers. Results
have documented tax reforms have executed globally with multiple objectives; it has admitted few
limitations, practice implication have pointed out and have sketched the road map for posterior
studies especially in the transition period in India when it would shortly move to GST regime.

Review of journals:-
i) Kumar (2014) Studied, “Goods and Service tax-Away Forward” and concluded that
implementation of GST in India help in removing economic distortion by current indirect
tax system and expected to encourage unbiased tax structure which is indifferent to
geographical locations.

ii) Mawuli (May 2014) studied “Goods and Service Tax-An appraisal’’ and found that
GST is not good for low-income Countries and does not provide broad based growth to
poor countries. If still these countries want to implement GST then rate of GST should be
less than 10% for growth.

iii) Ahmed et. al. (2009) studied, ”Goods and service Tax reform and Intergovernmental
Consideration in India and found that GST introduction will provide simpler and
transparent tax system with increase in out and productivity of economy in India. But the
benefits of GST are critically dependent on rational design of GST.
 1.3 Objectives/Need for the study
• To understand the problem of trading companies after launching GST.
• To get an idea about the perception og different business stores in around Kolkata about
GST system.
• To know the preferences of small trading companies between GST and old tax system.
• To get an idea about the changes og biling system,maintaining books of accounts of
different stores after launching GST.
• To know how GST is affecting their selling behaviour.
• To know how the whole tax system has changed after the implementation of GST.
• To make a comparative analysis between previous tax region and new GST system.
• To know the impact of GST on small traders.
 1.4 Research Methodology
2. Data sources-
i)Primary Sources

ii)Secondary Source

3. Primary Data-
i) Sample size- 50 Respondents were taken into the survey.

ii) Data collection method- 50 shopkeeper’s interview was taken for this project.

This interviews were taken from 50 shops which are located in Sinthi,B.T Road,
DumDum, Sodepur, Dunlop, Maniktala, Barasat.

4. Secondary Data-
Data sources- Sources like newspapers, books, Websites has been used for this project.

Data presentation tools- Tables, Bar-charts & Pie-charts has been used as tools for
analysis and presentation of the project.
 1.5 Limitation

• The present study was confined to North Kolkata and its adjoining areas. The findings
of this study may not applicable to other areas.
• Shortage of fund to do the work.
• Shortage of data to do the work.
• As the area of project was very wide, it required time for a complete understanding and
presentation. Efforts were made to cover all important are explaining the project irrespective of
time constraints.
• The sample size (only 50 respondents) do not ensure representation and conclusive
finding and finally a more robust analysis is needed to reach a strong conclusion.
 CHAPTER 2

Conceptual Framework/National and International Scenario

 2.1 Definition ,Concepts and Terms
The goods and services tax (GST) is a value-added tax levied on most goods and services sold

for domestic consumption. The GST is paid by consumers, but it is remitted to the

government by the businesses selling the goods and services. In effect, GST provides revenue

for the government.

KEY TAKEAWAYS

• The goods and services tax (GST) is a tax on goods and services sold domestically for
consumption.
• The tax is included in the final price and paid by consumers at point of sale and
passed to the government by the seller.
• The GST is a common tax used by the majority of countries globally.
• The GST is usually taxed as a single rate across a nation.

The goods and services tax (GST) is an indirect federal sales tax that is applied to the cost of
certain goods and services. The business adds the GST to the price of the product, and a
customer who buys the product pays the sales price plus the GST. The GST portion is
collected by the business or seller and forwarded to the government. It is also referred to
as Value-Added Tax (VAT) in some countries.

Most countries with a GST have a single unified GST system, which means that a single tax
rate is applied throughout the country. A country with a unified GST platform merges central
taxes (e.g. sales tax, excise duty tax, and service tax) with state-level taxes (e.g.
entertainment tax, entry tax, transfer tax, sin tax, and luxury tax) and collects them as one
single tax. These countries tax virtually everything at a single rate.

India established a dual GST structure in 2017, which was the biggest reform in the country's
tax structure in decades. The main objective of incorporating the GST was to eliminate tax on
tax or double taxation, which cascades from the manufacturing level to the consumption
level.

For example, a manufacturer that makes notebooks obtains the raw materials for, say, Rs. 10,
which includes a 10% tax. This means that he pays Rs. 1 in tax for Rs. 9 worth of materials.
In the process of manufacturing the notebook, he adds value to the original materials of Rs.
5, for a total value of Rs. 10 + Rs. 5 = Rs. 15. The 10% tax due on the finished good will be Rs.
1.50. Under a GST system, this additional tax can be applied against the previous tax he paid
to bring his effective tax rate to Rs. 1.50 - Rs. 1.00 = Rs. 0.50.

The wholesaler purchases the notebook for Rs. 15 and sells it to the retailer at a Rs.
2.50 markup value for Rs. 17.50. The 10% tax on the gross value of the good will be Rs. 1.75,
which he can apply against the tax on the original cost price from the manufacturer i.e. Rs.
15. The wholesaler’s effective tax rate will, thus, be Rs. 1.75 - Rs. 1.50 = Rs. 0.25.
If the retailer’s margin is Rs. 1.50, his effective tax rate will be (10% x Rs. 19) - Rs. 1.75 = Rs.
0.15. Total tax that cascades from manufacturer to retailer will be Rs. 1 + Rs. 0.50 + Rs. 0.25
+ Rs. 0.15 = Rs. 1.90.

