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Summary
 7
ABSTRACT

The Goods and Services Tax (GST), implemented on July 1, 2017, is regarded as a major
7
taxation reform till date implemented in India since independence in 1947. The primary
objective behind development of GST is to subsume all sorts of indirect taxes in India
like Central Excise Tax, VAT/Sales Tax, Service tax, etc. and implement one taxation
1
system in India. This paper is an analysis of what the impact of Goods and Services Tax
will be on Indian Tax Scenario. Here stated with a brief description of the historical
scenario of Indian taxation and its tax structure. Then the need arose for the change in tax
structure from traditional to GST model. GST has be detailed discuss in this paper as the
background, silent features and the impact of GST in the present tax scenario in India.
GST is the only indirect tax that directly affects all sectors and sections of our economy.
Ignorance of law is no excuse but is liable to panel provisions, hence why not start
1
learning GST and avoid the cost of ignorance. India is a centralized democratic and
therefore the GST will be implemented parallel by the central and state governments as
1
CGST and SGST respectively. This paper throws an insight into the Goods and Service
Tax concept, its History, advantages, disadvantages and its impact on Indian economy.
2
The study is exploratory in nature and Secondary Data which has been used for the
present study has been collected from different sources i.e. Journals, Periodicals,
31
Newspapers & different websites. Goods and service is very comprehensive tax structure
when implemented at the national level . It is one of the significant step towards the
development of the country. It is one of the biggest tax revolution which is all set to
integrate the state and national economy to boost the overall growth of the country.
Presently companies and businesses pay multiple taxes which increases the cost of
product and also hampers the profit level of the company. Multiple tax and complex
taxation system is one of the biggest hurdle for economic growth of the country. Once the
GST system is applied their would be single tax system which would record a significant
development in comprehensive indirect taxation reform. Under the GST system their
would be only on rate applicable for both goods and services. GST will create a business
22
friendly environment, as prices will fall and it would also control the inflation rates. India
is a Tax driven economy. This tax is levied on business owners, entrepreneurs and
 salaried people. The revenue thus generated by imposing taxes on the general public is
used to run and develop the nation. Many economists have quoted that GST is an Indirect
Tax that brings together most of the taxes that are imposed on all goods and services
1
(except a few) under a single banner. Goods and Service tax is tax regime adopted by 160
countries over the globe in order to evade cascading of tax in the economy. India
introduced GST in the year 2017 whereas many other countries implemented GST many
years before in their tax system. France was the primary country to adopt this single tax
system in 1954 and followed by Germany, Italy, Japan, South Korea. GST is one of the
top initiatives taken by most of the countries for a structured and developed economy. A
value-added tax levied on mainly goods and services provided or sold for domestic or
household consumption is called Goods and Service Tax

Key Words:

Literature Review

12
Ahmad (2009) discussed the GST specifically in relation to the place of supply rules for
services to be adopted, the method to apply dual GST. The author has discussed the
options to introduce the dual GST in India which could be Concurrent Dual GST,
National GST or State GST. Under the concurrent dual GST the better option was the one
where GST is applied on both goods and services. The other option explored was whether
the Central GST would be on goods and services but state GST would be only on goods.
This option also recommended one single return with both CGST and SGST details and
PAN based registration. Given the difficulties in identifying the state where SGST on
services is payable, one more variant of dual GST was where the center collects SGST on
behalf of states and then apportioning it on some scientific basis. The authors then
discussed the various rates available to tax, the slab structures, exemptions, etc. The paper
concluded that whilst GST is much awaited all these issues need to be addressed for it to
be effective.
Ehtisham Ahmed and Satya Poddar (2009) studied “Goods and Service Tax Reforms and
Intergovernmental Consideration in India” and found that GST introduction will provide
 simple and transparent tax system with increase in output and productivity of economy in
India. But the benefits of GST are critically dependent on rational design of GST.
12
Dr. R. Vasanthagopal (2011) studied “GST in India: A Big Leap in the Indirect Taxation
System” and concluded that switching to seamless GST from current complicated indirect
tax system in India will be a positive step in booming Indian economy. Success of GST
will lead [5] to its acceptance by more than 130 countries in world and a new preferred
form of indirect tax system in Asia also.

Jana V. M., Sarma& V Bhaskar (2012) studied “The Road Map for implementation of
Goods and Service Tax”. He found that the steps to be undertaken to implement the
comprehensive tax system i.e., GST. The authors have thrown light on the constitutional
amendment required for the implementation of GST in India. Syed Mohd Ali Taqvi
(2013) studied the challenges and opportunities of Goods and Service Tax in India. He
explained that GST is only indirect tax that directly affects all sectors and sections of our
country. It is aiming at creating a single, unified market that will benefit both corporates
and economy. He also explained the proposed GST model will be implemented parallel
by the central and state governments as Central GST and State GST respectively.

Jaiprakash ( 2014) in his research study mentioned that the GST at the Central and the
State level are expected to give more relief to industry, trade, agriculture and consumers
through a more comprehensive and wider coverage of input tax set-off and service tax
setoff, subsuming of several taxes in the GST and phasing out of CST. Responses of
industry and also of trade have been indeed encouraging. Thus GST offers us the best
option to broaden our tax base and we should not miss this opportunities to introduce it
when the circumstances are quite favorable and economy is enjoying steady growth with
only mild inflation.

Nitin Kumar (2014) studied “Goods and Service Tax- A Way Forward” and concluded
that implementation of GST in India help in removing economic distortion by current
indirect tax system and expected to encourage unbiased tax structure which is indifferent
to geographical locations.
Nishitha Guptha (2014) in her study stated that implementation of GST in the Indian
framework will lead to commercial benefits which were untouched by the VAT system
and would essentially lead to economic development. Hence GST may usher in the
possibility of a collective gain for industry, trade, agriculture and common consumers as
well as for the Central Government and the State Government.

Shefali Dani (2015) has suggested that GST administration is an irresolute endeavor to
26
legitimize backhanded expense structure. Roughly more than 150 nations have executed
GST idea. The legislature of India must examination the GST administration set up by
different nations and furthermore their aftermaths previously actualizing GST. IT is the
need of hour that, the legislature must make an endeavor to protect the huge poor
populace of India, against the expansion because of execution of GST. GST will
disentangle its current roundabout duty framework and should expel wasteful aspects
made by the current heterogeneous expense framework, just if there is a reasonable
agreement over issues of edge constrain, income rate, and incorporation of oil based
commodities, power, alcohol and land.

Srinivas K. R (2016) in his article “Issues and Challenges of GST in India” mentioned
that central and state governments are empowered to levy respective taxes as per the
Indian constitution which is likely to change the complete scenario of present indirect
taxation system. GST will be a compressive indirect tax structure on manufacture, sales
and consumption of goods and services throughout India, to replace the various indirect
taxes levied by the both the governments.

Poonam (2017) in her study cleared that in the system of indirect taxation GST plays a
very important role. The cascading and double taxation effects can be reduced by
combing central and state taxes. Consumer’s tax burden will approximately reduce to
25% to 30% when GST is introduced and then after Indian manufactured products would
become more and more inexpensive in the domestic and international markets. This type
of taxation system would directly encourage economic growth. GST with its transparent
 features will prove easier to administer. With the above reviews, we can assume that GST
is a tax reform which will change the scenario of the country as a support for this review
study.

20
Akansha Khurana and Aastha Sharma (2016) [5] concluded in their research article
“Goods and Services Tax in India- A positive reform for indirect tax system” that GST
will provide relief to producers and consumers by proving wide and comprehensive
coverage of input tax credit set-off, service tax set-off and subsuming the several taxes.
Further concluded that GST has a positive impact on various sectors and industry.

Pradeep Chaurasia et.al (2016) analyzed in the paper “Role of Goods and Services Tax
in the growth of Indian Economy” and found that GST will be helpful for the
development of Indian Economy as well as it will be very much helpful in improving the
GDP of the country more than two percent.
Hamdani Rizwana (2016) focused in his paper “GST and Indian Economy” that
implementation of GST will increase the job opportunities and this lead to stability in the
country, which is the most important requirement for development of an economy.
20
Raj Kumar (2016) highlighted the impact of GST on Indian Economy with a
comparison between GST and Current taxation system. In addition he concluded that
after implementation of GST, manufacturer, whole seller and retailer can be easily
recovered input taxes in form of tax credits.
Lourdunathan F and Xavier P (2016) focused on the challenges and prospects of
implementing GST and concluded that GST will bring One Nation and One Tax market
that will provide relief to the producers and consumers from several taxes.

2
Nitin Kumar (2014) studied, “Goods and Service TaxA Way Forward” that implementing GST in
India would help in removing current indirect tax system and expected to encourage unbiased tax
structure which is indifferent to geographical locations.

Nishita Gupta (2014) in her study stated that by implementing GST would give many benefits to
our country which is not given by current tax structure and will benefit the economy.
Rathod M (2017) in his paper “An Overview of Goods and Service Tax (GST) In India”
concludes that GST will be a step towards a developed India benefiting too many parties and
entire nation.

World Bank (2018) and et.al “Study on GST in India” concluded that the Indian GST system is
among the most complicated ones in the world, with its high tax rates and a larger number of tax
rates and negative impact on its economy .
27
Poonam, 2017 in her study , she had cleared that GST would be a very important step in the field
of indirect taxation. The cascading and double taxation effects can be reduced by combing
central and state taxes. Consumer’s tax burden will approximately reduce to 25% to 30% when
GST is introduced. After introduction of GST concept, Indian manufactured products would
became more and more competitive in the domestic and international markets. This taxation
system would instantly encourage economic growth.GST with its transparent features will prove
easier to administer .In this paper the author has tried to attempt to spot the concept of GST & its
current status in India. Paper has tried to give information about GST system. The study also
aims to be familiar with the advantages and challenges of GST in Indian scenario.

Shefali Dani has proposed that GST regime is a halfhearted attempt to rationalize indirect tax
structure. Approximately more than 150 countries have implemented GST concept. As per
researcher government of India must study the GST regime set up by various countries and also
their fallouts before implementing gst. IT is the need of hour that, the government must make an
attempt to insulate the vast poor population of India, against the inflation due to implementation
of GST. There is no doubt, GST will simplify its existing indirect tax system and will have to
help to remove inefficiencies created by the existing current heterogeneous tax system, only if
there is a clear consensus over issues of threshold limit, revenue rate, and inclusion of petroleum
products, electricity, liquor and real estate.
3
Garg (2014), analysed the impact of GST on Indian tax scenario. He tried to highlight the
objectives of the proposed GST plan along with the possible challenges and opportunity that
GST brings. He concluded that GST is the most logical step in Indian indirect tax reforms.
Further he mentioned that experts say that GST is likely to improve the tax collection and boost
the economic development of the country.

Kumar (2014), concluded that GST will help in eradicating economic distortion by current
Indian tax system and is expected to encourage unbiased tax structures which will be indifferent
to geo locations.

Sehrawat & Dhanda (2015) , conducted a study focused on advantages and challenges of GST
faced by India in execution. They concluded that a simplified and transparent tax system was the
need of Indian economy. Pointing out the various advantages they said that GST will provide
India a world class tax structure and a seamless tax system but it will depend upon effectiveness
of its implementation.

Khurana & Sharma (2016), conducted a study with a view to explore various benefits and
opportunities of GST by throwing a light on its’ background, objectives of proposed GST plan
and its impact on Indian tax scenario. They concluded that GST implementation will definitely
benefit producers and consumers although its’ implementation requires concentrated efforts of all
stake holders especially central and state government.
4
Dr. Agrawal Yogesh Kailashchandra (2019) According to his research, "Goods and
Services Tax and Its Impact on the Indian Economy," GST has both good and bad effects on
the Indian economy. The GST system is structured in such a manner that it is anticipated to
produce a significant amount of income for both the federal and state governments, according
to the research. It will be advantageous in the long term for corporations, businesses, and
service suppliers. It would increase transparency in indirect tax collection, which will benefit
both the government and the people of India.

Sandhu Vikram and Atwal Heena (2019), the research "Goods and Services Tax:
Issues and Challenges in India" finds that since GST is still in its early stages, it has its own
set of issues and challenges. However, if this system is executed correctly and efficiently, it
may aid in the improvement of our country's financial and economic standing. This method
4
is said to be a more transparent and better version of the taxation system. However, only time
will tell how much of an effect it has and how relevant it is. Kumar, Mohan. R (2019) He
concludes that GST would also reduce the cascading effect of taxes, as he examines the
"Impact of Goods and Services Tax on the Indian Economy." India is expected to play a
significant role in the global economy in the coming years. GST is expected to be
implemented not just in the nation, but also in neighbouring countries and developed
economies across the world. Only when the whole nation works together to make it a success
will it become nice and easy. In addition to the current situation, the new taxing system has a
slew of other effects on the economy that may help businesses thrive.

4
Pallavi Kapila (2018) In the article "GST: Its Impact on the Indian Economy" The
purpose of this study paper is to show how GST, which includes VAT, Excise Duty, Service
Tax, and Sales Tax, would help to reduce the current complexity of taxes in India. According
to research, the introduction of GST had a significant impact on the development of the
Indian economy. In the near future, a unified and reasonable taxation structure in India would
lead to fewer market disruptions and a more effective allocation of resources within the
sector. The research also discovered that GST would boost the country's GDP and exports,
improving economic welfare and returns on the inputs of production, such as land, labour,
and capital. Pallavi Kapila (2018)A study on "GST: Its Impact on the Indian Economy" In
this study paper, an effort is made to show how GST, which includes VAT, Excise Duty,
Service Tax, and Sales Tax, would assist in reducing the current complexity of taxes in India.
According to research, the introduction of GST had a significant impact on the development
of the Indian economy. In the near future, a unified and reasonable taxation structure in India
would lead to fewer market disruptions and a more effective allocation of resources within
the sector. The research also discovered that GST would boost the country's GDP and
exports, improving economic welfare and returns on the inputs of production, such as land,
labour, and capital.

