A Project Report

On
GOOD AND SERVICE TAX
Submied to
Hirakud Degree College, Hirakud

In Partial fulfillment for the award of the

degree of Bachelor of Commerce

+3 6th SEMESTER EXAMINATION

SESSION 2024-2025

Submitted By Shana Mehfooz

Roll no: S02722COM012
Reg. No:29731/22
Under the supervision of

Dr.Sidhant Mohanty

DEPARTMENT OF COMMERECE
HIRAKUD COLLEGE,
HIRAKUD,SAMBALPUR
 ACKNOWLEDGEMENT
Every work constitutes great deal of assistance and guidance from the
people concerned and this particular project is of no exception.
A project of the nature is surely a result of tremendous support, guidance,
encouragement and help.
Wish to place on record my sincere gratitude to Dr. Sidhant Mohanty,
Head of Commerce Department, Hirakud Degree College, Hirakud
for his valuable guidance. Without his support and guidance taking this
would not have been possible.
Also, wish to acknowledge enthusiastic encouragement and support
extended to me by my family members. At last, I would like to thank all
the faculty of commerce department to help me completing this project.
Im also thankful to my friends who provided me their constant support and
assistance.

Shana Mehfooz
Roll No.: S02722COM012
 DECLARATION
I do hereby declare that the research report titled “Goods & Services Tax
(GST)” submitted by me in partial fulfillment of the requirement of
Bachelor of Commerce exclusively prepared and conceptualized by me
and is not submitted to any other Institution or University or published
anywhere before for the reward of any Degree/Diploma/Certificate. It is
the Original work of mine and has not been obtained from any other part.

Shana Mehfooz
Roll No.: S02722COM012
Dr.Sidhant Mohanty
Lecturer in Commerce
Department of Commerce,
Hirakud Degree College, Hirakud,
Sambalpur, Odisha-768016

CERTIFICATE

This is to certify that the project report entitled, “GOOD AND SERVICE
TAX” has been submitted by Shana Mehfooz, under my guidance and
supervision for partial fulfilment of the requirements for the award of the
degree of Bachelor of Commerce.

Place: Sambalpur Dr.Sidhant Mohanty

Date: 28-02-2025 Lecturer in Commerce
Hirakud Degree College
 CHAPTERISATION

CHAPTER 1 INTRODUCTION TO GST 1 – 17

INTRODUCTION
GOOD AND SERVICE TAX
HISTORY OF GST IN INDIA
ADVANTAGES OF GST
WHY DO WE NEED GST
COMPONENT OF GST
PROBLEM IN IMPLIMENT OF GST

CHAPTER 2 LETRATURE REVIEW 18 – 38

BRIEF HISTORY ABOUT GST IN INDIA
SILENT FEATURES OF GST
DUAL GST
BENEFITE OF GST
CHALLENGES IN IMPLIMENTATION
OF GST
IMPACT OF GST ON INDIAN ECONOMY

CHAPTER 3 DATA ANALYSIS AND

ENTERPRETATION 39 -46

CHAPTER 4 SUMMARY OF FINDING, SUGGESTION

AND CONCLUSION 47 – 51
FINDING OF DATA
SUGGESTION
CONCLUSION

CHAPTER 4 BIBLOGRAPHY 52 -53

 CHAPTER I

INTRODUCTION
TO
GST
 INTRODUCTION TO GST

Tax policies play an important role on the economy through their impact
on both efficiency and equity. A good tax system should keep in view
issues of income distribution and, at the same time, also Endeavour to
generate tax revenues to support government expenditure on public
services and Infrastructure development.
The introduction of Goods and Services Tax (GST) would be a very
significant 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 mitigate 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 a reduction in the overall tax
burden on goods, which is currently estimated at 25%-30%. Introduction
of GST would also make our products competitive in the domestic and
international Markets.
It will lead to the abolition of taxes such as Octroi, Central Sales Tax, State
level Sales Tax, Entry Tax, Stamp duty, Telecom License Fees, Turnover
Tax, Tax on Consumption or Sale of Electricity, etc. It will also improve
government's fiscal health as the tax collection system would become
more transparent, making tax evasion difficult. CAG Mr. Vinod Rai in his
inaugural address to the National Conference on GST put forth the concept
as "An integrated scheme of taxation that does not discriminate between
goods and services and is a part of the proposed tax reforms that centre on
evolving an efficient and harmonized consumption tax system in the
country."
GST stands for Goods and Service Tax. It was first initiated in 1986 by
Vishwanath Pratap Singh 7th Prime Minister of India. After that in 2007,
the current government proposed to implement GST and presented the
same in Lok Sabha in 2011. In Dec 2014 GST again presented in Lok
Sabha and in same is passed in 2015. After approval of Rajya Sabha same
is called as 101th amendment of the Constitution and is rolling out from 1
July 2017. After the passage of 25 years of economic reforms in the
indirect taxes is going for a revolutionary change in the form of GST. GST
is defined as the giant indirect tax structure designed to support and
enhance the economic growth of a country. More than 150 countries have
implemented GST so far. However, the idea of GST in India was mooted
by Vajpayee government in 2000 and the constitutional amendment for the
same was passed by the Loksabha on 6th May 2015 but is yet to be ratified
by the Rajyasabha. However, there is a huge hue and cry against its
implementation. It would be interesting to understand why this proposed
GST regime may hamper the growth and development of the country.
 GOODS AND SERVICES TAX (GST)

