TYBFM A STUDY ON BUSINESSMAN PERCEPTION TOWARDS GST SEM 6

1.1 Introduction

Goods and Service Tax (GST) is an indirect tax levied in India on the sale of goods and services. Petroleum
products and alcoholic drinks are taxed separately by individual state governments. In addition, access of
22% or other rates on top of 28% GST applies on a few items like aerated drinks, luxury cars and tobacco
products. The taxation system of a country involves the levy of various types of taxes by its government on
its people and institutions. Taxes are a universal phenomenon prevalent in almost all countries of the world.
In fact, taxation and civilization exist simultaneously. A tax, as defined by many, is a compulsory extraction
made by the government from the general public. It is considered a financial charge levied on individuals or
legal entities by the Government in pursuant to its legislative authority.

A tax is not paid by an individual or entity as a voluntary payment in the form of a gift or donation but is a
compulsory payment made as a part of obedience to a law of the land. The proceeds from taxes constitute a
main source of revenue for any government. It spends the amount collected in the form of tax for society’s
welfare. Globally, countries charge various types of taxes covering economic parameters such as production,
sales, import, export, expenditure, services, income, wealth etc. Taxation structure significantly influences
the formulation of various socio-economic policies of any government and strongly supports its
infrastructure development and economic growth.

The taxation structure of any country primarily depends upon its political set up i.e. the type of political
system prevalent in the country. Thus, in the case of a unitary political system (e.g. the U.K.) where the
entire country is controlled centrally by one government, all taxes are imposed by such centrally located
Government. However, In the case of the federal political set-up where the demarcation of authority exists
between the central Government and the State Government, e.g. India, USA, taxes are levied by both.

The taxation system of a country involves the levy of various types of taxes by its government on its people
and institutions. Taxes are a universal phenomenon prevalent in almost all countries of the world. In fact,
taxation and civilization exist simultaneously. A tax, as defined by many, is a compulsory extraction made
by the government from the general public. It is considered a financial charge levied on individuals or legal
entities by the Government in pursuant to its legislative authority. A tax is not paid by an individual or entity
as a voluntary payment in the form of a gift or donation but is a compulsory payment made as a part of
obedience to a law of the land. The proceeds from taxes constitute a main source of revenue for any
government. It spends the amount collected in the form of tax for society’s welfare (Lim, 1980). Globally,
countries charge various types of taxes covering economic parameters such as production, sales, import,
export, expenditure, services, income, wealth etc. structure significantly influences the formulation of
various socio-economic policies of any government and strongly supports its infrastructure development and

1
TYBFM A STUDY ON BUSINESSMAN PERCEPTION TOWARDS GST SEM 6
economic growth. The taxation structure of any country primarily depends upon its political set up i.e. the
type of political system prevalent in the country. Thus, in the case of a unitary political system (e.g. the
U.K.) where the entire country is controlled centrally by one government, all taxes are imposed by such
centrally located Government. However, In the case of the federal political set-up where the demarcation of
authority exists between the central Government and State Government, e.g. India, USA, taxes are levied by
both.

The following are the salient features of the GST system:

1. Capability to make laws in relation to deliveries in course of inter-state business or with the central
government. States have the power to tax GST on intrastate dealings, comprising services.
2. Management of GST is the accountability of the GST Council, which is the zenith policy-making
form for GST. Members of the GST Council embrace central and State ministers in charge of the
economics group.
3. Central government has the power to tax IGST on the inter-state sale of goods and services. Import
of goods is subject to plain customs levy and IGST.
4. GST is described as any duty on the sale of goods and services (other than on alcohol for human
consumption).
5. Central taxes such as excise duty, service tax, central excise duty, extra custom duty and superior
additional duty, and state-level taxes such as central sales tax, octroi, entertainment tax, entry tax,
purchase tax, VAT or sales tax, and luxury tax are included in GST.
6. A provision is made for removing the imposition of entry tax/ octroi across India.
7. Entertainment tax, levied by states on movies, theatre, etc., are included in GST, but duties on
entertainment at panchayat, municipality or district level will stay.
8. Stamp duties, normally executed on legal agreements by states, will stay to be charged.