Jain, Vasundhara. & Aggarwal, Reema (2017) In "Impact of GST on the Indian
4
EconomyOpportunities and Challenges," the impact of the Goods and Service Tax (GST) on
the Indian economy is addressed, as well as why it is necessary to change the taxation system
from the existing tax structure to the GST model. GST offers a comprehensive income tax
4
credit that covers virtually all state and municipal indirect taxes. In India, an integrated GST
framework will be implemented to more effectively distribute input components, resulting in
increased GDP and exports. The new tax policy shift will not be easy for everyone, but the
new structure, which is contemporary, coherent, and open, will attract international investment
and provide many additional benefits. It would expand the base for taxpayers and boost the
competitiveness of Indian industry, which is the duty of non-organized companies. People and
small merchants, for example, will benefit from several industries and sectors, while others,
such as individuals and small traders, will lose out.
Khurana, A. & Sharma, A., (2016) The research "Goods and Services Tax in India –
A Positive Return for the Indirect Tax System" was done with the goal of examining the
different advantages and possibilities of GST by examining its history, planned GST plan
goals, and effect on the Indian tax situation. They found that the adoption of GST would
benefit both producers and consumers, but it would require concerted efforts from all
stakeholders, particularly the federal and state governments.

36
INTRODUCTION

The word “tax” is derived from Latin word “taxare” meaning to estimate. A tax is not a
voluntary payment or donation, but enforced contribution, exacted pursuant to legislative
authority and is contribution imposed by the government, whether under the name of toll,
tribute, impost, duty, custom, excise, subsidy, aid, supply, or any other name (Chakraborty &
Rao, 2010 ; Garg, 2014).01 Amalgamating several Central and State taxes into a single tax
12
would mitigate cascading or double taxation, facilitating a common national market. The
simplicity of the tax should lead to easier administration and enforcement. GST is expected
to pave way for better e-commerce and will make industries more competitive. GST will be a
game changing reform for Indian economy by developing a common Indian market and
reducing the cascading effect of tax on the cost of goods and services. It will impact the Tax
Structure, Tax Incidence, Tax Computation, Tax Payment, Compliance, Credit Utilization and
38
Reporting leading to a complete overhaul of the current indirect tax system. India’s economy
has been among the fastest growing economies in recent years. This growth has been
supported by several factors like market reforms, large inflow of foreign direct investment,
raising foreign exchange reserves, a blooming information technology and real estate sector
and flourishing capital market. In recent years also, India has been viewed as an attractive
and dynamic investment destination, and has witnessed an increased presence of
multinational enterprises (MNEs) and a consequential increase in cross- border trade. This
has created many opportunities to the Government for improving tax system of the
7
country.03 A good tax system plays an important role on the economy of a country through
7
their impact on both efficiency and equity. Already 160 countries have implemented GST in
their tax regime. GST is a comprehensive tax system that will subsume almost all the indirect
taxes of states and central governments. Although it was considered as the biggest taxation
by many countries of the world in many years ago, India roused up around the year 2000 and
then the NDA government formed an empowered committee to design GST model for its
implementation and since many debates was arise on implementing GST in India.05 “The
goods and services tax law in India is a comprehensive, multi-stage, destination-based tax
14
that is levied on every value addition”[1]. Taxation policy plays a very crucial role on the
economy of a country. The main source of revenue of the government comes from the taxes
levied on the citizens who can be direct or indirect. When the impact and incidence falls on
same person it is called as direct tax and when the impact and incidence falls on two different
peoplei.e. the burden can be shifted to any other person it is called as indirect tax. Before the
introduction of GST India had a complicated indirect tax system with multiple taxes imposed
by union and state separately, with the introduction of GST all the indirect taxes will be under
an umbrella and ensuring a smooth national market with high economic growth rate. GST is
a single point tax levied on the supply of goods and services, right from the manufacturer to
the consumer. Credits of input taxes paid at each stage will be available in the subsequent
stages on value addition, thus making GST an essential tax only on value addition at each
stage which ensures that there is no cascading of taxes 06 GST will ensure a comprehensive
2
tax base with minimum exemptions, which will help the industry. GST will help the economy
to grow in more efficient manner by ameliorating the tax accumulation as it will disrupt all
the tax barriers between states and integrate country via single tax rate. It will benefit the
Indian economy in many ways-help in reducing the price for consumers, rate of tax will be
 2
uniform, reduce multiple taxes. Goods and Services Taxes would be collected in three ways:
CGST: where the revenue will be collected by the central government, SGST: where the
revenue will be collected by the state governments for intra-state sales, IGST: where the
8
revenue will be collected by the central government for interstate sales.07 taxes are only
means for financing the public goods because they cannot be properly priced in the market.
And government is only the source of funding using the taxation methods. As taxes are the
drivers of the economy. Tax regimes should be designed in such a manner that is does not
become the source of distortion in the market or result in failure of market. Raising a
sufficient amount of revenue is main aim of tax law in efficient , effective and equitable
manner. Tax policies are important contributor to the economy in both the cases efficiency
and equity. Good tax system should keep in view the issues of income distribution and also
focused on strategies to generate tax revenues to support government expenditures on public
services and infrastructural development. GST stands for Goods and Service Tax. Domestic
trade tax will be levied in the form of a value added tax on all goods and services , in practice
with some exemptions. VAT exempts all inputs including capital goods. Moreover it is
general tax is on domestic consumption. Basically there is need to change the taxation
pattern, as double taxation system demotivates the consumer from consumption of products.
It also impacts spending pattern of public. Development of the economy depends on the
purchasing power of the country. GST is convenient and economically efficient way of taxing
the consumption. Basically there are very few exemptions because it has single rate and it
becomes a proportional tax on consumption. One level of tax is efficient way of collection ,
because it either goes to the state or central level. Multiple level of tax is distortion in case of
destination of tax collection. Tax should go to the state in which the concerned consumer
lives. This will automatically take place if tax is levied at the central level or state is in
unitary level with the one and only level of tax collection. If GST has to be implemented at
21
central level i.e. in one level, it has to face many challenges at central level 08 The Goods
and Services Tax Bill or GST Bill, officially known as The Constitution (One Hundred and
Twenty-Second Amendment) Bill, 2014, proposes a national Value added Tax to be
implemented in India from June 2016. "Goods and Services Tax" would be a comprehensive
indirect tax on manufacture, sale and consumption of goods and services throughout India, to
replace taxes levied by the Central and State governments. Goods and services tax would be
levied and collected at each stage of sale or purchase of goods or services based on the input
tax credit method. This method allows GST-registered businesses to claim tax credit to the
value of GST they paid on purchase of goods or services as part of their normal commercial
activity. Taxable goods and services are not distinguished from one another and are taxed at a
single rate in a supply chain till the goods or services reach the consumer. Administrative
responsibility would generally rest with a single authority to levy tax on goods and services.
Exports would be zero-rated and imports would be levied the same taxes as domestic goods
16
and services adhering to the destination principle.09 The GST is an indirect federal sales tax
that is set on the basis of the rate slab of saleable goods and services under consideration. The
GST is added to the value of the product/service at the business level and a consumer who
purchases the product/service has to pay the sales price plus GST. The GST portion collected
and from the consumers and accumulated by the business or seller should be forwarded to the
government. In some countries, this kind of tax is referred to as a Value-Added tax in simple
16
way VAT. With the implementation of GST, India is joined select League of Nations which
incorporated goods and service tax model. In fact, France was the first country to implement
the GST in 1954. Since then, Germany, Italy, the UK, South Korea, Japan, have introduced
the GST. The countries which implemented GST first in their nation are France in 1954,
Russia in 1991 and China in 1994. Merely a handful such as Canada has a dual GST system.
Compared to a combined GST economy where the central or federal government collects the
tax and then circulated to the states. In a dual system of GST, the central or federal GST is
imposed in addition to the sales tax of the state. For example, in Canada, the central
government levies a 5 percent tax and several provinces or states also levy a provincial state
43
tax which in short called PST, which varies from 7-10 percent. In this situation, Electronic
16
copy available at: https://ssrn.com/abstract=3391890 a consumer or customer's receipt will
obviously have the GST and PST rate that is imposed on his or purchase value. Recently, the
GST and PST have been mutually combined in several provinces into a single tax system
recognized as the Harmonized Sales Tax which in short called as HST. In 2013, Prince
Edward Island adopted the HST for the first time by combining Canada's federal and
provincial sales taxes to a solitary tax at 14 percent. Ever since then, quite a few other
provinces have followed this tax system including Nova Scotia and Ontario New Brunswick,
Newfoundland, and Labrador. 12
19
HSN CODE IN GST AND RATES
HSN (Harmonized System of Nomenclature) is a 6-digit code for identifying the applicable rate
of GST on different products as per CGST rules. If a company has turn over upto Rs. 1.5 Crore
in preceding financial year then they need not to mention HSN code while supplying goods on
invoices, if a company has turnover more than 1.5 Cr but up to 5 Cr then they need to mention 2
digit HSN code while supplying goods on invoices and if turnover cross 5 Cr then they shall
mention 4 digit HSN code on invoices. The GST is imposed at different rates on different 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 Rs. 100 and 28% GST on tickets
costing more than Rs.100. 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. The introduction of the GST increased the costs of most
consumer goods and services in India including food, hotel charges, insurance and cinema
tickets. Upon its introduction in the country, GST led to a number of protests by the business
community, primarily due to an increase in overall taxes and hence the prices of goods. Check-
posts across the country were abolished ensuring free and fast movement of goods. 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. 20

10
Silent features of GST

1. All transactions on goods and services will be covered up except exempted goods and services

2. There are two segments of GST, one is central GST and other is state GST. Central GST will
be paid to central government and state GST will be paid to respective state government

3. Meaning of taxable person, taxable events, chargeability, measure to levy tax, etc would be
same in CGST and SGST

4. Administration of CGST will be controlled by central government and administration of

SGST will be controlled by respective state government. The power of making law on taxation
of goods and services lies with both central and state government. A law imposed by central
government on GST will not overrule state GST law.
 5. Pan card based identification number would be allotted to the taxpayer to facilitate tax
payment and return

6. Tax return to be filled separately to central government for CGST and state government for
SGST

7. Input credit can be claimed from respective department where GST paid, i.e. central GST paid
on inputs can be claimed against central GST only and same for state

8. GST would be applicable if there is an import of goods and services

9. The GST slabs have been set at 0%,5%,12%,18% and 28% for different goods and services
10. Integrated goods and services tax(IGST) also known as interstate goods and services tax is a
component of GST which is charged on supply of goods and services in the course of interstate
trade which is collected by central government and distributed to imported states as destination
based tax. Additional 1% tax on interstate supply of goods which is levied by central government
and directly apportion to the exporter state. This tax will be charged for a period of two years or
more as per the recommendation of GST council

11. The union government will compensate the states for a period of 5 years or more on
recommendation of GST council for the loss of revenue arising out of GST implementation

12. GST council had been set up president and chaired by union finance minister. It will
constitute of union minister of state in charge of revenue and minister in charge of finance or any
41
other field nominated by state government. The representatives in the council are 2/3rd from
state and 1/3rd from union. The decision of council is made by 3/4th majority of the vote cast
and quorum of council is 50% 06
1
Features of GST

Registration of taxpayers: Every person with a turnover exceeding Rs 20 lakh will have to
register in every state in which he conducts business. This threshold will be Rs 10 lakh for
special category states (i.e. Himalayan and North-Eastern states).

Returns: Every taxpayer is required to file tax returns on a monthly basis by submitting: (i)
details of supplies provided, (ii) details of supplies received, and (iii) payment of tax. In addition
to the monthly returns, an annual return will have to be filed by each taxpayer.
 Exemptions from GST: There are certain goods and services which are exempted from GST.

Taxable amount (value of supply): The GST would be applicable on the supply of goods and
services, whose value will include: (i) price paid on the supply, (ii) taxes and duties levied under
other tax laws, (iii) interest, late fee, penalties for delayed payments, among others.

Payment of GST: The CGST and SGST needs to be paid in the accounts of the central and states
government.
2
Goods and Services Tax Network (GSTN):It is a non -profit, Non-Government Company called
Goods and Services Tax Network (GSTN). It will manage the entire IT system of GST portal.

Input Tax Credit (ITC) Set Off : ITC for CGST & SGST will be taken for taxes allowed against
central and state respectively.

