-

A
PROJECT REPORT ON
BENEFITS OF GST TO THE BUSINESS AND
GOVERNMENT
IN PARTIAL FULFILLMENT OF BACHELOR
IN BUSINESS
ADMINISTRATION
SUBMITTED BY
SAARA SHAIKHJEE
(TY BBA)
UNDER THE GUIDANCE OF
PROF L.K SINGH
DEPARTMENT OF COMMERCE
(SPECIALISATION FINANCE)
ABEDA INAMDAR SENIOR COLLEGE OF
ARTS , SCIENCE,
COMMERCE
CAMP-PUNE-411001
(2019-2020)

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 ACKNOWLEDGEMENT
It’s been a great pleasure and very good opportunity to work on this project report titled
“BENEFITS OF GST TO THE BUSINESS AND GOVERNMENT.”
I am very much thankful and grateful to our research guide Prof L.K. Singh whose valuable
advice and instructions helped me in completing this project.
I am also very thankful to my HOD, BBA department Mr. L.K. Singh for his consistent
support
in completion of the project.
I express my deep gratitude to the manager Mr. Anil Mittal and his employee for giving me
all
the necessary information and helping me throughout my project.
I owe personal debt to my colleagues and friends whose encouragement, guidance help made
an
important contribution to this project .
Student’s name: SAARA SHAIKHJEE

DECLARATION
I, SAARA SHAIKHJEE pursuing BBA -Third year hereby declare the project report entitled
“BENEFITS OF GST TO THE BUSINESS AND GOVERNMENT.” is the result of my own
work and is in original and the conclusion drawn therein arebased on the materials collected
by myself and has not been submitted to any other university or organization for the award of
any degree or diploma.

Date:
Name: SAARA SHAIKHJEE

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 INDEX

Chapter no. Name of chapter Page no.

1. INRODUCTION

2. CONCEPTUAL FRAMEWORK

3. REVIEW OF LITERATURE

4. RESEARCH METHODOLOGY

5. DATA ANALYSIS AND INTERPREATION

6. FINDING,SUGGESTION AND CONCLUSION

7. BIBILOGRAPHY

8. ANNEXURE

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 CHAPTER -1
INTRODUCTION

MEANING OF GST [ Goods and Services Tax (India)]

Goods and Service Tax (GST) is one of the structural reforms in the field of indirect taxation.
In India, the value chain of business process consist of incidence of multiple and double
taxation from the stage of production to the consumption. It also observed that existing
indirect taxation structure and practices has some loopholes to evade tax at different stages.
The federal structure of indirect taxation allows the state government to exempt or impose
higher tax rate on goods, and levy tax on the inter-state transfers. This has created end price
differences between the states or production centers versus consumption centers. The GST
reform helps the Indian economy to harmonize the imposition tax at the stage of production,
distribution and consumption of goods/services. It will increase the efficiency of distribution
system and price structure of goods offered to the market. In the era of globalization, the
price inequalities due to the cascading effect of taxation has to be removed and the market to
be efficient to decide the price without any difference in the place and time. The present
paper elucidates the drawbacks of existing indirect taxation structure; and introduces the
concept of GST and its role to consolidate the Indian market to become a global competitive
one.

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Introduction of Goods and Services Tax (GST) in India is one of the big moves to revamp the
existing Indirect Taxation system. It is widely accepted that the taxation policies should
ensure efficiency and equity in the economy. Indirect tax enables the government to the
equitable and fair distribution of goods and services across the country; and mobilization of
the budgeted revenue. Lack of uniformity in the indirect taxes imposed by the different State
Government has created cascading effect on the price of the goods/services. This has resulted
inefficiencies in the production anddistribution of goods/services within the domestic market.
It act as laggards in the free flow of goods and services to the market; and adversely affected
the international competitiveness of the economy or market.
The proposed GST will remove all these disparities in the existing indirect taxation structure
of India; and boost the economy to be more efficient in the production and distribution of
goods/services throughout the country.

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Implementation

The GST was launched at midnight on 1 July 2017 by the President of India, and the
Government of India. 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 Ratan Tata, it was boycotted by the opposition due to the
predicted problems that it was bound to lead for the middle and lower class Indians. The tax
was strongly opposed by the opposing Indian National Congress. It is one of the few
midnight sessions that have been held by the parliament - the others being the declaration of
India's independence on 15 August 1947, and the silver and golden jubilees of that occasion.

After its launch, the GST rates have been modified multiple times, the latest being on 22
December 2018, where a panel of federal and state finance ministers decided to revise GST
rates on 28 goods and 53 services.

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Members of the Congress boycotted the GST launch altogether.They were joined by
members of the Trinamool Congress, Communist Parties of India and the DMK. The parties
reported that they found virtually no difference between the GST and the existing taxation
system, claiming that the government was trying to merely rebrand the current taxation
system. They also argued that the GST would increase existing rates on common daily goods
while reducing rates on luxury items, and affect many Indians adversely, especially the
middle, lower middle and poorer income groups.