The Goods and Services Tax has revolutionized the Indian taxation
system. The GST Act was passed in the Lok Sabha on 29th March, 2017,
and came into effect from 1st July, 2017. Goods & Services Tax Law in
India is a comprehensive, multi-stage, destination-based tax that will be
levied on every value addition. In simple words, GST is an indirect tax
levied on the supply of goods and services. GST Law has replaced many
indirect tax laws that previously existed in India.
So,
bef
ore
Go
od
s
an
d
Ser
vic
e
Ta
x,
the pattern of tax levy was as follows:
Under the GST regime, tax will be levied at every point of sale.
Now let us try to understand “GST is a comprehensive, multi-stage,
destination-based tax that will be levied on every value addition.”
MULTI-STAGE

There are multiple change-of-hands an item goes through along its supply
chain: from manufacture to final sale to consumer.
Let us consider the following case:
o Purchase of raw materials
o Production or manufacture
o Warehousing of finished goods
o Sale of the product to the retailer
o Sale to the end consumer
Goods and Services Tax will be levied on each of these stages, which
make it a multi-stage tax. Value Addition
The manufacturer who makes shirts buys yarn. The value of yarn gets
increased when the yarn is woven into a shirt.
The manufacturer then sells the shirt to the warehousing agent who
attaches labels and tags to each shirt. That is another addition of value
after which the warehouse sells it to the retailer.
The retailer packages each shirt separately and invests in the marketing of
the shirt thus increasing its value.
GST will be levied on these value additions i.e. the monetary worth added
at each stage to achieve the final sale to the end customer.

DESTINATION-BASED
Consider goods manufactured in Rajasthan and are sold to the final
consumer in Karnataka. Since Goods & Service Tax (GST) is levied at the
point of consumption, in this case Karnataka , the entire tax revenue will
go to Karnataka.

HISTORY OF GST IN INDIA

The reform process of India's indirect tax regime was started in 1986 by
Vishwanath Pratap Singh, Finance Minister in Rajiv Gandhi’s
government, with the introduction of the Modified Value Added Tax
(MODVAT). Subsequently, Manmohan Singh,the then Finance Minister
under P V Narasimha Rao, initiated early discussions on a Value Added
Tax at the state level. A single common "Goods and Services Tax (GST)"
was proposed and given a go-ahead in 1999 during a meeting between the
then Prime Minister Atal Bihari Vajpayeeand his economic advisory
panel, which included three former RBI governors IG Patel, Bimal Jalan
and C Rangarajan. Vajpayee set 14 up a committee headed by the then
finance minister of West Bengal, Asim Dasgupta to design a GST model.
The Ravi Dasgupta committee was also tasked with putting in place the
back-end technology and logistics (later came to be known as the GST
Network, or GSTN, in 2017) for rolling out a uniform taxation regime in
the country. In 2002, the Vajpayee government formed a task force under
Vijay Kelkar to recommend tax reforms. In 2005, the Kelkar committee
recommended rolling out GST as suggested by the 12th Finance
Commission.
After the fall of the BJP-led NDA government in 2004, and the election of
a Congress-led UPA government, the new Finance Minister P
Chidambaram in February 2006 continued work on the same and proposed
a GST rollout by 1 April 2010. However in 2010, with the Trinamool
Congress routing CPI(M) out of power in West Bengal, Asim Dasgupta
resigned as the head of the GST committee. Dasgupta admitted in an
interview that 80% of the task had been done. In 2014, the NDA
government was re-elected into power, this time under the leadership of
Narendra Modi. With the consequential dissolution of the 15th Lok Sabha,
the GST Bill – approved by the standing committee for reintroduction –
lapsed. Seven months after the formation of the Modi government, the new
Finance Minister Arun Jaitley introduced the GST Bill in the Lok Sabha,
where the BJP had a majority. In February 2015, Jaitley set another
deadline of 1 April 2017 to implement GST. In May 2016, the Lok Sabha
passed the Constitution Amendment Bill, paving way for GST. However,
the Opposition, led by the Congress, demanded that the GST Bill be again
sent back to the Select Committee of the Rajya Sabha due to
disagreements on several statements in the Bill relating to taxation. Finally
in August 2016, the Amendment Bill was passed. Over the next 15 to 20
days, 18 states ratified the GST Bill and the President Pranab Mukherjee
gave his assent to it.
A 22-members select committee was formed to look into the proposed
GST laws. State and Union Territory GST laws were passed by all the
states and Union Territories of India except Jammu & Kashmir, paving the
way for smooth rollout of the tax from 1 July 2017. There was to be no
GST on the sale and purchase of securities. That continues to be governed
by Securities Transaction Tax (STT).

ADVANTAGES OF GST
WHY DO WE NEED GST

Despite the success of VAT, there are still certain shortcomings in the
structure of VAT, both at the Centre and at the State level.

Justification at the Centre Level


 At present excise duty paid on the raw material consumed is being
allowed as input credit only. For other taxes and duties paid for post-
manufacturing expenses, there is no mechanism for input credit
under the Central Excise Duty Act.
 Credit for service tax paid is being allowed manufacturer/ service
provider to a limited extent. In order to give the credit of service tax
paid in respect of services consumed, it is necessary that there
should be a comprehensive system under which both the goods and
services are covered.
 At present, the service tax is levied on restricted items only. Many
other large numbers of services could not be taxed. It is to reduce the
effect of cascading of taxes, which means levying tax on taxes.
Justification at the State Level