GST on Imports: Centre will levy IGST on inter-State supply of goods and services. 07

FEATURES OF GST BILL

22
According to the First Discussion Paper on Goods and Services Tax in India by the Empowered
Committee of State Finance Ministers dated Nov. 10th, 2009 , the five key features of the
proposed plan of the Goods and Services Tax for the Indian economy, approved by the
Government of India and Empowered Committee of State Finance Ministers comprises :

i. Two components: one levied by the Centre (hereinafter referred to as Central GST),
and the other levied by the States (hereinafter referred to as State GST), rates for
which would be prescribed appropriately, reflecting revenue considerations and
acceptability.
1
ii. The Central GST and the State GST would be applicable to all transactions of goods
and services made for a consideration except the exempted goods and services, goods
which are outside the purview of GST
iii. The Empowered Committee has decided to adopt a two-rate structure -a lower rate
for necessary items and goods of basic importance and a standard rate for goods in
general. There will also be a special rate for precious metals and a list of exempted
items
 iv. The GST will be levied on import of goods and services into the country.
v. v. The administration of the Central GST to the Centre and for State GST to the States
would be given. This would imply a reduction in unhealthy competition among the
centre and the states over tax revenue that was prevalent earlier and an increase in
harmonious functioning between them 10

3
GST Council: On 10th September 2016, a notification for bringing into force Article 279 A with
effect from 12 September 2016, was issued. According to Article 279 A of the amended
constitution, the GST council will be a joint forum of the centre and states shall consist of Union
Finance Minister (as chairperson) and the Union Minister of the state, in charge of Revenue of
Finance and the Minister in charge of finance or taxation or any other minister nominated by
each state government (as members). Further 279 A (4) states that the council will make
suggestions to the Union and the States on important issues related to GST such as goods and
services that should be exempted or subjected from GST, GST rates including floor rates with
bands, special rates for raising funds during natural calamities/disasters, threshold limits etc. and
all such decisions shall be made by 3/4th majority of the vote cast (2/3rd states together and
1/3rd of the centre). The GST council is managed by the GST Council Secretariat which consists
of the Central and State government officers taken on deputation. The entire cost and expenses of
GST council shall be borne by the Central government.11

Goods and Services Tax Network (GSTN): Its’ a non government, private limited company
formed on 28th march 2013. It was primarily set up to provide IT infrastructure and the services
to the Central and State government tax payers and other stake Holders for implementing GST.
The functions of GSTN includes facilitating registration, computation and settlement of IGST,
forwarding the returns to the central and state authorities, matching the details with banking
networks, providing an analysis of tax payers profile etc.11
 HISTORY

24
Taxation was first imposed in Ancient Egypt around 3000 B.C.- 2800 B.C. during the
first dynasty of the old kingdom. Records indicate from that period that the Pharaoh
would conduct a biennial tour of the kingdom, collecting tax revenues from the people.
Other data indications are granary receipts on limestone flakes and papyrus. Taxes are the
only way for financing the public goods because of their inappropriate pricing in the
market. It can only be levied by the government, via funds collected from taxes. It is
highly important that the taxation system is designed in such an appropriate manner that
it doesn't lead to any sort of market distortions and failures in the economy. The taxation
laws should be highly competitive so that revenue can be raised in a highly efficient and
effective manner In India, the taxation system was started in ancient times. The early
taxation system’s existence can be seen in many ancient books like Manu - Smrti and
Arthasastra. During the British empire, the entire taxation system of India was
transformed. It was entirely in favor of the British empire, but it also incorporated
modern and scientific techniques of taxation systems. Another remarkable transformation
came in the year 1922 in the taxation system when Britishers established an entirely new
administrative and taxation system in India. In this system, the taxation system was
categorized in two main categories: Direct Taxes and Indirect Taxes. In India, the taxation
system is entirely controlled, imposed, and updated by Central and State governments.
The authority to levy tax is derived from the Indian Constitution, which allocates the
power to levy taxes between Central Government System and State Government System.
01
6
3. LEGISLATIVE HISTORY
The Constitution (One Hundred and Twenty-second Amendment) Bill, 2014 was introduced in the Lok Sabha by
Finance Minister Arun Jaitley on 19 December 2014. The Bill was passed by the House on 6 May 2015,
receiving 352 votes for and 37 against. All 37 no votes came from members of the AIADMK. The Indian
National Congress party opposed the Bill and boycotted the vote, its members leaving the House before voting
began. Although the BJD and the CPI (M) had previously opposed the Bill, they cast votes in favour. The
Government attempted to move the Bill for consideration in the Rajya Sabha on 11 May 2015, however,
members of the Opposition repeatedly stalled the proceedings of the House. In order to appease the Opposition's
demand for further scrutiny of the Bill, Jaitely moved a motion to refer the Bill to a Select Committee. The 21
member Committee is expected to give its report by the end of the Monsoon session. In 2000, the Vajpayee
Government started discussion on GST by setting up an empowered committee. The committee was headed by
Asim Dasgupta, (Finance Minister, Government of West Bengal). It was given the task of designing the GST
model and overseeing the IT back-end preparedness for its rollout. It is considered to be a major improvement
over the pre-existing central excise duty at the national level and the sales tax system at the state level, the new
tax will be a further significant breakthrough and the next logical step towards a comprehensive indirect tax
reform in the country. The Kelkar Task Force on implementation of the FRBM Act, 2003 had pointed out that
although the indirect tax policy in India has been steadily progressing in the direction of VAT principle since
1986, the existing system of taxation of goods and services still suffers from many problems and had suggested a
comprehensive Goods and Services Tax (GST) based on VAT principle. GST system is targeted to be a simple,
transparent and efficient system of indirect taxation as has been adopted by over 130 countries around the world.
This involves taxation of goods and services in an integrated manner as the blurring of line of demarcation
between goods and services has made separate taxation of goods and services untenable. Introduction of an
Goods and Services Tax (GST) to replace the existing multiple tax structures of Centre and State taxes is not
only desirable but imperative in the emerging economic
environment. Increasingly, services are used or consumed in production and distribution of goods and vice-versa.
Separate taxation of goods and services often requires splitting of transactions value into value of goods and
services for taxation, which leads to greater complexities, administration and compliances costs. Integration of
various Central and State taxes into a GST system would make it possible to give full credit for inputs taxes
collected. GST, being a destination-based consumption tax based on VAT principle, would also greatly help in
removing economic distortions caused by present complex tax structure and will help in development of a
common national market. A proposal to introduce a national level Goods and Services Tax (GST) by April 1,
2010 was first mooted in the Budget Speech for the financial year 2006-07. Since the proposal involved reform/
restructuring of not only indirect taxes levied by the Centre but also the States, the responsibility of preparing a
Design and Road Map for the implementation of GST was assigned to the Empowered Committee of State
Finance Ministers (EC). In April, 2008, the EC a report to the titled "A Model and Roadmap for Goods and
Services Tax (GST) in India" containing broad recommendations about the structure and design of GST. In
response to the report, the Department of Revenue made some suggestions to be incorporated in the design and
structure of proposed GST. Based on inputs from GoI and States, The EC released its First Discussion Paper on
Goods and Services Tax in India on the 10th of November, 2009 with the objective of generating a debate and
obtaining inputs from all stakeholders. A dual GST module for the country has been proposed by the EC. This
dual GST model has been accepted by centre. Under this model GST have two components viz. the Central GST
to be levied and collected by the Centre and the State GST to be levied and collected by the respective States.
Central Excise duty, additional excise duty, Service Tax, and additional duty of customs (equivalent to excise),
State VAT, entertainment tax, taxes on lotteries, betting and gambling and entry tax (not levied by local bodies)
would be subsumed within GST. In order to take the GST related work further, a Joint Working Group consisting
of officers from Central as well as State Government was constituted. This was further trifurcated into three Sub-
Working Groups to work separately on draft legislations required for GST, process/forms to be followed in GST
regime and IT infrastructure development needed for smooth functioning of proposed GST. In addition, an
Empowered Group for development of IT Systems required for Goods and Services Tax regime has been set up
under the chairmanship of Dr. Nandan Nilekani. A draft of the Constitutional Amendment Bill has been prepared
and has been sent to the EC for obtaining views of the States. The Goods and Service Tax Bill or GST Bill,
officially known as The Constitution (122nd Amendment) Bill, 2014, would be a Value added Tax (VAT) to be
implemented in India, from April 2016. GST stands for "Goods and Services Tax", and is proposed to be a
comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the
national level. It will replace all indirect taxes levied on goods and services 1
by the Indian Central and State
governments. It is aimed at being comprehensive for most goods and services. In this study, we have summarized
the key structural features of the proposals contained in this Bill, and how it differs from erstwhile bill introduced
in 2011 along with our macro-level analysis. We have also provided a reference to the key next steps which this
5
Bill would need to navigate through to reach fruition and our thoughts on how the industry should view this.with
GST. At least one Indian business executive shares this optimistic view of GST. In a report by The Indian
Express, ICICI Bank CEO Chanda Kochhar was quoted to have said that GST is a transformational structural
reform which has multiple benefits. These benefits include the establishment ofa national market, improved ease
of doing business in India, better productivity and efficiency, and improved compliance among taxpayers.
The GST reformpackage is ambitious and is undoubtedly a major move for the $2 Trillion Indian economy.
Its main selling point for the Indian economy is its supposed advantage of making it easier for businesses to do
business. It provides a simplified taxation scheme for goods and services, something businessmen will
appreciate. It’s far fromperfect, though, and it’s definitely worth paying attention to non-political criticisms,
especially in relation to how it affects poorer Indians.
GST’s impact on the Indian economy can go either way: good or not so good. Fortunately, there aren’t that
many analysts who express damningly averse views on the matter. With honest and efficient administration, GST
1
may be a good move for the world’s third largest economy. recently reported a relatively high median rate of 22-
27 percent while earlier indications were a notch lower. Certain administrative clarity on this issue is the need of
the hour. As evident, many of the details would be a function of the model GST legislation and its features, from
norms for logistics, credit mechanism, assessments, dispute resolution, to how existing tax holidays and incentive
schemes would be transitioned. Separately, the herculean tasks of setting up the requisite information technology
infrastructure for administering GST on a pan-India basis as well as gearing up and training the revenue
authorities at the Centre and State needs to be addressed. As next steps, this Bill needs to be debated and voted
on by the Lower House of Parliament. Thereafter, it would need to be voted on by the Upper House of
Parliament, before being ratified by at least half of the States. The wider industry should take notice of this Bill
in as much to set in motion the various institutional decision makers and contribution teams to address this
 conceptual shift in the indirect tax regime. This change would impact almost all business divisions of industries
from procurement, to manufacturing, to sales and distribution. Service providers are also likely to be
substantially impacted, as they have historically been subjected to a less exacting compliance regime. It will
provide the industry to take a relook at how they are organized, since: Almost all manufacturing companies have
warehousing on a State-wise basis on account of VAT laws Current incentive and exemptions would get
impacted, as States would no longer directly receive inter-state revenues as CST but indirectly as a revenue share
Service providers are likely to experience a tax regime with a substantially higher rate and compliance levels 19

11
HISTORY
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). Subsequently, Manmohan Singh, then Finance Minister under of P
V Narasimha Rao, initiated early discussions on a Value Added Tax at the state level. A single
common "Goods and Services Tax (GST)" was proposed and given a go-ahead in 1999 during
a meeting between then Prime Minister Atal Bihari Vajpayee and his economic advisory panel,
which included three former RBI governors IG Patel, Bimal Jalan and C Rangarajan. Vajpayee
set up a committee headed by the then finance minister of West Bengal, Asim Dasgupta to
design a GST model. The Ravi Dasgupta committee was also tasked with putting in place the
backend technology and logistics (later came to be known as the GST Network, or GSTN, in
2017) for rolling out a uniform taxation regime in the country. In 2002, the Vajpayee government
formed a task force under Vijay Kelkar to recommend tax reforms. In 2005, the Kelkar
committee recommended rolling out GST as suggested by the 12th Finance Commission. After
the fall of the BJP-led NDA government in 2004, and the election of a Congress-led UPA
government, the new Finance Minister P Chidambaram in February 2006 continued to work on
the same and proposed a GST rollout by 1 April 2010. However in 2010, with the Trinamool
Congress routing CPI (M) out of power in West Bengal, Asim Dasgupta resigned as the head of
the GST committee. Dasgupta admitted in an interview that 80% of the task had been done. In
2014, the NDA government was re-elected into power, this time under the leadership of
Narendra Modi. With the consequential dissolution of the 15th Lok Sabha, the GST Bill–
approved by the standing committee for reintroduction–lapsed. Seven months after the
formation of the Modi government, the new Finance Minister Arun Jaitley introduced the GST
Bill in the Lok Sabha, where the BJP had a majority. In February 2015, Jaitley set another
deadline of 1 April 2016 to implement GST. In May 2016, the Lok Sabha passed the Constitution
Amendment Bill, paving way for GST. However, the Opposition, led by the Congress demanded
that the GST Bill be again sent back to the Select Committee of the Rajya Sabha due to
disagreements on several statements in the Bill relating to taxation. Finally in August 2016, the
Amendment Bill was passed. Over the next 15 to 20 days, 18 states ratified the GST Bill and the
President Pranab Mukherjee gave his assent to it. A 21-members select committee was formed
to look into the proposed GST laws. State and Union Territory GST laws were passed by all the
states and Union Territories of India except Jammu & Kashmir, paving the way for smooth
rollout of the tax from 1 July 2017. There was to be no GST on the sale and purchase of
securities. That continues to be governed by Securities Transaction Tax (STT). 20
 29
1. The Indian Taxation System - Scenario Before GST
Tax policies play a vital role in any country's progress and have a direct impact on any
country's economy in terms of efficiency and equity. A good taxation policy is that which
takes care of the entire income distribution and also generates tax revenues in such a
manner for Central and State Governments, which can lead to overall benefit in the
nation's infrastructure, defense, public amenities, people's security, and a country's
exports. The entire framework to impose indirect taxes comes under Constitutional
provisions of India. Article 246, Seventh Schedule gives the right to Central and State
Governments to levy taxes and collect indirect taxes on the basis of goods and services
transactions. The taxation system varies from manufacturer to manufacturer on point of
sale or level of imports or exports. Indirect taxation based collection systems are based on
origin, and are designed to impose tax and collect the same at the event of happening of
any taxable activity.01

7
Journey of Indian indirect taxation and turning points, which reformed the taxation
system till date before the introduction of GST taxation system in India.
1974: Report of LK Jha Committee suggested introduction of VAT system.
1986: Introduction of restricted VAT called “MODVAT”.
7
1991: Chelliah Committee report recommended “VAT/GST” and recommendations
accepted by the Government.
1994: Service Tax introduction.
1999: Empowered Committee formation on State VAT.
2000: Introduction of Uniform Floor State Tax Rates and abolition of tax-related
incentives granted by State Governments.
2003: Implementation of VAT system in Haryana.
2004: Strong progress towards introduction of CENVAT.
2005-06: Implementation of VAT based taxation system in 26+ states in India.
2007: First GST Stuffy released by Mr. P. Shome in January; Finance Minister speech
carries the introduction of GST in Budget; CST phase out starts in April 2007; joint
working group created and reports submitted.
2008: EC rolls out the GST Structure of Taxation System in April 2008. 2009: Date
proposed for Implementation as April 1, 2010.
2010: Department of Revenue commented on GST discussion paper and finance minister
suggested probable GST rate.
2011: Team was created to lay down the road map for GST and 115th Constitutional
Amendment Bill for GST was laid down by the Parliament.
2012: Negative list regime for service tax was implemented.
2013: Parliamentary Standing committee submitted its report on the Bill.
2014: 115th Amendment Bill lapsed and was reintroduced in 122nd Constitutional
Amendment Bill.01

(2) Limitations and Issues Pertaining to the Existing Indian Taxation System :
Various taxes are imposed on the Indian population by Central and State Governments
like Central Excise, Service Tax, VAT, etc. Before the introduction of VAT in Sales Tax
and CENVAT in Central Excise and Service Tax, the Indian Taxation System was very
complex and this had cascading effects. The tax imposed on one destination was also
taxed on another destination. However, in recent times, the taxation system has seen
remarkable revolutions. Many changes in taxation were implemented, that is, VAT, and
implementation of Service Tax by Central Government. In Central Excise taxation
system, the government introduced CEVAT by setting off taxes on inputs, while
producing output products. With introduction of VAT based taxation system in India, the
foundation stone of GST implementation was laid.

