Project Report

(Submitted for the Degree of B.Com Honours in Accounting and Finance under the
University of Calcutta)

Title of the Project

GOODS AND SERVICES TAX

SUBMITTED BY :
Name : NISHITA

CU Registration Number : xxx-xxxx-xxxx-xx

CU Roll Number : xxxxxx-xx-xxxx

College Name : XYZ
College Roll Number : 3035
SUPERVISED BY :
Name of the Supervisor :

Name of the College : XYZ

MONTH AND YEAR OF SUBMISSION :

JUNE 2022

1
Annexure-IA

Supervisor’s Certificate
This is to certify that Ms NISHITA , a student of B.com(Honours) in Accounting and
Finance of XYZ under the University
of Calcutta has worked under my supervision and guidance for her Project Work and
has prepared a Project Report with the title GOODS AND SERVICES TAX which
she is submitting, is her genuine and original work to the best of my knowledge.

________________
Place: Kolkata Signature

Date: Name:
Designation: State Aided College Teacher
College Name: XYZ

2
Annexure-IB

Student’s Declaration
I hereby declare that the Project Work with the title GOODS AND SERVICES TAX
submitted by me for the partial fulfilment of the degree of B.Com. Honours in
Accounting & Finance under the University of Calcutta is my original work and has
not been submitted earlier to any other University /Institution for the fulfilment of the
requirement for any course of study.
I also declare that no chapter of this manuscript in whole or in part has been
incorporated in this report from any earlier work done by others or by me. However,
extracts of any literature which has been used for this report has been duly
acknowledged providing details of such literature in the references.

________________
Place : Kolkata Signature

Date : Name : NISHITA

Address : Kolkata
Registration Number : xxx-xxxx-xxxx-xx

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 Acknowledgement
I would like to express my special thanks of gratitude to the principal of our college Dr.
ABC for completion of this project work in our organization XYZ.
My sincere thanks to Sir DB (Project Supervisor) who have provided support directly
and indirectly for completion of my project and for giving me the Golden opportunity to
do this wonderful project on the topic “GOODS AND SERVICES TAX”. I am really
thankful to him.

I would like to thank my Parents, family and internet for co-operating with me to carry
out these research work and help me with the Project work by filling up the report within
limited time. I would also like to express gratitude to the companies for using their name
as well as their statistical data. I am making this project not only for marks but to also
increase my knowledge.

THANKS AGAIN TO ALL WHO HELPED ME.

4
 Table of Contents
Serial No. Particulars Page No.

1. INTRODUCTION 6-9

Background 6
Justification 7
Objective 7
Literature Review 8
Research and Methodology 9
Limitations 9

2. CONCEPTUAL FRAMEWORK 10-25

Definition 10
Applicability and Mechanism 11-13
Salient Features 14
Overview, Registration and Return 14-18
Opportunities 19
Benefits 19-25

3. ANALYSIS AND FINDING 26-38

Taxes Subsumed 26-27

Need 28
Analysis and Opinions 29-30
Study on Automobile Industry 30-37
Global Experience 38

4. CONCLUSION AND RECOMMENDATIONS 39

5. BIBLIOGRAPHY 40

6. QUESTIONNAIRE 41

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CHAPTER-1

INTRODUCTION
1. Introduction

2. Need for GST

3. Objective of the study

4. Brief review of literature

5. Limitation of study

6. Chapter planning

INTRODUCTION
1.1Background
The introduction of Goods and Services Tax (GST) is a very significant step in the field of Indirect tax
reforms in India. In the pre GST regime, there was multiplicity of indirect taxes. The central excise duty
and service tax was levied by the Central Government, while VAT and Entry Tax was levied by the State
Government. Moreover, there was cascading effect of taxes,i.e. tax on tax, at various stages as credit of
taxes levied by one government was not available against payment of taxes levied by the other.

In India, the adopting of GST was first suggested by the “Atal Bihari Vajpayee” government in 2000. To the
“Narendra Modi’s” Government in 2014, India’s new Finance Minister submitted 122nd Constitution
Amendment Bill in the 16thLok Sabha on 19th December 2014. Finally in August 2016, The Constitution
Amendment bill was passed in the parliament & 18 states ratified The Constitution Amendment Bill & The
President “Pranab Mukherjee” gave his assent to it.

Under the GST scheme, no distinction is made between goods and services for Levying tax. In other words,
goods and services attract the some rate of tax. GST is a multi-tier tax where Ultimate burden of tax fall
on the consumer of goods/services. The GST was implemented at midnight on 1st July 2017 by president
of the India.

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1.2 Justification of GST
The introduction of GST under central level will not only include comprehensively more indirect Central
taxes and integrated goods and services for the purpose of set-off relief, but may also lead to revenue
gain for the center through widening of the dealer base by capturing value addition in the distributive
trade and increased compliance. In the GST, both cascading effects of CENVAT and service tax are removed
with set-off, and a constant chain of set-off from the original producer’s point and service provider’s point
up to the retailer’s level is established which reduces the burden of all cascading effects.

This is the real meaning of GST, and this is why GST is not simply VAT plus service tax but an improvement
over the previous system of VAT and disjointed service tax. Moreover, with the introduction of GST,
burden of central sales tax (CST) will also be removed.