Key advantages associated with GST are:

Offers a broader tax basis, essential for dropping duty rates and removing classification arguments.

Removes multiplicity of duties and their flowing consequences.

Justifies tax constitution and streamlines compliance processes.

Mechanises compliance processes to decrease mistakes and upsurge efficacy.

2
TYBFM A STUDY ON BUSINESSMAN PERCEPTION TOWARDS GST SEM 6
GST is charged on basis of the endpoint principle. Exports could be nil-rated, and imports entice tax in a
similar way as local goods and services. Income from this tax is to be assigned to source states. This tax is
planned to be charged for initially two years or an extended period, as suggested by GST Council. Through
GST, it is expected that dusty ground is complete, as practically all goods and services are chargeable, with
minimum exceptions. GST has brought a contemporary duty scheme to confirm well-organized and real duty
management. It has superior clarity and it has enhanced checking, thus making tax avoidance hard. GST
affects every business, regardless of segment. It has impacted the whole value string of processes, viz.
Obtaining, engineering, delivery, warehousing, trades and valuing.

“Goods and Services Tax” would be an inclusive incidental tax on the manufacture, sale and utilization of
goods and services all through India, to reinstate taxes levied by the Central and State governments.

History of Goods and Service Tax at the World Level:

France was the first country to execute the GST in 1954; since then, approximately 160 countries have
accepted this tax system in some form or another. The countries with a GST include Australia, Singapore,
the United Kingdom, Monaco, Nigeria, Brazil, South Korea, Canada, Vietnam, Spain, Italy, and India.
Canada and Brazil, have a twofold GST structure. Likened to an integrated GST economy where duty is
gathered by the central government and disseminated to states, in a twin system, central GST is functional
along with state sales tax. In Canada, for instance, the central government rates a 5% duty and few
jurisdictions also pay a domain state levy, which differs from 7% to 10%. A consumer’s receipt will clearly
have the GST and Provincial Sales Tax rate that was functional to their purchase value. More recently, the
GST and PST have been combined in some areas into a single tax comprehended as the Harmonized Sales
Tax (HST). Prince Edward Island was the former to adopt the HST in 2013, mingling its central and
provincial sales taxes into a single tax. Since then, numerous other provinces have chased garb, including
New Brunswick, Newfoundland and Labrador, Nova Scotia, and Ontario. Most countries with a GST have a
solo combined GST system, which aims that a sole tax rate is feasible all over the country. A country with a
combined GST podium combines central taxes (e.g., sales duty, excise duty levy, and service levy) with
state-level duties (e.g., luxury tax entertainment tax, entry tax, transfer tax, sin tax, and) and amasses them as
a unique only duty. Countries levy almost all at a solo rate.

3
TYBFM A STUDY ON BUSINESSMAN PERCEPTION TOWARDS GST SEM 6

History of GST in India:

Goods and Services Tax was implemented on July 1, 2017, replacing a number of previous taxes that were
functional till June 30, 2018. The deliberations of the GST bill have been in process for more than two spans
and the bill was passed to apply GST from July 1, 2017, by the Prime Minister of India and his Finance
Minister Arun Jaitley. GST was commenced on midnight of July 1, 2017. The sole GST substituted several
taxes and charges which included: central excise tax, services duty, additional customs tax, surcharges, state-
level value-added levy and Octroi. We track the double GST system i.e. GST for State and Central named
SGST and CGST, respectively. Let us have a summary of the history of GST from the content underneath as
an eye-opener.

GST fit into the VAT dynasty as tax revenues are gathered on the basis of value added. In the case of a real
commodity-based VAT system, GST includes services tax also. Likewise, input credit is provided while
calculating the tax burden.

