An Industry Oriented Dissertation Project On

‘GOODS AND SERVICE TAX’

Submitted for the partial fulfilment of the requirement of the

degree of

MASTER OF MANAGEMENT STUDIES

OF

UNIVERSITY OF MUMBAI

Submitted by

(Aakash Prakash Aagte)

Roll No. 61

Specialization: Finance

Submitted To

SASMIRA’S INSTITUTE OF MANAGEMENT

STUDIES AND RESEARCH, SASMIRA MARG,
WORLI, MUMBAI

July 2019
 DECLARATION BY THE CANDIDATE

I hereby certify that the work which is being presented in this Industry Oriented
Dissertation Project entitled- “Goods And Service Tax” in partial fulfilment
of the requirement for the award of the Degree of Master of Management
Studies, University of Mumbai and submitted to the Sasmira’s Institute of
Management Studies and Research, Worli, Mumbai, is an authentic record of
my own work carried out during a period from May, 2019 till June,2019 under
the guidance of Dr. Rupali More (Associate Professor, SIMSR).

The matter presented in this project report has not been submitted by me for
the award of any other degree of this or any other Institute.

Wherever references have been made to intellectual properties of any

individual / Institution / Government / Private / Public Bodies / Universities,
research paper, textbooks, reference books, research monographs, archives of
newspapers, corporate, individuals, business / Government and any other
source of intellectual properties viz., speeches, quotations, conference
proceedings, extracts from the website, working paper, seminal work et al,
they have been clearly indicated, duly acknowledged and included in the
Bibliography.

Name of the Student: Aakash P. Aagte

Signature of Student:

This is to certify that the above statement made by the candidates is correct to
the best of our knowledge.

Signature of Guide -
Name of Guide - Dr. Rupali More
 CERTIFICATE BY THE GUIDE

This is to certify that Mr. Aakash Prakash Aagte of the two year full-time
Master's Degree Programmed in Management Studies (MMS), (Finance),
Roll No.61 has carried out the work on the Industry Oriented Dissertation
Project titled Goods And Service Tax under my guidance in partial fulfilment
of the requirement for the completion of MMS as prescribed by the University
of Mumbai.

This Industry Oriented Dissertation Project Report is the record of authentic

work carried out by him / her during the period from May 2019 to June 2019.

Place: Mumbai

Date:

Signature of Guide:

Name of Guide: Dr. Rupali More

 ACKNOWLEDGEMENT

This project has been a great learning experience for me. I take this opportunity
to thank Dr. Rupali More, my internal project guide whose valuable guidance
& suggestions made this project possible. I am extremely thankful to him for
him support. He has encouraged me and channelized my enthusiasm effectively.

I also express my profound gratitude to Dr. Kamal Tandon, Director of

Sasmira’s Institute of Management Studies & Research for giving me the
opportunity to work on the projects and broaden my knowledge and
experience.

I would like to thank all the professors and the staff of Sasmira Institute
especially the Library staff who were very helpful in providing books and
articles I, needed for my project.

Last but not the least, I am thankful to all those who indirectly extended their
cooperation and invaluable support to me.
 ABSTRACT/EXECUTIVE SUMMARY

Goods and Service Tax or GST as it is known is all set to be a game changer for the
Indian Economy Taxation system. GST evolved an all India One Nation One Tax
regime. It has now been more than a decade since the idea of national Goods and
Services Tax (GST) was mooted by Kelkar Task Force in 2004. The Task Force
strongly recommended fully integrated ‘GST’ on national basis.

The Union Finance Minister Shri P. Chidambaram, while presenting the Central
Budget (2006-2007), announced for the first time a proposal to introduce a national
level GST by April 1, 2010. However, GST missed several deadlines and continued
to be surrounded by clouds of uncertainty. Since now, the former finance minister of
India Arun Jaitley in his budget speech of 2015 has announced time and again that
the tax will be introduced on 1 April 2016. In India, there are different indirect taxes
applied on goods and services by central and state government.

GST is intended to include all these taxes into one tax with seamless Input Tax Credit
and charged on both goods and services. Thus, excise duty, special additional duty,
service tax, VAT to name a few will get repealed and will be added into GST.