India has, since launching the GST on July 1, 2017, implemented the following tax rates.

• A 0% tax rate applied to certain foods, books, newspapers, homespun cotton cloth,
and hotel services.
• A rate of 0.25% applied to cut and semi-polished stones.
• A 5% tax on household necessities such as sugar, spices, tea, and coffee.
• A 12% tax on computers and processed food.
• An 18% tax on hair oil, toothpaste, soap, and industrial intermediaries.
• The final bracket, taxing goods at 28%, applies to luxury products, including
refrigerators, ceramic tiles, cigarettes, cars, and motorcycles.

The previous system with no GST implies that tax is paid on the value of goods and margin at every
stage of the production process. This would translate to a higher amount of total taxes paid, which is
carried down to the end consumer in the form of higher costs for goods and services. The
implementation of the GST system in India is, therefore, a measure that is used to reduce inflation in
the long run, as prices for goods will be lower.

Salient features of proposed Indian GST system

• The power to make laws in respect of supplies in the course of inter-State trade or
commerce will be vested only in the Union government. States will have the right to
levy GST on intra-State transactions including on services.
• Centre will levy IGST on inter-State supply of goods and services. Import of goods will
be subject to basic customs duty and IGST.
• GST defined as any tax on supply of goods and services other than on alcohol for
human consumption.
• Central taxes like, Central Excise duty, Additional Excise duty, Service tax, Additional
Custom duty and Special Additional duty and State level taxes like, VAT or sales tax,
Central Sales tax, Entertainment tax, Entry tax, Purchase tax, Luxury tax and Octroi
will subsume in GST.
• Petroleum and petroleum products i.e. crude, high speed diesel, motor spirit, aviation
turbine fuel and natural gas shall be subject to the GST on a date to be notified by the
GST Council.
• 1% origin based additional tax to be levied on inter-State supply of goods will be non-
creditable in GST chain. The revenue from this tax is to be assigned to the Origin
State. This tax is proposed to be levied for initial two years or such period as
recommended by the GST Council.
• Provision for removing imposition of entry tax / Octroi across India.
• Entertainment tax, imposed by States on movie, theatre, etc will be subsumed in GST,
but taxes on entertainment at Panchayat, municipality or district level to continue.
• GST may be levied on the sale of newspapers and advertisements and this would give
the government’s access to substantial incremental revenues.
• Stamp duties, typically imposed on legal agreements by the state, will continue to be
levied by the States.
• Administration of GST will be the responsibility of the GST Council, which will be the
apex policy making body for GST. Members of GST Council comprised of the Central
and State ministers in charge of the finance portfolio
Terms:-
1.HSN / SAC Code :- HSN (Harmonized System of Nomenclature) is an 8-digit code for identifying the
applicable rate of GST on different products as per CGST rules. If a company has turnover up to RS. 1.5
Crore in the preceding financial year then they need not mention the HSN code while supplying goods on
invoices. If a company has turnover more than 1.5 Cr but up to 5 Cr then they need to mention the 2 digit
HSN code while supplying goods on invoices. If turnover crosses 5 Cr then they shall mention the 4 digit
HSN code on invoices and also Know as GST Invoice .

2.Compliance Rating :- The GST compliance rating is a performance rating that is given to all
registered taxpayers. This rating tells you how complaint the supplier will be with respect to GST
provisions. This gives an option for the buyer to choose the seller based on the GST compliance rating.The
rating system can be devised on a scale of 1 to 10, based on the type of business, with 10 being the highest
complaint and 1 being the least complaint.

3.GSTIN :- GSTIN refers to the unique GST identification number that every business will be allotted.
Every taxpayer will be allotted a state-wise, PAN based 15-digit Goods and Services Taxpayer
Identification Number (GSTIN).Also, note that having PAN is mandatory for register under GST.

4.Self invoicing:- Self-invoicing is to be done when you have purchased from an unregistered supplier
AND such purchase of goods or services falls under reverse charge.This is due to the fact that your
supplier cannot issue a GSTcompliant invoice to you, and thus you become liable to pay taxes on their
behalf. Hence, self-invoicing, in this case, becomes necessary.
 2.2 NATIONAL SCENARIO

Present indirect tax structure

First we need to understand the present indirect tax system. There are endless access in the present
indirect tax system. Few of them have been divided by the centre and the rest divide by the states.
Government, draws the power to levy tax from the constitution. There are many shortcomings in the
present indirect tax structure .we will be discussing them now. Excise is levied on the manufacturing
of products and its credit is not available against liability of vat. VAT is charged on the value of excise
that causing cascading effect that is tax on tax.

Because of the multiple barriers and logistics efficiency is very low as the tracks have to wait in long
queues to get the permit to enter in different states our truck travel on an average of just 260
kilometres in a day as compared to the average of 440 kilometres in a day in European Nations and
660 kilometres in America .

There are multiple taxable even exist in our present system as for excise it is manufacturing of goods
where is for sales tax it is the sale of goods and service tax get levied on the provision of service.