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Tax

The single GST includes several taxes and levies, which includes central excise duty, services
tax, additional customs duty, surcharges, state-level value added tax and Octroi. Other levies
which were applicable on inter-state transportation of goods have also been done away with
in GST regime.GST is levied on all transactions such as sale, transfer, purchase, barter, lease,
or import of goods and/or services.
India adopted a dual GST model, meaning that taxation is administered by both the Union
and state governments. Transactions made within a single state are levied with Central GST
(CGST) by the Central Government and State GST (SGST) by the State governments. For
inter-state transactions and imported goods or services, an Integrated GST (IGST) is levied
by the Central Government. GST is a consumption-based tax/destination-based tax, therefore,
taxes are paid to the state where the goods or services are consumed not the state in which
they were produced. IGST complicates tax collection for State Governments by disabling
them from collecting the tax owed to them directly from the Central Government. Under the
previous system, a state would only have to deal with a single government in order to collect
tax revenue.

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Rate

The GST is imposed at variable rates on variable items. The rate of GST is 18% for soaps and
28% on washing detergents. GST on movie tickets is based on slabs, with 18% GST for
tickets that cost less than ₹100 and 28% GST on tickets costing more than ₹100 and 28% on
commercial vehicle and private and 5% on readymade clothes. The rate on under-
construction property booking is 12%. Some industries and products were exempted by the
government and remain untaxed under GST, such as dairy products, products of milling
industries, fresh vegetables & fruits, meat products, and other groceries and necessities.
Checkposts across the country were abolished ensuring free and fast movement of goods.
[ Such efficient transportation of goods was further ensured by subsuming octroi within the
ambit of GST.
The Central Government had proposed to insulate the revenues of the States from the impact
of GST, with the expectation that in due course, GST will be levied on petroleum and
petroleum products. The central government had assured states of compensation for any
revenue loss incurred by them from the date of GST for a period of five years. However, no
concrete laws have yet been made to support such action. GST council adopted concept paper
discouraging tinkering with rates.

Goods kept outside the GST

Alcohol for human consumption (i.e., not for commercial use).Petrol and petroleum products
(GST will apply at a later date), i.e., petroleum crude, high-speed diesel, motor spirit (petrol),
natural gas, aviation turbine fuel.

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Revenue Distribution

Revenue earned from GST (intra state transaction - seller and buyer both are located in same
state) is shared equally on 50-50 basis between central and respective state
governments.Example: if state of Goa has collected a total GST revenue (intra state
transaction - seller and buyer both are located in same state) of 100 crores in month of
January then share of central government (CGST) will be 50 crores and remaining 50 crores
will be share of Goa state government (SGST) for month of January.
For distribution of IGST (inter state transaction - seller and buyer both are located in different
states) collection, revenue is collected by central government and shared with state where
good is imported. Example: 'A' is a seller located in state of Goa selling a product to 'B' a
buyer of that product located in state of Punjab, then IGST collected from this transaction
will be shared equally on 50-50 basis between central and Punjab state governments only.

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GST Council
GST Council is the governing body of GST having 33 members, out of which 2 members are
of centre and 31 members are from 28 state and 3 Union territories with legislation. The
council contains the following members (a) Union Finance Minister (as chairperson) (b)
Union Minister of States in charge of revenue or finance (as member) (c) the ministers of
states in charge of finance or taxation or other ministers as nominated by each states
government (as member). GST Council is an apex member committee to modify, reconcile or
to procure any law or regulation based on the context of goods and services tax in India. The
council is headed by the union finance minister Nirmala Sitharaman assisted with the finance
minister of all the states of India. The GST council is responsible for any revision or
enactment of rule or any rate changes of the goods and services in India.

Goods and Services Tax Network (GSTN)

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The GSTN software is developed by Infosys Technologies and the Information Technology
network that provides the computing resources is maintained by the NIC. "Goods and
Services Tax Network" (GSTN) is a nonprofit organisation formed for creating a
sophisticated network, accessible to stakeholders, government and taxpayers to access
information from a single source (portal). The portal is accessible to the Tax authorities for
tracking down every transaction, while taxpayers have the ability to connect for their tax
returns.
The GSTN's authorised capital is ₹10 crore (US$1.3 million) in which initially the Central
Government held 24.5 percent of shares while the state government held 24.5 percent. The
remaining 51 percent were held by non-Government financial institutions, HDFC and HDFC
Bank hold 20%, ICICI Bank holds 10%, NSE Strategic Investment holds 10% and LIC
Housing Finance holds 11% .
However, later it was made a wholly owned government company having equal shares of
state and central government.

Criticism
Technicalities of GST implementation in India have been criticized by global financial
institutions/industries, sections of Indian media and opposition political parties in India.
World Bank's 2018 version of India Development Update described India's version of GST as
too complex, noticing various flaws compared to GST systems prevalent in other countries;
most significantly, the second-highest tax rate among a sample of 115 countries at 28%.

