1. xs are not entirely convinced with this new tax scheme.

There are debates

mainly centred on the advantages and disadvantages derived from the new
tax initiative. As per as India is concerned Agogo Mawuli (May 2014)
studied, “Goods and Service Tax an Appraisal” and found that GST is not
good for low-income countries and does not provide broad based growth to
poor countries. If still these countries want to implement GST then the rate
of GST should be less than 10% for growth. Dr. R. Vasanth Gopal (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 to its acceptance by more than 130 countries in
world and a new preferred form of indirect tax system in Asia also.
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
2. 19. 18 India. But the benefits of GST are critically dependent on rational
design of GST. RESEARCH METHODOLOGY Being an explanatory
research, it is based on secondary data of journals, articles, newspapers and
magazines. Considering the objectives of study descriptive type research
design is adopted to have more accuracy and rigorous analysis of research
study. The accessible secondary data is intensively used for research study.
DATA COLLECTION Dual GST Model To be introduced in India ❖ India
will adopt a dual GST which will be imposed concurrently by the Centre
and States, i.e. Centre and States will simultaneously tax goods and services.
Centre will have the power to tax intra-State sales & States will be
empowered to tax services. GST will extend to whole of India except the
State of Jammu and Kashmir. ❖ GST is a destination based tax applicable
on all transactions involving supply of goods and services for a
consideration subject to exceptions thereof. GST in India will comprise of
Central Goods and Service Tax (CGST) - levied and collected by Central
Government, State Goods and Service Tax (SGST) - levied and No
CENVAT after manufacturing stage Non-inclusion of several local levies in
State VAT such as luxury tax, entertainment tax, etc. Non- integration of
VAT & service tax Cascading of taxes on account of (i) levy of Non-VAT
able CST and (ii) inclusion of CENVAT in the value for imposing VAT
Double taxation of a transaction as both goods and services collected by
State Governments/Union Territories with State Legislatures and Union
Territory Goods and Service Tax (UTGST) - levied and collected by Union
Territories
3. 20. 19 without State Legislatures, on intra-State supplies of taxable goods
and/or services. Inter-State supplies of taxable goods and/or services will be
subject to Integrated Goods and Service Tax (IGST). IGST will
approximately be a sum total of CGST and SGST/UTGST and will be
 levied by Centre on all inter-State supplies. ❖ There is single legislation –
CGST Act, 2017 - for levying CGST. Similarly, Union Territories without
State legislatures [Andaman and Nicobar Islands, Lakshadweep, Dadra and
Nagar Haveli, Daman and Diu and Chandigarh] will be governed by
UTGST Act, 2017 for levying UTGST. States and Union territories with
their own legislatures [Delhi and Puducherry] have to enact their own GST
legislation for levying SGST. Though there would be multiple SGST
legislations, the basic features of law, such as chargeability, definition of
taxable event and taxable person, classification and valuation of goods and
services, procedure for collection and levy of tax and the like would be
uniform in all the SGST legislations, as far as feasible. This would be
necessary to preserve the essence of dual GST. ❖ In GST regime, tax (i.e.
CGST and SGST/UTGST for intra-State supplies and IGST for inter-State
supplies) shall be paid by every taxable person and in this regard provisions
have been prescribed in the law. However, for providing relief to small
businesses, a simpler method of paying taxes and accounting thereof is also
prescribed, known as Composition Scheme. Along with providing relief to
small-scale business, the law also contains provisions for granting
exemption from payment of tax on specified goods and/or services. ❖ Input
Tax Credit (ITC) of CGST and SGST/UTGST will be available throughout
the supply chain, but cross
4. 21. 20 utilization of credit of CGST and SGST/UTGST will not be possible,
i.e. CGST credit cannot be utilized for payment of SGST/UTGST and
SGST/UTGST credit cannot be utilized for payment of CGST. However,
cross utilization will be allowed between CGST/SGST/UTGST and IGST,
i.e. credit of IGST can be utilized for the payment of CGST/SGST/UTGST
and vice versa. ❖ Since GST is a destination based consumption tax,
revenue of SGST will ordinarily accrue to the consuming States. The inter-
State supplier in the exporting State will be allowed to set off the available
credit of IGST, CGST and SGST/UTGST (in that order) against the IGST
payable on inter-State supply made by him. The buyer in the importing State
will be allowed to avail the credit of IGST paid on inter-State purchase
made by him. Thus, unlike the existing scenario where the credit chain
breaks in case of inter-State sales on account of non-VAT able CST, under
GST regime there is a seamless credit flow in case of inter-State supplies
too. The revenue of inter-State sale will not accrue to the exporting State
and the exporting State will be required to transfer to the Centre the credit of
SGST/UTGST used in payment of IGST. The Centre will transfer to the
importing State the credit of IGST used in payment of SGST/UTGST. Thus,
the inter- State trade of goods and services (IGST) would need a robust
settlement mechanism amongst the States and the Centre. A Central Agency
is needed which can act as a clearing house and verify the claims and inform
the respective Governments to transfer the funds. This is possible only with
the help of a strong IT Infrastructure.
5. 22. 21 ❖ Resultantly, Goods and Services Network (GSTN) - a Special
Purpose Vehicle – has been set to provide a shared IT infrastructure and
services to Central and State Governments, taxpayers and other stakeholders
for implementation of GST. The functions of the GSTN, inter alia, include: •
Facilitating registration; • Forwarding the returns to Central and State
authorities; • Computation and settlement of IGST; • Matching of tax
payment details with banking network; • Providing various MIS reports to
the Central and the State Governments based on the taxpayer return
information; • Providing analysis of taxpayers' profile; and • Running the
matching engine for matching, reversal and reclaim of input tax credit.