Because of multiplicity of taxes there is a high cost of compliance for both assesses as well as for the
government

Because of different legislation involved they are different meanings assigned for the symptom. All
these shortcomings let us to adopt a new system of taxation for ease of doing the business and for the
seamless flow of credit across the whole supply chain
Proposed GST Structure for India

In India, GST was conceived in 2004 by the Task Force on implementation of the Fiscal Responsibility
and Budget Management Act, 2003 (Kelkar Committee) while analyzing prevailing indirect tax system
both at Central and State level. The Kelkar Committee observed that a tax reform of nationwide dual
GST which would comprehensively tax the consumption of almost all goods and services in the
economy would be able to achieve ‘a common market, widen the tax base, improve the revenue
productivity of domestic indirect taxes and enhance welfare through efficient resource allocation’. The
existing Indian Indirect tax structure empowers levy of taxes by Central government on manufacturing
of goods and supply of services like Customs duties, Central Excise duty, Service tax etc; and State
governments on goods at point of sale such as state VAT, Entry Tax, Octroi etc. Multiplicity of taxes
and tax base being fragmented between Centre and States have resulted in a complex system of
interconnected legislations leading to substantial distortions, cascading of taxes and adversely
effecting growth in Gross Domestic Production (GDP). Some of the limitations of the prevailing
Indirect tax structure are:

• Central Value Added Tax (CENVAT) structure does not tax value addition post the stage of
production,

• CENVAT portion of input goods remains included in the value of goods to be taxed under State VAT
contributing to that extent a cascading effect on account of CENVAT element.

• No integration of VAT on input goods with service tax on services at the State level thereby causing
cascading effect of service tax.

The proposed GST is consumption type VAT where only final consumption is treated as the final use of
a good. GST is expected to integrate taxes on goods and services across all supply

schain for availing set-off and capture value addition at each stage. A continuous chain of set-off is
expected to be established from the original producer's/ service provider's level upto the retailer's
level which would eliminate the burden of all cascading effects. Suppliers at each stage would be
permitted to set-off the GST paid on the purchase of input goods and services against GST to be paid
on the supply of goods and services.

GST Model Proposed for India

Based on the recommendations, the Government constituted an Empowered Committee comprising of

State Finance Ministers (Empowered Committee) to prepare a Design and Road Map for the
implementation of GST.
Salient features of the proposed GST model based on reports of Empowered Committee are
summarized below:

1. Aligned with the federal structure of the Indian government, GST model is proposed to be a dual
structure (like in Canada) to be levied and collected by the Union government [referred to as Central
GST (CGST)] and respective State governments [referred to as State GST (SGST)]. This dual GST model
would be implemented and governed by one CGST/IGST statute applicable across the country, SGST
statutes for each State, common rules determining valuation, place of supply, place of origin etc. This
would imply that the Centre and the States would have concurrent jurisdiction for the entire value
chain and the basic principles of law such as chargeability, definition of taxable event and taxable
person, measure of levy including valuation provisions, basis of classification, etc. shall be uniform
across State statutes. It has been reported that draft laws are already ready and under internal
discussions. Also, various allied rules are in the process of being drafted and finalized.

2. CGST and SGST would be comprehensively applicable to all goods and services upto the final
consumer (retail level), reflecting the tax base of a typical consumption VAT.
Thus, CGST and SGST would be applicable to all transactions involving supply of goods and services
made for a consideration (except alcoholic liquor for human consumption) and the exempted goods
and services, goods which are outside the purview of GST and the transactions which are below the
prescribed threshold limits.
Based on recommendations of both the 13th Finance Commission and Empowered Committee, GST on
following products shall be levied from a date to be notified by the GST Council

• Petroleum Crude
• High Speed Diesel
• Motor Spirit (commonly known as Petrol)
• Natural Gas
• Aviation Turbine Fuel

3. GST to be structured on the destination principle so that the tax base shifts from production to
consumption whereby imports will be liable to tax and exports will be relieved of the burden of GST.
Consequently, revenues will accrue to the State in which the consumption takes place or is deemed to
take place.

4. Taxes paid on input goods/services against CGST shall be allowed to be utilized as input tax credit
(ITC) against output tax liabilities under CGST and same principle applies to SGST. Cross utilization of
input tax credit between the Central GST and the State GST would not be allowed except in case of
inter-state supply of goods and services. Therefore, a taxpayer or exporter shall be required to
maintain separate details in books of account for utilization or refund of credit.

5. In order to maintain uninterrupted credit chain, CST would be phased out in case of inter-state
transactions of taxable goods. On such transactions, Centre would levy Integrated GST (referred to as
IGST which would be CGST plus SGST) with appropriate provision for consignment or stock transfer of
goods and services. The inter-state seller will pay IGST on value addition after adjusting available
credit of IGST, CGST, and SGST on his purchases. The importing dealer will claim credit of IGST while
discharging his output tax liability in his own State. The relevant information will also be submitted to
the Central Agency which will act as a clearing house mechanism, verify the claims and inform the
respective governments to transfer the funds.

6. An uniform threshold across all States and Union territories is being considered with adequate
compensation for the States (particularly, the States in North-Eastern Region and Special Category
States) where lower threshold had prevailed in the VAT regime.