The following points highlight the primary and severe issues pertaining in Indian indirect
tax structure system :
(i) The CENVAT (excise duty) was imposed on the products manufactured in India. But
issues originated regarding product valuations. The issue regarding implementation of
CENVAT only at the manufacturing level acted as a critical barrier to efficient and neutral
flow of tax credit. This led to the replacement of VAT to GST in many countries.
(ii) The Indian Constitution has distributed the taxation system between Central and State
Governments. The State government has right to impose any sort of tax on any matter or
item under the state. In Service Tax, the Central government enjoys the power to impose
tax but in Work Contracts, the State government has the dominance. This sort of system
creates distortions in revenue generation and distribution for the government.
(iii) Various things like copyrights, patents, software are not considered for taxation
system by the government. So, complexity again arose for classifying these goods under
the taxation policies.
7
(iv) With the booming of the service sector, the Central government has monopolistic
right to impose tax. The State Governments, on the other hand, are losing their revenue
by not imposing any tax on the service sector.
(v) Considering CST on inter state sales of goods, no set off was allowed, which
increased the cascading effect.
(vi) For better monitoring and administration of taxes, major transformations in
technology are required, which is costly and time consuming and has to be redressed.
(vii) Lack of cross verification of returns filed under Central and State taxation systems
led to lot of discrepancies.
(viii) Under the Indirect taxation system, there were more than 15 different taxes which
had to be filled under different norms. So, it required immediate and one system
regulation of filling and calculating taxes.
(ix) The Indian taxation system was cumbersome and full of burdens and different taxes
on same products in different states led to high inflation, which had to be redressed.
Despite of the existence of multiple taxes in the Indian Economy like Excise Tax, Custom
Duty, Service Tax etc., still the GDP of India is much less as compared to the GDP of
other countries like USA - 13.84%, China - 6.99%, Japan - 4.3%, and France - 2.05%. So,
the GDP data of various countries demonstrates that there is utmost need of tax reform,
that is, implementation of Goods and Services Tax (GST) in India.01
22
II. PROBLEMS ENCOUNTERED IN THE CURRENT TAXATION SYSTEM
1
• Taxation at Manufacturing Level i.e. Central Value Added Tax (CENVAT) is levied on
goods manufactured or produced in India which gives rise to definitional issues as to
what constitutes manufacturing, and valuation issues for determining the value on which
the tax is to be levied which through judicial proceedings has been observed to be a
severe impediment to an efficient and neutral application of tax.
• Exclusion of Services from state taxation has posed difficulties in taxation of goods
supplied as part of a composite works contract involving supply of both goods and
services, and under leasing contracts, which entail a transfer of the right to use goods
without any transfer of their ownership. Though these problems have been addressed by
amending the Constitution to bring such transactions within the purview of the State
taxation, services per se remain outside the scope of state taxation powers.
• Tax Cascading - Oil and gas production and mining, agriculture, wholesale and retail
trade, real estate construction, and range of services remain outside the ambit of the
CENVAT and the service tax levied by the Centre. The exempt sectors are not allowed to
claim any credit for the CENVAT or the service tax paid on their inputs. Similarly, under
the State VAT, no credits are allowed for the inputs of the exempt sectors, which include
the entire service sector, real property sector, agriculture, oil and gas production and
mining. Another major contributing factor to tax cascading is the Central Sales Tax (CST)
on inter-state sales, collected by the origin state and for which no credit is allowed by any
level of government.
• Complexity -In spite of the improvements made in the tax design and administration
over the past few years, the systems at both central and state levels remain complex.
Their administration leaves a lot to be desired. They are subject to disputes and court
challenges, and the process for resolution of disputes is slow and expensive. At the same
time, the systems suffer from substantial compliance gaps, except in the highly organized
sectors of the economy. According to Mr. Sunil Birla, Partner, Haribhakti & Co.,
Chartered Accountants, the implementation of GST would be a positive step towards "a
strong single taxation system wherein various Central and State statutes will be subsumed
into one comprehensive enactment" 10
9
a) In regard to Taxation of Goods In the previous indirect tax regime, four major taxes were
levied on goods manufactured in country. First was the CENVAT, which was a value added tax
imposed and collected by central government and incidence of tax was manufacturing of goods.
It was uniform across different states and allowed the input tax credit against Central Excise
duty, Service Tax (2004 onwards) and countervailing duty. And other taxes were state sales tax
or VAT and Entry Tax (in lieu of Octroi), which were imposed, collected and retained by state
governments. Fourth tax was central sales tax, which was levied by central government on
inter-state trades or sales but was collected and retained by exporting states only. The rates of
State taxes and rates for allowing input tax credits varied across States. For example, the
standard VAT rate varied from 12.5% to 14.5 % for the majority of States. For goods which are
under State VAT, input tax credits against in-State purchases were allowed. For the majority of
States, Entry Tax (in lieu of Octroi) was commodity specific and some States did not allow an
input tax credit against Entry Tax (e.g., Assam, Karnataka, Odisha). Entry tax rates varied
across States and commodity. Therefore previous system resulted in substantial transaction
costs for businesses, as they had to comply with different State tax rules and regulations with
different tax rates for same commodity, and it discouraged voluntary compliance which leads to
revenue leakage. This system of taxation could be best described as an origin-based tax
system where the manufacturing (origin or exporting) State collected CST on goods being sold
inter-State. Since it was a tax collected by the origin state, the destination (importing) State was
not used to allow input tax credit against CST. Therefore, CST remains a stranded cost for inter-
State dealers and manufacturers using goods procured from other States. If the goods were
used to sold from the origin State to final consumer (B2C transactions), the origin State levied
9
CST at the rate equivalent to State VAT whereas the destination State did not get any tax on the
transaction. However, if the incoming goods were imported for trading, the import attracted full
State VAT in addition to Entry Tax depending on the type of the goods and State of operation. In
States where entry tax was used to be collected on behalf of local governments and the
revenue was passed on to them, Entry Tax remains a stranded cost for these States as no input
tax credit against Entry Tax is allowed. A few States provided input tax credits against Entry Tax
provided the goods are meant for further value addition or trade in the State concerned. The
non-allowance of input tax credits breaks the chain, leading to cascading effect which is not
conducive for businesses as it causes substantial locking up of working capital as unpaid
credits. The system also did not provide enough incentives to businesses to take registration.
Noninclusion of a large section of businesses under the tax net is not conducive for the
economy as well as taxation system. These features of the previous indirect taxation system
encouraged a large part of economic activities to evade taxes and generate unaccounted
income.
b) In regard to Taxation of Services Similar kinds of problems were prevailing in the service tax
also. Service tax was a tax imposed and collected by Central Government on all services except
mentioned in negative list. Since these services were not zero-rated therefore these services
were not able to claim refund of CENVAT paid on purchase of goods and services as input and
thus remains a stranded cost. Therefore the previous tax regime was suffering from following
limitations: 1. There was no uniformity of tax rates across states. 2. There was cascading effect
of taxes due to tax on tax. 3. No credit for excise duty and service tax paid as input tax was
available to trader while paying state level sales tax or VAT and vice versa. 4. Further no credit
for taxes paid in one state was available in other states. 5. Imposition of multiple taxes with
different tax base in different states made the tax structure complicated. This lead to high
9
compliance cost and tax evasion. All such issues warrant the replacement of previous tax
regime by an efficient, simple and rational GST structure. It is expected that under GST regime,
the tax structure across States will be harmonized as multiple taxes have been subsumed under
GST and further there will be no distinction considered between goods and services, therefore
all above said limitations will automatically be eliminated and tax payers will be in a position to
take full credit for input tax paid irrespective of goods or service.14
35
GST was expected to provide the much-needed stimulant for economic growth in India that was hampered
due to demonetization by transforming the existing basis of indirect taxation towards free flow of goods and
services within the country and also eliminating the cascading effects of taxes in view of the important role
that India has to play in the world economy in the years to come. The expectations from GST were high not
only in India but also abroad. But they did not prove true and even after 9 months of its implementationGST
has not been able to deliver the desired results.Instead businessmen, manufacturers and traders are facing
numerous problems everyday juggling with GSTN portal, filing of returns, different slabs etc. According to
World Bank Biannual India Development. “GST implemented by Modi government is one of the most
complex with the second highest tax rate in the world among a sample of 115 countries which have a similar
1
indirect tax system”. However, the main problems with the current GST are
• India has highest number of GST slabs in the world namely 0%,5%,12%,18%,28%,
28%+cess. Further gold is taxed at 3%, precious stones at 0.25% while alcohol,
petroleum products, stamp duties on real estate and electricity duty are excluded from
GST and continue to be taxed by state governments at state specific rates. As many as
49 countries around the world have a single slab of GST, while 28 countries use two
slabs, only five countries including India use four non-zero slabs. Thus, India has
among the highest number of different GST slabs in the world.
• GST lacks clarity on discontinuation of local taxes so many states evolved their own
taxes. For example, Tamil Nadu devolved an entertainment tax to local governments in
order to impose over and above a 28% GST. Likewise, Maharashtra, to preserve
revenue collections, increased motor vehicle tax to compensate for losses due to GST.
• Many GST forms are not available on GSTN portal.(Sharma Harikishan March 18,
2018) For GST total 69 forms should be uploadedbut the design of many forms is still
not ready. For Example For filing returns there should be 10 forms but GSTR-7 and
GSTR-8 is still not ready. Likewise, GST PMT-3 form related to register and leisure is
still not developed. Same is the case for the form appeal and advance ruling.
• IT structure of GST is very complex and difficult to understand for a simple businessman
so always he/she is roaming all around tax professionals CA and advocates who have
increased their rates of filing GST returns so high that not only cost is increasing but for
the whole month businessman energy is being wasted to file returns.
• IT network of GST (GSTN)has various problems due to which not only businessmen
are facing much trouble but government also has to face awkward situation, criticism
and protests. This is why GST council has to postpone the dates of filing of returns
many times.
• Even the tax officials don’t know anything how to help taxpayers in case of
confusion or dilemma. Though excise and sales tax have been merged but both
officials don’t know their role under GST.
1
• Exporters are not getting refund so they are facing working capital problem even the
production of manufacturer is suffering due to it.(DJ April 15, 2018) Due to
technological problem in GSTN portal their data is not matching with GSTN portal so
exporters are unable to get their IGST refund on time due to which they are facing
many problems.
• Tax evasion has increased under GST after government postponed anti-evasion
measures such as e-way bill, matching of invoices of buyers and sellers and a reverse
charge mechanism wherein the large registered buyers have to pay tax on behalf of
small unregistered sellers. Under the composition scheme businessmen are evading
the tax. Mint reported that the directorate general of GST intelligence had unearthed
evasion amounting to Rs. 440crores in a Pan-India operation.(Nair, 2018)In E-way bill
people are under invoicing of bills as E-way bill is not applicable on goods less than
50000 Rs. and 150 items are out of its purview.
• There are reports of an increased administrative tax compliance burden on firms and a
locking- up of working capital due to slow tax refund processing.
• Though inter-state E-way bill has been implemented from April 1, 2018 but it is not
without fault. According to Confederation of All India Traders (DJ April 24, 2018)
businessmen are facing much problems First,it is not generating easily. Second
 problem is of HSN codebecause many businessmen don’t know about it. Third
problem is about tax rate about which many businessmen are still in dilemma. Fourth
problem is of GST portal because on it some information gets uploaded while some
not. Fifth problem is of complexity of returns. 16

CURRENT FRAMEWORK

8
Goods and Service Tax

Concept Of Goods and Service Tax

GST or Goods and Services Tax is applicable on supply of goods and services. It will replace the
current taxes of excise, VAT and service tax. Currently there are different VAT laws in different
states. This creates problems, especially when businesses sell to different states. Also, most
businesses have to pay and comply with 3 different taxes – excise, VAT, and service tax.GST will
bring uniform taxation across the country and allow full tax credit from the procurement of
inputs and capital goods which can later be set off against GST output liability. This reform gives
equal footing to the big enterprises as well as SMEs. The aim of GST is thus to simplify tax
hurdles for the entire economy.08

Who will have to pay GST? GST will be paid by all manufacturers and sellers. It will also be
paid by service providers such as telecom providers, consultants, chartered accountants etc.
However, being an indirect tax, GST will be ultimately borne by the end consumers, just like in
the current process What kind of GST will be implemented in India? India will implement the
Canadian model of Dual GST, i.e., both the Centre and State will collect GST. GST is a
21
destination based tax system GST is very comprehensive indirect taxation system on goods
manufactured and services provided.It is one of the biggest tax reform in country. Clause
366(12A) of the Constitution Bill defines GST as Dzgoods and services taxdz means any tax on
supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human
consumption. Further the clause 366(26A) of the Bill defines DzServicesdz means anything
other than Goods. Thus it can be said that GST is a comprehensive tax levy on manufacture, sale
and consumption of goods and services at a national level. The proposed tax will be levied on all
transactions involving supply of goods and services, except those which are kept out of its
purview.08
1
In present regime there are separate laws for separate levy like excise duty, customs duty, central
sales tax, value added tax etc. But in case of GST it is going to be a broad scheme which
subsumes all the laws. The tax compliance is going to be easy as all the laws are subsumed and
only one GST law to be implemented. The four GST slabs have been set at 5%, 12%, 18% and
28% for different items or services. The integration of tax laws in GST is expected to reduce the
tax burden on the tax payer compared to present system where the tax payer's burden is high.
Presently the tax is at two points i.e., when the product moves out of factory and other at the
reatil outlet. But GST is to be levied at final destination of consumption and not at various
30
points. This brings transparency and corruption free tax administration.04 Introduction of the
Value Added Tax (VAT) at the Central and the State level has been considered to be a major step
- an important step forward in the globe of indirect tax reforms in India. If the 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 indeed be an additional
important perfection - the next logical step towards a widespread indirect tax reforms in the
country. Initially, 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, 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 the taxes on the Goods and
37
Services. Under the GST scheme, no distinction is made between goods and services for levying
of tax. In other words, goods and services attract the same rate of tax. GST is a multi-tier tax
where ultimate burden of tax fall on the consumer of goods/services. It is called 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 his output, whether for provision of service or sale of goods,
is entitled to get input tax credit (ITC) on the tax paid on its inputs.02

3
Outline: Goods and Services Tax is basically destination based consumption tax levied on goods
and services. Simply, GST is a single tax on the supply of goods and services, right from the
manufacturer to the consumer. In the nutshell, it’s a tax would be levied only on the value
addition with transfer of input tax credit on the subsequent stages of value addition which means
that the final burden of tax shall be borne by the final consumer of the goods or services. The
Goods and Services Tax is a combination of two words “Goods” & “Services”. Where Goods
means every kind of movable property other than money and securities but includes actionable
claim, growing crops, grass and things attached to or forming part of the land which are agreed
to be severed before supply or under a contract of supply {Sec. 2(52)} and Services means
anything other than goods, money and securities but includes activities relating to the use of
money or its conversion by cash or by any other mode, from one form, currency or
denomination, to another form, currency or denomination for which a separate consideration is
charged {Sec. 2(102)}. 11

LAUNCH OF GST
11
The Goods and Services Tax was launched at midnight on 1 July 2017 by the President of India
Pranab Mukherjee and Prime Minister of India, Narendra Modi. The launch was marked by a
historic midnight (1 July–2 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 to for the middle and lower
class Indians. 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. 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. These 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 classes.10

20
Final Tax rates under GST

The GST council has finalized a five-rate tax structure on 3rd November, 2016 moving a step
ahead in developing the dream to make India a single market from 1st July, 2017. These final
GST slab rates are as follows:

0% rated item: Essential items including food grains used by common people.
 5% rated items: Items of mass consumption including essential commodities will have low tax
incidence.