• A major defect under the State VAT is that the State is charging
VAT on the excise duty paid to the Central Government, which goes
against the principle of not levying tax on taxes.
• In the present State level VAT scheme, Cenvat allowed on the goods
remains included in the value of goods to be taxed which is a
cascading effect on account of Cenvat element.
• Many of the States are still continuing with various types of indirect
taxes, such as luxury tax, entertainment tax, etc.
• As tax is being levied on inter-state transfer of goods, there is no
provision for taking input credit on CST leading to additional burden
on the dealers.
WHAT ARE THE COMPONENTS OF GST?
There are 3 applicable taxes under GST: CGST, SGST & IGST.
CGST: Collected by the Central Government on an intra-state sale
(Eg: Within Karnataka)
SGST: Collected by the State Government on an intra-state sale
(Eg: Within Karnataka)
IGST: Collected by the Central Government for inter-state sale
(Eg: Karnataka to Tamil Nadu)
In most cases, the tax structure under the new regime will be as follows:

NEW
TRANSACTION OLD REGIME
REGIME
Revenue will be
shared equally
VAT + Central
Sale within the between the
CGST + SGST Excise/Service
State
tax Centre and the
State
There will only
be one type of tax
(central) in case
of inter-state
Central Sales
sales. The Center
Sale to another Tax +
IGST
State Excise/Service will then share
Tax
the IGST revenue
based on the
destination of
goods.
Illustration:
A dealer in Maharashtra sells goods to a consumer in Maharashtra worth
Rs.10,000. The GST rate is 18%: comprising CGST of 9% and SGST of
9%.
In such cases, the dealer collects Rs. 1800 and of this amount, Rs. 900 will
go to the Central Government and Rs. 900 will go to the Maharashtra
government.
Now, let us assume the dealer in Maharashtra had sold the goods to a
dealer in Gujarat worth Rs. 10,000.
The GST rate is 18% comprising of only IGST. In such case, the dealer
has to charge Rs. 1800 as IGST. This IGST revenue will go to the Central
Government.
WHAT CHANGES DOES GST BRING IN?
Before GST, tax on tax was calculated and tax was paid by every
purchaser including the final consumer. The taxation on tax is called the
Cascading Effect of Taxes.
GST avoids this cascading effect as tax is calculated only on the value add.
at each transfer of ownership. Understand what the cascading effect is and
how GST helps by watching this simple video:
GST will improve the collection of taxes as well as boost the development
of Indian economy by removing the indirect tax barriers between states
and integrating the country through a uniform tax rate.
Illustration:
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 the 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 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 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.
PROBLEMS IN IMPLEMENTATION OF GST
Vat or sales tax is levied and collected by the state government. Different
state government charge different rate of taxes on different kind of goods
traded within their respective territorial limits under the extreme power
provided to the state under state list of the Constitution. Whereas CST
central sales tax is levied by the central government and collected by the
state government as per the concurrent list of the Constitution. Same the
EXCISE duty as per central excise act 1944 and service tax as per finance
act 1994 is levied and collected by the central government through the
extreme power provided under the union list of the Constitution.
Due to this distribution of power under the Constitution, no state
government wants to losses the revenue source called VAT or Sales tax.
GST is the subject matter of union list and no state agrees to bifurcate their
income to the central government but now as the same political party is in
majority in the state and central. All state government agreed to the
proposal, as a result, GST Rollout.
 CHAPTER II

LITERATURE REVIEW
 LITERATURE REVIEW
India is a federal country and both Centre and States have their own rights
to collect taxes. Each state is independent in levying and collecting taxes.
The taxation powers are defined clearly in the Indian Constitution. Centre
collects all the direct taxes (income tax, corporate taxes etc) along with the
Indirect taxes like Service Tax, Excise duty and Customs duty. The States
collect indirect taxes like VAT on goods, CST and Local Taxes. These
revenues states keep with themselves. Earlier instead of VAT, States had
sales taxes on various goods. Now states have replaced sales taxes with
VAT. Each state has adopted its own structure of VAT with different
duties and structure.
In an earlier taxation system, people paid taxes at various levels. There
was no system of getting a rebate on the taxes paid previously while
paying the inputs. This is also called as cascading effect. Ideally the taxes
should be based on value addition and the producer should pay taxes on
whatever value he adds to the product. In the absence of such a system,
producers ended up paying much higher taxes. Higher taxes are a barrier
for business and discourage business activity. The businesses instead
spend time trying to save taxes leading to distortions and a parallel
economy. A large number of enterprises prefer to stay out of the taxation
system and avoid paying taxes. High taxes also lead to lobbying activities
where producers of a certain sector ask the government to lower/waiver
taxes for their sector. This also leads to multiple taxation rates for multiple
products and further increases inefficiency in the system.
A Value Added Taxation system is seen as a way to negate this cascading
effect. VAT taxes goods at each stage and on the value addition done by
the enterprise.
GST is an extended version of Value Added Tax (VAT) and aims to cover
all goods and services. VAT covers mostly goods and GST covers all
goods and services. GST is an attempt to get rid of weaknesses in the VAT
structure. GST is an extended version of Value Added Tax (VAT) and
aims to cover all goods and services. VAT covers mostly goods and GST
covers all goods and services. GST is an attempt to get rid of weaknesses
in the VAT structure.
With a GST in place, all these indirect taxes should be merged into one
tax. Ideally, these taxes will be collected by the Centre which will then be
transferred to the States via a rule/formula.
This will require changes in the constitution as Centre can only tax goods
at production stage and on Services. The States can only tax sale of goods.
Hence, States cannot tax services and Centre cannot tax sales of goods.
The States cannot also tax imports. All this needs to be changed with the
GST and hence would require amendments in the Indian Constitution.
That is the reason why the 115th Constitution Amendment Bill has been
introduced
Hence, implementation of GST was always seen as a concern for States as
they surrender their powers to tax. This is a very difficult issue and as a
result numbers of discussions have followed between the stakeholders.
BRIEF HISTORY ABOUT GST IN INDIA
The idea of moving towards the GST was first mooted by the then Union
Finance Minister Shri P. Chidambaram in his Budget for 2006-07.
Initially, it was proposed that GST would be introduced by 1st April, 2010.
The Empowered Committee of State Finance Ministers (EC) which had
formulated the design of State VAT was requested to come up with a
roadmap and structure for the GST. Joint Working Groups of officials
having representation of the States as well as the Centre were set up to
examine various aspects of the GST and draw up reports specifically on
exemptions and thresholds, taxation of services and taxation of inter-State
supplies. Based on discussions within and between it and the Central
Government, the EC released its First Discussion Paper (FDP) on the GST
in November, 2009. This spells out the features of the proposed GST and
has formed the basis for discussion between the Centre and the States
Since then, discussion being held between Central and State Government
to consensus on certain conflicting issues. However, till today no final
agreement has been made between Central and State Government.
However, Central Government in view of implementing GST from 1st
April, 2016 all over India by agreeing all the States by making certain
modifications in proposed GST.
What is GST?
GST is a comprehensive indirect tax on manufacture, sale and
consumption of goods and services at national level. The GST is expected
to replace all the indirect taxes in India. At the centre's level, GST will
replace central excise duty, service tax and customs duties. At the state
level, the GST will replace State VAT. Integration of goods and services
taxation would give India a world class tax system and improve tax
collections. It would end the long standing distortions of differential
treatments of manufacturing and service sector.
Why GST?
GST is similar to VAT in terms of the value-added approach. The question
that comes to mind is -India already has VAT then why should someone
go for GST? Moreover, it seems to be very complicated and a difficult
exercise, then what are the reasons? The key problems of current taxation
system for Goods and Service in India are as follows:
Taxation at manufacturing:
CENVAT is levied on goods manufactured or produced in India which
gives rise to definitional issues as to what constitutes manufacturing, and
valuation issues for determining the value on which the tax is to be levied.
Exclusion of Services from state taxation:
Exclusion of Services from state taxation has posed difficulties in taxation
of goods supplied as part of a composite works contract involving a supply
of both goods and services, and under leasing contracts, which entail a
transfer of the right to use goods without any transfer of their ownership.
Tax Cascading:
Oil and gas production and mining, agriculture, wholesale and retail trade,
real estate construction, and range of services remain outside the ambit of
the CENVAT and the service tax levied by the Centre. The exempt sectors
are not allowed to claim any credit for the CENVAT or the service tax
paid on their inputs. Similarly, under the State VAT, no credits are allowed
for the inputs of the exempt sectors, which include the entire service
sector, real property sector, agriculture, oil and gas production and mining.
Another major contributing factor to tax cascading is the Central Sales Tax
(CST) on inter-state sales, collected by the origin state and for which no
credit is allowed by any level of government.