The main features of the GST are as follows:

1. Taxes enveloped: Indirect taxes of the centre and states are included under the GST. A significant tax
of the central government -Central Value Added Tax, Additional Customs Duty, Special Additional
Duty of Customs, Central Sales Tax charged by the Centre and gathered by the States, Service Tax,
and the state VAT are now combined into a sole tax under the Goods and Service Tax.
2. Tax on Consumption: GST is a tax on the consumption of goods and services. Tax is paid by the
consumer in the state where goods or services are consumed.
3. GST is a destination-based tax: GST is levied where goods or services are consumed. Zero tax is
applicable on exports and imports are taxed at the same rate as on domestic goods.
4. Tax on supply: Stock transfers, branch transfers and free gifts can be taxed as it is a tax on the supply
and not on manufacture or sale.
5. Dual GST model: India has adopted a dual GST model. CGST and SGST are charged on Intra State
supply and IGST is charged on Inter-State supply.
6. GST Rates: GST rates for the supply of goods are nil, 0.25%, 3%, 5%, 12%, 18%, and 28%. GST
rates for the supply of services are 5%, 12% and 28%. The general Rate of IGST on services is 18%.

GST is a tax that we need to pay on the supply of goods & services. Any person, who is providing or
supplying goods and services is liable to charge GST. GST is a consumption-based tax/charge. It is

4
TYBFM A STUDY ON BUSINESSMAN PERCEPTION TOWARDS GST SEM 6
based on the “Destination principle.” GST is applied to goods and services at the place where final/actual
consumption happens.

Broadly, the different taxes can be classified into two categories, namely, direct taxes and indirect taxes.

Direct Taxes :

In simple terms, a direct tax is one which is levied and collected from the same person. The levying of tax
means its impact and collection of tax means the incidence of tax. Thus, in the case of a direct tax, the
impact, as well as the incidence of tax, is on one person. Income tax is an example of direct tax because the
liability to deposit and the ultimate burden lie on one person only. Generally, direct taxes relate to income,
wealth and property.

Direct Taxes Applicable In India

Income Tax: Presently, income tax is the major direct tax applicable in India which is charged by the
Central Government as per entry 82 of the Union List Prescribed in schedule Seven to Article 246 of the
Indian Constitution and is applicable throughout India. It is administered by the Income Tax Department of
The Central Government under the overall charge of the Central Board of Direct Taxes (CBDT). The CBDT
is an overall authority which deals with matters relating to the levy and collection of direct taxes in the
country.

Income Tax is regulated by the Income Tax Act, 1961 along with Income Tax Rules 1962, the Finance Act
(annual), CBDT circulars/notifications and judicial decisions. It is an annual tax charged on the income of
every person covering natural persons (Individuals) and artificial persons (Firms, AOPs, Companies etc.).
The total income of a person is determined with reference to his/its residential status.

The Income Tax Act Contains detailed provisions regarding the meaning of income, persons covered,
residential status, types of taxable incomes, exempted incomes, deductions allowed, the procedure to
calculate various incomes, filing of returns, assessment procedure and penalties etc. Income tax includes
personal taxation as well as corporate taxation (Ahuja & Gupta, 2017).

Tax on Employment or Profession: It is a direct tax which is levied by a State Government under Article
246 of the Constitution by virtue of Entry 60 of the State List of the seventh schedule to the Constitution
read with Article 276. It is a tax on various people or entities engaged in income-earning activities whether
as employees or by carrying on any business or profession subject to certain other conditions such as level of
income, turnover etc. Such a tax though has not been levied by all the States of India yet the majority of

5
TYBFM A STUDY ON BUSINESSMAN PERCEPTION TOWARDS GST SEM 6
States (around 18 States) have imposed this tax in their respective States by enacting appropriate legislation.
As Per Article 276 of the Constitution, the maximum amount of such a tax can be Rs.2500 p.a. only.

Indirect Taxes :

An Indirect tax is one which is levied on one person but is collected from another. Thus, in the case of an
indirect tax, the impact and incidence of taxes are on two different persons. Goods and Service Tax (GST),
sales tax, customs duty, excise duty, stamp duty and electricity duty etc. Are certain instances of indirect
taxes. These are usually applicable to goods and services at different points such as production, sale, supply
and import-export etc. The impact of such taxes is on the persons who consume goods and services.
However, the consumers do not pay such taxes directly to Government. Such taxes are usually paid by the
consumers to the Government through the person supplying goods and services to them and that is why such
taxes are described as Indirect taxes. The existence of both the above taxes (direct & indirect) is a common
phenomenon practically found in all most all the countries of the world though in varying proportions.