12% and 18% rated items: Two standard rates have been finalized as 12% and 18%

28% rated items: White goods like Refrigerators, Washing Machine, Air conditioners, shaving
stuff and soap, shampoos etc. that were taxed at 30 - 31% shall be taxed now at 28%.

28% with cess: Demerit goods like tobacco and tobacco products, pan masala, aerated drinks and
luxury cars will invite a tax of 28% plus the cess. The overall incidence with cess, thus could
vary between 40-65% an additional tax on some luxury goods shall also be imposed.05

2
STRUCTURE OF GST

GST Council has specified multi-tier tax structure of 0%, 5%, 12%, 18% and 28% as applicable
to different categories of goods and services. 7% items are exempted from GST, whereas, 14%
items have 5% GST tax slab and 17% items have 12% GST tax slab. Around 43% items have
18% GST slab rate and 19% items have 28% GST slab rates. The latest category list is as under:-
·

GST Rate Slab Exempted (No Tax): This category includes 7% of all goods and services. Fresh
fruits and vegetables, milk, buttermilk, curd, natural honey, flour, besan, bread, all kinds of salt,
2
jaggery, hulled cereal grains, fresh meat, fish, chicken, eggs, bindi, sindoor, kajal bangles,
drawing, and coloring books, stamps, judicial papers, printed books, newspapers, jute and
handloom, hotels and lodges with tariffs below INR 1000, and so on are examples of these.

5% GST Rate Slab: This category includes 14% of all goods and services. Some examples
include clothing under INR 1000 and footwear under INR 500, packaged food items, cream,
skimmed milk powder, branded paneer, frozen vegetables, coffee, tea, spices, pizza bread, rusk,
sabudana, cashew nut, cashew nut in shell, raisin, ice, fish filet, kerosene, coal, medicine,
agarbatti (incense sticks), postage or revenue stamps, fertilizers, etc.
12% GST Slab Rate: Edibles such as frozen meat products, butter, cheese, ghee, packaged dry
fruits, animal fat, sausages, fruit juices, namkeen, ketchup & sauces, ayurvedic medicines, all
diagnostic kits and reagents, cellphones, spoons, forks, tooth powder, umbrella, sewing machine,
spectacles, indoor games such as playing cards, chess board, carrom board, ludo, apparels above
INR 1000, This category includes 17% of all goods and services.

18% GST Slab Rate: This category includes 43% of all goods and services. Pasta, biscuits,
cornflakes, pastries and cakes, preserved vegetables, jams, soups, ice cream, mayonnaise, mixed
condiments and seasonings, mineral water, more than INR 500 footwear, camera, speakers,
monitors, printers, electrical transformer, optical fiber, tissues, sanitary napkins, notebooks, steel
products, headgear and its parts, aluminum foil, bamboo furniture, AC restaurants that serve
liquor, restaurants in five-star and luxury hotels, telecom services.

28% GST Rate Slab: This category includes 19% of all goods and services. The remaining
edibles, such as chewing gum, bidi, molasses, chocolate that does not contain cocoa, waffles and
wafers coated in chocolate, pan masala, aerated water, personal care items such as deodorants,
shaving creams, aftershave, hair shampoo, dye, sunscreen, paint, water heater, dishwasher,
weighing machine, washing machine, vacuum cleaner, automobiles, motorcycles, Five star hotel
stays, race club betting, private lottery and movie tickets above INR.07

17
IMPACT ON ECONOMY

Indian economy is getting more globalized over the past two decades. On bringing GST
into practice, there would be amalgamation of Central and State taxes into a single tax
payment. It would also enhance the position of India in both, domestic as well as
international market. It is likely to improve the country’s tax to GDP ratio and also inhibit
inflation. The positive and negative impacts are discussed here.03

Positive impacts on the economy

Implementation of a single National GST will have major beneficial impact on all stake
holders. The key highlights of major such impact is
44
Advantages of GST in India
 i Elimination of Cascading Effect & Barrier Free Tax Structure- GST will eliminate
cascading (tax on tax / compounding tax) impact on the production and distribution cost
of goods and services. This reduced cost of goods and service leading to accelerated GDP
growth. GST without tax barriers will leads to economies of scale in manufacturing
industry and reduces the supply chain cost.
ii Reduced Production Cost- GST is expected to reduce the production cost by 15% to
20% in many of the products in view of full input tax credit which will have favorable
impact on the prices of product.
iii Increase in Tax Revenue
15
GST will widen the tax base and improve the tax compliance higher tax: GDP ratio. The Tax:
GDP ratio is expected to increase by 2% as per FRBM report (Fiscal Responsibility and Budget
Management). This works out to rupees 70,000 to 80,000 crores of additional annual revenue to
the central and state governments.

iv Leads to Sustainable Growth in the Economy

GST will remove the tax distortions from the economy. This will lead to sustainable higher
growth based on competitive strength of the country. Simple tax system will attract more
productive investment for growth.

v Optimization and Comparative Cost Advantage

GST will eliminate the Inter State tax by which it will leads to optimization of physical facilities
to the extent of full capacity. If the manufacturing is done at full capacity industry will be
benefited by comparative cost advantage.

vi Tax Governance

The GST would improve tax governance

15
vii Positive effects on export and BOP (Balance of Payment) level)

In proposed GST the exporter will get the full tax credit, the export units will be able to quote
better price for their products and services in comparison with present scenario. Increased export
will ultimately have positive effect on the BOP (Balance of Payment) of the country.
viii Leads to Unique price and removes inequalities between the markets

As GST will lead to imposition of same tax rate on the goods and services everywhere in the
country and by implementing same tax rate it will removes the inequalities between the market
which we can seen in the market at present because of the tax rate differentials.

ix Leads to reduced chance for tax evasion

Since the proposed GST will charges full tax on the each and every transfer, it’s difficult for the
firms to evade tax from the payment. E.g.: e-commerce firms can’t evade tax by operating
business from the place where tax rates are comparatively less.

x Leads to centralized where housing for manufacturers

In the present tax system if the dealer and the ware house are from different states, then the
dealer needs to pay a Central Sales Tax of about 2%.This will increases the price of the
commodity. Thus companies use to setup a warehouse in each state. In GST as the CST gets
eliminated, the centralized where housing can be availed by the manufacturers. 104 Introducing
GST and Its Impact on Indian Economy.

xi Makes the tax structure simple and reduces the compliances

Multiple taxes that currently exist will no longer remain in the picture. This will reduces the
compliances to be fulfilled as compared to present situation

xii Ease in starting new business

23
With the implementation of GST in India, the procedure for GST registration would be
centralized and standardized similar to service tax registration. Under GST regime, business
would no longer have to obtain multiple VAT registration as a single GST registration would be
applicable across India. The procedure for obtaining GST registration would also be
standardized, thereby improving the ease of starting a new business in India.
36
xiii Increase in the GDP and Standard of Living

Since it is expected that with the implementation of GST the price level will reduced in the
economy, it will results in increase in the consumption level and growth in GDP of the economy.
According to study by NCAER (National Council for Applied Economics and Research)
complete implementation of GST could lift GDP growth by 0.9-1.7%.
42
xiv Formalization of Manufacturing

Input credit is proposed to be allowed only if the details declared by a taxpayer matches with the
details declared by vendors in their returns.03

2
SECTOR-WISE IMPACT OF GST IN INDIA

1. E-commerce E-commerce sector in India is making progress day by day and after
implementation of GST there is continuous growth in e-commerce sector's but seeing its long
term effect will be interesting because tax collection at source (TCS) mechanism is introduced by
GST law for ecompanies with which they are not too happy. Introduction of GST will increase
administrative cost of e-commerce companies because GST makes it necessary to collect tax
collection at source which disrupts the relation between buyer and seller. Current rate prevailing
in India for TCS is 1%.

2. PharmaTaking about overall impact of GST, pharma and healthcare industries is the most
benefitingsector. It will set a degree of performance for generic drug makers, it boost medical
tourism and also elucidate tax framework. So a major concern which will arise for pharma sector
is pricing tax structure. So this sector is expecting a tax relaxation as it will result in making
healthcare services affordable to all at easy rates. The healthcare sector remain exempted from
the GST and all the inputs of this sector will be taxed at the rate of 18% which will result in
increasing the operating cost of healthcare sector.

3. Telecommunication After implementation of GST prices of telecom sector will arrive down.
Through effectively managing the inventory and by strengthening their warehouse manufactures
will get the benefit of saving on cost. For handset manufacturer it will be more convenient to sell
their equipment because GST has revoke the requirement of setting state specific bodies and
transfer stocks as will add on saving the logistics costs.Tax rate under GST on this sector is 18%
which was 15% previously. With higher tax credit is unlikely to exceed 1% of the revenue.
4. Textile As we know textile industry generate large number of jobs for skilled and unskilled
workers in India. It also gives 10% in the total export, and it will continue to grow under GST
also. GST would affectsmall and medium enterprises through affecting the cotton and textile
industry because it formerly attracted zero central excise duty (optional). Expected rate is 15%
after GST which will have a reasonable impact on the industry. The impact will be neutral or a
little negative compared to other present system of taxation. But they will be benefited with
reduce cost of transportation, saving etc.
2
5. Real Estate In Indian economy real estate is a most essential sector, and it also has a huge role
in employment generation. We can't evaluate the impact of Goods and Service Tax on real estate
completely because it heavily depend on prevailing tax rates. This sector has brought a lot of
essential transparency and accountability to the industry; it is due to the implementation of GST.
Tax rate under GST on under-construction real estate projects will be 12% only and which is not
fixed at 18% because it will reduce land cost.
2
6. Agriculture Agriculture sector is the base of Indian economy as a large part of population
depends on agriculture and it also is also contributing a major part in Indian GDP it has 16% part
in overall GDP. Implementation of GST will resolve the major issue of agriculture sector which
is transportation of agriculture products. Implementation of Goods and Service Tax is a notch
towards building one national agricultural market on account of comprising all type of taxes on
marketing of agricultural products. Under GST tax rate is nil in seeds, 12% on tractors, 5% on
fertilizers and 12% is on fertilizers.

7. FMCG FMCG sector is another most essential sector and it is taking important benefit through
saving in logistics and transportation cost and Goods and Service Tax has also terminated the
requisite for various sales depots. Under FMCG, by and large tax burden would reduce. The
major relief would be in Soap and Hair oil segment.

8. Freelancers Freelancer is still a promising industry in India and the rules regulation related to
it also very uncertain yet. But due to the GST implementation it will become easy for freelancer
to file their taxes online and it is also easy to do. As previously they are taxed as service provider
but the new tax format brings lot of transparency and answerability in freelancers.
9. Automobiles Automobile industry is a biggest producing sector as it produces a huge number
of cars which is mostly used by the giant population of India. In the earlier tax structure, a
number of taxes laid on this sector, such as road tax, value added tax, sales tax, motor vehicle tax
etc. GST submerged the all taxes previously collected individually by government. There is a
decrease in tax burden on majority of manufactured goods after GST implementation. A view at
key components of manufacturing like automobile sector discloses that tax rate will be reduced
in automobile sector and main advantage would go to SUV segment.

10. Startups GST will fit well in Indian startup scene due to the increasing limit of registration;
tax credit on purchase etc. previously in India there was different VAT laws in different state
which create a lot of confusion to the companies which have PAN India presence. But after the
introduction of GST this problem is resolved as a uniform tax structure is followed all over the
country .07

A EFFECTONCONSUMERGOODSANDSERVICES

5
When it comes to consumer goods and services, the main concerns are food and 5
the services
sector. For these, the GST brings goodandnotso goodnews.Thegoodnewsisthat food products are
charged 0%. The not so good news is thatservices in general are seeing an increase of 18% from
15%.

On the other hand, theimplementation of GST increases the tax on footwear and garments priced
at INR 500 from the previous 14.41% to 18% but those priced lower than INR 500 are taxed
lower at 5%. For ready-made garments, the rates are lowered to 12% from 18.16%. Mobile
services rates are slightly increased, though, because of the new 18% rate, from 15% before.
When it comes to direct-to-home and cable services, the new5 fixed rate of 18% can be
considered ageneralreductionascomparedtotheprevious10%-30%range and the additional service
tax of 15%.