GST's implementation in India has been further criticized by Indian businessmen for
problems including tax refund delays and too much documentation and administrative effort

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needed. According to a partner at PwC India, when the first GST returns were filed in August
2017, the system crashed under the weight of filings.

CHALLENGES IN DESIGNING GST:

In the discussion that preceded amendment in the Constitution for GST,there were a number
of thorny issues that required resolution and agreement between Central Government and
State Governments. Implementing a tax reformas vast as GST in a diverse country like India
required the reconciliation ofinterests of various States with that of the Centre. Some of the
challenging issues ,addressed in the run up to GST, were the following:
Origin-based versus Destination-based taxation: GST is a destination basedconsumption tax.
Under destination based taxation, tax accrues to the destination place where consumption of
the goods or services takes place. The existing VAT regime was based on origin principle
where Central Sales Tax was assigned to the State of origin where production or sale
happened and not to the State whereconsumption happened. Many manufacturing States
expressed concerns over the loss of revenue on account of shift from origin based taxation to
destination based taxation.

An argument put forward on behalf of producing states in support of origin based taxation is
that they need to collect at least some tax from inter-State sales in order to recover the cost of

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infrastructure and public services provided by the State Governments to the industries
producing the goods which are consumed in other states. This line of reasoning is based on
the assumption that in the absence of a tax on inter-State sales, the location of export
industries within their jurisdiction would not contribute to the tax revenues of the exporting
state. This view was missing the fact that any value addition in a jurisdiction necessarily
means extra income in the hands of the residents of that jurisdiction. Spending of this income
on consumer goods expands the sales tax base of the producing states and thereby contributes
to their revenues. In fact, to the extent that consumer expenditures are dependent on the level
of income of the residents of a State, it is the producing States that stand to gain the most in
additional sales tax revenues (even under the destination basis of consumption taxes) from
increased export output.
Rate Structure and Compensation: There was uncertainty about gains in revenue after
implementation of GST. Though attempts were made to estimate a revenue neutral rate,
nonetheless it remains an estimate only. It was difficult to estimate accurately as to how much
the States will gain from tax on services and how much they will lose on account of removal
of cascading effect and phasing out of CST. In view of this, States asked for compensation
during the first five years of implementation of GST.
A Committee headed by the Chief Economic Adviser Dr. Arvind Subramanian on possible
tax rates under GST suggested RNR (Revenue Neutral Rate). The term RNR refers to that
single rate, which preserves revenue at desired (current) levels. This would differ from the
standard rate, which is the rate that would apply to a majority of goods and services. In
practice, there will be a structure of rates, but for the sake of analytical clarity and precision it
is appropriate to think of the RNR as a single rate. It is a given single rate that gets converted
into a whole rate structure, depending on policy choices about exemptions, what commodities
to charge at a lower rate and what to charge at a very high rate.
The Committee recommended RNR of 15-15.5% (to be levied by the Centre and States
combined). The lower rates (to be applied to certain goods consumed by the poor) should be
12%. Further, the sin or demerit rates (to be applied on luxury cars, aerated beverages, pan
masala, and tobacco) should be 40%.
Dispute Settlement: A harmonized system of taxation necessarily required that all
stakeholders stick to the decisions taken by the supreme body, which was later constituted as
the Goods and Services Tax Council (the Council). However, the possibility of departure
from the recommendations of such body cannot be completely ruled out. Any departure
would definitely affect other stakeholders and in such circumstances there must be a statutory
body to which affected parties may
approach for dispute resolution. The nature of such dispute resolution body was a bone of
contention. Under the Constitution (One Hundred Fifteenth Amendment) Bill, 2011, a Goods
and Services Tax Dispute Settlement Authority was to be constituted for this purpose. This
body was judicial in nature. The proposed constitution of this Authority was challenged
because it‘s powers would override
the supremacy of the Parliament and the State Legislatures. The Constitution (One Hundred
Twenty Second Amendment) Bill, 2014 departed from the previous GST amendment bill and

14
proposed that the Goods and Services Tax Council may decide about the modalities to
resolve disputes arising out of its recommendations.

CHAPTER- 2
CONCEPTUAL FRAMEWORK

GST Full Form and Definition

GST stands for Goods and Services Tax. Goods and Service Tax (GST) is a type of tax
introduced in India from July 2017. GST is a consumption based tax ultimately borne by the
end consumer of a goods or service. Throughout the value chain, businesses and consumers
pay GST on their purchases. However, if the purchase was made by a business for sale to a
customer, then the business can claim input tax credit to set-off GST liability. Thus, through
the use of input tax credit mechanism, the GST liability is pushed to the end-consumer.

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Significance of Goods and Service Tax (GST) in India

In this article, we are going to discuss Significance of Goods and Service Tax (GST) in India.
Did you know that goods and service tax will now replace the other indirect taxes that exist
as on today on different goods and services? GST is anticipated to one of the crucial reforms
which will spur the economic growth of our country. When launched, GST will not just make
the taxation framework simple but shall also help and increase the compliance, decrease the
tax outflow and boost the tax revenue, while making the export market competitive.