The GST at the state level is therefore, justified for-

➢ Additional power of levy of taxation of services for the states

➢ System of comprehensive set-off relief

➢ Subsuming of several taxes in the GST

➢ Removal of burden of CST

1.3 Objectives of GST

The objectives of GST are as follows :

➢ To understand the meaning of Goods and services Tax (GST)

➢ To obtain a true insight of GST

➢ To analyze the impact of GST over Gross Domestic Product(GDP)

➢ To make a comparative study of GST and other Taxes in India

➢ Reduce tax evasion and corruption

➢ One Country – One Tax

➢ Reducing economic distortions

➢ Uniform GST Registration, payment and Input tax Credit

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1.4 Brief Review of Literature on GST
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.

Shaik et al , ¹¹(2015)
Studied the concept and impact of GST on Indian economy. The study also focused on some aspects of
GST models. This study also covered the advantages and working of GST. The study concluded that GST
in Indian framework will lead to commercial benefits which were untouched by VAT system and would
essentially leads to economic development.

Pinki et al., ⁷ (2014)

The authors in the paper have explored the concept of GST, the need to introduce it in India, the hurdles
in introducing it in India and suggestions to overcome the same. The paper also discusses the Benefits of
introducing GST at the earliest. The authors have 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 since state
to Collect GST in services is difficult to determine. This option also recommended one single return with
both CGST and SGST details and PAN based registration. The authors have also discussed the constitutional
amendments required if GST is ever to be introduced since without the amendment taxing both goods
and services using one tax is not possible. The other challenges to introduction of GST in India highlighted
are the availability of strong IT network, infrastructure and programmes, agreement on other provisions
like basic threshold, exemption to goods/services, rates to be applied, etc.

Halakhandi, (2007)
GST was supposed to be introduced in India way back in 2010. It has been getting postponed due to various
reasons major one being getting to a consensus between the various states and the centre for
compensation. The author in the paper has discussed the existing laws in India for indirect taxes, the VAT
laws in various states with their advantages and disadvantages, the impact of the proposed GST, the
compliances under the proposed GST etc. The author has also used various numerical examples to
demonstrate how GST is cost effective.

Mansor, (2013)
GST has always been considered as a tool in the hands of any Government to increase revenue. The
Malaysian Government introduced the said tax in Malaysia in order to reduce its budget deficit. The
authors in the paper have discussed the readiness of the Malaysian economy in adopting the said newly
introduced GST along with the reactions of various sections of the society.

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1.5 Research and Methodology
The study is based on secondary data collected from various referred books, National and international
journals, government reports, applications from various websites which focused on various aspects of
goods and service tax. The Researchers used an exploratory research technique based on past literature
from respective journals, annual reports, newspapers and magazines covering wide collection these were
critically reviewed and extracted. This helped in generating qualitative and quantitative theory for the
study. After this, the bibliometric visualization was done to analyze the year wise research studies done
on the domain

1.6 Limitations of the Study

The study has some limitation on its scope and interpretation of the results. It covers only the narrow
concept of goods and service tax and not the whole, the present study has also the following limitation:

➢ There are few common and unavoidable general problems in collecting secondary data, which are
required for our study.

➢ The basic and most shortage of Time, in fact we have not sufficient time for in-depth analysis,
International comparison and other analysis of data. This has indeed restricted our study to our mission.

➢ There was a problem of cost involved in earning out the project

➢ Due to time and manpower constraint limited number of manufacturers and businessmen have been
talked about.

1.7 Chapter Planning

• INTRODUCTION

• CONCEPTURAL FRAMEWORK

• GLOBAL SCENARIO

• PRESENTATION OF DATA ANALYSIS

• CONCLUSIONS

• BIBLIOGRAPHY

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CHAPTER – 2

CONCEPTUAL FRAMEWORK
1. Definition

2. Applicability and Mechanism of GST

3. Salient Features of GST Model

4. GST- Overview, Registration & returns

5. Opportunities

6. Benefits of GST Implication

2.1 Definition
GST is a multi-stage tax system which is comprehensive in nature and applied on the sale of goods and
services. The main aim of this taxation system is to curb the cascading effect of other indirect taxes and it
is applicable throughout India. GST is a tax that we need to pay on supply of Goods and Services. Any
person, who is providing or supplying goods and services, is liable to charge GST. GST is a consumption
based tax/levy. It is based on the “Destination Principal”.

It has been long pending issue to streamline all the different types of indirect taxes and implement a
“single taxation” system. This system is called as goods and services tax (GST). The main expectation from
this system is to abolish all indirect taxes and only GST would be levied. As the Name suggests, the GST
will be levied both on Goods and Services.

The business adds the GST to the price of the product, and a customer who buys the product pays the
sales price inclusive of the GST. The GST portion is collected by the business or seller and forwarded to the
government. The tax is included in the final price and paid by consumers at point of sale and passed to the
government by the seller.

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2.2 Application and mechanism
GST is a destination based tax on consumption of goods and services. It is proposed to be levied at all
stages right from manufacture up to final consumption with credit of taxes paid at previous stages
available as setoff. This is the case even today for all Indirect taxes but the difference under the GST is that
with streamlining of the multiple taxes the final cost to the customer will come out to be lower on the
elimination of double charging in the system.