B. EFFECT ON TRANSPORTATION
Under GST, cab and taxi rides are taxed lower, from 6% to 5%. For those who who travel by air,
GST is favorable as the tax rate is lowered to 5% for the economy class and 12% for
businessclass. Train fare, meanwhile, is mostlyunaffected as the change is minimal, from 4.5% to
5%. Those who travel by sleeper are not affected by the tax rate change but those who travel first
class are charged more.

C. EFFECT ON THE ENTERTAINMENT AND

HOSPITALITY INDUSTRIES

Amusement park rates increase with GST taking effect as the previous tax rate of 15% has been
raised to 28%. Movie tickets are similarly increasing as they are categorized under the 28% rate.
For hotels, no GST are to be charged for room rates priced lower than INR 1,000. However,
room rateshigher than INR 5,000 get a 28% tax rate. For 5-star hotel restaurants, the rate is 18%
for those that serve alcohol and 12% for those that don’t. Smaller hotels and restaurants are only
charged 5% if their annual turnover does not exceed INR 50 Lakh.

D. MAJORPROPERTYORASSETACQUISITIONS
5
GST reduces under-construction property costs as the tax rate is set at 18% but this can still be
lowered to an effective rate of 12% as the property builder 5
can avail of input tax
credits.Ontheother hand,buyingacar(mostmodels)inIndia can become slightly less expensive as
the tax rate is fixed at 28% with an additional
5
cess of either 1%, 3%, or 15% dependingon
whichsegment the car beingpurchased belongs. In contrast, investing in jewelry can become
slightly more expensivebecauseofthe3%(from2%in most statesofIndia) rateongold and
the5%charged onthecraftingofthejewelry.
5
E. EFFECTS ON FINANCIAL PRODUCTS AND
SERVICES

Indians who buy insurance policies, unfortunately,

5
are seeingincreases
intheirpremiumswiththeimplementationof GST as the tax rates have been raised for general,
health, and life insurance. On the other hand, the tax rate change on mutual fund returns under
GST is mostly minimal. This is because the GST is charged on the mutual fund’s Total Expense
Ratio (TER). The rate is only 3% so the effect is going to be marginal.

Since they belong to the service industry, bankingservices and the services provided by other
financial service companies are subject to the 18% rate, which is higher thanthe previous 15%.
Debit cards, fund transfers, ATM withdrawals, cheque book or draft issuance, bills collections,
charges on cash handling, and more are affected. Even money sending services are affected.
Companies that provide money transfer services, nevertheless, are expected to try to be
competitive so it’s worth observing how they change their rates. It’s advisable to observe these
changes on sites like Moneytransfercomparison.com to find out which ones are trying to be
competitive and which ones are taking advantage of GST to justify higher than expected rate
increases.

F. EFFECTONSTARTUPS
The GST regime is believed to be good for the Indian startup sector as it carries with it tax credit
on purchases, a simple compliance model, increased limits for registration,and the abilityto
promote the free flow of goods and services. It takes away the complication and confusion of the
previous VAT laws, especially for those in the ecommerce industry. GST may stir inflation but
there’s the optimistic view that the undesirable effects will not last long, and will eventually be
offset by the positive impact of an improving economy.

G. EFFECTONINFLATION

Given the sampling of effects mentioned earlier, it can be said that GST is mostly viewed as an
inflationary measure. However, the Indian government believes otherwise.Hasmukh Adhia,
Revenue Secretary, says that consumer price inflation with GST implemented will go down by
2% by the end of 2017. Naturally, not many are convinced by this claim. The fact thatthe tax rate
on services has been raised to 18% from around 15% is already expected to raise inflation above
levels experienced before the institution of GST.

MS Mani, a senior director of Deloitte, in an interview with Forbes India, said that the
inflationaryeffect of GST will be temporary or short-term. This is because, according to Mani,
the rates have been kept close to the existing exciseduty and state tax rates. For Mani, the
exemption (0% rate) of consumer products for the masses and the higher (28%) taxes on those
consumed by the rich will keep inflation in check. This is expected to improve the flow of input
credit with GST in place.

H. EFFECTONECONOMICACTIVITY
5
It’s difficult and too early to evaluate whether or not GST has positively affected economic
activity. The Indian government,however,believesthattheyareontherighttrack 17
3
Contribution of GST Towards Economic Development:

An economy has to function in the ecosystem. We cannot separate the economy from an
ecosystem as the ecosystem provides factors of production such as land, labour, capital etc with
which economy has to function. Sustainable economic growth is managing the resources in such
a way that present human needs are fulfilled and resources are so efficiently utilized that they
3
don’t get deleted and remain available for future generations. The introduction of GST in India is
expected to provide much needed stimulant growth to the economy as it has transformed the base
of indirect tax structure towards free flow of Goods and services. It is expected to remove the
cascading effect of taxes. Further the benefit of GST to the economy can be removal of myriad
of taxes and less compliance and simplified tax policy as compared to earlier one. It will also
lead to fall in manufacturing cost of goods and services which will reduce the burden from
consumer’s head, lower the burden less a person has to spend money to buy the product. Due to
lower price of product the demand may increase leading to increased production indirectly to
meet the demand. Hence production of goods is also expected to increase. GST is an attempt to
normalize the taxes applied on various goods and services. This will cut off the cascading effect
of the taxes and in turn bring out a better place for the customers and suppliers. With GST
brought into place a uniform price shall be maintained throughout the country and most of the
food items are exempted under GST such as bread, buttermilk, milk, fresh fruits and vegetables
etc. thus ensuring the contribution towards zero hunger and moreover implementation of GST
has led to decline in prices of cotton textiles, wool, silk and synthetic fibres. Further on account
of increase in economic activity resulting in higher growth, new employment opportunities will
increase which will directly benefit the urban poor. Moreover, health sector and education sector
services are exempted from getting taxed under GST regime. These services contribute to basic
human needs the exemption for these services will enable the poor to have cheaper accessibility.
Thus GST may have direct impact on accomplishing sustainable development goals. Thus by
reducing price of goods consumed and exempting basic goods of daily consumption the GST
regime ensures to contribute towards economic growth of the country.11

4
GST's Expected Economic Benefits in India

 It eliminates the cascading impact of taxes, i.e. it eliminates tax on tax.

  Goods demand and consumption are expected to rise.
 VAT, CST, Service tax, CAD, SAD, and Excise are among the bundled indirect taxes
that have been eliminated.
 When compared to the present tax system, there will be less tax compliance and a
simpler tax policy.
 Manufacturing costs are reduced as a result of decreased taxation in the manufacturing
sector. As a result, consumer goods prices are expected to fall.
 Lower the burden on the ordinary man, i.e., the general public will have to spend less
money to get the same expensive goods sooner. • More demand will lead to increased
supply. As a result, there will be an increase in the production of products. • Control
of black money circulation, as the system used by merchants and shops would be
subjected to obligatory scrutiny.
 Long-term boost to the Indian economy 13

ADVANTAGES, DISADVANTAGES, CHALLENGES, LIMITATIONS,BENEFITS

ECT….

Challenges
18
With respect to Tax Threshold: The threshold limit for turnover above which GST would be
levied will be one area which would have to be strictly looked at. First of all, the threshold limit
should not be so low to bother small scale traders and service providers. It also increases the
allocation of government resources for such a petty amount of revenue which may be much more
costly than the amount of revenue collected. The first impact of setting higher tax threshold
would naturally lead to less revenue to the government as the margin of tax base shrinks; second
it may have on such small and not so developed states which have set low threshold limit under
current VAT regime.

With respect to nature of taxes: The taxes that are generally included in GST would be excise
duty, countervailing duty, cess, service tax, and state level VATs among others. Interestingly,
there are numerous other states and union taxes that would be still out of GST.

With respect to number of enactments of statutes: There will two types of GST laws, one at a
centre level called ‘Central GST’ and the other one at the state level is ‘State GST’. As there
seems to have different tax rates for goods and services at the Central Level and at the State
Level, and further division based on necessary and other property based on the need, location,
geography and resources of each state.

With respect to Rates of taxation: It is true that a tax rate should be devised in accordance
with the state’s necessity of funds. Whenever states feel that they need to raise greater revenues
to fund the increased expenditure, then, ideally, they should have power to decide how to
increase the revenue.

With respect to tax management and Infrastructure: It depends on the states and the union
how they are going to make GST a simple one. Success of any tax reform policy or managerial
measures depends on the inherent simplifications of the system, which leads to the high
conformity with the administrative measures and policies. 02

10
IV. Challenges

Wall Street firm Goldman Sachs, in a note „India: Q and A on GST- Growth Impact Could Be
Muted‟, has put out estimates that show that the Modi government‟s model for the Goods and
Services Tax(GST) will not raise growth, will push up consumer prices inflation and may not
result in increased tax revenue collections [4] There appears to be certain principle loopholes in
the GST model imposed by the union government which may be ineffective in delivering the
desired result.
1. The principle ideology behind implementation of GST-one country one tax is not suitable for
India. Previously there were 32 taxes which include service tax, excise duty, sale tax and 29 state
VAT taxes and after implementation of GST it comes to 31 taxes which include IGST, CGST and
29 SGST which again bear complicated tax structure in the country and rebuts the principle of
one country one tax.

2. Another principle ideology behind implementation of GST-one rate of tax is not possible in
India due to, According to the 101st amendment in the constitution, Article 246 A states that
parliament and legislative assembly can impose taxes on goods and services. Hence not only
union government but also state government had power to have own GST rate.Article 279 A of
the constitution states that GST council has only recommendatory powers, now it‟s up to state
government to levy its own GST rate and distorts the entire GST uniformity rate system of the
country.[5]

3. Government had incorporated goods and services tax network(GSTN), which is responsible
for developing GST portal to ensure services like GST registration, GST return filling, IGST
settlement, etc. which requires robust IT network. It is widely known that India is in an
embryonic stage as far as IT network connectivity is concerned.

4. Trained and skilled man power with updated GST subject knowledge are not easily available,
this had created an additional work load on professionals across industry.

5. The Indian insurance market is not so developed as less than 10% of the population has
insurance. This was the reason behind the government initiative „PradhanMantriJeevan Bema
Yojna‟ however with the implementation of GST insurance premiums have become expensive
by 300 basis points which will become difficult for insurance companies to penetrate the market
and would work as an unfavourable factor against insurance awareness schemes. The
government initiative „PradhanMantri Jan DhanYojna‟ initiated that every citizen of have a bank
account will face difficulties as the tax on financial services had raised by 3% in the new goods
and services tax regime.

6. The telecommunication sector assumes a serious problem as on the one hand the government
is initiating digital India and on the other hand telecom services is getting costlier as telecom
services will attract GST tax rate of 18% which is 3% higher than the previous service tax rate,
even when India‟s rural teledensity is not even 60%.

7. The GST administration intends to keep petroleum products out of the ambit of GST, being
petroleum products have been a major contributor of inflation in India.

8. Small traders are confused with the GST tax rate application and increasing cost of
operations, as they are unable to afford the cost of computer and accounting staff for
maintenance of record and filling of returns under GST. 06 CHALLENGES

25
Opportunities

An end to cascading effects: This will be the major contribution of GST for the business and
commerce. At present, there are different state level and centre level indirect tax levies that are
compulsory one after another on the supply chain till the time of its utilization.

Growth of Revenue in States and Union: It is expected that the introduction of GST will
increase the tax base but lowers down the tax rates and also removes the multiple point This, will
lead to higher amount of revenue to both the states and the union.

Reduces transaction costs and unnecessary wastages: If government works in an efficient

mode, it may be also possible that a single registration and single compliance will suffice for
both SGST and CGST provided government produces effective IT infrastructure and integration
of such infrastructure of states level with the union.

Eliminates the multiplicity of taxation: One of the great advantages that a taxpayer can expect
from GST is elimination of multiplicity of taxation. The reduction in the number of taxation
applicable in a chain of transaction will help to clean up the current messthat is brought by
existing indirect tax laws.

One Point Single Tax: Another feature that GST must hold is it should be ‘one point single
taxation’. This also gives a lot of comforts and confidence to business community that they
would focus on business rather than worrying about other taxation that may crop at later stage.
Reduces average tax burdens: Under GST mechanism, the cost of tax that consumers have to
bear will be certain, and GST would reduce the average tax burdens on the consumers.
40
Reduces the corruption: It is one of the major problems that India is overwhelmed with. We
cannot expect anything substantial unless there exists a political will to root it out. This will be a
step towards corruption free Indian Revenue Service.02
33
Benefits of GST

1. GST provide comprehensive and wider coverage of input credit setoff, you can use service
tax credit for the payment of tax on sale of goods etc.

2. CST will be removed and need not pay. At present there is no input tax credit available for
CST.

3. Many indirect taxes in state and central level included by GST, You need to pay a single GST
instead of all.

4. Uniformity of tax rates across the states.

5. Ensure better compliance due to aggregate tax rate reduces.

6. By reducing the tax burden the competitiveness of Indian products in international market is
expected to increase and there by development of the nation.

7. Prices of goods are expected to reduce in the long run as the benefits of less tax burden would
be passed on to the consumer. 02
34
Experts have enlisted the benefits of GST as under:

It would introduce “one country one tax”

It would absorb all the indirect taxes at the central and state level thus eliminating the
32
cascading effect of tax It would bring down the prices of goods and services which in turn will
help the companies as consumption will increase

Higher threshold for registration which will exempts many small traders and service providers.
In the GST system, when all the taxes are integrated it would eliminate the number of
compliances like return filling

It would help to eliminate the separate tax imposition on goods and services which requires the
transaction to split its value among goods and services leading to greater complications

It would wider the tax regime by covering all the sectors including the unorganised sectors thus
widening the tax base. This would lead to better and more revenue collection by the
government.

GST would simplify the working procedures and would minimise the tax burden of E-commerce
and logistics companies

Employment generation for youths as GST trained experts 06

2
BENEFITS OF GST

GST will enable seamless credit across the entire supply chain and across all states using a
single tax base.

2
The implementation of a Goods and Services Tax would eliminate the cascading effects of taxes
on the production and distribution costs of goods and services.

Theelimination of cascading effects , i . e .tax on tax, will significantly improve the

competitiveness of original goods and services in the market, resulting in a positive impact on
the country's GDP growth.