6. 23. 22 GST PORTAL The government’s portal (ref fig.2) for GST
compliance is finally live and open for business registrations. The GST
portal is hosted at https://www.gst.gov.in/ and so far, only registrations are
enabled on it. Existing taxpayers or new businesses can apply to register and
submit the required documents. All the existing registered taxpayers will be
granted provisional registration initially and would be required to submit
additional documents within 6 months. Figure (2) GSTIN For any dealer
registered under state VAT law, a unique TIN number is issued by the
respective state tax authorities. Similarly, a service provider is assigned a
service tax registration number by the Central Board of Excise and Custom
(CBEC). Going forward, in the new GST regime, all these taxpayers will get
consolidated into one single platform for compliance and administration
purposes and will be assigned registration under a single authority. The
government has set up GSTN–a special purpose vehicle to provide the IT
infrastructure necessary to support GST digitally. It is expected that 8
million
7. 24. 23 taxpayers will be migrated from various platforms into GST. All of
these businesses will be assigned a unique Goods and Services Tax
Identification Number (GSTIN). But most are yet not aware of the new
registration process and the identification number. Proposed GST
Identification Number (GSTIN) A complete break-up of the proposed GST
Identification Number. Each taxpayer will be allotted a state-wise PAN-
based 15-digit Goods and Services Taxpayer Identification Number
(GSTIN). ▪ The first two digits of this number will represent the state code
as per Indian Census 2011 ▪ The next ten digits will be the PAN number of
the taxpayer ▪ The thirteenth digit will be assigned based on the number of
registration within a state ▪ The fourteenth digit will be Z by default ▪ The
last digit will be for check code A format of proposed GSTIN has been
shown in the image below. GST Registration Every business carrying out a
taxable supply of goods or services under GST regime and whose turnover
exceeds the threshold limit of Rs. 20 lakh/ 10 Lakh as applicable will be
required to register as a normal taxable person. This process is of
registration is referred as GST registration.
8. 25. 24 Importance of GST Registration GST registration is critical because
it will enable you to avail various benefits that are available under the GST
regime. One such benefit is to avail seamless input tax credit. Multiple taxes
are being clubbed under GST and thus the cascading of taxes that is
prevailing currently will no longer be the case. Also, timely registration will
help you avoid any kind of interface with tax authorities. Casual
Registration A person who occasionally supplies goods and/or services in a
territory where GST is applicable but he does not have a fixed place of
business. Such a person will be treated as a casual taxable person as per
GST. Example: A person who has a place of business in Bangalore supplies
taxable consulting services in Pune where he has no place of business would
be treated as a casual taxable person in Pune. Composition Dealer This is an
option available to small businesses and taxpayers having a turnover less
than Rs. 75 lakhs. They can opt for Composition scheme where they will tax
at a nominal rate of 1% or 2.50% (for manufacturers) CGST and SGST each
(rates will be notified later). They will be required to maintain much less
detailed records and file only 1 quarterly return instead of three monthly
returns. However, they cannot issue taxable invoices, i.e., collect tax from
customers, but are required to pay the tax out of their own pocket. They
cannot also claim any input tax credit. Composition levy is available to only
small businesses. It is not available to interstate sellers, e-commerce traders,
and operators.
9. 26. 25 Applicability GST will apply when turnover of the business exceeds
Rs 20 lakhs (Limit is Rs 10 lakhs for the North-Eastern States). [Earlier the
limit was Rs 10lakhs and Rs 5lakhs for NE states.] Migration to GST All
existing Central Excise and Service Tax assessees and VAT dealers will be
migrated to GST. To migrate to GST, assessees would be provided a
Provisional ID and Password by CBEC/State Commercial Tax Departments.
Provisional IDs would be issued to only those assessees who have a valid
PAN associated with their registration. An assessee may not be provided a
Provisional ID in the following cases: 1. The PAN associated with the
registration is not valid 2. The PAN is registered with a State Tax authority
and Provisional ID has been supplied by the said State Tax authority. 3.
There are multiple CE/ST registrations on the same PAN in a State. In this
case, only 1 Provisional ID would be issued for the 1st registration in the
alphabetical order provided any of the above 2 conditions are not met. The
assessees need to use this Provisional ID and Password to login to the GST
Common Portal https://www.gst.gov.in where they would be required to fill
and submit the Form 20 along with necessary supporting documents.
10. 27. 26 Penalties for Not Registering Under GST An offender not paying tax
or making short payments has to pay a penalty of 10% of the tax amount due
subject to a minimum of Rs. 10,000. The penalty will be high at 100% of the
tax amount when the offender has evaded i.e., where there is a deliberate
fraud. However, for other genuine errors, the penalty is 10% of the tax due.
 Multiple Registrations Under GST A person with multiple business verticals
in a state may obtain a separate registration for each business vertical. PAN
is mandatory to apply for GST registration (except for a non-resident person
who can get GST registration on the basis of other documents). A
registration which has been rejected under CGST Act/SGST Act shall also
stand rejected for the purpose of SGST/CGST act.