Interstate Sales Tax (CST):

Though it is an important source of revenue for states it is seen as very

burdensome by businesses. The companies make goods in one state but on
distribution inside the country, end up paying taxes in each state. They are
supplying goods within the country and should just be taxed at one place.

Inclusion of Services in VAT system:

Production of goods is because of both physical production and services.

But Services are taxed only by Centre and that too is done selectively. The
Services need to be taxed at State level and integrated with the Goods.
International Standard:
GST is becoming an international standard and it is important India also
has one. There are many factors before international companies while
choosing a country for its business and taxation system is one very
important factor. With other countries having GST and India not having
one, the companies are likely to opt for former ahead of India for locating
their businesses. Likewise Indian companies may also prefer to
increasingly set their bases in other countries where tax system is more
efficient.

Silent features of GST

The GST system is based on the same concept as VAT. Here, set-off is
available in respect of taxes paid in the previous level against the GST
charged at the time of sale. The GST model has some aspects which are as
follows:

Two Components:
GST will be divided into two components, namely, Central Goods and
Service Tax and State Goods and Service Tax. However, the basic features
of law such as chargeability, definition of taxable event and taxable
person, measure of levy including valuation provisions, basis of
classification etc. would be uniform across these statutes as far as
practicable.
Merger of various taxes:
GST will lead merger of various taxes levied by Central and State
Governments. The taxes that merged into GST are as follow:

Central Taxes State Taxes

Central excise duty Value Added Tax/ Sales tax

Entertainment tax (unless it is

Additional excise duties,
levied on local bodies)

Service tax, Tax on lottery, betting and Gambling

Excise duty under Medicinal & Toiletries

Luxury tax
Preparation Act

Countervailing duties (on imports in lieu of

Entry tax not in lieu of Octroi
excise duty)
Additional duty of Customs (levied on
State surcharges and cesses in so far as they
imports in lieu of value added tax or central
relate to supply of goods and service
sales tax)

Entry tax in lieu of Octroi

(Included in revised bill)

Dual GST:
The Central GST and the State GST would be levied simultaneously
on every transaction of supply of goods and services except the exempted
goods and services, goods which are outside the purview of GST and the
transactions which are below the prescribed threshold limits. Further, both
would be levied on the same price or value unlike State VAT which is
levied on the value of the goods inclusive of CENVAT. While the location
of the supplier and the recipient within the country is immaterial for the
purpose of CGST, SGST would be chargeable only when the supplier and
the recipient are both located within the State.
Rate:
There will be two tax rates for SGST– lower rate for necessary and
basic importance items and a standard rate for all other goods. Further,
there will be a special rate for precious metals and a list of exempted
items. Rates charged across all states and the central level will be uniform
along with the regulations, definitions and classifications. However, as per
latest development, it has been agreed to include a floor rate with bands to
allow States the freedom to have a high or low rate.
Threshold limit:

Threshold exemption is built into a tax regime to keep small traders out of
tax net. This has three-fold objectives:
a) It is difficult to administer small traders and cost of administering of
such traders is very high in comparison to the tax paid by them.