In fact, people say that with GST coming into place, the government will be able to set a
different roadmap during the upcoming budget session. GST has been a long pending reform
which has been in pipeline. This taxation reform hopes to iron out all wrinkles that are
present in Indian taxation system. This rich and comprehensive tax policy is forecasted to a
significant one, aimed to contribute to the growth of our country India.

We have already discussed in previous posts about how GST is going to change the way
India does business and Benefits of GST in India. We have also created a guide to
implementing GST in your business.

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Why is GST must for revolution – MAKE IN INDIA?

We all know that our Prime Minister has a dream – Make in India which will eventually
enable India to come out as a promising manufacturing hub. This initiative is definitely vital
because of sluggish domestic production sector and the need to pull the foreign investment. If
the initiative is implemented in the right manner then it assures of creating job and
employment opportunities for numerous jobless people of India.

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To make India a promising manufacturing hub, it is very important that different foreign
investors make their investments in India.

Migration:

One more window for completion of migration process is being allowed. The due date for the
taxpayers who did not file the complete FORM GST REG-26 but received only a Provisional
ID (PID) till 31.12.2017 for furnishing the requisite details to the jurisdictional nodal officer
was extended till 31.01.2019. Also, the due date for furnishing FORM GSTR-3B and FORM
GSTR-1 for the period July, 2017 to February, 2019 / quarters July, 2017 to December, 2018
by such taxpayers was extended till 31.03.2019.

Existing Structure of Indirect Taxation

It has been found that the cascading effect of taxes is one of the major drawbacks of existing
indirect taxation system followed by the country. This is mainly due to the federal
administrative structure followed by the country which allows both the Central and State
Government to levy taxes separately on goods and services at different stages of production
to consumption. Presently, there are two layer structures of indirect taxes in India. Certain
categories of taxes are imposed by the Union Government; and others are levied by the State
Government and local bodies. In practice, customs duty, excise duty, service tax and Central
Sales Tax (CST) are levied by the central government; and VAT/sales, entry tax, state excise,
property tax, agricultural tax, and octroi are charged by the State Government and Local
bodies.

There are many possible transactions which come under the ambit of two or more of these
taxes, and value of the second tax is calculated on the value arrived at by adding the value of
first tax tom the transactions. This method of tax computation is more complex in nature, and
leads to the multi-staged/cascading effect on the cost of goods and services. This Customs
duties such as export and import duties are levied by the Union Government and the rate of
customs duties depends on the categories of the goods under the Customs Tariff. Central
excise duty is levied on goods manufactured in India, which have been specified in the
Central Excise Tariff Act. There are three types of Central Excise Duties viz., Basic Duty,
Additional duty of Excise, and Special Excise Duty. Service Tax was introduced in India in
1994 by the Central Government, and it is levied on specified taxable services at the rate of
12 percent. The effective rate of service tax including education cess is 12.36 per cent.

Central sales tax is imposed on the sale of all goods by a dealer in the course of inter-state
trade or outside a State or in the course of unscientific method of tax computation will
prevent availability of cheap labour and free flow of other factors of production between the
States; and incurring inflated price at the stage of final consumption.The existing indirect tax
structure in Indian can be classified into two categories i.e., Taxes levied by the Central
Government, and Taxes levied by the State Government.

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Composition Scheme:

Composition scheme has been formulated for small businessmen being supplier of goods and
supplier of restaurant services. Under the scheme, person with annual turnover up to Rs. 1.5
crore (Rs. 75 lakhs in States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram,
Nagaland, Sikkim, Tripura and Uttarakhand) needs to pay tax equal to 1% to 5% on his
turnover and needs to file his returns annually with quarterly payment from FY 2019-20.
Composition Scheme has been made available for suppliers of services (to those who are not
eligible for the presently available Composition

Scheme) with a tax rate of 6% (3% CGST +3% SGST) having an annual turnover in the
preceding FY up to Rs. 50 lakhs. They would be liable to file one Annual Return with
quarterly payment of taxes. This has been made effective from 01.04.2019. Composition
scheme shall not be available to inter-State suppliers and specified category of manufacturers.

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 CHAPTER – 3 Review of literature

Recently, some of the scholars have discussed different dimensions of the proposed GST
from the conceptual stage itself. The study stated that under GST, the taxation will be
equitably divided among producers and service providers, and lower tax rate will be levied to
the goods/services when compared to the existing tax system (Morrissey, 2003).

There was a study conducted by the National Institute of Public Finance and Policy on a
state-wise analysis on the revenue implications of GST and estimation of Revenue Neutral
Rate (RNR)revealed that GST rate in a three rate structure would be higher than the general
rate of Value Added Tax (VAT) at 12.5 percent, and around 12.5 per cent in two rate
structure. However, there is a scope of trimming the number of commodities in lower tax rate
category, which can give higher base for the standard rate and lower revenue neutral rate.

