A

Project Report
On
Goods and service tax
Submitted To
Savitribai Phule Pune University
In partial fulfilment of the requirement for the award degree of

Bachelors of Business Administration (BBA)

Submitted By
AKSHAY ATUL MALVE
Under the guidance of
Prof. Prasad R. Shishupal

THROUGH

S.N.B.P COLLEGE , YERWADA

PUNE - 411006
2023 - 2024
 BONAFIDE CERTIFICATE

This is to certify that, this project report, “Goods And Service Tax” is the
Bonafide work of AKSHAY ATUL MALVE who carried out the project
work under my supervision.

SIGNATURE

Prasad Shishupal

Assistant Professor

S.N.B.P Senior College

Yerwada , Pune-06,

2
Page
 ACKNOWLEDGEMENT

I, undersigned express my sincere, gratitude to the following persons

helped me in completing the project work.

Principal: Prof. Ganesh Bhosale

HOD: Prof. Chandrabhan Singh

Project Guide: Prof. Prasad R. Shishupal

Date:

Place: Pune

Signature of the Candidate

AKSHAY ATUL MALVE

3
Page
 DECLARATION

This is to declare that I, AKSHAY ATUL MALVE student of Bachelor

of Business Administration (2023- 2024), S.N.B.P. Senior College,
Yerwada, Pune-06 have given the original data and information to the
best of my knowledge in this project report title ‘Goods And Service Tax’
under the guidance of our Professor Prasad Shishupal and that, no
part of this information has been used for any other assignment but for
the partial fulfilment of the requirement towards the completion of the
said course.

I have prepared this report independently and I have gathered all

the relevant information personally. I have prepared this project for

B.B.A. for the year 2023-2024.

Date:

Place: PUNE

Signature of the Student

4
Page
 PROJECT COMPLETION CERTIFICATE

This is to certify that

Ms AKSHAY ATUL MALVE of BBA Roll No. …… having

specialization in Financial Management has successfully
completed her project ‘Goods And Service Tax’ titled as per the
norms of Savitribai Phule Pune University under the
guidance of Prof. Prasad R. Shishupal for the academic year
2023-24.

Internal Guide External Guide HOD /Principal 5

Page
 ABSTRACT
The Government of India has introduced a single tax regime for both goods and services for
the entire country (except Jammu &Kashmir) with the roll out the GST w.e.f. July 1, 2017. The
GST is a comprehensive consumption-based tax on supply of goods or of services or
both and subsumed the majority of indirect taxes into a single tax basket. In view of the
majority of indirect taxes being merged into one tax, impact is expected to be almost
every business operation in India. The main goal of the GST regime is ‘one tax one market’,
which aims at providing a cohesive tax approach across country. This paper is an analysis
of the impact of GST (Goods and Services Tax) on Indian Tax Scenario. The Good and services
tax (GST) is the biggest and substantial indirect tax reform since the year 1947. The main idea
of GST is to take over existing taxes like value-added tax, excise duty, service tax and sales
tax. GST will be levied on manufacturing of sales and consumption of goods and services
and is expected to address the tumble effect of the existing tax structure and result in
uniting the country economically. Its main objective is to maintain a plebeian between the
basic structure and design of the CGST, SGST and SGST between states. GST is a new story of
VAT which gives a widespread setoff for input tax credit and contains many indirect
taxes from state and national level. The main aim of GST is to create a single, unified market
which will benefit in the development of country’s economy. India is a democratic country
and therefore the GST will be implemented parallel by the central and state governments
respectively. In this project, I have discussed GST and highlighted on the objectives of it.
Consequently, I also put a light on the possible challenges, threats, and opportunities that
GST brings to strengthen the free market economy.
SR.no CONTENTS PAGE NO.

1. Introduction to goods and service tax 7-15

1.1- Tax
1.2-Value added tax {VAT}
1.3- Goods and service tax
1.4- How does GST increase and decrease
2 IT Infrastructure – A Priority for GST 16-22
2.1- Urgency
2.2- An IT Infrastructure for GST
2.3- Stakeholders
3 Implication of GST on small and medium Enterprises 23-31
3.1- Small scale industries
3.2- Role of small scale industries in Indian economy
3.3- Positive implications
4 Benefits of GST to consumers, traders and government 32-38
4.1- Advantages of GST to consumers
4.2- Benefits of GST to government
4.3- benefits of GST to traders
5 Conclusion and recommendations 38-41
5.1- Conclusion
5.2- Recommendations
 Chapter 1

Introduction to Goods and Service Tax

1. Introduction

1.1 Tax

The word tax is derived from the Latin word ‘taxare’ meaning to estimate. A tax is not
a voluntary payment ordination, but an enforced contribution, exacted pursuant
to legislative authority" and is any contribution imposed by government whether under
the name of toll, tribute, impost, duty, custom, excise, subsidy, aid, Supply, or other
name.”