Let us understand the above supply chain of GST with an Example:

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The current tax structure does not allow a business person to take tax credits. There is a lot of chances
that double taxation takes place at every step of supply chain. This may set to change with the
implementation of GST. Indian Government is opting for Dual system GST. This system will have two
components which will be known as

➢ Central Goods and Service Tax(CGST)

➢ State Goods and Service Tax (SGST)

TYPES OF GST:

CGST : CGST means Central Goods and Service Tax. CGST is a part of goods and service tax. It is covered
under Central Goods and Service Tax Act 2016. Taxes collected under Central Goods and Service tax will
be the revenue for central Government. Present Central taxes like Central excise duty, Additional Excise
duty, Special Excise Duty, Central Sales Tax, Service Tax etc. will be subsumed under Central Goods And
Service Tax.

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SGST : SGST means State Goods and Service Tax. It is covered under State Goods and Service Tax Act
2016. A collection of SGST will be the revenue for State Government. After the introduction of SGST all the
state taxes like Value Added Tax, Entertainment Tax, Luxury Tax, entry Tax etc. will be merged under SGST.
For example, if goods are sold or services are provided within the State then SGST will be levied on such
transactions.

IGST : IGST means Integrated Goods and Service Tax. IGST falls under Integrated Goods and Service
Tax Act 2016. Revenue collected from IGST will be divided between Central Government and State
Government as per the rates specified by the government. IGST will be charged on transfer of goods and
services from one state to another state. Import of Goods and Services will also be deemed to be covered
under Inter-state transactions so IGST will be levied on such transactions. For example, if Goods or services
are transferred from Rajasthan to Maharashtra then the transaction will attract IGST.

UTGST : UTGST means Union Territory Goods and Services Tax. UTGST is the counterpart of State
Goods and Services Tax (SGST) which is levied on the supply of goods and/or services in the Union
Territories (UTs) of India. The UTGST is applicable on the supply of goods and/or services in Andaman and
Nicobar Islands, Chandigarh, Daman Diu, Dadra, and Nagar Haveli, and Lakshadweep.

13
2.3 Salient Features of the GST Model
• The GST shall have two components: one levied by the center (referred to as central GST) and the other
levied by the states (referred to as state GST). Rate for central GST and the state GST would be approved
appropriately, reflecting revenue considerations and acceptability.

• 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.

• The Central GST and state GST are to be paid to the accounts of the Central and the States individually.

• Since the Central GST and the state GST are to be treated individually, taxes paid against the Central GST
shall be allowed to be taken as input tax credit (ITC) for the CentIdeally, the problem related to credit
accumulation on account of refund of GST should

• Ideally, the problem related to credit accumulation on account of refund of GST be avoided by both the
Central and the states except in the cases such as exports, purchase of capital goods, input tax at higher
rate than output tax etc,purchase of capital goods, input tax at higher rate than output tax etc.

• Cross utilization of ITC between the Central GST and the state GST would not be permitted except in the
case of inter-state supply of goods and services.

2.4 Overview, Registration and Returns

Present System of GST :
► INTRA STATE SUPPLY: CGST & SGST
► INTER STATE: IGST = CGST + SGST
► IMPORT FROM OUTSIDE INDIA: CUSTOM DUTY (CVD-SAD) & IGST

GST Basics :

► GST is principally consumption/destination based tax.

► Tax will be payable in the state in which goods and services are consumed.

► No declaration

► No check posts

► SGST will be kept same in all states. However, a price band may be given to states for SGST Rates.

14
► CGST & IGST rates will be same all over India.

► IGST may be sum total of SGST & CGST i.e. IGST=SGST+CGST

VAT Principle in GST :
► GST will be on basis of value Added Tax (VAT) concept

► VAT to avoid cascading effect of taxes

► ITC (set off) of CGST for CGST and IGST but not for SGST

► ITC (set off) of SGST and IGSST but not for CGST

► ITC (set off) of IGST for IGST, CGST and SGST in that order

► Credit on basis of Return like 26AS

Rates in GST :

► SCHEDULE 1 : LIST OF GOODS AT NIL RATE- Meat of bovine animals fresh or chilled, Natural Honey,
live sheep, goats poultry etc.

► SCHEDULE 2 : LIST OF GOODS AT 0.25% RATES- Diamonds, precious metals, Semi precious stones etc

► SCHEDULE 3 : LIST OF GOODS AT 3% RATES–Silver, Gold, Platinum, Beans, Coin, Imitation jewellery

► SCHEDULE 4 : LIST OF GOODS AT 5% RATE- Vanilla, oats ,Soya beans, Olive oil, Cane sugar, Cocoa beans,Pizza

bread etc.

► SCHEDULE 5 : LIST OF GOODS AT 12% RATE- Beverages, contacting milk, live horses, stream, Cheese,
Granite Blocks, Stream, Feeding bottles etc.

► SCHEDULE 6 : LIST OF GOODS AT 18% RATE- Kajal pencil sticks, hair oil, toothpaste, Gum, Tall oil, activated
carbon, photographic plates & films etc.

► SCHEDULE 7 : LIST OF GOODS AT 28% RATE- Molasses, Chewing gum, cocoa butter, pan masala etc

15
Composition scheme under GST:
GST composition scheme was implemented under the respective State VAT Laws with conditions applied
on eligibility for the scheme accordingly. Any taxable person whose aggregate turnover in the preceding
financial year is less than Rs. 1.5 Crores and less than Rs. 75 lakhs for North Eastern States can opt for a
simplified composition scheme where tax will payable at a concessional rate on the turnover in a state
without the benefit of Input Tax credit. The floor rate of tax for CGST and SGST shall not be less than 1%.
A tax payer opting for composition levy shall not collect any tax from his customers. Tax payers making
inter-state supplies or paying tax on reverse charge basis shall not be eligible for composition scheme.