If, both goods and services are taxed at the same rate, the RNR will come down (Kavita Rao,
2013). The proposed GST will create a single and unified market to make the economy
stronger, and benefit both corporate and the economy. It will boost economic development by
breaking tax barriers between states and integrating India through a uniform tax rate (Girish
Garg, 2014). It has been stated that the transition of economy in to a new GST regime will
arise new challenges and issues; and could have a lasting impact on the
economy/business.Some of these issues are one time/short-term in nature; and others are
long-term and recurring in nature. The business firms have to identify those favorable and
adverse issues; and formulate appropriate strategies to overcome negative impact on the cost
and revenues of the organization (Rajkumar, 2015).

The study observed that the GST willreduce the cost of Indian goods and services in the
international market due to the minimization of cascading and double taxation effect in the
economy. Further, it will result in increasing tax revenue of the Government; and achieve
more transparency and efficiency in the tax collection system (Thowseaf, 2016).

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 The National Council of Applied Economic Research (NCAER) had estimated that the
proposed GST will boost Gross Domestic Product (GDP) of India by one per cent to two per
cent. The Credit Rating Information Services of India Ltd (CRISIL) stated that GST is the
best way to mobilize revenue to the Government and reduce the fiscal deficit. It is going to
impact all sections of the society from small businessmen to type of business organizations
(Satish, 2016).

RESEARCH METHODOLOGY

COLLECTION OF PRIMARY DATA

METHODOLOGY
Research is a logical and systematic search for new and useful information on a particular
topic. Research methodology is a systematic way to solve a problem. It is a science of
studying how research is to be carried out. Essentially, the procedures by which researchers
go about their work of describing , explaining and predicting phenomenon are called research
methodology.
About my Research Problem :
The present research is exploratory in nature. Since GST is a new phenomenon in India, there
are hardly any studies in this area. Specially there is a huge gap of empirical and behavior
studies on GST in India. The study tries to find the significance of popular perception
regarding GST.
RESEARCH DESIGN
A good research design has characteristics viz, problem definition , time required for research
project and estimate of expenses to be incurred the function of research design is to ensure
that the required data are collected and they are collected accurately and economically. A
research design is purely and simply the framework for a study that guide the collection and
analysis data. In this project the two basic types of research designaroused.

➢Exploratory Research:
All research projects must start with exploratory research. This is a preliminary phase and is
absolutely essential in order to obtain a proper definition of problem in hand. The major
emphasis on the discovery if ideas and in sights . The exploratory study is particularly helpful

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in breaking broad and vague problems in to smaller, more precise sub problem statements .
Exploratory research is also used to increase the familiarity with the problem under
investigation.

➢Descriptive Research:
It is the design that one simply describe something such as demographic characteristics of
people .The descriptive study typically concerned with determining frequency with which
something occurs or how two variables vary together what, when and why apex of the
research . It requires formulation of more specific hypothesis and the testing these through
statically inference technique.This is the research design of the study and then it comes to
develop the research plan.

RESEARCH EXECUTION
SAMPLINGTECHNIQUES
Basis of Convenience Sampling (Non-Probability)
STASTICAL TOOLS
Following MS Office tools are being availed while preparing the project:
• MS Excel: Pictorial & graphical representation of data
• MS Word: Preparation of project & other reports

METHODS FOR PRESENTATION OF DATA

• Traditional method of data representation i.e. Pie chart, Barchartetc.
• Average of responses – No. of Responses/Total Responses*50
Sample size:
The sample size shorted out from the population (universe set) is 100 nos. to draw the
conclusion of the study.
Sampling Technique: The Project will be non-probability sampling.
Research Type: The project will be exploratory research type.

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 ANALYSIS OF DATA

DATA COLLECTION SOURCES

Primary Data:
Primary data is basically the live data which I collected on field while doing cold calls with
the customers and I shown them list of question for which I had required their responses.

Secondary Data:
Secondary data for the base of the project I collected from intranet and from internet,
magazines, newspapers etc.

SAMPLING TECHNIQUE:
Sampling Technique Sampling techniques can be broadly classified in to two types:
 Probability Sampling.
 Non Probability Sampling.

Tools for analysis

 Bar chart (Bar charts will be used for comparing two or more values that will be taken
over time or on different conditions, usually on small dataset)
 Pie-chart (Circular chart divided in to sectors, illustrating relative magnitudes or
frequencies)

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Tools and Techniques
As no study could be successfully completed without proper tools and techniques, sames with
my project. For the better presentation and right explanation I used tools of statistics and
computer very frequently. And I am very thankful to all those tools for helping me a lot.
Basic tools which I used for project from statistics are-
- Bar Charts
- Piecharts
- Tables
Bar charts and pie charts are really useful tools for every research to show the result in a well
clear, ease and simple way. Because I used bar charts and pie cahrtsin project for showing
data in a systematic way, so it need not necessary for any observer to read all the theoretical
detail, simple on seeing the charts any body could know that what is being said.