For this, GST will have 3 parts CGST, SGST and IGST. The central taxes like excise
duty will be subsumed into CGST and state taxes like VAT into SGST. For the
introduction of GST in the above form, the Government needs to get the Constitution
Amendment Bill passed so that the proposed objective of subsuming all taxes and
allowing states to tax subjects in Union list and vice versa is achieved. Without these
powers, it is not legally possible to move towards GST.
However, the Lok Sabha passed the Bill on 6th May 2015 and Rajya Sabha on 3rd
August 2016. Subsequent to ratification of the Bill by more than 50% of the States,
Constitution (122nd Amendment) Bill, 2014 received the assent of the President on
8thSeptember, 2016 and became Constitution (101st Amendment) Act, 2016, which
paved the way for introduction of GST in India

CONTENT
Chapter Details Page No.
No.

Candidate’s Declaration I

Certificate by the Guide II

Certificate by the Institute III

Abstract/Executive Summary IV

1 INTRODUCTION 1-7

1.1 Background 1

1.2 Significance of the Study 2

1.3 Need for the Study 3

1.4 Scope of the Study 3

1.5 Aims and Objectives of Study 4

1.6 Simplification of Various Terms of GST 4

2 LITERATURE REVIEW 8

3 RESEARCH METHODOLOGY 9

4 DATA COLLECTION 10-23

4.1 Dual GST Model 10

4.2 GST Portal 11

4.3 GST Registration 12

4.4 Composition Dealer 13

4.5 Migration to GST 13

4.6 Penalties of not registering under GST 14

4.7 Multiple Registration under GST 15

 4.8 Input tax credit 15

4.9 GST software 16

4.1-0 GST rate comparison existing tax system v/s new tax 17
system
4.11 GST return procedure 22

5 Data Analysis 24-34

5.1 GST Calculation 24

5.2 GST benefit (comparison chart) 25

5.3 GST benefit to common man 26

5.4 Impact of GST (over all) 30

5.5 Impact of GST (In Indian Economy) 33

6 List of taxes not covered under GST 35

7 Limitation of GST 36-37

8 Research Questionnaire 38-40

9 Conclusion 41

10 Recommendation 42

11 Reference 43
 CHAPTER I - INTRODUCTION

1.1 Background

Goods and Service also known as the Value Added Tax (VAT) or
Harmonized Sales Tax.
Following are some successfully implemented GST models in other
countries:

France: -
• Rate of GST 19.6%

• France was the first country to introduce GST in 1954.

Worldwide, almost 150 countries have introduced GST in one or the other form
since now. Most of the countries have a unified GST system. Brazil and Canada
follow a dual system vis-à-vis India is going to introduce. In China, GST applies
only to goods and the provision of repairs, replacement and processing services.

Australia: -
• Rate of GST 10%

• GST is administered by the Tax office on behalf of the Australian

Government and is appropriated to the states and territories.
• Every company whose turnover exceeds $75,000 is liable for registration
under GST and in default 1/11th of the income and some amount is form of
penalty.

1
 • There are provisions for credit back of GST, submission of returns according
to limit decided, Maintenance of records etc. There they have to keep records
for 5 years for the purpose of GST.

Canada: -
• GST is imposed at 5% in Part IX of the Excise Tax Act. GST is levied on
goods and services made in Canada except items that are either "exempt" or
"zero-rated".
• When, a supplier makes a zero-rated supply, he is eligible to recover any GST
paid on purchases but the supplier who makes supply of Exempt goods he is
not eligible take input tax credit on purchases for the purpose of making the
exempt goods and services.

1.2 Significance of the study

The existing system of taxation of goods and services still suffers from
many Problems. In fact, people say that with GST coming into place,
the government will be able to set a different roadmap during the
upcoming budget session. GST has been a long pending reform which
has been in pipeline. This taxation reform hopes to iron out all wrinkles
that are present in Indian taxation system. This rich and comprehensive
tax policy is forecasted to a significant one, aimed to contribute to the
growth of our country India.

2
1.3 Need for the study

• GST aims to replace all indirect levied on goods and services by the Indian
Central and State governments. GST would subsume with a single
comprehensive tax, bringing it all under a single umbrella, eliminating the
cascading effect of taxes on the production and distribution prices of goods
and services.

• It is highly expected that all steps are taken to ensure that no pending work
relating to Sales Tax, VAT or other Indirect Taxes remains outstanding before
implementation of GST so that everybody can concentrate on new law.

1.4 Scope of the study

The scope of this study is as follows:

• The scope of the study is wide as it is related to whole Indian taxation

system.
• This study can be useful for Small companies, Small Retailers mainly
those who are filling their GST returns on their own.

3
1.5 Aims and Objectives of the study

The following are the aims and objectives of the study

1) To study the features of GST

2) To evaluate the advantages and challenges of GST

3) To furnish information for further research work on GST

4) The main objective of the project is to understand about need, requirements,

purpose, benefits and backlogs of the GST.