Revenue will rise under the GST regime as the dealer base expands by capturing value addition
in the distributive trade and as compliance improves.

The GST regime is expected to increase transparency in the indirect tax framework while also
lowering the rate of inflation.
 Exports will be zero-rated in their entirety under the GST regime, as opposed to the current
system, where refunds of some taxes are not permitted due to the fragmented nature of indirect
taxes between the Centre and the States.

All taxes paid on exported goods or services, or on inputs or input services used in the supply of
such export goods or services, will be refunded.

By eliminating rate arbitrage between neighboring states as well as that between intra and inter-
state sales, uniform GST rates will reduce the incentive for evasion. Harmonization of laws,
procedures and tax rates will make compliance easier and more straightforward.

Common procedures for taxpayer registration, tax refunds, uniform tax return formats, a
common tax base, a common system of classification of goods or services, and timelines for each
activity will provide greater certainty to the taxation system.

GST is heavily reliant on technology. The common portal will serve as the taxpayer's interface
with the tax authorities (GSTN). Various processes, such as registration, returns, refunds, tax
payments, and so on, will be simplified and automated. 07

22
IV. BENEFITS OF GST

The implication of GST assures a single taxation system in the entire country for all goods and
1
services making tax compliance easier and more effective. They are:-

To The Economy - It will simplify India's tax structure, broaden the tax base, and create a
common market across states. This will lead to increased compliance and increase India's tax-to-
gross domestic product ratio.
14
To The Corporate - It will be beneficial for India Inc. as the average tax burden on companies
will fall. Reducing production costs will make exporters more competitive

To The Exporters - The subsuming of major Central and State taxes in GST, complete and
comprehensive setoff of input goods and services and phasing out of Central Sales Tax (CST)
would reduce the cost of locally manufactured goods and services. This will increase the
competitiveness of Indian goods and services in the international market and give boost to Indian
exports.

To Industry - Manufacturing sector in India is one of the highly taxed sectors in the world. A
complex and high taxation structure has the tendency to render products uncompetitive in the
international market or consume large portions of the cost arbitrage available in manufacturing
set-ups in low cost economies such as India. GST when enforced would eliminate complexities
in the present taxation structure and consequently prevent the loss of nearly 50% of the
advantage of lower manufacturing costs that India has over the western nations. "A well-
designed GST is the most graceful method to get rid of distortions of the existing process of
multiple taxation" Sanjay Pant, Commissioner Service Tax, Bangalore.

To The Centre And State - Approximately $ 15 billion a year of profits are predicted by the
government with the implementation of GST as it is speculated to bring about raise in
employment, promotion of exports and consequently a significant boost in overall economic
growth. "The 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" Mr. Premnath Hegde H.N., Chartered Accountants, Premnath Hegde and Co. Another
positive aspect of this proposal is that it is aimed at equitable division of tax burden between the
manufacturing and services. "GST will be the biggest reform after 1991 and its implementation
alone would add 1.5-2 percentage point to India's GDP growth. It will provide a tremendous
stimulus and can solve several issues like inflation and fiscal deficit" - Mr. Adi Godrej Chairman
of the Godrej Group.
36
To The Individuals And Companies - With the collection of both the central and state taxes
proposed to be made at the point of sale , both components will be charged on the manufacturing
costs and the individual will benefit from lowered prices in the process which will subsequently
lead to increase in consumption thereby profiting companies. 10

BENEFITS OF GST
13
FOR BUSINESS AND INDUSTRY
Easy Compliance: A robust and comprehensive IT system would be the foundation of the GST
regime in India. Therefore, all tax payer services such as registrations, returns, payments, etc.
would be available to the taxpayers online, which would make compliance easy and
transparent.
Uniformity of Tax Rates and Structures: GST will ensure that indirect tax rates and structures
are common across the country, thereby increasing certainty and ease of doing business. In
other words, GST would make doing business in the country tax neutral, irrespective of the
choice of place of doing business.
Removal of Cascading: A system of seamless tax-credits throughout the value-chain, and
across boundaries of States, would ensure that there is minimal cascading of taxes. This would
reduce hidden costs of doing business.
Improved Competitiveness: Reduction in transaction costs of doing business would eventually
lead to an improved competitiveness for the trade and industry.
Gain to Manufacturers and Exporters: The subsuming of major Central and State taxes in GST,
complete and comprehensive set-off of input goods and services and phasing out of Central
Sales Tax (CST) would reduce the cost of locally manufactured goods and services. This will
increase the competitiveness of Indian goods and services in the international market and give
boost to Indian exports. The uniformity in tax rates and procedures across the country will also
go a long way in reducing the compliance cost.
FOR CENTRAL AND STATE GOVERNMENTS
Simple and Easy to Administer: Multiple indirect taxes at the Central and State levels are being
replaced by GST. Backed with a robust end-to-end IT system, GST would be simpler and easier
to administer than all other indirect taxes of the Centre and State levied so far.
Better Controls on Leakage: GST will result in better tax compliance due to a robust IT
infrastructure. Due to the seamless transfer of input tax credit from one stage to another in the
chain of value addition, there is an in-built mechanism in the design of GST that would
incentivize tax compliance by traders.
Higher Revenue Efficiency: GST is expected to decrease the cost of collection of tax revenues
of the Government, and will therefore, lead to higher revenue efficiency.
FOR THE CONSUMER
Single and transparent tax proportionate to the value of goods and services: Due to multiple
indirect taxes being levied by the Centre and State, with incomplete or no input tax credits
available at progressive stages of value addition, the cost of most goods and services in the
country today are laden with many hidden taxes. Under GST, there would be only one tax from
the manufacturer to the consumer, leading to transparency of taxes paid to the final consumer.
Relief in Overall Tax Burden: Because of efficiency gains and prevention of leakages, the
overalltax burden on most commodities will come down, which will benefit consumers. 20
3
PROSPECTS OF GST IN INDIA:

Manufacturers will get the benefit of tax credit, thus the tax burden on producer will be reduced
and it will foster growth through more productions.

Under GST structure no entry tax is charged for goods manufactured or sold in any part of India.
Thus as a result delivery of goods and services between two states can easily be made without
any check posts or toll plazas and goods of perishable nature can easily be transported reducing
the preservation or warehousing cost. According to an estimate by CRISIL, the logistics cost for
manufacturer of bulk goods will get reduced significantly about 20%. It is expected boost e-
commerce throughout the nation.

Introduction of GST has made taxation simple. The end consumer now knows exactly how
much tax is being charged to them and on what basis. It will increase the faith of the customers
towards tax structure of the country.

The tax credit phenomena in GST structure is expected to boost up producers to purchase raw
materials from different registered dealers and is hoped to bring up more vendors and suppliers
under the purview of taxation.

GST regime will increase the competitiveness of India in the global market as custom duties
applicable on exports is removed hence reducing the cost of transaction.

Ambiguity between goods and services has been removed , this will make various legal
proceedings in relation to gods and services as a result distinction between material and service
shall no longer exist which will reduce tax evasion.

Unlike earlier tax system under GST registration has been centralised which will make starting a
new enterprise much more easily and consequent expansion will be easy which is an added
advantage for SMEs. Further under GST exemption limit is 25 lakhs giving relief to over 60% of
small trades and dealers.

High inflationary impact would be on telecom, real estate, construction, air and road transport
etc.

Thus services would increase the consumers cost. Thus in the nutshell it could be said that GST
being a new concept in India may have some repercussions but its advantages cannot be ignored.
If we consider previous impacts of GST introduction and for time being ignore its few
disadvantages it seems that in long run the economy would be benefitted at its best by this major
tax reform.11
3
Manufacturers will get the benefit of tax credit, thus the tax burden on producer will be reduced
and it will foster growth through more productions.

Under GST structure no entry tax is charged for goods manufactured or sold in any part of India.
Thus as a result delivery of goods and services between two states can easily be made without
any check posts or toll plazas and goods of perishable nature can easily be transported reducing
the preservation or warehousing cost. According to an estimate by CRISIL, the logistics cost for
manufacturer of bulk goods will get reduced significantly about 20%. It is expected boost e-
commerce throughout the nation.

Introduction of GST has made taxation simple. The end consumer now knows exactly how
much tax is being charged to them and on what basis. It will increase the faith of the customers
towards tax structure of the country.

The tax credit phenomena in GST structure is expected to boost up producers to purchase raw
materials from different registered dealers and is hoped to bring up more vendors and suppliers
under the purview of taxation.

GST regime will increase the competitiveness of India in the global market as custom duties
applicable on exports is removed hence reducing the cost of transaction.

Ambiguity between goods and services has been removed , this will make various legal
proceedings in relation to gods and services as a result distinction between material and service
shall no longer exist which will reduce tax evasion.

Unlike earlier tax system under GST registration has been centralised which will make starting a
new enterprise much more easily and consequent expansion will be easy which is an added
advantage for SMEs. Further under GST exemption limit is 25 lakhs giving relief to over 60% of
small trades and dealers.

High inflationary impact would be on telecom, real estate, construction, air and road transport
etc.

Thus services would increase the consumers cost. Thus in the nutshell it could be said that GST
being a new concept in India may have some repercussions but its advantages cannot be ignored.
If we consider previous impacts of GST introduction and for time being ignore its few
disadvantages it seems that in long run the economy would be benefitted at its best by this major
tax reform.

8
Advantages of GST:

1. GST is structured to simplify the current indirect system by removing multiple taxes. It creates
India as a single market.

2. It taxes goods and services at the same rates so many disputes are eliminated on tax matter. 3.
GST will be levied only at the final destination of consumption based on VAT principle and not
at various points (from manufacturing to retail outlets). This will help in removing economic
distortions and bring about development of a common national market.

4. The procedural cost is reduced due to uniform accounting namely, CGST, SGST, IGST have to
be maintained for all types of taxes.

5. The reduced tax burden on companies will reduce production cost making exporters more
competitive at national and international level.

6. More business entities including unorganized will come under the tax system thus widening
the tax base. This may lead to better and more tax revenue collections.

7. Many businesses create depots and go downs in different states simply because there is a
difference in tax rates. Now that GST will come, this difference between states will vanish. It
would help to remove the tax difference as a bias, thereby helping businesses.04
4
GST Advantages

The Goods and Services Tax (GST) replaced the Value Added Tax (VAT) system. It
is a tax on products and services manufactured, consumed, and sold in India. It replaced or
consolidated all indirect taxes levied on products and services by the federal government and
state governments. The Goods and Services Tax (GST) prioritises long-term gains. This new
system has benefited a wide range of industries. The following are some of the benefits of the
 Goods and Services Tax (GST): -
1. This method aided in the reduction of tax evasion.
2. Control over the circulation of black money
3. Due to a lower burden of taxes, there is a reduction in overall costs.

Goods and Services Tax (GST) merged all the indirect taxes into one. This made the
4
tax system easier and simpler for all service and business.
4. The Goods and Services Levy (GST) consolidated all indirect taxes into a single tax.
For every service and business, this made the tax system easier and simpler.
5. The Goods and Services Tax (GST) decreases non-receipted sales and lowers the
incidence of corruption.
6. Not only removal of cascading tax effect, i.e. tax on tax but also Increase in the
production of goods and services
7. Expected to increase the revenue of the government.
8. The burden has been decreased on the final taxpayer, i.e. Consumer at the end.
9. Removal of multiple taxations. 13

Dis-advantages of GST in India

8
1. There will be dual control on every business by Central and State Government. So compliance
cost will go up.

2. All credit will be available on from online connectivity with GST Network. Hence, small
businesses may find it difficult to use the system

3. VAT and service tax on some products may become higher than the current levels.

4. States may lose autonomy to change their tax rates.

5. Manufacturing states would lose big revenue

6. Service sector may oppose because they have to register in every state with central and state
government. So every business at all India level will have around 60 registrations while they are
having just one today. Moreover their rates will also go up.
 7. Retail business may oppose because their taxes will go up and they will also have to deal with
Central Government now in addition to States.

8. GSTN may not work optimally for quite some time.04

17
i Price level of essential goods and services - The proposed GST may lead to increase the price
of essential products and services which are presently exempted from the taxation.

ii Negative effect on the real estate industry - As per the study undertaken by the Curtin
University of Technology, Perth in 2000, GST would negatively impact the real estate market as
it would add up to 8% to the cost of new homes and reduce demand by about 12%.

iii Negative effect on working capital - As the firms are supposed to make the payment of the tax
on every transfer the companies working capital requirement will shoots up by proportional to
the purchase of inputs for the value addition.

iv Emergence of transfer pricing issues - As the GST considers all the transaction for taxation
purpose, this procedure will increases the price of the transfer from one department to another for
further process.
21
v Dual Control - There will be dual control on every business by Central and State Government.
So compliance cost will go up.03
4
GST Negative Effects

The Goods and Services Tax (GST) replaced the Value Added Tax (VAT) system. It
is a tax on products and services manufactured, consumed, and sold in India. It replaced or
consolidated all indirect taxes levied on products and services by the federal government and
state governments. The Goods and Services Tax (GST) prioritises long-term gains. Working
hard for the future has its disadvantages as well. The following are some of the drawbacks of
the Goods and Services Tax (GST):-
1. The Goods and Services Tax (GST) has increased the cost of transactional fees between
banking institutions. Transaction costs have been raised from 15% to 18%.
2. The Goods and Services Tax (GST) has increased the cost of insurance premiums.
3. It has had an adverse effect on the real estate market. Because of the Goods and
Services Tax (GST) (GST). The price of real estate has increased from 8% to 12%. It is
 anticipated, however, that it will not endure in the long run.
4. Because the Goods and Services Tax (GST) excludes fuel, the price of petrol constantly
deviates from the principles of commodity unification.
5. The Goods and Services Tax (GST) has progressed to a more complicated structure for
company owners.
6. Prior to the Goods and Services Levy (GST), only a few retail items were subject to a
tax of up to 4%. However, the Goods and Services Tax (GST) has increased the cost of
clothing and garments.
7. The Goods and Services Tax (GST) has an impact on the aviation industry. Prior to the
introduction of the Goods and Services Tax (GST), the service tax on airline tickets
ranged from 6% to 9%. However, they have already been surpassed, with tax rates
ranging up to
 15%, almost twice the rate set by the government before.
8. There was no change in the tax system with the introduction of the Central Goods and
Services Tax (CGST) and State Goods and Services Tax (SGST), which replaced the
Service Tax or Central Excise, Value Added Tax (VAT), and Central Sales Tax (CST).
There are still numerous levels to the tax structure. 13

34
SUGGESTIONS:

Filing 37 returns per GSTIN is very time consuming and costly matter, where in every one may
not have the resources to meet up the compliance. So processes must be simplified.