11. 28. 27 Input Tax Credit One of the fundamental features of GST is the
seamless flow of input credit (ref fig.3) across the chain (from the
manufacture of goods till it is consumed) and across the country. Figure (3)
12. 29. 28 Gst software The brink of one of the biggest business changes of our
times viz. Goods and Services Tax. So far, most of the big businesses have
already identified vendors for implementation of GST software. Many of the
large enterprises had floated a Request for Proposal/Request for Information
(RFP/RFI) late last year, asking software providers to present them with
their solutions. They would have then evaluated these providers, over
multiple product demos and extensive question and answer rounds, to reach
a stage where they can now begin the implementation process, and
undertake business process mapping and solution’s. GST software, a list of
some of the key features that software provides. 1. Cloud based GST
Software: - Clear tax GST is a cloud based software i.e. developed and
maintained on internet which empowers us to provide our users with the
following features • Create a sync between working offline and backup on
connectivity with internet • Providing an updated version of our software
without bothering the user with additional efforts to update the software •
Easy access to software from anywhere at any time without worrying about
internet connectivity
13. 30. 29 2 No desktop for installation: - As the software is hosted on cloud,
user need not have a desktop system for installation of our software. Clear
Tax GST software can be downloaded as an offline software on system /
mobile app, mobile website / desktop website. User need not bear additional
cost of installation of the software and utilities. Hence, You can login from
anywhere and anytime. At the point of creating an invoice our software
makes sure that all mandatory fields are accurately filled. In case of any
mistake, an alert or notification will be given for every error made in an
invoice along with report of all such invoices.
14. 31. 30 GST RATES COMPARISION EXISTING TAX SYSTEM V/S
NEW TAXATION GST council has made the much-awaited
announcements around tax rates on various categories of goods on day one
of a two-day meeting of the said council at Srinagar. There has been a hype
around these rates for a while and now these rates are finally in the public
domain. As soon as the GST rates were announced a huge wave of curiosity
hit across industry and trade bodies. Everyone is evaluating their position as
a result of this change. So, in this article, we bring you our analysis of these
GST rates. We know that the GST slabs are pegged at 5%, 12%, 18% &
 28%. According to the GST council, the tax structure for common-use
goods are as under: Services Name of ITEM GST Rate (%) Existing Rate
(%) Telecom 18 15 Works contracts 12 15 Non-AC/alcohol-serving
restaurants 12 13-14 AC, alcohol-serving restaurants 18 22 Five-star
restaurants 28 18
15. 32. 31 Constructions Name of ITEM GST Rate (%) Existing Rate (%)
Cement 28 30 Wall paper 28 18.5 Paints and varnishes 28 26 Putty, wall
fillings 28 26 Plaster 28 26 Ceramic tiles 28 26 Tempered glass 28 26 Sand
lime bricks, fly ash bricks 5 6 Metals & Minerals Name of ITEM GST Rate
(%) Existing Rate (%) Peat 5 19.5 All ores and concentrates 5 18.5
Kerosene PDS 5 17 Petroleum coke, petroleum bitumen 18 27.5 Tar 5 12
Coal 5 12 Lignite 5 12 Copper bars, rods, wires 18 18.5 Copper screws,
nuts, bolts 18 18.5 Nickel bars, rods, wires 18 18.5 Nickel screw, nuts, bolts
18 18.5 Nickel tubes, pipes, netting 18 18.5 Aluminium ingots, rods, wires
18 18.5 Lead plates, sheets, strips 18 18.5 Zinc goods 18 18.5 Tin bars, rods
18 18.5
16. 33. 32 Lifestyle and Home Name of ITEM GST Rate(%) Existing Rate(%)
Leather bags 28 6 Cell phones 18 6 Yachts 28 18.5 Air conditioners 28 26
Refrigerators 28 26 Storage water heaters 28 26 Dish washing machines 28
26 Printer, photocopier, fax machines 28 26 Wristwatches 28 26 Furniture
28 26 Video game consoles 28 26 Exercise equipment 28 26 Sports goods
12 18.5 Bicycles 12 18.5 Spectacle lens 12 18.5 Whey proteins & fitness
supplements 18 26 Hats and other headgears 18 26 Steel utensils 5 18.5
Consumer Goods ITEM GST Rate (%) Existing Rate (%) Aluminium Foil
28 18.5 Agarbatti 12 0 Preserved Vegetables 18 0 Butter, ghee, cheese 12 6
Dry fruits 12 6 Jams, jellies 18 12 Frozen meal 12 6 Branded paneer 5 0
Branded cereals 5 0 Cocoa butter, oils chocolates 28 26 Instant, aroma
coffee 28 26 Coffee concentrates, custard powder 28 26
17. 34. 33 Protein concentrates, sugar syrups 28 26 Razors 28 26 Dental floss 28
26 Toothpaste 28 26 Deodorants 28 26 Aftershave 28 26 Shaving cream 28
26 Cereals 0 0 Puffed, rice, papad, bread Exempt 0 Aquatic/poultry/cattle
feed Exempt 0 Salt Exempt 0 Soyabean, groundnut, sunflower, seeds 5 6
Infant use preparations 18 19.5 Pasta, corn flakes, and cakes 18 19.5 Coffee,
tea 5 6 Frozen vegetables 5 6 Condensed milk 18 18.5 Toilet paper 18 18.5
Hot water bottles 18 18.5 Petroleum jelly, paraffin wax 18 20 Pencil
sharpeners, knives 12 18.5 Meats & fish preparations 12 18.5 Sweetmeats 5
12 Bakery mixes, dough’s, pizza bread 5 12 Vegetable fats & oils 5 12 Tea