b) The compliance cost and compliance effort would be saved for such
small traders.

c) Small traders get relative advantage over large enterprises on

account of lower tax incidence.
The present threshold prescribed in different State VAT Acts below which
VAT is not applicable varies from State to State. The existing threshold of
goods under State VAT is Rs. 5 lakhs for a majority of bigger States and a
lower threshold for North Eastern States and Special Category States. A
uniform State GST threshold across States is desirable and, therefore, the
Empowered Committee has recommended that a threshold of gross annual
turnover of Rs. 10 lakh both for goods and services for all the States and
Union Territories may be adopted with adequate compensation for the
States (particularly, the States in North-Eastern Region and Special
Category States) where lower threshold had prevailed in the VAT regime.
Keeping in view the interest of small traders and small scale industries and
to avoid dual control, the States considered that the threshold for Central
GST for goods may be kept at Rs.1.5 crore.
Applicability:
GST will be applicable to all Goods and Services sold or provided in
India, except from the list of exempted goods which fall outside its
purview.
Payment:
GST will be charged and paid separately in case of Central and State level.
No Inter System Tax Input Credit:
The facility of Input Tax Credit at Central level will only be available in
respect of Central Goods and Service tax. In other words, the ITC of
Central Goods and Service tax shall not be allowed as a set-off against
State Goods and Service tax and vice versa.
Inter-state GST:
The Empowered Committee has accepted the recommendations of the
Working Group of concerned officials of Central and State Governments
for adoption of IGST model for taxation of inter-State transaction of
Goods and Services. The scope of IGST Model is that Centre would levy
IGST which would be CGST plus SGST on all inter-State transactions of
taxable goods and services. The inter-State seller will pay IGST on value
addition after adjusting available credit of IGST, CGST, and SGST on his
purchases. The Exporting State will transfer to the Centre the credit of
SGST used in payment of IGST. The Importing dealer will claim credit of
IGST while discharging his output tax liability in his own State. The
Centre will transfer to the importing State the credit of IGST used in
payment of SGST. The relevant information will also be submitted to the
Central Agency which will act as a clearing house mechanism, verify the
claims and inform the respective governments to transfer the funds.
GST on Imports:
The GST will be levied on imports with necessary Constitutional
Amendments. Both CGST and SGST will be levied on import of goods
and services into the country. The incidence of tax will follow the
destination principle and the tax revenue in case of SGST will accrue to
the State where the imported goods and services are consumed. Full and
complete set-off will be available on the GST paid on import on goods and
services.
PAN linked Taxpayer Identification Number:
Each taxpayer would be allotted a PAN linked taxpayer identification
number with a total of 13/15 digits. This would bring the GST PAN-linked
system in line with the prevailing PAN-based system for Income tax
facilitating data exchange and taxpayer compliance. The exact design
would be worked out in consultation with the Income-Tax Department.
Need of compensation during implementation of GST:
Despite the sincere attempts being made by the Empowered Committee on
the determination of GST rate structure, revenue neutral rates, it is difficult
to estimate accurately as to how much the States will gain from service
taxes and how much they will lose on account of removal of cascading
effect, payment of input tax credit and phasing out of CST. In view of this,
it would be essential to provide adequately for compensation for loss that
might emerge during the process of implementation of GST for the next
five years. This issue may be comprehensively taken care of in the
recommendations of the Thirteenth Finance Commission. The payment of
this compensation will need to be ensured in terms of special grants to be
released to the States duly in every month on the basis of neutrally
monitored mechanism.
How does GST work?

Suppose there is a Paper manufacturer. He purchases raw materials and

machinery on which he pays certain percentage of tax.

Purchase
Particulars (In Rs Lakh) Tax Rate (%) Tax (In Rs Lakh)

Raw Material 200 10% 20

Machinery 400 10% 40

Total Input Tax paid 60

Now suppose he produces Papers worth Rs 800 lakh and adds Rs 200 lakh
as profit. He sells all the goods to sole distributor in India. The
manufacture will have to pay taxes on selling his papers. Now in a
traditional system, he would pay the tax on the entire Rs 1000 Lakh and
get no input credit. So he pays a total tax of Rs 160 Lakh – Rs 60 Lakh on
Input and Rs 100 Lakh on Sales. This is called cascading effect and a
producer pays the tax on each economic transaction. The end result is
much higher taxes by the producer leading to lack of incentives by the
producer.
However with a GST system, the producer gets an input tax credit of Rs 60
Lakh. As he had paid Rs 60 Lakh on the inputs, it gets deducted from the
tax bill. On net basis, the Producer pays Rs 100 Lakh of taxes.
Sale Tax Rate Without GST With GST
Particulars (In Rs Lakh) (%) Tax (InRs Lakh) Tax (In Rs Lakh)
Sales
(Cost 800 + Profit 200) 1000

100 100
Total Output Tax 10%

Less: Input Tax 0 60

Tax Paid 100 40

Total Tax paid (Input
160 100
Tax + Output Tax)

Now let us see the books of the all India distributor. Let’s say he pays Rs
50 lakh to the transport provider for transporting goods from manufacturer
to the distributors’ godown. He pays service tax on the same. Hence total
value of his goods becomes Rs 1050 Lakh. His input tax payable is Rs 105
Lakh.