Technological Tools
 Ms-Excel
 Ms-Access
 Ms-Word

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FINDINGS ,LIMITATIONS , SUGGESTIONS , RECOMMENDATION AND
CONCLUSION.

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GST shall be the mother of all Indian tax reforms of this centaury and it would subsume most
(if not all) of the existing Central and State level taxes on supply of goods and
services.Accordingly, GST would have a significant impact on business environment and its
operations. When undertaking oversight of organizational readiness to adopt GST,
independent directors need to focus on the following aspects:

1. GST will have a multi-fold impact on operations – Besides the fiscal impact and tax
compliance, GST will have an impact on cash flows, product pricing, supply chain
arrangements, procurement, revenue recognition and the IT systems. It is therefore important
to assess whether the organization is undertaking a holistic impact assessment of GST
encompassing all oftheabove.

2. Assess the impact on financial results – GST will have an impact on the financial
statements; for example the top-line may get reduced in some cases (e.g. traded items) due to
elimination of tax cascading. The gross margins will also undergo changes as Cost of Goods
Sold may undergo changes as a result on input tax credits. For listed companies, these
changes will need to be factored in quarterly forecasts and earning releases to the stock
markets.

3. Monitor the impact on cash flows – Most of the planning in GST will revolve around
optimizing cash flows. The impact will be as a result of GST on imports, stock Transfers and
changes in point of taxation/tax credits.

4.Organisations may need to re-design certain aspects of their Supply Chain – The concept of
mere supply of goods and services trigger tax liability under GST as opposed to sale under
the present VAT, will impact Sourcing, Production and Distribution aspects of the Supply
Chain. For instance, sourcing considerations would involve revisiting sourcing mix (local,
inter-state and imports), stock transfer policy and renegotiation of vendor price due to the
GST impact. From a production perspective, GST impact would vary depending upon the
manufacturing and distribution arrangements e.g.own/job-work/contract manufacturing. The
“Place of Supply” rules will determine state where GST is to be deposited.

5. Understand the linkages, differences for companies implementing IFRS – For companies
implementing IFRS, the requirements under IFRS vary with those under GST. Organizations
will need to consider necessary re-alignments within their IT systems to effectively manage
these differences. For instance, there could be possible differences between GST levy date
and date of revenue recognition, accounting for multiple element arrangements (e.g. the
invoice value includes a supply and maintenance element), accounting for barter transactions,
reconciliation of GST on stock transfers with accounting records etc.

26
6. Understand the implications on product pricing, marketing and HR – The impact of GST
needs to be considered in the margins of various stakeholders in the distribution chain to
ensure that GST does not negatively impact product pricing and consequently market share.
This calls for a reassessment of exchange, discount and incentive schemes. From a HR
perspective, there may be a need to reconsider the indirect tax management structure, training
requirements of key indirect tax personnel depending upon the impact assessment.

Assess if the IT systems are geared to address GST requirements effectively with minimal
manual work arounds – The Audit Committee should at the outset require management to
undertake necessary enhancements to IT systems so that the necessary systemic alignments
are in place to manage GST MIS requirements.
Changes in the system are likely to be required primarily on account of change in taxes/ tax
rates, availability of credits for input taxes on purchases including inter- state purchases and
Import GST, availability of cross credits for goods and services and GST on stock transfer.
Tax policies play an important role on the economy through their impact on both efficiency
and equity.
A good tax system should keep in view issues of income distribution and at the same time,
also Endeavour to generate tax revenues to support government expenditure on public
services and infrastructure development.
The ongoing tax reforms on moving to a goods and services tax would impact the national
economy, International trade, firms and the consumers. There has been a good deal of
criticism as well as appraisal of the proposed Goods and Services Tax regime. By the above
discussions one can reach following conclusion :-
• The macroeconomic impact of GST is significant in terms of growth effects, price effects,
current account effects and the effect on the budget balance. • In developing open economy
with growing service sector, a change in the tax mix from income to consumption-based
taxes is likely to provide a fruitful source of revenue.
• The proposed structure will simplify the procedure which will end up with equal
opportunity for all the markets and in other hand will leads reduced tax evasion. It is
preferred every economy must adopt GST at national level to make their economy attractive
for foreign investors. By implementing GST, the developing economy like India can achieve
sustainable and balanced development.
Slowly, India shall move to join the world wide standards in taxation, corporate laws and
managerial practices and be among the leaders in these fields. • It can also be concluded from
the above discussion that GST will provide relief to producers and consumers by providing
wide and comprehensive coverage of input tax credit set-off, service tax set off and
subsuming the several taxes. It can be further concluded that GST have a positive impact on
various sectors and industry.
Implementation of a comprehensive GST across goods and services is expected,
ceterisparibus to increase india’sGDPsomewherewithinarangeof0.9percentto 1.7 per cent.
The corresponding changes in absolute values of GDP over 2008-09 is expected to be

27
between rs 42,789 crore and rs 83,899 crore, respectively. The comparable dollar value
increment is estimated to be between $9,461 million and $18,550 million, respectively.
The additional gain in GDP, originating from the gstreform, would be earned during all years
in future over and above the growth in gdp which would have been achieved otherwise. The
present value of the gst-reform induced gains in GDP may be computed as the present value
of additional income stream based on some discount rate.