concentrates, sauces, soups 5 12 Ice cream, instant food mixes, sherbet 18
26 Refined sugar 18 26 Soap 18 26 Dentrifices – toothpaste 18 26 Hair oil
18 26 Handmade safety matches 5 18.5 Broomsticks 5 18 Candles 12 26
Tooth powder 12 26 Led lights 12 26 Milk beverages 12 26 Ready to eat
Namkeen/bhujiya 12 26
18. 35. 34 Beet sugar, cane sugar 5 26 Others Name of ITEM GST Rate (%)
Existing Rate (%) Tyres 28 18.5 Steam 12 0 Children’s drawing books 12 0
 Plastic products 28 18.5 Calcerous stone 28 18.5 Artists’, students’ or
signboard colours 28 18.5 Nuclear fuel 5 0 Heavy water and other nuclear
fuels 5 0 Compressed air 5 0 Solar water heater 5 0 Renewable energy
devices 5 0 Braille typewriters 18 13.5 Pianos 28 26 Revolvers 28 26
Artificial Flowers 28 26 Bangles (Non-Precious Metals) EXEMPT 0
Fountain pen ink, ball pen ink 12 12 Wood pulp 12 12 Printed books 0 0
Calendars 12 12 Animal or human blood vaccines 5 6 Power driven water
pumps 12 12.5 Padlocks, locks 18 18.5 Helmets 18 18.5 Plastic Products 28
18.5 Fertilizers 12 18.5 Tractors 12 18.5 Sewing/knitting needles 12 18.5
Agricultural implements 0 12.5 Firewood 0 12.5 Geometry boxes 5 18.5 Gst
return procedure
19. 36. 35 GST Monthly Returns: - Gst return procedure (ref fig no.3) Based on
the category of registered person such as monthly return is to be filed by
Regular, Foreign Non-Residents, ISD and Casual Tax Payers whereas
Compounding/Composite tax payers has to file quarterly returns: Figure (3)
Needs to file Return in GST regime • Every registered dealer is required to
file return for the prescribed tax period. A Return needs to be filed even if
there is no business activity (i.e. Nil Return) during the said tax period of
return. • Government entities / PSUs, etc. not dealing in GST supplies or
persons exclusively dealing in exempted / Nil rated / non –GST goods or
services would
20. 37. 36 neither be required to obtain registration nor required to file returns
under the GST law. • However, State tax authorities may assign
Departmental ID to such government departments / PSUs / other persons
and will ask the suppliers to quote this ID in the supply invoices for all inter-
State purchases being made to them. Salient Features of GST Returns •
Filing of returns would only be through online mode. Facility of offline
generation and preparation of returns will also be available. The returns
prepared in the offline mode will have to be uploaded. • There will be a
common e-return for CGST, SGST, IGST and Additional Tax. • A
registered Tax Payer shall file GST Return at GST Common Portal either by
himself or through his authorised representative. • There would be no
revision of Returns. Changes to be done in subsequent Returns
21. 38. 37 ANALYSIS GST calculation Model of GST with example: The GST
shall have two components: one levied by the Centre (referred to as Central
GST or CGST), and the other levied by the States (referred to as State GST
or SGST). Rates for Central GST and State GST would be approved
appropriately, reflecting revenue considerations and acceptability. The
CGST and the SGST would be applicable to all transactions of goods and
services made for a consideration except the exempted goods and services.
Cross utilization of ITC both in case of Inputs and capital goods between the
CGST and the SGST would not be permitted except in the case of inter-
State supply of goods and services (i.e. IGST). The Centre and the States
would have concurrent jurisdiction for the entire value chain and for all
 taxpayers on the basis of thresholds for goods and services prescribed for the
States and the Centre.
22. 39. 38 THE FOLLOWING COMPARISION SHOW THE BENEFIT OF
GST: - Comparison between Multiple Indirect tax laws and proposed one
law Particulars Without GST With GST (Rs.) Manufacture to Wholesaler
Cost of Production 5,000.00 5,000.00 Add: Profit Margin 2,000.00 2,000.00
Manufacturer Price 7,000.00 7,000.00 Add: Excise Duty @ 12% 840 –
Total Value(a) 7,840.00 7,000.00 Add: VAT @ 12.5% 980 – Add: CGST @
12% – 840 Add: SGST @ 12% – 840 Invoice Value 8,820.00 8,680.00
Wholesaler to Retailer COG to Wholesaler(a) 7,840.00 7,000.00 Add: Profit
Margin@10% 784 700 Total Value(b) 8,624.00 7,700.00 Add: VAT @
12.5% 1,078.00 – Add: CGST @ 12% – 924 Add: SGST @ 12% – 924
Invoice Value 9,702.00 9,548.00 Retailer to Consumer: COG to Retailer (b)
8,624.00 7,700.00 Add: Profit Margin 862.4 770 Total Value(c) 9,486.40
8,470.00 Add: VAT @ 12.5% 1,185.80 – Add: CGST @ 12% – 1,016.40
Add: SGST @ 12% – 1,016.40 Total Price to the Final consumer 10,672.20
10,502.80 Cost saving to consumer – 169.4 % Cost Saving – 1.59 Notes: -
Input tax credit available to wholesaler is Rs.980 and Rs. 1,680 in case of
without GST and with GST respectively.

1. 40. 39 Likewise Input tax credit available to Retailer is Rs. 1,078 and Rs.
1,848 in case of without GST and with GST respectively. In case, VAT rate
is also considered to be 12%, the saving to consumer would be 1.15%. Gst
benefits to common man The basis of Goods and Services Tax is the
seamless flow of Input Tax Credit (ITC) along the entire value addition
chain. At every step of the manufacturing process, businesses will have the
option to claim the tax already paid in the previous transaction.