7. In view of the fact that the CGST and SGST are intended to be levied on consumption of all goods
and services, these two taxes must subsume all taxes presently levied on various goods and services by
the Centre and the States, respectively. With an objective of free flow of tax credit in intra and inter-
State levels,

Source:testdt.cchtaxonline.com
 2.3 INTERNATIONAL SCENARIO

Global Value Added Tax (VAT)/Goods and Service Tax (GST)

Trends

The spread of Value Added Tax (VAT) or Goods and Services Tax (GST) system of Indirect taxes across
the globe is showing an increasing trend with more than 160 countries, including 33 of the 34 member
countries of Organization for Economic Co-operation and Development (OECD), employing VAT as the
preferred form of consumption tax (refer Graph 1 below). Malaysia is the recent country to implement
GST effective 1 April 2015 and current Indian government has announced a timeline to introduce GST
in India by 1 April 2016. Countries introduced VAT/GST for different reasons depending on their
existing tax system and in case of European Union (EU) to replace turnover taxes on account of the
ease of handling cross border-transactions, facilitating development of common market and reducing
trade and economic distortions. Another reason of countries adopting VAT/GST was to increase
revenue from general consumption to cut down rate of income taxes. Revenue neutral approach was
another reason (Norway, New Zealand etc.). Other counties moved to VAT/GST to consolidate and
modernize existing tax structure comprising of multiple sales tax at different rates. This increasing
trend towards VAT/GST can be attributed to key factors such as.

1. VAT/GST preserves neutrality by taxing the value added by each factor equally;
2. Consumption tax is large and more stable source of revenue; and
3. Potentially self-enforcing in nature.
Graph 1: Increase in the VAT/GST Geographies
 12
As economists, Richard M. Bird & Pierre-Pascal Gendron noted in their book2, IMF played a key role in
this spread by consistently supporting and advocating this form of taxation and facilitating its
adoption by countries with less developed economic and administrative structures as well. OECD has
also launched a project to develop International VAT/GST Guidelines to apply VAT to cross border trade,
with an aim to reduce uncertainty and risks of double taxation and unintended non-taxation that
result from inconsistencies and the third meeting of the OECD Global
Forum on VAT is scheduled to be held in Paris in November 2015.

1. OECD (2014), Consumption Tax Trends 2014, OECD Publishing; http://dx.doi.org/10.1787/ctt-2014-en

2 . The VAT in Developing and Transitional Countries role of International Monetary Fund (‘IMF’) in
spreading VAT to developing countries

A roundup of VAT/GST structure of some of the major economies and taking stock as to rate of tax,
threshold limits, exemptions, zero-rated transactions etc. would provide a guidance and allow
legislators of jurisdictions, planning to introduce new tax regime or replace existing structure with
revised structure, to learn from other consumption tax systems and adopt the best practice in laying
the groundwork.
European Union (EU)

European Economic Community adopted VAT throughout Europe, replacing cascading multi-stage
turnover tax, owing to the ease with which it handled cross-border transactions and facilitated
development of a common market.
Council Directive 2006/112/EC adopted in 2007 (‘VAT Directives’) codifies the provisions implementing
the common system of VAT and Council Regulation (EU) No 282/2011(VAT Implementing Regulation) lays
down binding implementing measures to ensure uniform application of the VAT Directive. The VAT
Directive sets the framework
for the VAT structure in the EU, but it gives national governments freedom to set the number and level
of rates they choose and transport provisions of VAT Directives into national legislation, subject to
below basic rules:
• Supply of all goods and services in the course of business by a taxable person within EU is subject to
VAT at a standard rate not lower than 15%3, unless specifically exempt. EU member states can opt to
apply one or two reduced
rates not less than 5%4 for supplies of goods or services, such as foodstuff, water supplies,
pharmaceutical, books, admission to cultural/amusement/sporting services, social services, medical
services and equipments, agricultural inputs etc., listed in Annex III of the VAT Directive. Member states
may continue to charge any lower rates, including zero rates, which were in place on 1 January 1991,
though they cannot introduce any new rate under 5%.
• Activities and supplies in 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, intra-
EU supplies etc.5 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 Excise Tax Act. Canada has a federal government (like in India) and a federal GST
was introduced in 1991 replacing 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 levy. The harmonized sales tax (HST) is imposed in provinces that have harmonized
their provincial sales tax with the GST (New Brunswick, Nova Scotia, Newfoundland and Labrador, Ontario, Prince
Edward Island) and is a combination of a federal component and a provincial component (i.e., 5 percent to 8
percent) applicable generally on same base of property and services as the GST. In the remaining provinces, GST is
imposed on taxable goods and services alongwith provincial sales tax or a retail sales tax.
The three territorities (Northwest Territorities, Nunavut and Yukon and Province of Alberta charge GST at the rate
of 5%. Most goods and services supplied in or imported into Canada are 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)6.

• 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/HST7.

• Article 96 and Article 97 of VAT Directives. As per Council Directive 2010/88/EU dated 7 December 2010,
standard rate shall be not lower than 15% until 31 December 2015

• 4 Article 98 (1), Article 98 (2) and Article 99 of VAT Directives

• 5 Article 132 to Article 153 of VAT Directives

• 6 Schedule VI [Subsection 123(1)] of Excise Tax Act

• 7 Schedule V [Subsection 123(1)] of Excise Tax Act

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 become 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 the European VAT Directives8.
In New Zealand, GST governed by GST Act, 1985 is applicable on most indigenous goods and services, most
imported goods, and certain specified imported services at a rate of 15%9.

