LAW OF TAXATION-II

TOPIC- - INDIAN TAX STRUCTURE AND GST

ASSIGNMENT SUBMITTED TO
FACULTY OF LAW, UNIVERSITY OF LUCKNOW

For the Partial Fulfillment of the Requirement in

LL.B. (Hons.)- VIII SEM (SECTION-B)

UNDER GUIDANCE OF: SUBMITTED BY:

Dr. Anand Kumar Singh Kavyanjali Singh

Faculty of Law Semester 8th, Section B

University of Lucknow Roll number: 200013015089

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 ACKNOWLEDGEMENT

The success and final outcome of this project required a lot of guidance and
assistance from many people and I am extremely privileged to have got this all along
the completion of my project. All that I have done is only due to such supervision
and assistance and I would not forget to thank them.

This work would not have been possible without the support and constant help of my
reverend guide Dr. Anand Kumar Sing, Faculty of Law, University of Lucknow; for
his countenance advice, adherent interest and pain taking nature.

I am especially indebted to, Prof. B.D.Singh, Honorable Head and Dean of Law
Faculty, University of Lucknow, who have been supportive of my career goals and
who worked actively to provide me with the protected academic time to pursue those
goals.

I am grateful to all of those with whom I have had the pleasure to work during this.
I am thankful to and fortunate enough to get constant encouragement, support and
guidance from all my friends who helped me in successfully completing this project
work. Also, I would like to extend my sincere esteems to all family members for
their timely support.

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 CONTENTS

S.NO. TOPIC NAME PAGE NUMBER

1. Cover page. 1
2. Index. 2
3. Acknowledgement. 3
4. Introduction 4
5. GST 5
6. Types of gst 6
7. Conclusion 9
8. References 10

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INTRODUCTION

Tax structure in India is a three tier federal structure. The central government, state governments,
and local municipal bodies make up this structure. Article 256 of the constitution states that “No
tax shall be levied or collected except by the authority of law”. Hence, each and every tax that is
collected needs to backed by an accompanying law. Under the Indian Taxation law the structure
or the system of taxation is divided mainly into two taxes that are commonly known as Direct
taxes and Indirect taxes, direct taxes are those taxes in which the burden to deposit the taxes are
on the assesses themselves (for example income tax imposed on the income earned by an
individual is to be paid by him only ) and indirect taxes are those taxes wherein the burden to pay
the tax is shifted to someone else this tax is usually imposed on the goods and services which
then results in higher prices of such goods.

“Over the last few years, the Central and many State Governments have undertaken various
policy reforms and process simplification towards great predictability, fairness and automation.
This has consequently lead to India‟s meteoric rise to the top 100 in the World Bank‟s Ease of
Doing Business (EoDB) ranking in 2017. The Goods & Services Tax (GST) reform is one such
reform to ease the complex multiple indirect tax regime in India”

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 1. Direct Tax-

Direct Tax is levied directly on individuals and corporate entities. This tax cannot be transferred or
borne by anybody else. Examples of direct tax include income tax, wealth tax, gift tax, capital gains
tax.Income tax is the most popular tax within this section. Levied on individuals on the income earned
with different tax slabs for income levels. The term „individuals‟ includes individuals, Hindu
Undivided Family (HUF), Company, firm, Co-operative Societies, Trusts.”

2. Indirect Tax-

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

 Value Added Tax1 (VAT)– A sales tax levied on goods sold in the state. The rate depends on the
government.
 Octroi Tax– Levied on goods which move from one state to another. The rates depend on the state
governments.
 Service Tax– Government levies the tax on service providers.
 Customs Duty– It is a tax levied on anything which is imported into India from a foreign nation.

GST is one of the biggest indirect tax reforms in the Country.

GST is a comprehensive indirect tax levied on manufacture, sale and consumption of goods as well as
services at the national level. It has replaced all indirect taxes levied on goods and services by the
Central and State Governments GST regime was implemented from 1st July 2017, and India has
adopted the dual GST model in which both the Centre and States levy taxes:”

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Previously ,now it does not exists anymore
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GST has three components-

 “CGST-Stands for Central Goods and Services Act. The central government collects this tax
on an intrastate supply of goods or services”
 “SGST:Stands for State Goods and Services Tax. The state government collects this tax on an
intrastate supply of goods or services”
 “IGST:Stands for Integrated Goods and Services Tax. The central government collects this for
inter-state sale of goods or services.\

TYPES OF GST

The GST has subsumed all the indirect taxes and made it come under one cloud. Here, it composes of
two rates. If the transaction is intra-state( within the state), CGST and SGST is applicable or CGST
and UGST in case of U.T.

If the transaction is inter-state ( with states), then CGST and IGST will be applicable.

There are four types of GST:

 Central Goods and Services Tax

 State Goods and Services Tax
 Integrated Goods and Services Tax
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  Union Territory Goods and Services Tax

1) CGST full form is Central Goods and Services Tax.

CGST refers to the Central GST tax that is levied by the Central Government of India on any
transaction of goods and services tax taking place within a state. It is one of the two taxes charged on
every intrastate (within one state) transaction, the other one being SGST (or UTGST for Union
Territories). CGST replaces all the existing Central taxes including Service Tax, Central Excise Duty,
CST, Customs Duty, SAD, etc. The rate of CGST is usually equal to the SGST rate. Both taxes are
charged on the base price of the product. See the example below to understand it better.

 e.g. – In the example above, when Suresh sales a product to Pradeep in the same state
(Rajasthan), he has to pay two taxes. CGST is for the central government while SGST is for
the state. The rate of CGST is 9%, same as SGST. After the application of CGST (9% of Rs
10,000), the final cost of the product will become Rs 11,800.