Understanding this process is crucial for businesses. A detailed explanation
here. To understand this, let us first understand what is Input Tax Credit. It
is the credit an individual receives for the tax paid on the inputs used in
manufacturing the product. So, if there is a 10% tax that the individual must
submit to the government, he can subtract the amount he has paid in taxes at
the time of purchase and submit the balance amount to the government.
Understand this with a hypothetical numerical example. Say a shirt
manufacturer pays Rs. 100 to buy raw materials. If the rate of taxes is set at
10%, and there is no profit or loss involved, then he has to pay Rs. 10 as tax.
So, the final cost of the shirt now becomes Rs (100+10=) 110. At the next
stage, the wholesaler buys the shirt from the manufacturer at Rs. 110, and
adds labels to it. When he is adding labels, he is adding value. Therefore, his
cost increases by say Rs. 40. On top of this, he has to pay a 10% tax, and the
final cost therefore becomes Rs. (110+40=) 150 + 10% tax = Rs. 165. Now,
the retailer pays Rs. 165 to buy the shirt from the wholesaler because the tax
liability had passed on to him. He has to package the shirt, and when he does
that, he is adding value again. This time, let’s say his value add is Rs. 30.
 Now when he sells the shirt, he adds this value (plus the VAT he has to pay
the government) to tof services 1. Services by an employee to the employer
in the course of or in relation to his employment. 2. Services by any Court or
Tribunal established under any law for the time being in force. 3. Functions
performed by the MPs, MLAs, Members of municipality and Member of
other local authorities. 4. Duties performed by any person who holds any
constitutional post. 5. Duties performed by any person as a Chairperson or a
Member or a Director in a body established by the Central Government or a
State Government or
2. 48. 47 local authority and who is not deemed as an employee before the
commencement of this clause. 6. Services of funeral, burial, crematorium or
mortuary including transportation of the deceased. 7. Sale of land and sale
of building where entire consideration has been received after issuance of
completion certificate. 8. Actionable claims other than lottery, betting and
gambling.
3. 49. 48 List of taxes not covered under GST ✓ Stamp Duty ✓ Electricity
Cess ✓ Extra Entertainment Tax Levied by Local Bodies ✓ Property Tax ✓
Entry Fee at Municipal Corporation Border ✓ Road Tax ✓ Toll Tax ✓ Extra
Excise Duty on Tobacco Products
4. 50. 49 LIMITATION OF GST Why no to gst? For quite some time now, it
has been clear that the people most keen on this “reform” are big
industrialists, especially multinationals. Since they are big, they cannot
evade state or central taxes on goods. Their crib is that they have to compete
with companies in the unorganised sector which often pay no tax. FIRST, as
we noted above, it helps the big more than the small. Since the proposal is
that companies with a turnover of Rs 1.5 crore will have to pay GST, it
means many small companies will end up paying taxes. The big companies
will benefit, as they will now get deductions on the taxes paid by their small
suppliers. Since the initial GST rate could be anywhere from 15-25 percent
(depending on what is left out of its ambit), that’s a huge tax bite for the
small. the key beneficiaries of GST will be sectors such as batteries,
footwear, plywood, electrical appliances, ceramics, adhesives and paints,
where the unorganised sector accounts for 35-70 percent of total market
size.” The latter’s loss will be the gain of their competitors in the organised
sector. SECOND, if the unorganised sector is going to lose some of its
competitive edge initially, it means there will be pressures for layoffs in
companies that can’t compete as a result of GST implementation. In the
short run, GST may end up costing jobs till the smaller companies learn to
compete. And small companies are the biggest job creators anywhere in the
world. THIRD, if we assume that those evading excise (legally or otherwise)
currently will henceforth start paying the tax, it means they have to raise
prices to stay
5. 51. 50 profitable. Taxes up, prices up. In the short-term, GST may boost the
prices of some segments of the economy. Beside above mentioned, some
 other reason Businesses Need to Overcome in the GST Regime, ✓ Change
in Business Software ✓ GST Compliance ✓ Increase in Operating Costs ✓
Policy Change During the Middle of the Year ✓ Online Procedure ✓ Higher
Tax Burden for Manufacturing SMEs ✓ No Clarity on Tax Holidays ✓
Disruption to Business
6. 52. 51 CONCLUSION From the above discussion, it is clear that GST is
basically an indirect tax that brings most of the taxes imposed on most
goods and services, on manufacture, sale and consumption of goods and
services, under a single domain at the national level. In the present system,
taxes are levied separately on goods and services. The GST is a consolidated
tax based on a uniform rate of tax fixed for both goods and services and it is
payable at the final point of consumption. At each stage of sale or purchase
in the supply chain, this tax is collected on value- added goods and services,
through a tax credit mechanism Introduction of the Value Added Tax (VAT)
at the Central and the State level has been considered to be a major step – an
important breakthrough – in the sphere 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 a further significant improvement –
the next logical step – towards a comprehensive indirect tax reforms in the
country. Once GST is implemented, most of the current challenges of this
move will be a story of the past. India will become a single market where
goods can move freely and there will lesser compliances to deal with for
businesses. The benefits of GST will definitely outweigh the disadvantages
of GST.