Brief History of Taxation:

Tax is today an important source of revenue for the government in all the countries.
More than 3000 years ago, the inhabitants of ancient Egypt and Greece used to pay
tax, consumption taxes and custom duties. Income tax was first introduced in India in
1860 by James Wilson who became India’s First Finance Member.

In order to meet the losses sustained by the government on account of military mutiny
of 1857. In 1918, A New Income Tax bill was passed and which was further again
replace in 1922. Finally, The Ministry of Law and Finance the Income Tax was passed in
1961 and brought came in force on 1st April 1962. And this is also known as the
Financial Year in Current Era i.e. (01.04.18 - 31.03.2019).
Taxation System:
Tax system of raising money to Finance Government. All governments require
payment of money taxes from people.
Government use revenues to pay soldiers and police to build dams and roads,
to operate schools and hospitals, to provide food to the poor and medical
care facilities etc and also hundreds of other purposes without taxes to
fund its activities. Govt could not exist.
So, taxation is the most important source of revenues for modern government
typically according for 90% or more of their income.

Essentials Characteristics of Tax:

It is an enforce contribution.
It is generally payable by Money.
It proportionates in character, usually based on ability to pay.
It is levied on person and property with the jurisdiction of the state.
It is levied for public purpose.
It is commonly required to be paid a regular interval

What are the reasons of Taxation?

1. Provide the basic facilities for every citizen of country.
2. Finance government multiple projects and schemes.
3. Protection of Life.
4. Responsibility of citizen to the Nation
1.2 Value Added Tax (VAT)
VAT at the Central and the State level has been considered as a major step,
towards indirect tax reforms in India. If VAT is a major improvement over the
pre-existing Central excise duty at the national level and the sales tax system at
the State level, then the Goods and Services Tax (GST) will undoubtedly be an
additional important perfection, the next logical step towards a
widespread indirect tax reforms in the country. At the outset, it was
conceptualized that there would be a national level goods and services tax,
however, with the release of First Discussion Paper by the Empowered
Committee of the State Finance Ministers on 10.11.2009, with this it has
Been made clear that there would be a “Dual GST” in India, taxation power
both by the Centre and the State to levy of taxes on Goods and Services.
Almost 160 countries have introduced GST in some or the other form.
Presently there are 160 countries in the world that have implemented
GST or VAT. Under this scheme, no distinction is made between goods and
services for levying of taxes. This means that goods and services attract the
same rate of tax. GST is a multi-tier tax where ultimate burden of tax Fallon the
consumer. It is termed as value added tax because at every stage, tax is being
paid on the value addition. Under the GST scheme, a person who was liable to
pay tax on output, whether for provision of service or sale of goods, is entitled
to get input tax credit (ITC) on the tax paid of its inputs. Since VAT was
beneficial for the taxation system but with certain shortcomings which are
expected to be overcome by the Goods and Services. Hence, it would definitely
a positive reform for the indirect Tax System in India.
1.3 Goods and Service Tax (GST)