2) SGST full form is State Goods and Services Tax

SGST (State GST) is one of the two taxes levied on every intrastate (within one state)
transaction of goods and services. The other one is CGST. SGST is levied by the state where
the goods are being sold/purchased. It will replace all the existing state taxes including VAT,
State Sales Tax, Entertainment Tax, Luxury Tax, Entry Tax, State Cesses and Surcharges on
any kind of transaction involving goods and services. The State Government is the sole claimer
of the revenue earned under SGST. Let‟s understand this with an example.

e.g. – Suresh from Rajasthan wants to sell some goods to Pradeep in Rajasthan. The product,
originally priced at Rs 10,000, will attract GST at 18% rate comprising of 9% CGST rate and
9% SGST rate. The SGST tax amount here is Rs 900 (9% of Rs 10,000) which is fully claimed
by the Rajasthan State Government. The rate of the product after SGST will be Rs 10,900.

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3) IGST full form is Integrated Goods and Services Tax.
Integrated GST (IGST) is applicable on interstate (between two states) transactions of goods
and services, as well as on imports. This tax will be collected by the Central government and
will further be distributed among the respective states. IGST is charged when a product or
service is moved from one state to another. IGST is in place to ensure that a state has to deal
only with the Union government and not with every state separately to settle the interstate tax
amounts. Let‟s try to understand IGST with an example.

e.g., – Ramesh is a manufacturer in Rajasthan who sold goods worth Rs 10,000 to Suresh in
Rajasthan. Since it is an interstate transaction, IGST will be applicable here. Let‟s assume the
GST rate is 18% for the particular item. So, the IGST amount charged by the Central
Government will be Rs 1800 (18% of Rs 10,000), and the refined rate of the product will be Rs
11,800.

4) UTGST full form is Union Territory Goods and Services Tax.

The Union Territory Goods and Services Tax, commonly referred to as UTGST, is the GST
applicable on the goods and services supply that takes place in any of the five Union
Territories of India, including Andaman and Nicobar Islands, Dadra and Nagar Haveli,
Chandigarh, Lakshadweep and Daman and Diu. This UTGST will be charged in addition to the
Central GST (CGST) explained above. For any transaction of goods/services within a Union
Territory: CGST + UTGST

The reason why a separate GST was implemented for the Union Territories is that the common
State GST (SGST) cannot be applied in a Union Territory without legislature. Delhi and
Puducherry UTs already have their own legislatures, so SGST is applicable to them.

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CONCLUSION

While paying taxes may not be a pleasant feeling, however, it is prudent to understand that tax paid by
every single individual contributes towards the country‟s administration and resources required for its
economic progress”

It promotes savings as well as investments. If an individual makes certain set of investments, a part
amount of the same would be tax exempted, thereby enabling him or her to pay reduced amount of
taxes”

Paying tax also works as a proof that you are not only disciplined in filing your tax returns but also
helps at the time of loan application. This is because at the time of purchasing a home loan, the bank
requires proof of whether the applicant has filed his or her taxes regularly” By implementing GST on
goods and services, the Indian government is looking at improving the economy by eliminating the
cascading system of tax and streamlining the business process in India. Similar to every other type of
tax, GST also has provisions to give the benefits of tax credits. The credits will be applicable to the
subsequent taxes on the same product or service. All three IGST, SGST and CGST credits are usable
against each other. Any IGST credit will be first used to deal with IGST tax, then CGST, and then to
set off SGST. Every concept has both positive and negative aspects. Just on the basis of some negative
aspects, a system cannot be just torn out which has many big long term advantage. Thus the GST
should be widely accepted and supported.

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REFERENCES

 Ahmad, Ehtisham and Nicholas Stern, 1991. The Theory and Practice of Tax Reform in
Developing Countries (Cambridge, University Press).
 Bagchi, A, 1994. “India‟s tax reform: a progress report”, Economic and Political Weekly, vol.
XXIX, 22 October, pp. 2809-2815.
 Bird, R.M., 1989. “Administrative dimension of tax reform in developing countries”, in
Malcolm Gillis, ed., Tax Reform in Developing Countries (London, Duke University Press).
_______ , 1993. “Tax reform in India”, Economic and Political Weekly, vol. XXVIII, 11
December, pp. 2721-2726.
 Burgess, Robin and Nicholas Stern, 1993. “Tax reform in India”, Working Paper No. 45,
STICERD, London School of Economics.
 Dasgupta, Arindam and Dilip Mookherjee, 1998. Incentives and Institutional Reform in Tax
Enforcement (Oxford University Press).
 Harberger, Arnold, 1990. “Principles of taxation applied to developing countries: what have we
learned” in Michael Boskin and Charles McLure, Jr., eds., World Tax Reform: Case Studies of
Developed and Developing Countries (San Francisco, ICS Press) pp. 25-46.
 India, 1994. Reform of Domestic Trade Taxes in India: Issues and Options, Report of the Study
Team (Chairman: Dr Amaresh Bagchi)
 Joshi, Vijay and I.M.D. Little, 1996. India‟s Economic Reforms 1991-2001 (New Delhi,
Oxford University Press.
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