We assume a discount rate as the long-term real rate of interest at about 3 per cent. The
present value of total gain in gdp has been computed as between rs 1,469 thousand crore and
2,881 thousand crore.
The corresponding dollar values are $325 billion and $637 billion. Gains in exports are
expected to vary between 3.2 and 6.3 per cent with corresponding absolute value range as rs
24,669 crore and rs 48,661 crore.
The comparable dollar value increment is estimated to be between $5,427 million and
$10,704 million, respectively. Imports are expected to gain somewhere between 2.4 and 4.7
per cent with corresponding absolute values ranging between rs 31,173 crore and rs 61,501
crore. The comparable dollar value increment is estimated to be between $6,871 million and
$13,556 million, respectively.
The overall price level would go down. It is expected that the real returns to the factors of
production would go up. Our results show gains in real returns to land ranging between 0.42
and 0.82 per cent.
Wage rate gains vary between 0.68 and 1.33 per cent. The real returns to capital would gain
somewhere between 0.37 and 0.74 per cent. The efficiency of energy resource use improves
in the new equilibrium.
The introduction of gstwould thus be environment friendly. Based on our computations, the
revenue neutral gstrate across goods and services is expected to be positioned somewhere in
the range of 6.2 per cent and 9.4 per cent, depending on various scenarios of sectoral
exemptions.
In sum, implementation of a comprehensive gst in india is expected to lead to efficient
allocation of factors of production thus leading to gains in gdp and exports. This would
translate into enhanced economic welfare and returns to the factors of production, viz. Land,
labour and capital.
As with any other modelling exercise, the results of our exercise are subject to certain
limitations. The general equilibrium model that we have used is comparative static in nature.
Aggregate supplies of labour, capital, and agricultural land are assumed to remain fixed so as
to abstract from macroeconomic considerations.
Given these limitations the results must not be read as forecasts of variables but only as
indicative directional changes. Implementation of a comprehensive gst across goods and

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services is expected, ceteris Paribus, to increase india’s gdp somewhere within a range of 0.9
per cent to 1.7 per cent.
The corresponding changes in absolute values of gdp over 2008-09 is expected to be
Between’s 42,789 corer and rs 83,899 crore, respectively. The comparable dollar value
Increment is estimated to be between $9,461 million and $18,550 million, respectively.
The additional gain in gdp, originating from the gst reform, would be earned during all Years
in future over and above the growth in gdp which would have been achievedOtherwise.
The present value of the gst-reform induced gainsin gdp maybe computed as The present
value of additional income stream based on some discount rate. We assume a Discount rate as
the long-term real rate of interest at about 3 per cent.
The present value of Total gain in gdp has been computed as between rs 1,469 thousand
crore and 2,881 Thousand crore. The corresponding dollar values are $325 billion and $637
billion. Gains in exports are expected to vary between 3.2and 6.3 per cent with corresponding
Absolute value range as rs 24,669 crore and rs 48,661 crore.
The comparable dollar value Increment is estimated to be between $5,427 million and
$10,704 million, respectively. Imports are expected to gain somewhere between 2.4 and 4.7
per cent with corresponding Absolute values ranging between rs 31,173 crore and rs 61,501
crore. The comparable Dollar value increment is estimated to be between $6,871 million and
$13,556 million, Respectively.
The overall price level would Godown. It is expected that the real returns to the factors of
production would go up. Our Results show gains in real returns to land ranging between 0.42
and 0.82 per cent. Wage rate Gains vary between 0.68 and 1.33 per cent. The real returns to
capital would gain somewhere Between 0.37 and 0.74 per cent. The efficiency of energy
resource use improves in the new equilibrium.
The introduction of Gst would thus be environment friendly. Based on our computations, the
revenue neutral gst rate across goods and services is Expected to be positioned somewhere in
the range of 6.2 per cent and 9.4 per cent, depending On various scenarios of sect oral
exemptions. In sum, implementation of a comprehensive gstinindia is expected to lead to
efficient Allocation of factors of production thus le ading to gains in gdp and exports. This
would Translate into enhanced economic welfare and returns to the factors of production, viz.
Land ,Labour and capital. As with any other modeling exercise, the results of our exercise are
subject to certain Limitations.
The general equilibrium model that we have used is comparative static in nature. Aggregate
supplies of labour, capital, and agricultural land are assumed to remain fixed so as to Abstract
from macroeconomic considerations. Given these limitations the results must not be Read as
forecasts of variables but only as indicative directional changes.
The proposed Goods and Services Tax (GST) is said to replace all indirect taxes levied on
goods and services by the Government, both Centraland States, on ceitis implemented. The
GST will consolidate all State economies. It will be one of the biggest taxation reforms to
take place in India once the Bill gets the official green signal. The basic idea is to create a
single, cooperative and undivided Indian market to make the economy stronger and powerful.
The GST will make a significant breakthrough paving way for an all-inclusive indirect tax