Goods and Service Tax (GST) would be a very compelling step in the field of
indirect tax reforms in India. By amalgamating a large number of Central and
State taxes into a single tax, it would lessen overflow or double taxation in a
major way and pave away common national market. From the consumer point
of view, the biggest advantage would be in terms of a reduction in the overall
tax burden on goods, which is currently estimated to be around 25%-30%.
Commencement of GST would also make Indian products competitive in
the domestic and international markets. Studies show that this would have a
boosting impact on economic growth. Because of its transparent and self-
policing character, GST would be easier to administer as well.
GST is a tax on goods and services with comprehensive and continuous
chain of setoff benefits from the Producer’s point and Service provider’s
point up to the retailer level. It is conventional to be levied only at the
destination point, and not at various points (from manufacturing to retail
outlets).
1.4 How does GST increase and decrease
Consumers would now have to pay more tax on most of the goods and
services they buy. Most of the things we buy every day now pay the same or a
little more tax. In addition, the implementation of the GST (GST full form:
Goods and Services Tax) comes with a cost for people to keep up with the
rules. It looks like the small-scale manufacturers and traders, who have also
protested against the same, will not be able to afford to pay for this. There is a
chance that they will charge more for their goods.
Long-term, it is thought that GST will not just cut taxes but also set minimum
tax rates. There are only two or three tax rates in countries where the Goods
and Service Tax has helped to change the economy. One is the “mean” rate,
and there are lower tax rates for essential goods and higher tax rates for more
luxurious goods.
 Chapter 2
IT Infrastructure – A Priority for GST
IT infrastructure is one of the basic requirements for successful
implementation of Goods and Services tax. It was to be well in place
before introduction of GST. Based on the experience of different state
governments, we can say that without an efficient e-governance it is not
possible to administer value added tax regime effectively. The Input Tax
Credit (ITC) is an important aspect of VAT and it is difficult to monitor ITC in the
absence of fully developed computerized system.
At present, the e-filing of returns as well as filing of various forms under VAT,
excise duty and service tax is a bitter experience for the taxpayers. In spite of
the confirmatory claims made by both the central government and the
state governments, the system is not adequate. The hardware developed is
quite slow in responding to the taxpayers’ requirements. Not even hardware
but software application is also full of irregularities. Human resources required
under present E-Systems are substantially more than what is used under the
earlier system. It was supposed that the electronic system will bring down the
use of paper but it has gone up after the introduction of e-filing. The entire
system created is a mess and will be of no use in the long run.
2.1 Urgency
The broad framework of GST is now clear, with the model being approved by
the Government of India and Empowered Committee of State Finance
Ministers. The GST is a dual tax with both Central and State GST component
levied on the same base. The IGST framework is used for goods and services
that are exported across state boundaries. Thus, all goods and services, barring
a few exceptions, will be brought into the GST base. For reasons of simplicity
for the taxpayer, ease of tax administration, and bringing about a national
common market, a common PAN-based taxpayer ID, a common return, and a
common challan for tax payment have been agreed to by all stakeholders.
A number of issues still remain to be resolved. These are presently under
the consideration of the Empowered Committee of State Finance Ministers
under the Chairmanship of Dr Asim Dasgupta. Such issues include: the rates of
taxation, the revenue sharing between States and Centre, and a framework for
exemption, thresholds and composition.
On the IT front, there has been consensus that there will be a common portal
providing three core services (registration, returns and payments). The
broad services framework of the portal has been discussed with the Sub
Working group for IT. Various technology issues have been addressed
including solution architecture and selection of likely service provider.
Some of these issues include incubation, ownership and governance
structures, development, deployment, and integration of existing systems,
and change management procedures, among others.
2.2 An IT Infrastructure for GST

Service Tax Network (GSTN)

Simplicity for taxpayers: The process of filing of tax returns and

payment of tax should be simple and uniform and should be
independent of taxpayer’s location and size of business. In addition, the
compliance process should not place any undue burden on the taxpayer
and should be an integral part of his business process.

Respect autonomy of states: The design of the IT system should

respect the constitutional autonomy of the states. Several business
processes will be re-engineered as a new IT system for GST is put into
place. There should be no dilution of the autonomy of states as a
result of the IT system, or the re-engineering. On the contrary, it
should strengthen the autonomy of states.
Enable digitization and automation of the whole chain: All the business
processes surrounding GST should be automated to the extent possible, and all
documents processed electronically. This will lead to faster processing
and reconciliation of tax information and enable risk-based scrutiny by tax
authorities. For small taxpayers, facilitation centers can be set up to ease the
migration.

2.3 Stakeholders

The design of an IT infrastructure should serve all stakeholders and their

business processes.
Small taxpayers: Much of the economic activity in India is concentrated
among small taxpayers. They may not have the skill or the resources to
effectively migrate to GST. Thus, adequate preparations must be done to
ensure smooth migration for small taxpayers to GST. This includes
extensive consultations, setting up of facilitation centers, education and
training.
Corporate taxpayers: Corporate taxpayers may operate across various states
and typically have sophisticated IT systems for accounting, e-filing returns,
payments etc. Common file formats and message specifications should be
released early to allow IT vendors that provide software to corporate
taxpayers to modify and release updated versions with GST support.
State tax authorities: The state tax authorities would be responsible for
collecting SGST. Common file formats, interfaces, and policy administration will
enable accurate and timely 5 assessments, and risk-based investigations
resulting in enhanced productivity and revenues
CBEC: CBEC would be responsible for collecting CGST and IGST. Common file
formats, interfaces, and policy administration will increase the productivity of
CBEC. It will allow for accurate and timely assessment, risk-based
investigations and facilitate IGST settlement by Centre at agreed time intervals.
RBI: The Reserve Bank of India will facilitate the interface with various banks
to facilitate movement of states and center’s funds. The processes of
funds settlements and documentary compliance are independent.
Banks: Banks will accept duty from the taxpayers and process challan. All tax
collections (whether physical or electronic) will happen at bank branches,
or through the banks’ IT systems. Banks will route the tax collected to the
concerned authorities through the RBI channel.
Implication of GST on Small and Medium Enterprises