It is interesting to note that there has been a global growing trend of resorting more to indirect taxes than to
direct taxes due to their hidden nature in the prices of goods and services. Indirect taxes are regressive in
nature as the burden of such taxes falls equally on various persons with different financial abilities to pay
(Decoster, et al, 2009). Often, in a bid to consume more goods and services, the consumers don’t mind much
in paying such taxes as their personal requirements for goods or services dominate over their unwillingness
to pay such taxes. Here, it is important to mention that economists generally do not favour the policy of
levying more indirect taxes due to their regressive nature and hence are in favour of direct taxes because of
their progressive nature (Kato, J. 2003). A direct tax like income tax is progressive in the sense that a person
having more income is liable to pay more amount of income-tax as compared to a person having lower
income. Hence, real global taxation practices are not consistent with the accepted canons of taxation under
the theory of public finance.

The following are the main indirect taxes applicable in India:

 Goods and Services Tax (GST): It is a comprehensive indirect tax propounded on the principle of value addition
made to the product or services and leviable on the supply of goods or services in the country. It is the only indirect
tax applicable on the supply of goods or services at various levels of supply chain. It is a modern, logical and
progressive form of multi-staged indirect tax to be levied on the value addition made to a product by each supplying
dealer with the provision of credit (relief) of tax paid by the supplier to the previous supplier on purchase or for
manufacturing of goods or for rendering of services.

6
TYBFM A STUDY ON BUSINESSMAN PERCEPTION TOWARDS GST SEM 6
 Central Excise Duty: It is a charge on production, manufacturing of goods in India. It is levied by the Central
Government by virtue of Entry 84 of the Union list of Seventh Schedule as per the Central Excise Act, 1944 and the
Central Excise Tariff Act, 1985. This tax is imposed on the manufacturers or producers manufacturing or producing
excisable goods that are sold within the territory of India (Sengupta, 2013).

 Customs Duty: It is the oldest form of indirect tax in India and is levied on import or export of goods. It is levied in
India by the Central Government by virtue of Entry 83 of the Union list of its seventh schedule and is regulated by the
Customs Act, 1962 along with Customs Rules, Annual Finance Act, CBIC Circulars/ Notifications and Judicial decisions.
It is applicable in respect of articles imported into or exported from India at prescribed rate.

 State Level VAT (State Sales Tax): It is a tax on sale or purchase of goods taking place in the territory of a particular
State. It is levied in India by the various State Governments in their respective States by virtue of Entry 54 of the
State list of its seventh schedule and is governed by the State Sales Tax laws of various State Governments. Prior to
2005, every State in India used to charge sales tax on sales made by a dealer within that State duly authorised by its
State Sales tax Act. Presently in India, since 2005, State level sales tax is known by the name of State level VAT or
simply VAT.

 State Excise Duty: It is charged by the various State Governments in India and is governed by the respective State
Level Excise Act. It is applicable on certain items like alcohol, liquor, opium, narcotics etc.

 Securities Transaction Tax: Securities Transaction tax (i.e. STT) is a tax levied by the Central Government as per the
Securities Transaction Tax Act, 2004. It is applicable on the transaction of purchase and sale of specified securities
entered into in a recognized stock exchange in India. Such specified securities include equity share in a company or a
derivative or a unit of an equity-oriented fund or a unit of a business trust.

Introduction To Indirect Taxation

The prevalence of indirect taxes (in various forms) is synonymous with civilization as such. Historically and
traditionally, countries worldwide have been charging such indirect taxes in varied forms covering various
aspects such as manufacturing, buying of goods, sale, import or export of goods, and provision of services
etc. (Martinez, 2011). These taxes are often designated commodity taxes. Accordingly, such taxes are known
by various names such as Goods and Services Tax (GST), Value Added Tax (VAT), Excise duty, Sales tax,
Service tax and Customs duty etc. A remarkable fact about these taxes is the increasing dependence of
various Governments on such taxes as a source of revenue. The share of indirect taxes in total tax collection
is very significant and, in many cases, it is more than the share of direct taxes.