Taxable event is supply of goods and services being payable by the supplier at the time of supply on a
forward charge basis. In certain notified matters, liability of GST will be on recipient of goods and services
under a reverse charge mechanism.

There is TDS & TCS mechanism under specified circumstances.

Supply :
Under GST, Supply is considered a taxable event for charging tax. The liability to pay tax arises at the ‘time
of supply of goods or services’.

Supply includes all forms of Goods and Services-

►Such as sales, transfer, barter, license, exchange, rental, lease or disposal made or agreed to made for

a consideration by a person in the course of furtherance of business.

►Importation of Service where the same is not for a consideration and whether or not it is in the course

of furtherance of business

► Sale of under construction properties, temporary transfer of intellectual property rights, intangible

property, works contracts, transfer of right to use any goods and development, up graduation, software

► Transactions between principal and agents are deemed to be suppliers.

► Supply of goods to job Worker would not be covered.

► Schedule-I to schedule-IV describes what would be supply or supply of goods/Service or would not be

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Electronic Era To Commerce :
► E-REGISTRATION

► E-PAYMENT

► E-RETURN

Conditions for Availing Composition Scheme?

► The taxpayer has to mention the words “Composition Taxable Person” on every notice or

signboard displayed prominently at their place of business.

► The dealer cannot supply GST exempted goods.

► No input tax credit can be claimed by a dealer opting for composition scheme.

► Those supplying goods can provide services of up to Rs. 5 lakh.

► The taxpayer cannot make any inter-state supply of goods.

GST Rates for a Composition Dealer:

Following chart explains the rate of tax on turnover applicable for composition dealers:

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Advantages of Composition Scheme:
The following are the advantages of registering under GST composition scheme :
► Less tax and high liquidity

► Less compliance involved

► Limited tax liability

Disadvantages of Composition Scheme:

The following are the disadvantages of registering under GST composition scheme :
► No availability of input tax credit

► Inter-state sale not permitted

► Non-eligibility to supply exempted goods

Registration :
Once a business is successfully registered, it enjoys the following benefits :

► Without GST registration, a legal person can neither collect GST nor claim any input tax credit of

GST paid by him.

► Plays very important role in any tax statute with unique identification number

► Service compliances: Tax-Returns-Assessment or any communication

► Link transactions and proper accounting of input taxes paid.

► Legally recognized as supplier of goods and services.

► Determines jurisdiction of a particular authority.

Exemption from Payment of Tax :

► Taxpayers with an aggregate turnover of Rs. 20 lakhs would be exempted from tax. For,

North Indian states and Sikkim, the exemption would be Rs. 10 lakhs.

► Aggregate turnover shall include the aggregate value of all taxable and non-taxable/ non GST supplies

exempt/nil-rated supplies and exports of goods and/ or Services and exclude taxes under GST.

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2.5 Opportunities to End the Cascading Effects
This means each succeeding transfer of good is taxed inclusive of the taxes charged on the preceding. GST
will be a major contribution to GST's business and trade. Currently, there are different state-level indirect
tax collections, which are sequentially required on the supply chain up to at the time of its utilization.

• Eliminates The Multiplicity Of Taxation

One of the great benefits taxpayers can expect from GST is the elimination of the large number of taxes.
By reducing the number of taxes applied to the transaction chain, the can eliminate the current confusion
caused by existing indirect tax laws. One Point Single Tax: Another feature that needs to be included in
the GST is that it needs to be a “One Point Single Tax”. This also gives the business community the peace
of mind and confidence to focus on the business rather than worrying about possible taxation at a later
date.

• Reduces Transaction Cost And Unnecessary Wastages

If the government is efficient, then maybe one registration and one compliance is enough for both the
SGST and the CGST, as long as the government creates an efficient IT infrastructure and integrates this
infrastructure into state level with the union.

• Growth Of Revenue In States And Union

The introduction of GST is expected to increase the tax base but reduce the tax rate by and also remove
the multiple point. This will result in a higher amount of revenue for both states and the union.

2.6 Benefits of GST Bill Implementation

➢ It is good for export oriented business. Because it is not applied for goods/Services which are

exported out of India.

➢ The suppliers, manufacturers, wholesalers and retailers are able to recover GST incurred on input costs

as tax credits. This reduces the cost of doing business, thus enabling fairer prices for consumer’s.

➢ The entire Indian market will be a unified market which may translate into lower business costs. It can
facilitate seamless movement of goods across states and reduce the transaction costs of business.

➢ In the long run, the lower tax burden could translate into lower prices on goods and consumer’s.

➢ The tax structure will be made lean and simple.

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Procedure of GST :
► Every person who is registered under the pre-GST law (i.e., Excise, VAT, Service tax etc.)needs to

register under GST.

► When a business which is registered has been transferred to someone, the transferee shall take

registration with effect from the date of transfer.

► Anyone who drives inter-state supply of goods

► Casual taxable person

► Non-resident taxable person.

► Agents of a supplier

► Those paying tax under the reverse charge mechanism.

► Input service distributor

► E-commerce operator or aggregator

► Person supplying online information and database access or retrieval Services from a place outside

India to a person in India, other than a registered Taxable Person.