Goods and Services Tax (GST) is an indirect tax levied in India on the sale of
goods and services. The reform process of India's indirect tax regime was
started in 1986 by Vishwanath Pratap Singh, Finance Minister in Rajiv
Gandhi’s government, with the introduction of the Modified Value Added
Tax (MODVAT). Consequently, the Prime Minister P V Narasimha Rao and
his Finance Minister Manmohan Singh, initiated early discussions on a Value
Added Tax at the state level.
According to the IBEF, India is a global production plant, and SMEs account for
about 90% of its industrial facilities The single GST (goods and service taxes)
replaced several former taxes and levies which included: central excise
duty, services tax, additional customs duty, surcharges, state-level value added
tax and Octroi. Small scale industries play a significant role in the overall
growth of an economy.
This industry is mainly specialized in the production of consumer
commodities generate huge employment due to the utilization of labour
power for the production of goods.

3.1 Small Scale Industries

Small scale industries which are also called as MSMEs (Micro, Small and
Medium Enterprises) are defined, categorized and dealt by the Micro, Small &
Medium Enterprises Development Act, 2006.
This particular act categorizes different scale of industries on the basis of
investment in plant & machinery in case of manufacturing industries and on
the basis of investment in equipment in case of service sector industries
3.2 Role of Small Scale Industries in Indian
Economy
Employment Generation
The basic problem that is confronting the Indian economy is increasing
pressure of population on the land and the need to create massive
employment opportunities. This problem is solved to larger extent by small-
scale industries because small- scale industries are labour intensive in
character. They generate huge number of employment opportunities.
Employment generation by this sector has shown a phenomenal growth .

Mobilization of resources and entrepreneurial skill

Small-scale industries can mobilize a good amount of savings and
entrepreneurial skill from rural and semi urban areas remain untouched from
the clutches of large industries and put them into productive use by
investing in small-scale units. Small entrepreneurs also improve social
welfare of a country by harnessing dormant, previously overlooked talent.
Thus, a huge number of latent resources are being mobilized by the small-
scale sector for the development of the economy.

Equitable distribution of income

Small entrepreneurs stimulate a redistribution of wealth, income and
political power within societies in ways that are economically positive and
without being politically disruptive. The small-scale industries ensure equitable
distribution of income and wealth in the Indian society which is largely
characterized by more concentration of income and wealth in the organized
section keeping unorganized sector undeveloped.

Regional dispersal of industries

There has been massive concentration of industries m a few large cities
of different states of Indian union. People migrate from rural and semi urban
areas to these highly developed centers in search of employment and
sometimes to earn a better living which ultimately leads to many evil
consequences of over-crowding, pollution, creation of slums, etc.

3.3 Positive implication

POSITIVE IMPACT OF GST ON SMALL SCALE INDUSTRIES:
As per industry experts, SMEs and start-ups will be affected the most with the
rollout of the GST and the impact will be favorable in ways more than one.
Some of the ways GST will benefit SMEs and start-ups are:

1. Launching a new business becomes easier

Under the previous tax regime, if your business had operations across
multiple states, you would need to register for VAT with each state’s sales
tax department in order to carry out business activities there. The
fact that every state had different tax rules complicated the entire
process, and business owners had to pay multiple procedural fees for
VAT registration. Under GST, the registration is centralized and the
rules are uniform for all the states across the country. All you have to do
is complete and submit an online form to obtain a GSTIN (GST
Identification Number). Launching a new business, and subsequently
expanding it, will be comparatively easier under the GST regime.
 2. The entire process of taxation becomes simpler
A combined tax also means dealing with fewer tax authorities. Previously,
business owners had to deal with many different tax authorities depending on
the nature of their business and transactions. Under GST, you can be sure that
the relevant authority is always either the Centre or the State government.
3. Reduce cost of logistics
The current tax regime has created a lot of hassles for the transportation
sector. The long queues at checkpoints and inter-state entry points have
caused vehicles to stand idle for long periods of time, adding to labour
and fuel costs. Businesses transporting goods to other states have had
a hard time filing paperwork and paying entry taxes at the inter-state
borders, further delaying the delivery of goods.