• Goods include 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 etc. and by other such technical
systems. Services cover everything other than goods or money.
• Supply of certain goods and services such as exported goods and services, telecommunication services,
supplier is a territorial authority and the consideration for the supply is proceeds from the local
authorities, sales of going concern (slump sale), sale of land etc. are subject to GST at the rate of 0%10.
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 not-for-
profit organization, rental on residential property, penalty interest etc. are exempt11 from GST

Australia
Implementation of New Tax System package in Australia including New Tax System (Goods and Services Tax)
Act,1999 is considered as 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% tax on 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, child care, exports, religious services, international
transport etc. are known as GST-free 12 on which GST not payable (other counties refer to these as
zero-rated).

• Certain supplies such as financial supplies, residential rent, residential premises, precious metals,
school tuck shops and canteens and fund raising events conducted by charities etc. are known as
input-taxed supplies13 (other countries refer to these as exempt) and no GST is applicable on such
supplies.

• 8 .Popularly known as Mirrlees Review led by economists James Alexander Mirrlees cited by Richard
Krever and David White in their book ‘GST
• in Retrospect and Prospect’

• Section 8 (1) of GST Act, 1985

• Section 11, 11 A, 11B, 11 AB, of GST Act, 1985
• Section 14 of GST Act, 1985
• Division 38 of New Tax System (Goods and Services Tax) Act, 1999
• Division 40 of New Tax System (Goods and Services Tax) Act, 1999
Source:www.oecd.org
 CHAPTER 3

Presentation of data, Analysis and Findings

 3.1 Presentation of Data & analysis
The analysis of the data and inference involves the analysis of the collected data
and interpreting it with the help of diagrammatic representation using pie charts,
bar graphs, etc. It is done to make the collected data easier and simpler to
understand.

For this project the answers to the questions of the survey conducted have been
represented using pie charts and bar graphs.
 • What kind of a trader you are?

No. of Respondents

Manufacturer Retailer Wholesaler Service provider

0%

24%

54%
22%

INFERENCE-

The chart shows that –

• Out of 50 traders 27 are Retailers.

• Out of 50 traders 11 are Wholesalers.
• Out of 50 traders 12 are Service Providers.
 • Do you file GST return?

No of Respondents
Yes No

0%

100
%

INFERENCE –

The chart shows that –

• Out of 50 respondents all 50 file GST Return.

• No one is found who do not file GST Return.
 • What do you think which is better?

No of Respondents
GST Old taxes

40
%
60
%

INFERENCE –

The chart shows that –

• Out of 50 respondents 30 people think that GST is better tax system.

• 20 respondents think that Old Tax system was better than GST.
 • Do you agree that after the implementation of GST the whole tax system of India has
changed?

No of Respondents

Strongly Agree Agree Disagree Strongly disagree

4%
8% 28%

60%

1. INFERENCE –

The chart shows that –

• Out of 50 respondents 14 Strongly Agree with the fact that after GST the whole tax
system of India has changed.
• 30 respondents Agree that after the implementation of GST the tax system of India
has changed.
• Only 2 respondents Disagree with this statement.
• Only 4 respondents out of 50 Strongly Disagree with the statement that after the
implementation of GST the whole tax system of India has changed.
 • Is it easy for you not to face different taxes but only GST?

No of Respondents
ree
Strongly Agree Agree Disagree Strongly
disag

58
%

INFERENCE –

The chart shows that –

• Out of 50 respondents 16 people Strongly Agree that it is easy for them not to face
different taxes and only GST.
• 29 respondents Agree that it is being easy for them to face only one tax, GST
instead of many taxes.
• Only 2 people Disagree with the above mentioned statement.
• Out of 50 respondents 3 Strongly Disagree with the statement that it is easy for
them not to face different tax but only GST.
 • Do you think that GST has reduced the tax rates?

No of Respondents

Strongly agree agree disagree strongly disagree 2%

20%

52%
26%

INFERENCE –

The chart shows that-

• Only 1 respondent is Strongly Agree with the fact that GST has reduced the tax
rates in India.
• 10 respondents Agree with the above statement.
• Out of 50 respondents 13 people Disagree with the statement.
• Whereas 26 respondents Strongly Disagree with the statement that GST has
reduced the tax rates in India.
 • Is GST affecting your business performance as the waiting period for claiming Input
Tax Credit can stretch to months, which in turn leads to increase the Working
Capital?

No of Respondents
Strongly agree agree disagree strongly disagree

18%
34%

20%

28%

INFERENCE –

The chart shows that-

• Out of 50 respondents 17 think that GST is affecting business performance as the
waiting period for claiming Input Tax Credit can stretch to months, and thus
increasing Working Capital.
• 14 respondents Strongly Agree with the above mentioned statement.
• 10 people Disagree with the statement.
• Only 9 respondents Strongly Disagree and they think that GST is not affecting their
business performance by increasing Working Capital instead of the waiting period
for claiming Input Tax Credit can stretch to months.
 • The E-Way bill system was implemented after the implementation of the GST Act.
Has this system made the movement of goods for business hassle-free?