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Documents Required to Register Under GST:

• Owner’s Pan Card

• Owner’s Aadhaar Card

• Owner’s Photograph

• Proof of address

• Bank account details

GST Registration Fees:

Business can register for GST and obtain GSTIN free of cost.

However, GST registration is a tedious 11 step process which involves submission of many Business details
and scanned documents.

You can opt for clear tax goods and services tax (GST) Registration Services where a GST expert will assist
you end to end with GST registration.

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GSTIN : Goods and Services Tax Identification Number
GSTN is a unique 15 digit identification number assigned to every taxpayer (primary dealer or supplier or
any business entity) registered under GST regime.

Tax Invoice, Debit and Credit Note:

Every registered taxable person under GST supplying Goods or services is required to issue a tax invoice
for all supplies effected. For non-taxable goods a bill shall be issued.

Since debit notes are a major change to an invoice, they have to be reported separately in the GST returns.

The credit note has to be issued based on an original invoice already issued. The original invoice will get
reduced to the extent of such credit notes.

Time of Supply :
For Goods:

• Normal supply of goods- earliest of removal of goods (in case of movable) made available to recipient

(non-movable) invoice raising, recipient of payment, accounting books.

• Continuous supply of goods- on successive payments/ statement of account or invoice/payment.

• Confirmation of supply

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For Services:

• Normal supply of services

-When invoice raise within time- Earliest of invoice raising or recipient of payment

-Otherwise- Earliest of completion of service, receipt of payment or accounting in books.

• Continuous supply of Services- when due date is ascertainable from contract, the due date each time

payment is received/ invoice issued, in case payment is linked to completion of event.

• Reverse charge- Earliest of date of receipt of goods/Services, payment, invoice, Accounting in books.

Place of supply:
For Goods:

• Place where the goods are delivered except in case of Goods not involve movement, assembled/

installed at site- location of goods.

For Services:

• In case of a registered person- location of such registered person.

• In case of a unregistered recipient- address the recipient and if it is not available, the location of the

of Services.

Payment of Challans :
Tax payable as per return shall be paid on or before the last date for filling the return, i.e. on or before
20th of the next month in case of monthly return.

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Mode of payments :
Payments for Challah are made via Internet banking through an authorized bank or credit / debit card,
counter (OTC) payments through an authorized bank, or payments via NEFT / RTGS, from any bank can
do.

Payment by book adjustments would not be allowed.

Bird’s Eye View of GST Returns :

Returns are essential and a vital part of any tax structure.

24
GST Returns Due Dates in India :

Maintanence of Records:
As per the GST Act, every registered taxable person must maintain the accounts books and records for at
least 72 months (6 years). The period will be counted from the last date of filing of Annual Return for that
year. The last date of filing the Annual return is 31st December of the following year.

Every registered person shall be required to keep and maintain records of production, inward and outward
supplies, stock, input tax credit availed, tax payable and paid at least for 60 months.

Audit:

• Audit of all returns compulsorily

• Around 70% state- 30% central.

25
Refund Process:
• Export of goods/Services

• Refund of pre-deposit for filling appeal

• Excess payment of tax due to mistake or inadvertence

• Tax credit on inputs used for manufacturing/generation/production/creation of tax free supplies or Non-
GST

supplies.

• Finalization of provisional assessment.

• Refund of tax payments on purchases made by Embassies or UN bodies

• Payment of duty/tax during investigation but no/ less liability arises at the time of finalization of

investigation/adjudication.

Process to claim GST refunds:

Refund requests must be submitted electronically using Form RFD01 within 2 years from the relevant
date. Applicants must submit a redemption claim certified by a cost calculator or chartered accountant if
the redemption amount exceeds 20,000 rupees.

GST refund requests may, in some cases, be subject to review or audit. Once the refund request is
approved, the taxpayer will receive a GST refund request in the registered bank account.

26
CHAPTER-3

PRESENTATION , ANALYSIS AND

FINDINGS
1. Present Taxes to be Subsumed
2. Need of Goods and Services Tax (GST)
3. GST Analysis and Opinions
4. Impact of GST on Automobile Industry
5. Global Experience of GST

3.1 GST Subsumed Previous Tax Structure

GST proposes to subsume the following indirect taxes currently levied by the Central Government (CG)
and the state government (SG).

27
► Tobacco products are covered under GST and the CG is empowered to levy Excise duty on the same

over and above GST.

► All goods and services are covered under GST except alcoholic liquor for human consumption.

Excise duty would be levied by the SGs on production and VAT would be levied by the SGs on sale of

liquor for human consumption.

► 5 petroleum products namely, petroleum crude, natural gas, motor spirit (petrol), high speed

diesel and aviation turbine fuel would be brought under GST from the date to be notified on

recommendation of GST council. These 5 petroleum products continue in the union list of articles 246

of the constitution of India for excise duty & state list for VAT. Other petroleum products like LPG,

Naphtha, kerosene, fuel oil etc. Would be covered under GST.

28
3.2 Need for Goods and Services Tax (GST)
There are different taxes paid at each stage, different states and central governments have different taxes,
and tax rates vary from state to state. When talking about GST, it unifies the whole country and taxes are
split between the central and state governments. This eliminates additional state taxes and makes it easier
to provide services and goods nationwide.

India has a 3-tier federal structure, compromising the union Government, the state government and the
urban / rural local bodies. The power to levy taxes and duties is distributed among the 3 tires of
governments, in accordance with the provisions of the India Constitution. Principal indirect taxes levied in
India are listed.