4. The distinction between goods and services will be eliminated

Previously, businesses providing both goods and services had to
calculate the VAT and service taxes individually. GST eases the process
by removing the distinction between goods and services; tax will be
calculated for the final total, not individual products or services.

Limitations of GST
Though there are a lot of advantages to GST, SMEs may have reservations
about transitioning to GST and getting used to the new tax regime
within a short period of time. Their concerns might include increased
compliance costs and numerous returns. Here are a few negative effects
of GST that are likely to affect SMEs.
Goods and Services Tax (GST) is an indirect tax on the supply of goods
and services in India. The benefits of GST are quite high for the Indian
consumer as it has reduced the burden of several Taxes and brought it under
one roof. It is important to know that GST is a tax that the buyers don’t
pay directly to the government. They pay it to the producers or the sellers.
And, these producers and sellers then pay it to the government.

GST is a destination-based consumption tax. It has been designed in a manner

so that tax is collected at every stage and the credit of tax paid at the previous
stage is available to set off the tax to be paid at the next stage of transaction
there by eliminating cascading of taxes. This eradicates “tax on tax” and
allows cross utilization of input tax credits which benefit the industry by
making the entire supply chain tax neutral.
4.1 Advantages of GST to consumers

1. Decrease in the price of goods and services

Since GST is charged at all levels of the supply chain, a considerable

difference can be found in the prices of the products. While
consumers would have to pay separate taxes before, they now have
to pay just one tax. A customer will be able to avail the advantages of
GST cost that will be lesser than VAT or service taxes. Food items,
such as basic food grains & spices fall under the Range 0-5% GST, this
might be extremely beneficial for the customers as they are cheaper
to buy
 2. Same price around the country
One of the major advantages of GST is the fact that a consumer will be able to
avail the product at the same price anywhere in the country. However, the
products that fall under the GST tax-slab come under this advantage.

3. Simplified tax system

The entry of GST into the Economy has made the tracking of taxes
easier than ever before. Since GST works on a computerized system,
consumers can be fully aware of the amount they are paying in taxes
for the goods and services. Every time you purchase goods and
services; you will be able to see the amount you paid in tax on the
receipt.

4.2 Benefits of GST to the government

1. Foreign investments
Goods and Services Tax (GST) was launched with the motto
of ‘One Tax One Nation’. Common and accountable markets
help attract foreign investment and promote Indian products
at an international platform.

2. Boost in the import and export

Industry Attracting foreign investment will not only help
Indian products and services reach a global platform, but
also give a boost to the Import and export industry. The more
trade takes place the better job opportunities are created. The
unemployed of the country will get jobs and newer
businesses will enter the Market. The overall economic
situation in the country will improve.
4.3 Benefits of GST to traders

1. Transparency
Traders could be wholesalers, retailers, importers and exporters, etc.
One of the major advantages is the transparency that comes with
GST. It makes the business transaction easy for traders as they have to
pay GST for everything, they purchase along the supply chain.

2. Easy borrowing
Digitalization has brought about immense ease in transactions to
society and has made life much easier for both consumers and traders.
GST brought the recording of every financial transaction on its
system which makes it easier for small and large businesses to
Maintain their transactions’ record.

3. Easy entry into the market

This is another major advantage for any business under the GST tax
regime. With the clarity in market processes, a better flow of action
between the various traders can be maintained. This makes the entry
of any trader into the market easier as compared to previous times.
5.1 Conclusion
A major chunk of the taxes that government of India gets is from the business
sector. It is therefore crucial for the government to ensure that they face
minimum difficulty in paying taxes. The earlier, indirect tax regime had
two major drawbacks. One, the taxes and the paperwork involved was too
complicated to follow and resulted in reluctance of small businesses filing
income tax.
Second, the cascading effect of the taxes made the tax rate higher than the
GST tax rates in most of the cases. Typically, indirect taxes (excise duty, VAT,
entry tax, input taxes, etc.) increased the cost of goods by about 30% to 35%,
which was affecting tax payers.
Service tax too (at 14.00%) included the non-creditable VAT / CST on the input
and capital goods used for providing the service.

5.2 Recommendations
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

➢ Building information technology backbone – the single most important

initiative for GST implementation

➢ The customers suggested that there should be a smooth, transparent and

simple transition provisions which is easily understandable.

➢ Special focus on awareness and training of all officers, professionals and

assesses should be given on GST.
 ➢ Since the public are very clear about GST, any disputes on GST introduction
should be protectively addressed by way of speedy redress