There are many economies in the world which depend entirely on indirect taxes. The economic development
of a country is largely influenced by such taxes due to their immediate impact on the level of production and
7
TYBFM A STUDY ON BUSINESSMAN PERCEPTION TOWARDS GST SEM 6
consumption. However, the most ironical part of these taxes is their regressive nature and their multiplicity
as there are various forms of such taxes which are based on different taxable events such as production,
sales, import, export etc. And Quite often, the indirect taxation system is found to be very complex and lacks
coordination between various forms, which creates many problems for the administrators as well as for the
subjects (i.e. persons liable to pay taxes). as the source of revenue. The share of indirect taxes in total tax
collection is very significant and, in many cases, it is more than the share of direct taxes. There are many
economies in the world which depend entirely on indirect taxes.

The economic development of a country is largely influenced by such taxes due to their immediate impact
on the level of production and consumption. However, the most ironical part of these taxes is their regressive
nature and their multiplicity as there are various forms of such taxes which are based on different taxable
events such as production, sales, import, export etc. And. Quite often, the indirect taxation system is found to
be very complex and lacks coordination between various forms, which creates many problems for the
administrators as well as for the subjects (i.e. persons liable to pay taxes).

Structure Of the Indian Taxation System

The Indian taxation system is one of the world’s largest taxation systems in terms of its wide application to a
large number of people and other business entities. It is a well-structured system derived from the Indian
Constitution. As per the Constitution of India, the Government has the power to charge taxes from its
citizens and other artificial bodies/organisations (whether juridical or not) and any such tax can be charged
by it as per the authority granted under Article 265 of the Constitution (Joshi, 1975).

As we know that India has a federal structure of Government with defined segregation of power amidst the
Union Government and the various State Governments. Like the political set-up of governance, the
administration of various taxes is also very well demarcated between Union Government and various State
Governments at first instance followed by demarcation between State Governments and Local Bodies
(Poddar & Ahmad, 2009).

Article 246 of the Indian Constitution talks about the legislative powers (including the power to enact laws
relating to taxation) of the Central Government (Jasmine, 2017) and of the various State Governments in
respect of various matters as specified in the Seventh Schedule attached to the Constitution which prescribes
the following 3 lists containing various legislative areas:

The list 1 i.e. Union List [As per Article 246(1)]: It prescribes the various areas for which any law
(including the law relating to any tax) can only be enacted by the parliament i.e. Central Government.

8
TYBFM A STUDY ON BUSINESSMAN PERCEPTION TOWARDS GST SEM 6
List 2 i.e. State List [As per Article 246(3)]: It prescribes the various areas for which any law (including
the law relating to any tax) can only be enacted by the State Legislature i.e. State Government.

List 3 i.e. Concurrent List [As per Article 246(2)]: It prescribes the various areas in respect of which any
law can be enacted concurrently by the Parliament and the State Legislature (Parameswaran, 1976; Purohit,
2001).

TAXES IN INDIA

Based on above comprehensive Constitutional provisions governing taxation powers of Indian Government, a
number of taxes have been imposed in India. These taxes are levied in India at three levels, namely:

Central Government level

State Government level

Local Bodies level

IMPLEMENTATION AND REFORMS

The tax came into effect on July 1, 2017, through the implementation of the one hundred and first
amendment of the constitution of India by the central government. The tax replaced existing multiple
cascading taxes levied by the central and state government. The tax rates, rules and regulations are governed
by the goods and services tax council which comprises finance ministers of central and all the states. GST is
simplified as lew of indirect taxes with a unified tax and is therefore expected to dramatically reshape the
country’s 2 trillion-dollar economy. Goods and services are divided into four tax slabs for collection of tax –
0%, 5%, 12%, 18%, and 28%.

The reform process of India’s indirect tax regime was started in 1986 by Vishwanath Pratap Singh, finance
minister in Rajeev Gandhi’s government, with the introduction of the modified value-added tax
(MODVAT). There is a special rate of 25% on rough precious and semi-precious stones and 3% on gold.