3.3 GST Analysis and Opinions

The Government of India rolled-out GST with the hope of making taxation system in the country simpler
from what the previous regime was. The main aim of GST is to supposedly create a single taxation system.
However, the impact of GST will vary as the taxation rates for industries like manufacturing, distribution,
retailer and service providers will be different from one another.

29
Impact of GST on Various Industries:

• Impact of GST on Manufacturers, Retailers and Distributors :

GST will likely promote competitiveness and production within the manufacturing sector. The multi
taxation practice which has been prevalent in these industries will be clubbed together under GST which
in turn will increase production and more focus can be put towards quality.

• Impact of GST on E-Commerce :

E-commerce sector in India has witnessed tremendous growth in recent years. GST will enhance the
growth of e-com industry. The only set-back of GST on this industry is the Tax Collected at Source (TCS)
mechanism which many companies are not too excited about.

• Impact of GST on Telecommunication :

The prices of telecom services are expected to come down under GST. Efficient inventory management
and the strengthening of workflow in the warehouses will help manufacturers save on its cost of
manufacturing. Manufacturers of mobile phone will also have the ease of selling their products as GST will
eliminate indirect taxation during transfer of goods as well as the need to set up state-specified entities.

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• Impact of GST on Agricultural Industries :
The largest contributor to the overall GDP of India, with a contribution of around 16% is the agricultural
sector. By implementing GST, the big issue of transportation of agricultural products will be resolved. GST
will eliminate the taxation at check-posts, taking away the burden of transport taxes from the agricultural
sector.

• Impact of GST on FMCG :

GST will remove the requirement of setting up multiple storages of a single business from which the
Fastmoving consumer goods (FMCG) sector will see huge profits in logistics and distribution. Under GST,
the tax rate for FMCG will be 18-19% (depending on the type of product) which is subsequently a lot lesser
rate from its former 24-25% rate. Everything, including excise duty, entry tax and VAT have been merged
into GST.

• Impact of GST on Textile Industries :

As one of the key contributors in the total annual export value of India, the textile industry will see growth with
GST. The current 10% contribution to the export value is likely to increase, since under GST it will attract no
indirect taxes and thereby there will be more job prospects in the textile industry.

3.4 Impact of GST on Automobile Industry

In recent years the automobile industry has been significantly growing with the increasing need of the
populace. The previous taxation structure imposed many taxes like excise, sales tax, motor vehicle tax,
VAT, road tax and duty on registration but under GST these taxes will come under one banner. It is
anticipated that many automobile companies will start slashing their price tags in the coming months.

The Indian auto industry is one of the largest in the world. The industry accounts for 7.1% of the largest in
the world. The industry accounts for 7.1% of the country’s gross domestic product (GDP). Almost 13% of
the revenue from Central excise is from this sector and claims a size 4.3% of total exports from India.
Despite its contribution to the economy and growth potential, this sector has been combating the
hardship of high tax rates for substantially a long period of time now with central excise duty ranging
between 12.5% to 30% coupled with introduction of multiple cases ant revenues whims and fancies, most
recent being infrastructure chess.

Thus, introduction of GST shall be a breather for this sector wherein taxes on vehicle are largely expected
to be @ 18% in GST regime except for luxury cars where the rate may go up to 28% plus cases.
However, even this rate of taxation will be beneficial of this unchain part of this industry that is the
“automobile dealers”. Therefore, this article examines the intricacies of GST on automobile dealers.

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Dealers Before Implementation of GST :
Dealers were paying following indirect taxes earlier :

• Value added tax (VAT) / Central sales tax (CST) / on sale of vehicles / spares /Accessories. • Service tax

(ST) on services both as provider and also as receiver under reverse / joint Charge.

Various Aspects Examined Below:

➢Impact on Credit :
Currently, automobile dealers are not able to avail CENVAT credit on the following indirect taxes paid by
them.

• Excise duty paid on purchase of vehicle, spares, consumable and accessories.

• NCCD, auto season infrastructures is paid on purchase of vehicle

• CVD pet on any imported spares, accessories and consumable.

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• SBC paid on input services.

• Reversal of proportionate CENVAT credit of service tax due to trading activity showroom rent,
advertisement expenses etc.

• CST paid on purchase of vehicle, Spares, consumables and accessories.

➢Impact on Procurement Cost of Vehicles :

With the implementation of GST, which is a single tax, the GST impact on the automobile industry has
been positive. Automobile dealers can now claim the Cess and Value Added Tax or VAT paid as Input Tax
Credit or ITC as its benefits. Thus, the final price of cars has been reduced in the new tax regime. And one
can even see luxury cars becoming common on the roads because of this.

Since, all of the above taxes get subsumed in the GST; therefore the procurement cost to that extent will
come down as explained below:

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• Since, IGST and cusses shall be fully available as credit in the GST regime, therefore they will not form

part of purchase cost and can be set off from output GST payable on sale of the vehicle.

• Procurements are assumed to be in the course of inter-state. GST rates have been assumed to beat such

levels based on the various news reports and the reports issued by various committees formed by the

Ministry of Finance.

As noted above, reduction in procurement Cost is substantial as cascading of taxes was just adding to the
cost in this sector.