1.6 Simplification of Various Terms of GST

 CGST - Central Goods and Service Tax*

 SGST – State Goods and service Tax

 IGST - Integrated Goods and Service Tax

 UTGST - Union Territory Goods and Service Tax

4
 UTGST

Intra-State Movement: -
An intra-State supply if the goods remain within the same State.

A supply of Services shall be -

(a) An inter-State supply if the service provider and the service recipient are located
in different States.
(b) An intra-State supply if the service provider and the service recipient are located
in the same State.

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Inter- State Movement: -
An inter-State supply if the supply involves the movement of goods from one
State to another.

Explanation: Where the movement of goods commences and terminates in the

same State it shall not be deemed to be a movement of goods from one State to
another by reason merely of the fact that in the course of such movement the goods
pass through the territory of any other State.

CGST: -

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

SGST: -

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

IGST: -

IGST means Integrated Goods and Service Tax. IGST falls under Integrated Goods
and Service Tax Act 2016. Revenue collected from IGST will be divided between

6
Central Government and State Government as per the rates specified by the
government. IGST will be charged on transfer of goods and services from one state
to another state. Import of Goods and Services will also be deemed to be covered
under Inter-state transactions so IGST will be levied on such transactions. For
example, if Goods or services are transferred from Rajasthan to Maharashtra then
the transaction will attract IGST.

UTGST: -

The full form of UTGST is Union Territory Goods and Service Tax. UTGST is a part
of Goods and Service Tax in India. GST under supply of goods and services takes
place in Union Territories like Andaman and Nicobar Islands, Chandigarh, Dadra
and Nagar Haveli, Daman and Diu, Delhi (National Capital Territory of Delhi),
Lakshadweep, Puducherry etc. is accounted under UTGST. A separate Act is being
implemented for Union Territory states to impose and administer GST in India in the
name of UTGST Act. Under UTGST Act, the details of GST rates payable against
the movement of goods and services in Union territories are explained.
The UTGST bill is presented in respective states government to implement as UTGST
Act.

7
 CHAPTER II: LITERATURE REVIEW

2.1 Introduction:
The proposed GST is likely to change the whole scenario of current indirect tax system. It is
considered as biggest tax reform since 1947. Currently, in India complicated indirect tax
system is followed with imbrication of taxes imposed by unions and states separately. GST
will unify all the indirect taxes under as umbrella and will create a smooth national market.
Expert says that GST will help the economy to grow in more efficient manner by improving
the tax collection is it will disrupt all the tax barriers between states and integrate country by
single tax rate.

GST was first introduced by France in 1954 and now it is followed by 140 countries . Most
of the countries followed unified GST while some countries like Brazil , Canada follow a dual
GST system where tax imposed by central and state both. In India also dual system of GST is
proposed including CGST and SGST .

2.2 Definition

● According to Tan and Chin-Fat (2000) - Malaysian understanding regarding GST was still
low. Based on study conducted by Djawadi and Fahr (2013) pointed out that knowledge about
tax is important to increase the thrust of authorities and also the citizens.

● Shakwipee ( 2017) , A study conduct on the inquring the level of awareness towards GST
among the small business owners in Rajasthan State, found that the main areas to be focused
include training errors and computer software availability.

● Bar hate (2017) , found that people have no doubt whatsoever regarding the proposed benefits
of GST irrespective of their business type, legal status of business for the reason being they
feel irritated by the present system which appears to be cumbersome. Most respondents believe
that GST will bring monetary gains to their business and do not anticipate any significant boost
in tax compliance costs. Interestingly, respondents expect the spending on tax compliance to
go down after GST is implemented. The lack of information coupled with the apathy towards
reforms may paralyze the speedy implementation of this system especially in small towns

8
where still not a single orientation programs have been planned and executed till date by
competent authorities.

2.3 KEY TRENDS (INDIA’S TAX REGIME) :

In India the power for taxation has been divided between the centre and state under article
246 of the constitution. As per the said article the centre has power to tax under list I of
the Schedule VII of the constitution, the state can tax under list II of the schedule and both
can make law under list III of the schedule. Therefore, there is clearly mentioned tax
regime in the India.