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reform in the country. In the year 2000, for the first time the idea of initiating the GST was
made by the then BJP Government under the leadership of Atal Behari Vajpayee.
An empowered committee was also formed for that, headed by Asim Das gupta (the then
Finance Minister of the West Bengal Government). The committee was formed to design the
model of the GST and at the same time inspect the preparation of the IT department for its
rollout. In 2011, the previous United Progressive Alliance (UPA) Government also
introduced a Constitution Amendment Bill to facilitate the introduction of the GST in the Lok
Sabha but it was rejected by many States. The GST is basically an indirect tax that brings
most of the taxes imposed on most goods and services, on manufacture, sale and consumption
of goods and services, under a single domain at the national level. In the present system,
taxes are levied separately on goods and services. The GST is a consolidated tax based on a
uniform rate of tax fixed for both goods and services and it is payable at the final point of
consumption. At each stage of sale or purchase in the supply chain, this tax is collected on
value-added goods and services, through a tax credit mechanism.
While RERA and GST will slowly change the way the real estate industry operates in India,
they have also thrown open a few aspects that need extensive deliberation. One such issue is
the liability of developers to provide for workmanship for structural defects for a period of
five years. Unlike in the past, developers will now have to create a backto-back warranty with
suppliers in case a challenge comes up.
Starting from the contract to execution and finally handing over, documentation has to be
clearly spelled out. If a developer wants to save himself from the pain of poor construction,
he will have to keep tabs on agencies he conducts business with and the quality of materials
he procures.
The end user would, of course, benefit from this improved diligence. GST in India provides
the long awaited generalization of the indirect tax structure. The cash constituent of the
building construction economy will reduce duetothe execution of GST in India. To avail ITC,
contractors must purchase raw materials from GST-registered vendors, resulting in better tax
compliance.
Under GST, the work contract is considered as a service, and hence, the composition scheme
is not available. Contractor’s compliances and costs will increase as they will follow the
standard taxation system. GST confirmation on works contract as a service has brought
clarity. But the lack of details in the areas of input tax credit (ITC) and composition schemes
might lead to disputes. All in all, GST should impact the construction sector in a positive
manner, not only from a rate perspective but also on pricing of various products, albeit in a
longrun.

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 RECOMMENDATION

The following are the suggestion made based on the results of the study.
Some suggestions for better administrative machinery to handle the implementation of
Goods and Services Tax Act in India are:

➢ Standardization of systems and procedures.

➢ Tax relief in case of branch transfer

➢ Well defined procedures in case of Job works

➢ Uniform dispute settlement machinery.

➢ Adequate training for both tax payers and taxen forcers.

➢ Re-organization of administrative machinery for GST implementation.

➢ Building information technology backbone – the single most important initiative

for GST implementation.

➢ Uniform Implementation of GST should be ensured across all states (unlike the staggered
implementation of VAT) as many issues might arise in case of transactions between states
who comply with GST and states who are not complying with GST.

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 CONCLUSION

Indian economy is one of the fastest growing economies in the world. In the era of
globalization, economic policies taken by the Government of India will act as a catalyst to the
growth of Indian economy.
The fiscal and monetary policies have greater impact on the developmental agenda set by the
Government. The taxation policies and system implemented in the country need to be more
efficient, competitive, equitable,transparent, and inclusive one. It has been observed that the
existing indirect tax structure in India has many drawbacks, which is not conducive to the
different stake holders of economy for realizing their objectives.
There are lots of impediments to the developments of Indian economy. Existing indirect
taxation structure is one of the setbacks in the developmental path of the economy. So, the
revamping of the existing tax structure is to be done very urgently to make Indian economy
more vibrant and dynamic.
Introduction of GST is one of the initiatives taken by the Government to transform the
economy into globally competitive one. This move may help the business organizations to
remove the disparities in the production and distribution system, and maximize efficiency in
the allocation of resources across the country without any regional disparities. The input and
output tax will be uniform throughout the country, and the price charged from the customers
will be reasonable/equitable. In order to transform Indian economy in to global competitive
market, at the outset, it is essential to eliminate domestic trade barriers within the country
itself.
The proposed GST may have some negative implications on the economy in respect of
diminishing effect in the revenue collection of State Government, and regulatory constraints
on the federal structure followed by the country.
Appropriate measures to be taken by the authorities to solve some of these issues connected
with administrative/fiscal policies implemented by the Central and State Governments. The
GST Council has greater role in this regard

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 BIBLIOGRAPHY

www.wikipedia.com
www.slideshare.com
www.yourarticlelibrary.com
www.gstcouncil.gov.in

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