➢Impact on the Sale Price :

Previously, two major taxes were charged to the consumers of cars which were VAT and excise duty. The
combined rate would range anywhere between 26.5% and 44%. As compared to this, the GST rates on
cars are much lower ranging between Nil and 28%. This has reduced the price of cars and benefited
consumers.

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NOTE :-
Suppose the selling price is 5% higher than the buying price. From the Calculation above, the overall
reduction in acquisition costs per vehicle is between 16% and 34%, and all the benefits of such reduced
prices are passed on to the final consumer. If the selling price of vehicles should be largely positive for the
penetration of GST, the increase in its GST system will boost the growth of this sector.

GST is no doubt a boon for those who are willing to buy luxury cars as their prices are expected to go
down. The two taxes charged to the end consumer on cars and bikes previously were excise and VAT, with
an average combined rate of 26.50% to 44% which is higher than the GST rates of 18% and 28%. Therefore,
there has been less burden of tax on the end consumer under GST.

➢Impact on Working Capital :

This would be a huge concern for the dealers as the supply is taxable in GST. On the date of vehicle transfer,
GST liability would be attracted and it would lock the capital.
Another cash lock would be when the auto manufacturers would offer free services/warranties as sales’
benefit to their customers (at the time of sale of vehicles). They would pre-pay GST on the issue date of
the coupon while customers would be using the service on a later date.
Following aspects will impact the working capital of the automobile dealers in the GST regime:

• Vehicle Transfers :
Whenever any vehicle is dispatched from one place to another, GST is paid and capital is locked since such
supply attracts GST. Now, the dealer is liable to pay GST on the same day. This shall be block the working
capital as the taxes needs to be paid from own fund and collection of taxes will be at a later date only
when such / services evenly so. However, this will also enforce the dealer to adopt a deliberate approach
to avert disrupting their outflow.

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• Free Service Coupon Vouchers :
Cash lock on free services is another loophole that might affect dealers under the GST regime. The
majorities of automobile makers render free services like repairs while selling vehicles to benefit the
customers. GST will apply to such services at the time of their issuance. However, customers are free to
redeem these services whenever they want or as per their convenience but they said taxes can be
collected from the customers only when the vehicle comes for the repair leading to unnecessary blocking
of fund in taxes.

• Advance Vehicle Booking :

Vehicles are very common in this industry to be booked in advance for a fixed amount of payment as a
token. Currently no VAT is paid for such things prepaid payment will be made at the time of vehicle sales.
But this extravagant way of holding In the GST system, non-paying prepayments are truncated and you
have to pay the tax the receipt for the reservation will also proceed. Therefore, traders have to pay taxes
on the down payment as the token advances, pull it out of your pocket or collect Axis text.

• Warranties and Incentives :

Tax is to be charged on vouchers or warranty cards issued to the customer as a part of after-sales services.
GST has to be paid at the time of the issue of the vouchers or warranty cards on the money value of the
goods or services or both redeemable against the vouchers or warranty cards. Thus, working capital to the
extent of tax would be blocked at the time of the issue of the vouchers even though they are redeemable
at a later date.

• Commission from Bankers/Insurers :

As details of the commission will be provided by bankers/ insurers at a later dates with constant changes
involved. Therefore, generally dealers pay service tax on such receipts only upon receipt of commission.

• Income from Manufacturers :

Various commissions, incentives, reimbursements, warranty receipts etc. Are received from
manufacturer. Dealer does not pay taxes on this incomes on accrual basis as the same may or may not get
approved by the manufacturer at a later date. Therefore, currently Service tax is paid on receipt basis only
when the amount is credited by the manufacturer and is reflected in the manufacturer’s statement.

However, the GST system does not accept the luxury of paying taxes on a receipt basis, as
everything is system controlled. Therefore, traders need to connect the system immediately to
the bankers and manufacturers to ensure a smooth transition to the GST system, or the itself
bears the tax brunt due to the seller’s negligence.

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➢Reduction in Current Litigations :
• Valuation in Servicing of Vehicles
Complexity in bifurcation of the material and labour component is the servicing of vehicle has led to
multiple disputes as both the Service tax and sales tax authorities demanded taxes on a higher
component.

• Handling Charges
Weather it is liable for VAT or Service tax has led to demand of taxes from both authorities and thereby
disputes.

• Registration Charges
Disputes were noted on Applicability of Service tax on various charges that are merely collected as pure
agent such as temporary permanent Registrations etc.

• Incentives
It has been a matter of disputes at a various judicial forum as to whether the incentives received by the
automobile dealers from the manufacturer whether amounts to any “Service” to be liable for service tax.
Such disputes would end in the GST regime as the tax base for both CGST and SGST shall be same.

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➢Impact on Transitional Credit:
• Excise Duty/CDV
As it is now, dealers do not use excise tax & CVD credits. Therefore, they are determination of stock
price on record date based on invoice availability and credits are available. Also, even if the correct
excise tax invoice is not yet available to the seller a given percentage can be considered as a deduction
for the transfer of excise tax deductions to the GST system.

•Credit of Service Tax

The same must be properly reflected in the last Service tax returns and documentation must be in place
to establish the same. Further, Service tax credit pertaining to cars, spares in stock can also be availed.

•VAT/ SAD
Similarly, if a supplier isn’t always availing the credit score of VAT/SAD cutting-edge because of restrict
with inside the nation VAT Law, then credit score may be availed primarily based totally at the
ascertainment of inventory as on appointed day. However, if the credit score of VAT is being presently
availed then the equal wishes to be well pondered with inside the remaining VAT go back to switch such
credit to the GST regime.