7. 53. 52 RECOMMENDATION Some suggestions for better administrative
way to handle and implement of goods and service tax act in India are: - •
Standardization of systems and procedure • Tax relief in case of branch
transfer • Well defined procedures in case of job works • Uniform dispute
settlement procedure • Adequate training for both tax payers and tax
enforcers • Re-organization of administrative machinery for GST
implementation • Building information technology backbone – the single
most important initiative for GST implementation • Uniform
implementation of GST should be ensured across all states (unlike the
staggered implementation of VAT) as many issues might arise in case of
transactions between states who comply with GST and states who are not
complying with GST.
8. 54. 53 REFERENCE • Mehra, P (2015) Modi govt.’s model for GST may
not result in significant growth push. The Hindu. • Girish Garg, (2014),
“Basic Concepts and Features of Good and Service Tax in India • Nitin
Kumar (2014), “Goods and Service Tax in India-A Way Forward”, “Global
Journal of Multidisciplinary Studies”, Vol 3, Issue6, May 2014. •
https://cleartax.in/s/gst-law-goods-and-services-tax •
http://www.cbec.gov.in/htdocs-cbec/gst •
 https://en.wikipedia.org/wiki/Goods_and_Services_Tax_(India) •
http://economictimes.indiatimes.com/gst • http://www.business-
standard.com/search?type=news&q=Gst •
http://www.financialexpress.com/economy/what-is-gst-act-2017-full-
details- specifications-pdf-rules-forms-and-faqs/743156/ •
http://newsonair.nic.in/GST_FAQ •
http://www.thehindubusinessline.com/multimedia/archive/03166/GST_rate_
sc hedule__3166109a.pdf • https://www.quora.com/What-is-the-main-
purpose-of-implementing-GST-in- India • https://www.studydhaba.com/gst-
slabs-pdf-download-gst-rates-structure/
9. 55. 54

23.he final cost. So, the cost of the shirt becomes Rs. 214.5 Let us see a
breakup for this: Cost = Rs. 165 + Value add = Rs. 30 + 10% tax = Rs. 195
+ Rs. 19.5 = Rs. 214.5
24. 41. 40 So, the customer pays Rs. 214.5 for a shirt the cost price of which
was basically only Rs. 170 (Rs 110 + Rs. 40 + Rs. 30). Along the way the
tax liability was passed on at every stage of transaction and the final liability
comes to rest with the customer. This is called the Cascading Effect of
Taxes where a tax is paid on tax and the value of the item keeps increasing
every time this happens. Action Cost 10% Tax Total Buys Raw Material @
100 100 10 110 Manufactures @ 40 150 15 165 Adds value @ 30 195 19.5
214.5 Total 170 44.5 214.5 In the case of Goods and Services Tax, there is a
way to claim credit for tax paid in acquiring input. What happens in this
case is, the individual who has paid a tax already can claim credit for this
tax when he submits his taxes. In our example, when the wholesaler buys
from the manufacturer, he pays a 10% tax on his cost price because the
liability has been passed on to him. Then he adds value of Rs. 40 on his cost
price of Rs. 100 and this brings up his cost to Rs. 140. Now he has to pay
10% of this price to the government as tax. But he has already paid one tax
to the manufacturer. So, this time what he does is, instead of paying Rs
(10% of 140=) 14 to the government as tax, he subtracts the amount he has
paid already. So, he deducts the Rs. 10 he paid on his purchase from his new
liability of Rs. 14, and pays only Rs. 4 to the government. So, the Rs. 10
becomes his input credit. When he pays Rs. 4 to the government, he can
pass on its liability to the retailer. So, the retailer pays Rs. (140+14=) 154 to
him to buy the shirt. At the next stage, the retailer adds value of Rs. 30 to his
cost price and has to pay a 10% tax on it to the government. When he adds
value, his price becomes Rs. 170. Now, if he had to pay 10% tax on it, he
would pass on the liability to the
25. 42. 41 customer. But he already has input credit because he has paid Rs.14
to the wholesaler as the latter’s tax. So, now he reduces Rs. 14 from his tax
liability of Rs. (10% of 170=) 17 and has to pay only Rs. 3 to the
government. And therefore, he can now sell the shirt for Rs. (140+30+17)
 187 to the customer. Action Cost 10% Tax Actual Liability Total Buys Raw
Material 100 10 10 110 Manufactures @ 40 140 14 4 154 Adds Value @ 30
170 17 3 187 Total 170 17 187 In the end, every time an individual was able
to claim input tax credit, the sale price for him reduced and the cost price for
the person buying his product reduced because of a lower tax liability. The
final value of the shirt also therefore reduced from Rs. 214.5 to Rs. 187, thus
reducing the tax burden on the final customer. So essentially, Goods &
Services Tax is going to have a two-pronged benefit. One, it will reduce the
cascading effect of taxes, and second, by allowing input tax credit, it will
reduce the burden of taxes and, hopefully, prices.
26. 43. 42 Impact of GST OVERALL GST IMPACT: - a) Change in law and
procedure: Since it is a major indirect tax reform in India, there would be
new legislations and procedures. The entire indirect tax code would be a
new one. b) Change in tax-rates: The standard rate of 12.5 % for central
excise, Service tax, along with residuary rate of VAT at 12.5-14.5% brings
the overall rate to 25%-30%. But, post GST, the general rate will be 18%; a
net gain of almost 7%-12%. Most of the dealers and consumers would
experience the change in tax rates, either significantly or marginally. When
the tax rates are increased for some products it could lead to tax evasion as
well. c) GST based on HSN: The central excise tariff based classification
would no longer be applicable. It would reduce the interpretational issues in
respect of class of commodities. d) Availment of tax credit: GST would
facilitate near seamless credit across the entire supply chain and across all
States under a common tax base. At present no cross credits are available
across central excise/service tax to local VAT/sales tax. Under the GST law,
the input tax credit (ITC) (set off) would be given for Central GST against
CGST and the States would give input tax credit (ITC) SGST to SGST.