No of
Stronglyagree
Respondents
agree disagre strongl disagre
e y e
10%
10
% 28
%

52
%

INFERENCE –

The chart shows that-

• Out of 50, 14 respondent Strongly Agree that E-Way bill system which is
implemen
after GST, has made the movement of goods for business
ted
hassle-
free.
• 26 respondents Agree that this billing system has made the movement of goods
hassle-free.
• Only 5 people Disagree with the statement.
• 5 respondents Strongly Disagree and they think that the E-Way bill system which
was implemented after the implementation of GST has not brought any ease in the
movement of goods.
 • Is the E-Way bill portal simple to use?

No of
Strongly
Respondents
agree strongly
agree disagre disagree
4% 4%

36
%

56
%

INFERENCE –

The chart shows that-

• 18 respondents Strongly Agree with the fact that E-Way bill portal is simple to use.
• Most of the respondents, 28 Agree with it.
• Out of 50, only 2 respondents Disagree with the statement.
• Only 2 respondents Strongly Disagree and they think the E-Way bill portal is not
simple to use.
 • After GST, is the cost of compliance of your company increased?

No of
Respondents
Strongly agree agree strongly
disagre disagree

8
20 % 38
% %

34
%

INFERENCE –

The chart shows that-

• Out of 50 respondents, 19 Strongly Agree and think that after GST the cost of
compliance of their company has increased.
• 17 respondents Agree with the above mentioned statement.
• Only 10 Disagree with the statement.
• 4 respondents Strongly Disagree as they think the cost of compliance of their
company has not increased after GST.
 • Is it creating problems as now you have to maintain up-to-date records in an
electronic system?

No of
Strongly
Respondents
agree strong ydisagre
agree disagre l e
2
%
26 42
% %

30
%

INFERENCE –

The chart shows that-

• Out of 50 respondents 21Strongly Agree with the statement that they are facing
problem now-a-days as they have to maintain up-to-date records in an electronic
system.
• 15 respondents Agree with the statement.
• Only 13 people Disagree.
• Only 1 respondent is saying that he Strongly Disagree and he thinks it is not
creating any problem as now they have to maintain up-to-date records in an
electronic system.
 • Do you agree with the monthly tax returns system of GST?

No of
Strongly
Respondents
agree disagre strongly
agree e disagree

6
40 % 26
% %

28
%

INFERENCE –

The chart shows that-

• Only 3 respondents Strongly Agree wit the statement.
• 13 respondents Agree as they are saying that they are ok with the monthly tax
returns system of GST.
• 14 people Disagree with the statement.
• Out of 50 respondents, 20 respondents Strongly Disagree with the monthly tax
returns system of GST.
 • Does it create problem when you cannot file return for a period if earlier one is
pending under GST?

No of
Strongly
Respondents
agree disagree strongly
agree disagree

14
% 32
%
18
%

36
%

INFERENCE –

The chart shows that-

• 16 respondents Strongly Agree as it is creating problem when they cannot file
return for a period if earlier one is pending under GST.
• Out of 50 respondents, 18 Agree with the above mentioned statement.
• Only 9 people Disagree.
• 7 respondents Strongly Disagree as according to them there is no problem when
one file return is pending and they cannot file the next.
 • Is it justified to levy the late fee for not filling the returns in time?

No of
Respondents
Strongly agree agree disagre strongly
e disagree

8
34 %
%
38
%

20
%

1. INFERENCE –

The chart shows that-

• 4 people Strongly Agree with the statement.
• 19 respondents Agree as they think it is justified to levy the late fee for not filing
the returns in time.
• Out of 50, 10 respondents Disagree with the statement.
• 17 respondents Strongly Disagree and they think that it is not justified to levy the
late fee for not filing the returns in time.
 • Do you think that the ease of doing business parameter has improved after the
implementation of GST?

No of
Stronglyagree
Respondents
agree disagree disagre
strongl e

24 18
% %

16
% 42
%

INFERENCE –

The chart shows that-

• Out of 50 respondents, only 9 Strongly Agree.
• 21 respondents Agree and they think that the ease of doing business parameter
has improved after GST.
• Only 8 people Disagree.
• 12 respondents Strongly Disagree as they think the ease of doing business
parameter has not improved after the implementation of GST.
 • GST has increased the burden on small traders that are already running their
businesses on thin margins and competing with large companies?

No of
Strongly
Respondents
agree disagre strongly
agree e disagree

10
% 42
22
% %

26
%

INFERENCE –

The chart shows that-

• Out of 50 respondents 21 people Strongly Agree that GST has increased the burden
on small traders that are already running their business on thin margins and
competing with large companies.
• 13 respondents also Agree with the statement.
• 11 Disagree as they do not think that GST has increased the burden on small
traders.
• Only 5 respondents Strongly Disagree with the statement.
 • Do you think GST will lead to greater business opportunities and increased
employment?

No of Respondents

Strongly agree agree disagree strongly disagree

26% 18%

20% 36%

INFERENCE –

The chart shows that-

• 9 respondents Strongly Agree with the statement that GST will lead to greater
business opportunities and increased employment.
• Out of 50 , 18 people Agree with this matter.
• Only 10 Disagree.
• 13 respondents Strongly Disagree as they do not think that GST will lead to greater
business opportunities and increased employment.
 • Do you think lack of education leads to face difficulties in GST filling?