• Credit of CST
The same can’t be availed subject to possession of appropriate documents for the same in states where
such set off is permissible.

• Entry Tax
Credit of some can be availed subject to possession of appropriate documents for the same in states where
such set-off is permissible.

➢Impact Due to Anti-Profiteering Measures:

Since a supplier might be capable of take the credit score of products mendacity in stock, the tax value
could be decrease. This extra advantages accruing to a supplier is anticipated to be handed directly to the
quit client via way of means of manner of discount in fees etc. A separate authority might be fashioned
with inside the GST regime to screen the non-compliance of the anti-profiteering topics which can have
an detrimental effect at the complete enterprise specially while the pricing is predefined via way of means
of the manufacturer. Therefore, it’s miles vital for the supplier to set up passing of the GST advantages to
its consumers. In this instances of falling fees this can now no longer be

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3.5 Global Experience of GST :
GST, a pathway towards unified taxation regime eventually leading towards betterment of economy. GST
has been practiced in around 160 countries around the globe. Legal instincts through this article bring
before its readers the scenario of GST/VAT around the globe, its implementation and its impact on
respective economies.

France was the first country to implement GST to reduce tax- evasion. Since then, more than 140 countries
have implemented GST with some countries having Dual-GST (e.g. Brazil, Canada etc. model. India has
chosen the Canadian model of dual GST.

Few Countries who Have Implemented GST :

• Canada
Date of introduction : 1 January 1991

Name of tax : Federal Goods and Service Tax & Harmonized Sales Tax
The GST, which is administered by Canada Revenue Agency (CRA), replaced a previous hidden 13.5%
manufacturers’ sales tax (MST). Introduced at an original rate of 7%, the GST rate has been lowered twice
and currently sits at rate of 5%, since January 1, 2008.

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• Australia
Date of introduction : 1 July 2000

Name of tax : Goods and Services Tax

The GST is a value added tax of 10% on most goods and services sales, with some exemptions (such as for
certain food, healthcare and housing items) and concessions (including qualifying long term accommodation
which is taxed at an effective rate of 5.5%.

• Singapore
Date of introduction : 1 April 1994

Name of tax : Goods and Services Tax

The GST is a broad-based value added tax levied on import of goods, as well as nearly all supplies of goods
and services. The only exemptions are for the sales and leases of residential properties, importation and
local supply of investment precious metals and most financial services. Export of goods and international
services are zero-rated.

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CONCLUSIONS AND RECOMMENDATIONS
While successfully completing this project, I have identified that GST drives for boosting up
economic growth of any country. GST is the most logical steps towards the comprehensive
indirect tax reform in our country since independence. GST is lovable on all supply of goods and
provision of services as well combination thereof. All sectors of economic whether the industry,
business including Govt. Departments and service sector shall have to bear impact of GST. All six
sense of economy viz., Big, medium, small scale units, intermediaries, importers, exporters,
traders, professionals and consumers shall be directly affected by GST. One of the biggest taxation
reforms in India – Goods and Service Tax (GST) is all set to integrate state economies and boost
overall growth. GST bill create a single. Unified Indian market to make the economy stronger.
Experts say that GST is likely to improve tax collections and boost India's economic development
by breaking tax barriers between states and integrating India through a uniform tax rate. Under
GST, the taxation burden will be divided equitably between manufacturing and services through
a lower tax rate by increasing the tax base and minimizing exemptions.

Beside this various recommendations has come to my mind while doing this project
which are as follows :
• Government should create more items under zero rated supplies rather than exempt rate
supplies

• The proactive initiative if implemented properly, government can expect refund of rupees
thousand crore

• GST will simplify our indirect tax structure

• In order to settle the issue, the Govt. Need to play their role by put more efforts in educating

the public about tax.

• Registration to remain temporarily suspended while cancellation of registration is under

process, so that the taxpayer is relieved of continued compliance under the law.

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 BIBLIOGRAPHY
This project has been completed with the help of my supervisor who
gave me important suggestions for this accomplishment. I also took help
from different books, journals, magazines and websites from the internet
in doing so.

I visited many sites and journals like :-

➢ www.cleartax.in

➢ www.gstcouncil.gov.in

➢ www.financialexpress.com

➢ www.caclubindia.com

➢ www.taxguru.in

➢ www.moneycontrol.com

➢ www.wikipedia.org

➢ Student’s journals of Institute of Chartered Accountants of India

➢ The Economic Times (News Paper)

➢ All about GST- A Complete Guide to Model GST Law

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 QUESTIONNAIRE
1. Will GST boost towards GDP of the Country?
(A) Yes (B) No
2. Will state government collect more Revenue through GST system?
(A) Yes (B) No
3. Do you think GST shall be applicable on necessary Goods?
(A) Yes (B) No
4. Will society get benefit through GST implementation?
(A) Yes (B) No
5. Will Government control the inflation of price of commodity?
(A) Yes (B) No
6. Do you think GST shall be applicable on books?
(A) Yes (B) No
7. Will Central Government collect more Revenue through GST system?
(A) Yes (B) No
8. Is GST more beneficial than previous indirect tax structure?
(A) Yes (B) No
9. Will GST block the loopholes of previous indirect taxation system?
(A) Yes (B) No
10. Do you support GST?
(A) Yes (B) No

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