Cross- utilization of credit between Central GST and State GST would not
be allowed. e) Credit availment based on vendor’s invoices: The credit of
excise duty paid is available based on the excise invoice raised by
manufacturer or service provider. The credit is available under the Service
Tax law when the invoice amount is paid within 3 months of the invoice
date. In respect of joint charge and reverse charge, based on receipt of
payment on the basis of payment challans of the assessee. Under State VAT
law, credit is allowable on the basis of tax invoice. Under GST the credits
could be availed based on the invoices of vendors under CGST and SGST.
But the onus may shift onto the assessee to ensure that the
27. 44. 43 amount of the CGST/SGST has been deposited in the respective
Government treasury by the vendor. This provision has been added to bring
in tax discipline but smaller businesses may find transaction cost increasing
due to this. f) Avoidance of Double Taxation: Presently, several transactions
suffer VAT as well as Service Tax such as works contract or licensing of
software. This could be resolved under the GST regime by redefining what
is goods and service. g) Changes in the Accounting Software: Dealers and
 service providers need to modify/replace the accounting and taxation
software. Initially there could be investment costs, costs of training in GST
of people at each level starting from junior/mid to higher level managerial
staff, management group/stakeholders. h) Training: Comprehensive training
would be required to the staff members of the business community, both at
senior level and also at junior level across the purchase, sales and finance
functions. VAT + CE/ ST officers would also need to understand the law
well. i) Competent Professionals: There are specialized consultants for
Excise Duty, Service Tax and VAT. With the GST, only a single consultant
maybe required who can handle all GST matters. Compliance for the SME
may necessitate competent tax preparers j) Amending existing contracts:
Assessees have to incorporate an extra clause in the existing contracts to
collect CGST and SGST as applicable.
28. 45. 44 ON INDIA: - Goods and Services Tax (GST) is expected to provide
the much-needed stimulant for economic growth in India by transforming
the existing basis of indirect taxation towards free flow of goods and
services within the economy and also eliminating the cascading effect of tax
on tax. In view of the important role that India is expected to play in the
world economy in the years to come, the expectation of GST being
introduced is high not only within the country, but also in neighbouring
countries and in developed economies of the world. Some of the imp
impacts are: - a) Increased FDI: The flow of Foreign Direct Investments
may increase once GST is implemented as the present complicated/ multiple
tax laws are one of the reasons foreign Companies are wary of coming to
India in addition to widespread corruption. (b) Growth in overall revenue: It
is estimated that India could get revenue of $15 billion per annum by
implementing the Goods and Services Tax as it would promote exports,
raise employment and boost growth. Over a period, the dilution of the
principles may see that only part of this is accruing. (c) Single point
taxation: Uniformity in tax laws will lead to single point taxation for supply
of goods or services all over India. This increases the tax compliance and
more assesses will come into tax net. (d) Simplified tax laws: This reduces
litigation and waste of time of the judiciary and the assessee due to frivolous
proceedings at various levels of adjudication and appellate authorities.
Present law appears to be much worse and an amalgam of the bad parts of
VAT/ ST/ CE.
29. 46. 45 (e) Increase in exports and employment: GST could also result in
increased employment, promotion of exports and consequently a significant
boost to overall economic growth and factors of production -land labour and
capital. ON INDIAN ECONOMY: - • Reduce tax burden on producers and
foster growth through more production. This double taxation prevents
manufacturers from producing to their optimum capacity and retards
growth. GST would take care of this problem by providing tax credit to the
manufacturer. • Various tax barriers such as check posts and toll plazas lead
 to a lot of wastage for perishable items being transported, a loss that
translated into major costs through higher need of buffer stocks and
warehousing costs as well. A single taxation system could eliminate this
roadblock for them. • A single taxation on producers would also translate
into a lower final selling price for the consumer. • Also, there will be more
transparency in the system as the customers would know exactly how much
taxes they are being charged and on what base. • GST would add to
government revenues by widening the tax base. • GST provides credits for
the taxes paid by producers earlier in the goods/services chain. This would
encourage these producers to buy raw material from different registered
dealers and would bring in more and more vendors and suppliers under the
purview of taxation. • GST also removes the custom duties applicable on
exports. Our competitiveness in foreign markets would increase on account
of lower cost of transaction.
30. 47. 46 • The proposed GST regime, which will subsume most central and
state-level taxes, is expected to have a single unified list of
concessions/exemptions as against the current mammoth exemptions and
concessions available across goods and services The introduction of Goods
and Services Tax would be a very noteworthy step in the field of indirect tax
reforms in India. By amalgamating a large number of Central and State
taxes into a single tax, it would alleviate cascading or double taxation in a
major way and pave the way for a common national market. From the
consumer point of view, the biggest advantage would be in terms of
reduction in the overall tax burden on goods and services. Introduction of
GST would also make Indian products competitive in the domestic and
international markets. Last but not the least, this tax, because of its
transparent character, would be easier to administer. However, once
implemented, the system holds great promise in terms of sustaining growth
for the Indian economy. Negative list under GST Schedule III: -Activities or
transactions which shall be treated neither as a supply of goods nor a supply
of services 1. Services by an employee to the employer in the course of or in
relation to his employment. 2. Services by any Court or Tribunal established
under any law for the time being in force. 3. Functions performed by the
MPs, MLAs, Members of municipality and Member of other local
authorities. 4. Duties performed by any person who holds any constitutional
post. 5. Duties performed by any person as a Chairperson or a Member or a
Director in a body established by the Central Government or a State
Government or
31. 48. 47 local authority and who is not deemed as an employee before the
commencement of this clause. 6. Services of funeral, burial, crematorium or
mortuary including transportation of the deceased. 7. Sale of land and sale
of building where entire consideration has been received after issuance of
completion certificate. 8. Actionable claims other than lottery, betting and
gambling.