Particulars Tax Rate (%) Tax (In Rs Lakh)

In Rs Lakh

Goods Purchase 1000 10% 100

Transportation
50 10% 5
Charge
Total Input Tax paid 105

The Distributor sells the papers to the consumers. The same input tax
output tax calculation applies here as well. Without a GST system he pays
a total of Rs 235 Lakh as taxes. With a GST system he pays Rs 130 Lakh
as total taxes, a total saving of Rs 51 lakhs.
 Purchase Tax Rate
Particulars (In Rs Lakh) Without GST With GST
(%)
Tax (InRs Lakh) Tax (In Rs Lakh)
Sales (Cost 1050+
1300
Profit 250) )
Total Output Tax 10% 130 130

Less: Input Tax 0 105

Tax Paid 105 25

Total Tax paid (Input
235 130
Tax + Output Tax)

Benefits of GST
The implication of GST assures a single taxation system in the entire
country for all goods and services making tax compliance easier and more
effective. The belief that trade and industry will benefit from
implementation of GST is widely accepted. Because the GST will give
more relief to industry, trade and agriculture through a more
comprehensive and wider coverage of input tax set off and service tax in
subsuming of several Central and State taxes in the GST and phasing out
CST. The transparent and complete chain of set-off which will result in
widening of tax base and better tax compliance may also lead to lowering
of tax burden on an average dealer in industry, trade and agriculture. It will
also boost up economic unification of India. The major benefits of
implementation of GST as follows:
To Economy:
It will simplify India's tax structure, broaden the tax base, and create a
common market across states. This will lead to increased compliance and
increase India's tax-to gross domestic product ratio. According to a report
by the National Council of Applied Economic Research, GST is expected
to increase economic growth by between 0.9 per cent and 1.7 per cent.
Exports are expected to increase by between 3.2 per cent and 6.3 per cent,
while imports will likely rise 2.4-4.7 per cent.
To Corporate:
It will be beneficial for India Inc. as the average tax burden on companies
will fall. Reducing production costs will make exporters more competitive.
To Exporters:
The subsuming of major Central and State taxes in GST, complete and
comprehensive setoff of input goods and services and phasing out of
Central Sales Tax (CST) would reduce the cost of locally manufactured
goods and services. This will increase the competitiveness of Indian goods
and services in the international market and give boost to Indian exports.
To Industry:
Manufacturing sector in India is one of the highly taxed sectors in the
world. A complex and high taxation structure has the tendency to render
products uncompetitive in the international market or consume large
portions of the cost arbitrage available in manufacturing set-ups in low
cost economies such as India. GST when enforced would eliminate
complexities in the present taxation structure and consequently prevent the
loss of nearly 50% of the advantage of lower manufacturing costs that
India has over the western nations.
To Centre and State:
Approximately Rs 900 billion a year of profits are predicted by the
government with the implementation of GST as it is speculated to bring
about raise in employment, promotion of exports and consequently a
significant boost in overall economic growth.
To Common Consumer:
With the introduction of GST, all the cascading effects of CENVAT and
service tax will be more comprehensively removed with a continuous
chain of set-off from the producer’s point to the retailer’s point than what
was possible under the prevailing CENVAT and VAT regime. Certain
major Central and State taxes will also be subsumed in GST and CST will
be phased out. Other things remaining the same, the burden of tax on
goods would, in general, fall under GST and that would benefit the
consumers.
CHALLENGES IN IMPLEMENTATION OF GST
The actual challenge before the Finance Minister is not of drafting a model
GST but of its proper implementation and smooth transition from the
prevailing system. The challenges which the Government has to face in
introducing GST are as follows:
Legislative Challenge:
The Constitution provides for delineation of power to tax between the
Centre and States. While the Centre is empowered to tax services and
goods upto the production stage, the States have the power to tax sale of
goods. The States do not have the powers to levy a tax on supply of
services while the Centre does not have power to levy tax on the sale of
goods. Thus, the Constitution does not vest express power either in the
Central or State Government to levy a tax on the ‘supply of goods and
services’. Moreover, the Constitution also does not empower the States to
impose tax on imports. Therefore, it is essential to have Constitutional
Amendments for empowering the Centre to levy tax on sale of goods and
States for levy of service tax and tax on imports and other consequential
issues.
Inclusion of Goods and Services:
The first issue major issue of implementation of GST is to the inclusion of
taxes within the ambit of GST. The bone of contention relates to inclusion
of purchase taxes on food grain, taxes on motor spirit and high-speed
diesel (GSD), and octroi or entry tax in lieu thereof. The foodgrain surplus
states have been levying the purchase tax, the burden of which is exported
to non-residents.
The states are reluctant to bring motor spirit and high speed diesel within
the ambit as presently the tax is levied at a floor rate of 20% and the states
derive about 35% of their sales tax collections from these petroleum
products.
Rationalization of GST rate:
Another issue to be decided is the rates of central and state GSTs to be
levied. It is expected that the tax rates would be revenue neutral. This
implies that in the short term, there would not be any revenue loss or gain,
but over time the revenue productivity is expected to increase due to better
compliance of the tax and increased productivity of the economy.
Rates charged across all states and the central level will be uniform along
with the regulations, definitions and classifications for effective
implementation of GST However, due to dispute between Central and
State Government, it has been agreed to include a floor rate with bands to
allow States the freedom to have a high or low rate.
Rationalization of threshold and exemption limits:
To get the full benefits of GST, it is necessary to rationalize threshold limit
and exemption limits. However, there are dispute between Central
Government and State Government regarding finalizing of threshold limit.
State Governments are in view of to keep the threshold limit at as low as
possible to avoid revenue loss to state.
Place of Supply:
One of the main challenges in introducing in GST is defining the place of
supply in respect of certain services and intangible properties. In the
existing tax regime, place of supply is not a big issue because service is
taxed by the Centre and the place of levy does not affect revenue receipts.
In GST, however, the place of supply will have to be clearly defined to
avoid disputes among states in case of interstate transactions.
Time of Supply:
Time of supply will explain the point at which tax would be levied invoice
date, due date or payment date. Currently, different taxes are levied by the
Centre and the states at various stages. These variations will be eliminated
in GST.
Rapid increase in Assesses:
The dual GST model will widen the tax net by taxing every economic
supply in the distribution network. This will lead to rapid increase in
assesses. It will require some of the businesses to restructure their
distribution network to reduce additional tax burden on the consumer with
a view to be price competitive. Though it will generate revenue in a
neutral and transparent way, the Government will have to ensure that the
ultimate consumer is not burdened with tax beyond his capacity.
In addition to above Government have to decide regarding
 Dispute settlement procedure and machinery