No of Respondents
Yes No

34
%

66
%

INFERENCE –

The chart shows that-

• Out of 50 , 33 respondents think that lack of education leads to face difficulties in
GST filling.
• 17 respondents do not think that lack of education will lead to face difficulties in
filling GST.
 • Do you face difficulties in filling return online?

No of Respondents
Yes No

24
%

76
%

INFERENCE –

The chart shows that-

• Only 12 respondents are saying that they face difficulties in filling GST return
online.
• Out of 50 respondents , 38 do not face any difficulties in filling GST return online.
 • According to you, what will be the impact of GST on Small Traders?

No of Respondents
Positive Negative No
Impact

40
%

56
%

INFERENCE –

The chart shows that-

• 20 respondents think the impact of GST on small traders will be Positive.
• Out of 50 , 28 respondents think the impact of GST on small traders will be
Negative.
• According to only 2 respondents , there will be No Impact of GST on small traders.
 3.2 Findings
After analysis and interpretation of the data these following findings were emerged:
• Most of the respondents are male.
• Majority of the respondents i.e. 58% comes under the age group above 40 years and 32 % comes under 25-40
years.
• More than 60% respondents are related to Businessman category.
• Perception of most of the respondent is positive towards the GST and they are aware of GST through the mass
media.
• 56 % respondents are of that opinion that GST is very good tax reform for India and it is the turning point of the
taxation system.
• Most of the customers perception that GST is very beneficial in Long Term for economy of the country and also
effect of GDP.
• Maximym 50% respondents response to GST has increased the various Legal formalities.
• There exists no significant difference between locality of business and the factors such as ‘The reason for the
sudden implementation of GST system by the Government’, ‘Business flow after GST implementation in
beginning stages during July 2017’, ‘The present GST system is more beneficial to the Government in current
and future aspects’, ‘The present GST system is more beneficial to the retailers in current and future aspects’,
‘Level of agreement that except some clauses, GST is benefit to retail sector in a big way’, ‘Business affected
due to tax on gifts and promotional items in the current GST’, ‘Level of average Sales per month’, ‘GST reduces
material cost and comparing with the sales tax’.
• There is a significant difference between number of years in business and the level of satisfaction with
the present GST system.
• There is a significant difference between locality of business and the level of satisfaction with the
present GST system.
• The weighted average scores to identify the level of extreme towards various impact to retailers
due to GST implementation on various constraints varies from ‘Business affected due to tax on gifts
and promotional items in the current GST’ stood at first and ‘GST reduces material cost and
comparing with the sales tax’ stood at last.
• There exists a significant difference between number of years in the business and the factors
towards impact to retailers due to GST implementation except the level of satisfaction with the
present GST system.
• Majority of people have perception that they still need more clarity on GST and opened that they
discuss about GST with others.
• Most of the customers opinion that GST is gair tax. And also GST is predominantly compliance tax.
 CHAPTER 4

Conclusion, Recommendations and Bibliography

 4.1 Conclusion
While interacting with the entrepreneurs during the survey, the reviews & suggestions received were regarding
the system technology used for filing GST & working process of the government. According to them, they faced
many problems with the technical software; they were also of the view that the Government should also support
them in other ways in terms of subsidies and easy funds and trainings as they are paying their taxes duly.

Overall, GST is good for the trading community. As long as a trader smartly manages his supply chain and stays
GST compliant – he will continue to reap benefits under GST. However, technology will surely be a game-changer
in this regard, as this will be the only way the compliance burden of GST can be effectively absorbed, translating
into more business benefits for the Indian trader.

MSME is a growing sector where enterprises enter and exit the market frequently, so the implementation of GST
has had a great effect on the survival in the market. Some enterprises found it beneficial but majority faced
difficulty in accepting it. For existing enterprises, GST simplified the tax structure, unified the market hence
improved the overall operational efficiencies of MSME, so far the unorganized MSMEs were growing fast than
the organized ones because of the tax avoidance, with GST in effect, it has made the taxation system transparent
thus making the entities liable for tax payment. For a new entrepreneur, the application of GST, made the
registration for taxation easy, relieved them from previous VAT registration. The Government has implemented
GST with a view of long-term better prospect for the country by various aspects. The goods and services tax
(GST) makes the tax system easy and thus contributing in the growth of the country. The Government applied
GST by summing up of various taxes under CGST & SGST, transparent taxation, reduced raw material cost, to
bring down the cost of goods and services and the ease of doing business in India. Initially there was huge chaos
regarding the enactment of GST, but many successful businesspersons supported it and considered it as a boon
for the long-term development of the nation.

GST being the big step of Government of India to simplify the previous tax system has both positive and negative
impact on business regulations of Micro, Medium & Small Enterprises. The fundamental of ‘ONE NATION, ONE
TAX’ was created with an intention to easy tax filing, ease of doing business in other states, reduction in the
prices of goods, relieving the burden of logistic overhead from small enterprises. On the contrary, it has
increased the technology dependency of every enterprise, as every transaction is madeonline. It will take some
time for the people to get used to the new taxation regime, only then will the nation start to see the fruits of
‘ONE NATION, ONE TAX’ – the GST.
 4.2 Recommendation
GST is now the only one indirect tax of India by omitting all indirect taxes. While the MSMEs will enjoy the
tax neutrality, there are some problems which have arised after launching of GST.