After the enactment of various GST laws, goods and service tax was launched all over India with effect from
01 July 2017. The Jammu and Kashmir state legislature passed its GST Act on 7 July 2017 thereby ensuring
that the entire nation is brought under and unified indirect taxation system. There was to be no GST on the
sale and purchase of securities. That continues to be governed by a security transaction tax.

RATIONALE OF INTRODUCING GOODS AND SERVICES TAX IN INDIA

9
TYBFM A STUDY ON BUSINESSMAN PERCEPTION TOWARDS GST SEM 6
The various above discussed reforms in indirect taxation system done since independence have been a sort of
piecemeal reforms undertaken in selective manner which though helped the economy in developing its taxation
system yet the position was far from satisfactory as compared to other nations of the world. The indirect taxation
system was still suffering from the problems such as complex nature, multiple indirect taxes, dual levy of indirect
taxes by Central/State Governments, lack of co-ordination, tax cascading between manufacturing level taxes and
sales level taxes, tax evasion low tax-GDP ratio and corruption etc. (Panda & Patel, 2010). Some of the anomalies
prevalent under Central level CENVAT, Central sales tax and State level VAT mechanisms were as follows:

Launch Of Goods And Service Tax

The goods and service tax was launched at midnight on 1 July 2017 by the former president of India, Mr
Pranab Mukherjee, and the prime minister Mr Narendra Modi. The launch was marked by a historic
midnight (30 June – 1 July) session of both houses of parliament convened at the central hall of parliament.

GST is structured to simplify the current indirect system by removing multiple taxes. It creates India as a
single market. Its taxes goods and services at the same rates therefore many disputes were eliminated on tax
matters. The procedural cost is reduced due to uniform accounting namely, CGST, SGST, and IGST have to
be maintained for all types of taxes. More business entities including the unorganised will come under the
tax system thus widening the tax base. This may lead to better and more tax revenue collection. Many
businesses create depots and go downs in different states simply because there is a different tax rate. It
would help to remove the tax difference as a bias, thereby helping businesses.

As the world economy slows, and increasing financial volatility and turbulence become the “newest
normal,” only a few economies have the resilience to be a refuge of stability and the potential to be an
outpost of opportunity. India is one of those few. As oil and commodity prices continue to be soft, and in the
wake of actions taken by the government and the Reserve Bank of India, macroeconomic stability seems
reasonably assured for India. This bedrock of stability coupled with reforms to unleash the entrepreneurial
energies of India can create the policy credibility and business environment that India is indeed seizing the
historic opportunity afforded by domestic and international developments to propel the economy to a high
growth trajectory. Key amongst these reforms is the goods and services tax,1 which has, in some ways, been
“priced” into expectations of the government’s reform program, but not gets success. Economic
liberalization and reforms played a great role in the development of the Indian economy.

In India, goods are taxable since long but till 1994 there was no tax on services. Service tax
was introduced by the then Finance Minister, Dr Manmohan Singh, in the year 1994-95, but
only on three services. With the passing of time, the number of services were increased year

10
TYBFM A STUDY ON BUSINESSMAN PERCEPTION TOWARDS GST SEM 6
by year and presently there number are more than hundred on which service tax is imposed.
In the sphere of indirect tax reforms in India Value added tax at the Centre and States level
has been considered to be a major step. For nearly ten years. India has been on the verge of
implementing GST. But now, with political consensus close to being secured, the nation is on
the cusp of executing one of the most ambitious and remarkable tax reforms in its
independent history.

Implementing a new tax, encompassing both goods and services, to be implemented by the
Centre, 29 States and 2 Union Territories, in a large and complex Federal system, via a
constitutional amendment requiring broad political consensus, affecting potentially 2-2.5
million tax entities, and marshalling the latest technology to use and improve tax
implementation capability, is perhaps unprecedented in modern global tax history. Due to
multiplicity of taxes on goods it is very difficult for a businessmen, not only to Indian
businessmen but also for multinational corporations to do trading smoothly.