Reverse charge payable by registered dealers in case of purchase from non registered dealer
shall be completely withdrawn.

An intense and deep training is needed to make the work force entirely capable of handling the
new tax regime. Moreover workshops and conferences may add up to increase the knowledge
about GST.

Concept of input tax credit requires a large volume of data to be matched between supplier and
receiver. These processes shall be simplified.
3
Rates shall be rationalized and unified to make India competitive and in interest of economic
development of the country and reduce complications.

GST should not lead to regional imbalance in items of resources and responsibility among
governments. A due care of it shall be taken.

A proper monitoring system shall be constructed to manage unreal registrations and refunds
filed as these are the areas where loopholes invisibly exist.11

1
Procedure of filing GST return should be made simple and number of GST forms should be less or a simple
one-page form should be there to file the returns.
 Controversial issues of GST should be resolved so that businessmen may not be confused about tax rate,
GST form etc. and may file their return very easily.
Automatic tax calculation procedure should be there in IT software of GSTN so that taxpayer may not
confuse about amount of tax.
GST slabs should be reduced to one or two.
Petroleum products should be brought under GST as this time petrol and diesel rate is all time high of Rs.
74 and Rs. 68 respectively that is increasing inflation and unrest among public.
No state should be allowed to levy local/state tax on GST goods on the name of revenue loss as central
government is already compensating the loss for first 5 years.
All GST forms should be designed and uploaded on GSTN portal as soon as possible and should be
designed so easy to fill that businessmen may fill them at their own and should not require to roam about
tax professionals to file their GST. 16

23
GST will Improve Ease of Starting a Business in India:

While starting a new business in India, businesses currently have to get VAT registration from
the State’s Sales Tax department. Since, each State has different procedures and fees for VAT
registration, it is hard for businesses operating in multiple States to obtain and maintain
compliance with VAT regulations. With the implementation of GST in India, the procedure for
GST registration would be centralized and standardized similar to service tax registration. Under
GST regime, business would no longer have to obtain multiple VAT registration – as a single
GST registration would be applicable across India. The procedure for obtaining GST registration
would also be standardized, thereby improving the ease of starting a new business in India.
Integration of Multiple Taxes in GST Currently goods and products are taxed under the VAT
regime implemented by State Government and services are taxed under the service tax regimen
implemented by the Central Government. As VAT is implemented by State Governments, each of
the State has different VAT rates, VAT regulations and VAT procedures – leading to
complications. Further, in addition to VAT and Service Tax, there are various other tax
regulations that businesses must comply with like Central Sales Tax (CST), Additional Customs
Duty, Purchase Tax, Luxury Tax, etc.,04
1
5. FINDINGS AND DISCUSSIONS
The key findings of the present study are reported below.
GST is one of the biggest indirect tax reforms in India

. The major reason for such a transformation is to eradicate the cascading effects of tax and
to boost the tax base of Central Government.

It is probably the best tax structure implemented in India since independence and it is expected
to promote impartial tax structure throughout the nation as a whole.

GST is a comprehensive taxation system that subsumes all indirect taxes of states and central
regimes and cumulated economy into a flawless national market. But, it fails to follow the
principle of diversity. As GST replaces all the indirect taxes, these will reduce the government
existing revenue and it tends to increase the rates of other direct taxes and even the prices of
other goods too which in turn will raise the burden of the people.

It will provide India a world-class and a smart tax system for its simplicity and transparency.

It will lead to better tax administration and control, which in turn will reduce tax evasion
practice thereby, enhance the indirect tax revenue of the Government.

GST is based on the concept of “One Nation and One Tax” hence it will reduce complexities
and will improve the transparency in the present taxation system.

Moreover, it is expected to provide a sigh of relief to industry, trade, agriculture, and

consumers because of its comprehensive and wider coverage of input tax set-off and service
tax set-off.

The tax burden for the customers and cost of compliances for the dealers are expected to be
reduced.

Dual model of GST will widen the Central Government’s tax base through the levy of central
taxes both on goods and services.

GST will make India industry-friendly and it will help in attracting more foreign investments.
Thereby, will generate more employment opportunities in the near future. GST will play a
dynamic role towards the growth and development of our country.

It will help to foster country’s economic growth rate, keep up sound and stable price level, and
promote export but its implementation should be backed by strong IT infrastructure.
1
Indian products would become more competitive in the domestic as well as in the international
markets and thereby, lead to growth in India’s real GDP.

Especially, sectors like FMCG, Pharmaceuticals, Automobile, Infrastructure, Textile, IT,

Agriculture, Food Industry, Transport, Real estate industry, media & entertainment industry will
be benefitted from it whilst, hospitality, alcoholic products as well as e-commerce sector will
suffer due to its implementation.
Finally, it is expected that this new indirect taxation reform will elevate overall Indian welfare as
well as the welfare of all Indian states in the long run.18

CONCLUSION
17
Conceptually GST is expected to have numerous benefits like reduction in compliances in the
long run since multiple taxes will be replaced with one tax. It is expected to bring down prices
and hence the inflation since it will remove the impact of tax on tax and enable seamless credit.
It is expected to generate revenue for the country as the tax base will increase as the GST rate
will be somewhere around 27% with both goods and services covered. It is also expected to
make exports from India competitive and India a preferred destination for foreign investment
39
since GST is a globally accepted tax. GST will not increase the tax burden drastically, and in
many cases total tax burden will decline due to removal of cascading effect replacement of
gamut of tax systems by one tax systems. The biggest gain shall be from increase in
39
competitiveness and ease of doing business which GST brings with it. The overall impact is
2
expected to be positive on economy thereby increasing the overall economic growth.04 One of
the most significant actions taken by the administration is the introduction of the Goods and
Services Tax (GST). The use of an information technology (IT) method for goods and services
tax increases openness of tax income to the public. After the introduction of GST, the advantage
of which is transferred to both government and consumer, it is expected that mischievous activity
2
related to theft will be eradicated. The government's anticipated increase in revenue would not
come from higher prices paid by customers but rather from a decrease in tax evasion. We have
made the biggest step toward a more equitable indirect tax reform in our country with the
implementation of GST. There is no distinction between the government, industry, or the service
sector when it comes to the application of the goods and services tax. The goal of establishing
GST is to promote economic growth on a national scale by facilitating greater collaboration
between individual state economies. Confusion and problems are to be expected in the transition
to a new goods and services tax (GST) regime, to which 159 nations are currently familiar.
Because of the different tax rates imposed by the federal government and individual states, GST
28
has gained widespread acceptance and praise.07 Taxation plays an significant role in the
development of the economy as it impacts the efficiency and equity. It is expectated that a good
system should control income distribution and at the same time it will also endeavour to generate
tax revenue which will support government expenditure on public services and development of
28
infrastructure. GST will have positive impact on Indian economy. The new system of taxation is
considered to be more improved system over the preexisting central excise duty at the national
level and sales tax system at state level. The new tax will be significant breakthrough and a
logical step towards a comprehensive indirect tax reforms in the country.GST is not only Vat plus
service tax but it is major improvement over previous VAT system. A single of tax will help
maintain simplicity and transparency by treating all goods and services equal without giving a
special treatment to some types of goods and services. It will reduce the litigation on
classification of issues. It is also said that implementation of GST in Indian framework will lead
to commercial benefits which VAT has not given and hence it would essentially lead to economic
development. GST may assure the possibility of overall gain for industry , trade , agriculture and
also to central and state government. Now Indian consumer need to have professionalism to
acknowledge the GST. It is sure that India will join the international standards of taxation ,
22
corporate laws and managerial practices and also be among the world leaders. Indeed, GST has
the potential to be the single most important initiative in the fiscal history of India. It can pave
the way for standardization of tax administration - make it simpler and more transparent - and
significant enhancement in voluntary compliance for the development of the nation. As an
economist, I believe that the implementation of the GST proposal of the Union Government
pertinent to all states across the country will prove to be an effective medium of simplification in
paperwork and accounting processes for businesses, equitable revenue sharing between centre
and states and consequent significant improvement in commerce and eventually economic
development of the nation can be achieved.

1
8. CONCLUSIONS
This Bill, as with any new legislation, contains transitional provisions. Such provisions allows for
implementation of different provisions of the Bill at different points in time. The Central and State
Governments would need to closely guard against lack of clarity and difficulties that may arise
out of this; since this particular element has been criticized by the industry during recent reforms
of corporate laws. As this Bill clearly has the potential to usher in monumental changes in the
indirect tax regime in India, it is only a starting point. At this stage, the current Bill is an improved
and more implementable version of the one introduced in 2011, mainly due to the focus on:
  An egalitarian approach to endow the representation by States in the GST Council with
wider powers; and
 Various provisions for safeguards against revenue losses.
However, this Bill does leave certain questions unanswered. For example, the key taxing
provision of Article 366(29A) which defines the various transactions of sale, lease, hire
purchase, works contract etc. has been left unaltered. Since GST would be imposed on the
supply of goods or services (or both), it appears that this provision could become superfluous. It
is also unclear whether the State of Jammu and Kashmir (J&K) would be brought within GST.
Service tax does not currently apply to J&K, and it enjoys differential powers to tax transactions
within it. There is no clear indication on how J&K would be integrated into GST and its interplay
with Article 370 (which provides J&K with a special constitutional status on various matters
including taxation), though it is worthwhile to note that the GST Council has been empowered to
make particular rules with respect to J&K as well as other Himalayan States. While this Bill is
aimed at achieving constitutional empowerment for GST, clarity is urgently needed on expected
1
rate regime for industry to prepare for the ultimate impact; the media had recently reported a
relatively high median rate of 22-27 percent while earlier indications were a notch lower. Certain
administrative clarity on this issue is the need of the hour. As evident, many of the details would
be a function of the model GST legislation and its features, from norms for logistics, credit
mechanism, assessments, dispute resolution, to how existing tax holidays and incentive
schemes would be transitioned. Separately, the herculean tasks of setting up the requisite
information technology infrastructure for administering GST on a pan-India basis as well as
gearing up and training the revenue authorities at the Centre and State needs to be addressed.
As next steps, this Bill needs to be debated and voted on by the Lower House of Parliament.
Thereafter, it would need to be voted on by the Upper House of Parliament, before being ratified
by at least half of the States. The wider industry should take notice of this Bill in as much to set
in motion the various institutional decision makers and contribution teams to address this
conceptual shift in the indirect tax regime. This change would impact almost all business
divisions of industries from procurement, to manufacturing, to sales and distribution. Service
providers are also likely to be substantially impacted, as they have historically been subjected to
a less exacting compliance regime. It will provide the industry to take a relook at how they are
organized, since:
 Almost all manufacturing companies have warehousing on a State-wise basis on
account of VAT laws
 Current incentive and exemptions would get impacted, as States would no longer
directly receive inter-state revenues as CST but indirectly as a revenue share
 Service providers are likely to experience a tax regime with a substantially higher rate
and compliance levels 19
 Similarity Report

94% Overall Similarity

Top sources found in the following databases:
94% Internet database 22% Publications database
Crossref database Crossref Posted Content database
58% Submitted Works database

TOP SOURCES
The sources with the highest number of matches within the submission. Overlapping sources will not be
displayed.

researchgate.net
1 14%
Internet

pm.sdcollegeambala.ac.in
2 9%
Internet

researchersworld.com
3 8%
Internet

ijemr.net
4 6%
Internet

ijiras.com
5 4%
Internet

docshare.tips
6 4%
Internet

mbanimit.ac.in
7 4%
Internet

ijrcs.org
8 4%
Internet

Sources overview
 Similarity Report

aarf.asia
9 3%
Internet

iosrjournals.org
10 3%
Internet

Aligarh Muslim University, Aligarh on 2019-06-13

11 3%
Submitted works

ABES Engineering College on 2019-04-09

12 3%
Submitted works

tndalu.ac.in
13 2%
Internet

scribd.com
14 2%
Internet

zbw.eu
15 2%
Internet

mpra.ub.uni-muenchen.de
16 1%
Internet

University of Mumbai on 2020-04-29

17 1%
Submitted works

managejournal.com
18 1%
Internet

bbau.ac.in
19 1%
Internet

allresearchjournal.com
20 1%
Internet

Sources overview
 Similarity Report

primaxijcmr.org
21 1%
Internet

ijser.org
22 1%
Internet

Amity University on 2018-08-26

23 1%
Submitted works

Management Development Institute on 2019-04-25

24 1%
Submitted works

jms.eleyon.org
25 1%
Internet

North Eastern Regional Institute of Science and Technology on 2023-0...

26 1%
Submitted works

ijhssi.org
27 1%
Internet

irjet.net
28 1%
Internet

Management Development Institute on 2019-04-25

29 <1%
Submitted works

rootsjournal.com
30 <1%
Internet

aiirjournal.com
31 <1%
Internet

oldror.lbp.world
32 <1%
Internet

Sources overview
 Similarity Report

viirj.org
33 <1%
Internet

ijmer.s3.amazonaws.com
34 <1%
Internet

mafiadoc.com
35 <1%
Internet

socialworkfootprints.org
36 <1%
Internet

Ambedkar University Delhi on 2018-03-29

37 <1%
Submitted works

ABES Engineering College on 2018-04-25

38 <1%
Submitted works

proceeding.conferenceworld.in
39 <1%
Internet

Graphic Era University on 2023-06-02

40 <1%
Submitted works

aiirjournal.com
41 <1%
Internet

SASTRA University on 2017-09-08

42 <1%
Submitted works

National Institute Of Technology, Tiruchirappalli on 2024-02-22

43 <1%
Submitted works

PES University on 2023-05-05

44 <1%
Submitted works

Sources overview