The government must either waive the GST on the exempted entities or ensure that the entities receive
refunds either monthly or quarterly instead of annually. In the interest of ease of doing business, the
government must introduce centralized registration or at least zonal-wise registration system instead of
the proposed state-wise registration. Also, the government must allow assesses involved in vertical
business to have single registration for the purpose of claiming input tax credit. The same tax payer should
not be assessed by both the Centre and the relevant State and clarity on the issue is most crucial prior to
the roll out of the GST. The government must translate the existing GST rules and regulations in vernacular
languages so that it can be better understood by all the assesses, especially in the MSME sector. The
government must exempt MSMEs from the norms for filing returns at least in the initials few years.
MSMEs must be allowed to file single return, instead of three separate returns, on a monthly basis at least
for the first five years. The government must reconsider this threshold limit to reduce the tax burden of
MSMEs.

Till now, many of business companies don’t understand the full GST system. It should become easier to
understand for all. There are also some problems created to pay return filing system to the business
companies. It should not be complicated to make return file for all. The GST system should be made useful
for all people.
 4.3Bibliography
Following are the helpful sources which help me to carry out my study paper successfully.

❖ First Discussion Paper On Goods and Services Tax In India

The Empowered Committee of State Finance Ministers

❖ GST Model(Thirteenth Finance Commission Government of India)

❖ Report Of the Task Force On GST

❖ Institute Of Chartered Accountants Of India (ICAI) GST Report

Internet website
• www.finmin.nic.in
• www.gstindia.com
• timesofindia.indiatimes.com
• economictimes.indiatimes.
• cominvestopedia.com
NAME – AGE – SEX –
STORE NAME – LOCATION –

QUESTIONS FROM GST EFFECT ON SMALL TRADERS

1. What kind of a trader you are?
Manufacturer Retailer Wholesaler Service provider
2. Do you have file GST return? Yes No
3. What do you think which is better? GST Old taxes
4. How GST is affecting your selling behavior?
Increased turnover Decreased turnover No impact
5. Sales for what kind of goods is affected most with introduction of GST? Necessary goods
Luxury goods Entertainment Others
6. Do you think GST is the best tax improvement after Independence?
Strongly Agree Agree Disagree Strongly Disagree
7. Do you agree that after the implementation of GST the whole tax system of India has
changed?
Strongly Agree Agree Disagree Strongly Disagree
8. Is it easy for you not to face different taxes but only GST?
Strongly Agree Agree Disagree Strongly Disagree
9. Do you get Input Tax Credit? Yes No
10. After GST, do you face difficulties in getting Input Tax Credit?
Strongly Agree Agree Disagree Strongly Disagree
11. Do you think that GST has reduced the tax rates?
Strongly Agree Agree Disagree Strongly Disagree
12. Is GST affecting your business performance as the waiting period for claiming Input Tax
Credit can stretch to months, which in turn leads to increase the Working Capital?
Strongly Agree Agree Disagree Strongly Disagree
13. The E-Way bill system was implemented after the implementation of the GST Act. Has this
system made the movement of goods for business hassle-free?
Strongly Agree Agree Disagree Strongly Disagree
14. Is the E-Way bill portal simple to use?
Strongly Agree Agree Disagree Strongly Disagree
15. After GST, is the cost of compliance of your company increased?
Strongly Agree Agree Disagree Strongly Disagree
16. Is it creating problem as now you have to maintain up-to-date records in an electronic
system?
Strongly Agree Agree Disagree Strongly Disagree
17. Do you agree with the monthly tax returns system of GST?
Strongly Agree Agree Disagree Strongly Disagree
18. Does it create problem when you cannot file return for a period if earlier one is pending
under GST?
Strongly Agree Agree Disagree Strongly Disagree
19. Do you think that for businesses where quantum of transactions is quite large, it is a wise
decision to burden the assessee and the GST portal from day one?
Strongly Agree Agree Disagree Strongly Disagree
20. Do you think there is lack of clarity in GST which results indifferent interpretations and
consequently different reporting by different persons?
Strongly Agree Agree Disagree Strongly Disagree
21. Is it justified to levy the late fee for not filing the returns in time?
Strongly Agree Agree Disagree Strongly Disagree
22. Do you think that the ease of doing business parameter has improved after the
implementation of GST?
Strongly Agree Agree Disagree Strongly Disagree
23. With introduction of GST, the market has become bigger for small traders? Strongly Agree
Agree Disagree Strongly Disagree
24. GST is advantageous only to big business units?
Strongly Agree Agree Disagree Strongly Disagree
25. GST has increased the burden on small traders that are already running their businesses on
thin margins and competing with large companies?
Strongly Agree Agree Disagree Strongly Disagree
26. Do you think GST will lead to greater business opportunities and increased employment ?
Strongly Agree Agree Disagree Strongly Disagree
27. Do you think lack of education leads to face difficulties in GST filling Yes
No
28. Do you face difficulties in filling return online? Yes No
29. 29. According to you, what will be the impact of GST on SmallTraders? Positive
Negative No Impact