Introduction:

Therefore, a new and composite tax, named Goods and Services tax is proposed by the
Central Government not only to be imposed on goods but also on services and most of the
indirect taxes which are at present imposed by the centre and State governments on goods and
services shall be subsumed either in Centre GST or State GST, as the case may be. To achieve
these objective an amendment in the Constitution is required and a Bill, in the name of the
Constitution (One Hundred and Twenty Second Amendment) Bill, 2014 was introduced in
Parliament. Though the Bill was passed by the Lok Sabha, the matter is still pending in Rajya
Sabha. By this Bill a new Article 246A, will be inserted which deals with taxation of goods
and services by Union government as well as State governments.

The proposed Article 246A(1) may run as follows: Notwithstanding anything contained in articles 246 and
254, Parliament, and subject to clause (2), the Legislature of every State, have power to make laws with
respect to goods and services tax imposed by the Union or by such State. And as per Article 246A(2)
Parliament has exclusive power to make laws with respect to goods and services tax where the supply of
goods, or of services, or both takes place in the course of inter-State trade or commerce. It is easy to
overlook how ambitious the Indian GST will be, and a cross country comparison highlights the magnitude of
ambition. According to the World Bank report of 2015, over 160 countries have some form of value added
tax, which is what the GST would be. But the ambition of the Indian GST experiment is revealed by a

11
TYBFM A STUDY ON BUSINESSMAN PERCEPTION TOWARDS GST SEM 6
comparison with the other large federal systems i.e. European Union, Canada, Brazil, Indonesia, China and
Australia-that have a VAT. But the United States does not have a VAT till present.

The Indian GST is expected to represent a leap forward in creating a much cleaner dual VAT which would
minimize the disadvantages or completely independent and completely centralized systems. A common base
and common rates across goods and services and very similar rates across States and between Centre and
States will facilitate administration and improve compliance while also rendering manageable the collection
of taxes on inter-State sales. At the same time, the exceptions in the form of permissible additional excise
taxes

on some goods, petroleum and tobacco for the Centre and petroleum and alcohol for the States will provide
the requisite fiscal autonomy to the States. Indeed, even if they are brought within the scope of the GST,
Introduction the States will retain autonomy in being able to levy top-up taxes on these goods. The Indian
GST will be the 21st century standard for VAT in federal systems. It is, therefore, imperative to ensure that
the design and implementation of this policy is done right. The replacement of the State sales taxes by the
Value Added Tax in 2005 marked a significant step forward in the reform of domestic trade taxes in India.
Buoyed by the success of the State VAT, the Centre and the States are now embarked on the design and
implementation of the perfect solution, Goods and Services Tax, to be levied concurrently by both levels of
the governments Although GST simplifies the entire tax structure in the country, it is not free from
limitation. There will be dual control on every business by central and state government. So, compliance cost
will go up.

All credit will be available on from online connectivity with GST network. Hence, small businesses may
find it difficult to use the system. VAT and service tax on some products may become higher than the
current level. State may lose autonomy to change their tax rate. Manufacturing states would lose big
revenue. Retail business may oppose because their taxes will go up and they will have to deal with central
government now in addition to states.

12
TYBFM A STUDY ON BUSINESSMAN PERCEPTION TOWARDS GST SEM 6

The main difference only through offline mode. GST is payable both through offline and online mode.

Whereas, Vat is only available through offline mode as explained through visuals.

This study attempts

to analyse pursued
benefits and
challenges of GST
with reference to
business man in
Mumbai who are immediately affected by the implementation of GST.

Statement Of The Problem

GST (goods and service tax) is a single indirect tax aimed at making the country unified common market.
The implementation of GST is considered a historical move, considering the fact that it significantly
reformed indirect tax in India. But this huge reform was not happily welcomed. It is in this light the study
becomes necessary to evaluate the awareness among people about GST. The study attempts to analyses the
perceived benefits and challenges towards GST.

Scope of the study

13
TYBFM A STUDY ON BUSINESSMAN PERCEPTION TOWARDS GST SEM 6
The study makes an attempt to analyse the perception towards GST with reference to businessmen in
Mumbai.

Objective of the study

• To analyse the businessmen perceived challenges towards GST

• To analyse the challenges faced by the businessmen due to GST in Mumbai.

• To analyse the business problems due to GST.

14