32. 49. 48 List of taxes not covered under GST ✓ Stamp Duty ✓ Electricity
Cess ✓ Extra Entertainment Tax Levied by Local Bodies ✓ Property Tax ✓
Entry Fee at Municipal Corporation Border ✓ Road Tax ✓ Toll Tax ✓ Extra
Excise Duty on Tobacco Products
33. 50. 49 LIMITATION OF GST Why no to gst? For quite some time now, it
has been clear that the people most keen on this “reform” are big
industrialists, especially multinationals. Since they are big, they cannot
evade state or central taxes on goods. Their crib is that they have to compete
with companies in the unorganised sector which often pay no tax. FIRST, as
we noted above, it helps the big more than the small. Since the proposal is
that companies with a turnover of Rs 1.5 crore will have to pay GST, it
means many small companies will end up paying taxes. The big companies
will benefit, as they will now get deductions on the taxes paid by their small
suppliers. Since the initial GST rate could be anywhere from 15-25 percent
(depending on what is left out of its ambit), that’s a huge tax bite for the
small. the key beneficiaries of GST will be sectors such as batteries,
footwear, plywood, electrical appliances, ceramics, adhesives and paints,
where the unorganised sector accounts for 35-70 percent of total market
size.” The latter’s loss will be the gain of their competitors in the organised
sector. SECOND, if the unorganised sector is going to lose some of its
competitive edge initially, it means there will be pressures for layoffs in
companies that can’t compete as a result of GST implementation. In the
short run, GST may end up costing jobs till the smaller companies learn to
compete. And small companies are the biggest job creators anywhere in the
world. THIRD, if we assume that those evading excise (legally or otherwise)
currently will henceforth start paying the tax, it means they have to raise
prices to stay
34. 51. 50 profitable. Taxes up, prices up. In the short-term, GST may boost the
prices of some segments of the economy. Beside above mentioned, some
other reason Businesses Need to Overcome in the GST Regime, ✓ Change
in Business Software ✓ GST Compliance ✓ Increase in Operating Costs ✓
Policy Change During the Middle of the Year ✓ Online Procedure ✓ Higher
Tax Burden for Manufacturing SMEs ✓ No Clarity on Tax Holidays ✓
Disruption to Business
35. 52. 51 CONCLUSION From the above discussion, it is clear that GST is
basically an indirect tax that brings most of the taxes imposed on most
goods and services, on manufacture, sale and consumption of goods and
services, under a single domain at the national level. In the present system,
taxes are levied separately on goods and services. The GST is a consolidated
tax based on a uniform rate of tax fixed for both goods and services and it is
payable at the final point of consumption. At each stage of sale or purchase
in the supply chain, this tax is collected on value- added goods and services,
through a tax credit mechanism Introduction of the Value Added Tax (VAT)
 at the Central and the State level has been considered to be a major step – an
important breakthrough – in the sphere 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 a further significant improvement –
the next logical step – towards a comprehensive indirect tax reforms in the
country. Once GST is implemented, most of the current challenges of this
move will be a story of the past. India will become a single market where
goods can move freely and there will lesser compliances to deal with for
businesses. The benefits of GST will definitely outweigh the disadvantages
of GST.
36. 53. 52 RECOMMENDATION Some suggestions for better administrative
way to handle and implement of goods and service tax act in India are: - •
Standardization of systems and procedure • Tax relief in case of branch
transfer • Well defined procedures in case of job works • Uniform dispute
settlement procedure • Adequate training for both tax payers and tax
enforcers • Re-organization of administrative machinery for GST
implementation • Building information technology backbone – the single
most important initiative for GST implementation • Uniform
implementation of GST should be ensured across all states (unlike the
staggered implementation of VAT) as many issues might arise in case of
transactions between states who comply with GST and states who are not
complying with GST.
37. 54. 53 REFERENCE • Mehra, P (2015) Modi govt.’s model for GST may
not result in significant growth push. The Hindu. • Girish Garg, (2014),
“Basic Concepts and Features of Good and Service Tax in India • Nitin
Kumar (2014), “Goods and Service Tax in India-A Way Forward”, “Global
Journal of Multidisciplinary Studies”, Vol 3, Issue6, May 2014. •
https://cleartax.in/s/gst-law-goods-and-services-tax •
http://www.cbec.gov.in/htdocs-cbec/gst •
https://en.wikipedia.org/wiki/Goods_and_Services_Tax_(India) •
http://economictimes.indiatimes.com/gst • http://www.business-
standard.com/search?type=news&q=Gst •
http://www.financialexpress.com/economy/what-is-gst-act-2017-full-
details- specifications-pdf-rules-forms-and-faqs/743156/ •
http://newsonair.nic.in/GST_FAQ •
http://www.thehindubusinessline.com/multimedia/archive/03166/GST_rate_
sc hedule__3166109a.pdf • https://www.quora.com/What-is-the-main-
purpose-of-implementing-GST-in- India • https://www.studydhaba.com/gst-
slabs-pdf-download-gst-rates-structure/
38. 55. 54