 Building IT (Information technology) infrastructure to capture the

full benefits of GST
  Training of tax administrators and assesses

 Protecting and balancing the present and future revenues of the

Centre and the States

 Safeguarding the interests of less developed states with lower

revenue potential
Impact of GST on Indian Economy
The studies assessing impact of GST are limited as the design of GST was
not clear till the First Discussion Paper. Thirteenth Finance Commission
has undertaken a study with NCAER, a Delhi based think-tank on cost-
benefit analysis of GST regime in India. The highlights of the report were:
Medium term gains:
GST could to increase India’s GDP somewhere within a range of 0.9% to
1.7%. The comparable dollar value increment is estimated to be between
$9.5 billion and $18.6 billion respectively.
Long term gains:
The additional gain in GDP, originating from the GST reform, would be
earned during all years in future over and above the growth in GDP which
would have been achieved otherwise. It estimates present value of total
gain in GDP between $325 billion and $637 billion. This is nearly 30-60%
of the size of Indian economy currently!
Export gains:
GST will lower the overall tax inputs in supply chain of goods and
services leading to lower prices of Indian goods and services. This will
increase the competitiveness of Indian goods and services in the
international market and give boost to Indian exports. The uniformity in
tax rates and procedures across the country will also go a long way in
reducing the compliance cost. These gains are expected to vary between
3.2 % - 6.3% with corresponding absolute value range between $5.4
billion - $10.7 billion, respectively. Imports are expected to gain
somewhere between 2.4 and 4.7% with corresponding absolute values $6.9
billion and $13.6 billion, respectively.
Others:
GST would lead to efficient allocation of factors of production. The
overall price level would go down. It is expected that the real returns to the
factors of production would go up. NCAER results show gains in real
returns to land ranging between 0.42 and 0.82 per cent. Wage rate gains
vary between 0.68 and 1.33%. The real returns to capital would gain
somewhere between 0.37 and 0.74%. Kelkar adds that GST could help add
productive employment of as much as 4 to 5 million. Barring impact on
economy, GST could help the consumers as well. The lower taxation will
lead to lower prices of goods and services.
However, going by the above international experiences there could be two
additional problems.
Inflation:
Most of the international case studies show an inflation spurt in initial
months of GST implementation. In main reason for spurt in prices of
goods which consumers thought would become expensive after the GST.
Much of blame for inflation is accorded to the various regulatory bodies
and uncertainty over the new tax regime. The inflation situation stabilizes
as implementation gains pace and is understood by consumers and
producers. In India’s case inflation could be critical as unlike developed
countries, India has far more inefficiencies in supply chain in local
markets. The Indian GST reform is far larger in scale compared to above
economies of developed countries. These rigid inefficiencies along with
higher information asymmetry on probable impact of GST could push
inflation higher in initial days of implementation. Indian economy is
already plagued with persistent high inflation and this new reform could
further test inflation further.
Tax Revenue Shortfall:
RBI in the State Finances Report (2010-11) said the revenue implications
of GST are likely to vary across states. The Centre and the States are still
discussing various aspects of GST like taxation rates, revenue sharing
model between Centre and States etc. As there is still uncertainty over the
final blueprint of GST, it is difficult to estimate the impact of GST on state
finances. The report points that VAT led to improvement in tax revenue
for most states. However, just like VAT there could be some short-falls in
revenues in some states over a short term.
The central government has already proposed a Rs 50,000 Cr fund to help
the states which suffer from the short-fall. However, a higher shortfall
could lead to both Centre and States to borrow more from the markets.
This will be critically watched as it has further ramifications on fiscal
deficits, interest rates and inflation.
 CHAPTER III

DATA ANALYSIS
AND
INTERPRETATION
DATA ANALYSIS
The data collected various respondents have to analysis for the drawing
conclusion. So in this chapter efforts have been made to analysis and
interpret the collective data on “Goods and Service Tax” through
questionnaire.
First of all the collected data have been presented in tabular form and there
after it is analyzed with the help of percentage and pie charts.
A brief description of analysis interpretation given below:
Table no 01
The table shows classification of respondents on the basis of perception
regarding the GST implementation (GST has increased the various legal
formalities.)
Responds Percentage (%)
Strongly Agree 21 42
Agree 21 42
Neutral 7 14
DIS Agree 1 2
Strongly Dis Agree 0 0
Total 50 100
Figure no 01
The figure shows classification of respondents on the basis of perception
regarding the GST implementation (GST has increased the various legal
formalities.)

Responds

StronglyAgree Agree Neutral DIS Agree StronglyDisAgree

Interpretation
Above Chart depicted that majority of the respondents satisfied with the
statement after implementation of GST has increased various types of
formalities. 42% respondents are strongly agree and also 42 % are Agreed
and 14% are also neutral. So it is concluded that majority of the
respondents satisfied this statement.
Table no 02
The table shows Classification of response on the basis of response of the
respondents regarding the statement GST has increased Tax burden on
Common Man.
 Responds Percentage (%)
Strongly Agree 8 16
Agree 16 32
Neutral 15 30
DIS Agree 11 22
Strongly Dis Agree 0 0
Total 50 100

Figures no 02
The figures shows Classification of response on the basis of response of
the respondents regarding the statement GST has increased Tax burden on
Common Man.

Responds

StronglyAgree Agree Neutral Disagree StronglyDisAgree

Interpretation
Interpretation: According to above table , it is shows that majority of the
respondents i.e. 32%are agree with this statement and 30% are neutral and
also 22% are Dis Agree for this statement. 16% are strongly Agreed. So it
is concluded that majority and cum majority peoples are said that GST has
increased the burden of Common man.
Table no 03
The table shows classify the respondents on the basis of their statement
GST has increased the Tax burden on Businessman.
Responds Percentage (%)
Strongly Agree 12 24
Agree 19 38
Neutral 13 26
DIS Agree 6 12
Strongly Dis Agree 0 0
Total 50 100

Figure no 03
The figure shows the respondents on the basis of their statement GST has
increased the Tax burden on Businessman.

Respon
ds

StonglyAgr Agre Neutr Disagre StonglyDis

ee e al e Agree
Interpretation
From the above data table and figure show that maximum respondents are
represents that GST has increased the tax burden on businessman so 38%
respondents are Agree and 24% are strongly agree this statement and also
26 % are neutral but even 12% are Dis Agreed for this statement.
Hence , is concluded that maximum results are positive nature for this
statement.
Table no 04
The table shows classify the respondents on the basis of their response
towards the statement The newly implemented Goods and Service tax
confused the customers.

Responds Percentage (%)

Strongly Agree 9 18

Agree 9 18

Neutral 13 26

DIS Agree 17 34

Strongly Dis Agree 2 4

Total 50 100
Figure no 04

Responds

StronglyAgree Agree Neutral DIS Agree StronglyDisAgree

Interpretation
Above Figure depicted that 18% respondents responds Strongly Agree and
Agreed regarding statement GST confused customers. 26% are neutral
regarding this and maximum respondents respond 34% and another 4% are
Dis agreed with this statement, Hence it is concluded that customers has
no confusion for GST implementation and overall maximum result for this
analysis may negative. And less than positive also
Table no 05
Responds Percentage (%)
Strongly Agree 10 20
Agree 19 38
Neutral 11 22
DIS Agree 9 18
Strongly Dis Agree 1 2
Total 50 100
Figure no 05
The figure shows classify the respondents on the basis of their response
towards the statement The GST system government to collect revenue to
manage an economy.

Responds

StronglyAgree Agree Neutral DISAgree StronglyDisAgree

 CHAPTER IV

SUMARRY OF
FINDING,
CONCLUSION AND
SUGGESTION
 FINDINGS OF THE STUDY
After Analysis and Interpretation of the data these are followings findings
were emerged:
 Most of the respondents are Male.
 Majority of the respondents i.e. 58 % comes under the age group
above 40 years are comes
 under 25- 40 years.
 More than 60% respondents are related to Businessman category.
 56% respondents are that opinion GST is very good tax reform for
India and it is t point of
 the taxation system.
 majority of the respondents satisfied with the statement after
implementation of GST has
 increased various types of formalities 42% respondents are strongly
agree.
 Represents that 38% respondents are strongly Agree and 20%
respondents are Agree with
 the statement The GST system is away for the govt. to collect
revenue to manage an
 economy re this statement are Positive and show the positive good.
 That maximum respondents are represents that GST has increased
the tax burden on
 businessman so 38% respondents are Agree and 24% are strongly
agree this statement.
 Hence , is concluded that maximum results are positive nature for
this statement.
 Concluded that customers has no confusion for GST implementation
and overall maximum
 result for this analysis may negative. And less than positive also.
 Represents that 38% respondents are strongly Agree and 20%
respondents are Agree with
 the statement The GST system is away for the govt. to collect
revenue to manage an
 economy Hence it is concluded that the results are this statement are
Positive and show the
 positive good.
 SUGGESTIONS
 The customers suggested that there should be a smooth, transparent
and simple transition provisions which is easily understandable.
 Special focus on awareness and training of all officers, professionals
and assesses should be given on GST.
 Since the public are very clear about GST, any disputes on GST
introduction should be protectively addressed by way of speedy
redress.
 The people are not well informed on the implementation of the GST.
Therefore in order ensure efficient implementation of the GST, the
Government should come out with a proper guideline to the society
on the procedures for the implementations of GST.
 Gradunl stages may be employed for the implementation like the
agricultural sector, then industrial and then the service sector.
 The relevant authorities especially the customers department must
work closely with other departments like information, Inland
Revenue and other enforcement authority ensure good
implementation.
 Lastly, the government must ensure a good management of the
income collected from the GST.
 CONCLUSION
Study highlighted the overall overview of GST. The Government to put in
more effort to ensure that Consumers have a clear understanding and
develop a positive perception towards leading acceptance. Good
understanding among customers is important as it can generate a positive
perception towards the taxation policy Custom Department could initiate
and promote an extensive publicity program mes which could help to
create awareness and generate positive perception among customers in
understanding the rationale and importance of GST in India.
 CHAPTER V

BIBLOGRAPHY
REFERENCE
 www.wikipedia.com
 www.google.com
 www.slideshare.net
 Published articles.
 Research papers.
 Relevant papers, newspapers and magazine.
BOOKS
1.GST guide for students: Making GST- Good and Simple Tax
Publisher: Neelam Book House
Author: CA Vivek KR Agarwal

2. Goods and Services Tax law book for students

Publishing date: 28 February 2021
Author: Shubham Jain

3. GST for the Layman: How it impacts your daily life

Publishing house: Bloomsbury India
Author: CA Apeksha Solanki