Taxation structure existing in the country:

Taxes Levied by The Centre Taxes Levied by The State

Central Excise and Custom Value Added Tax (state sales

tax)

Service Tax Local Taxes

Direct Taxes

Prior to the introduction of VAT in the centre and in the state, there was a burden of
multiple taxation in the pre-existing Central excise duty and the State sales tax systems.
Before any commodity was produced, inputs were first taxed, and after the commodity
got produced with input tax load, output was taxed again. This was causing a burden of
multiple taxation ( i.e tax on tax) with a cascading effect. Moreover in the sales tax
structure there was also a system of multipoint sales taxation at subsequent levels of
distributive trade, then along with input tax load, burden of sales tax paid on purchase at
each level was also added.

In India, VAT was introduced at the Central level for a selected number of commodities
in terms of MODVAT with effect from March 1, 1986 and in step-by-step manner for all
commodities in terms of CENVAT in 2004-05

9
When VAT is introduced in place of Central excise Duty, a set-off is given i.e a deduction
is made from the overall tax burden not only for input tax paid but also for tax paid on the
previous made purchases. With VAT, the problem of tax on tax can be eliminated.

Before introduction of the VAT apart from the problem of multiple taxation and burden
of other cascading effect there was no harmony. rates of sales tax and unhealthy
competition among the states in terms of sales tax rates often resulting in revenue wise a
counter-production system
.
IT is in the background that attempts were made by the State to introduce a harmonious
VAT in the States keeping the same time in mind the issues of the sovereignty of the
states regarding the State tax matters

2.4 Gaps found (Rationale for GST):

Despite success with VAT there are certain shortcomings in the structure of VAT both at
Central and State level and they are as follows:-

 Non inclusion of several Central taxes in the overall framework of CENVAT such
as additional custom duty, surcharges etc and thus keeping the benefits of
comprehensive input tax and service tax set off out of reach for
manufacturer/dealers

 No step has yet been taken to capture the value-added chain in the distribution
trade below the manufacturing level in existing scheme of CENVAT

In the existing state level VAT structure shortcomings are as follows:

 Several taxes which are in the nature of indirect tax on goods and services have
yet not been subsumed in the VAT.

10
  CEN/VAT on the goods remain included in the value of the goods to be taxed
under State VAT and contributing to that extent.

 Non integration of CAT on goods with tax on services at the State level.

Implementation of GST will remove certain roadblocks in the following taxation system
of India:

a) Tax cascading
b) Complexity
c) Double taxation
d) Composite contracts
e) Revenue growth

11
 CHAPTER III: RESEARCH METHODOLOGY

3.1 Introduction of Research Methodology :

Research is a logical and systematic search for new and useful information on a particular
topic. Research methodology is a systematic way to solve a problem. It is a science of studying
how research is to be carried out. Essentially, the procedures by which researchers go about
their work of describing, explaining and predicting phenomenon are called research
methodology.

The present research is exploratory in nature. Since GST is a new phenomenon in India, there
are hardly any studies in this area. Specially there is a huge gap of empirical and behavior
studies on GST in India. The study tries to find the significance of popular perception
regarding GST.

Exploratory Research :
All research projects must start with exploratory research. This is a preliminary phase and is
absolutely essential in order to obtain a proper definition of problem in hand. The major
emphasis on the discovery if ideas and insights. The exploratory study is particularly helpful
in breaking broad and vague problems in to smaller, more precise sub problem statements.
Exploratory research is also used to increase the familiarity with the problem under
investigation.

Research Design :

A good research design has characteristics viz, problem definition , time required for research
project and estimate of expenses to be incurred the function of research design is to ensure
that the required data are collected and they are collected accurately and economically. A
research design is purely and simply the framework for a study that guide the collection and
analysis data. In this project the two basic types of research design are used.

12
 CHAPTER IV: DATA COLLECTION

4.1 Dual GST model

 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.

 Goods and Service Tax (UTGST) - levied and collected by Union Territories
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.

 Input Tax Credit (ITC) of CGST and SGST/UTGST will be available

throughout the supply chain, but cross
utilization of credit of CGST and

13
 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.

4.2 GST Portal

The government’s portal 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.

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4.3 GST Registration

Going forward, in the new GST regime, all 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
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.

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

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4.4 Composition Dealer

This is an option available to small businesses

and taxpayers having a turnover less than Rs. 75
lakhs. They can adopt Composition scheme
where they will tax at a nominal rate of 1% or
2.50% (for manufacturers) CGST and SGST
each.
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.

4.5 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.

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.

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 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.

4.6 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.

4.7 Multiple Registrations Under GST

17
 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.

4.8 Input Tax Credit

Input Tax Credit means claiming the credit of the GST paid on purchase of Goods and Services
which are used for the furtherance of business.

Input Tax Credit means reducing the taxes paid on inputs from taxes to be paid on output.
When any supply of services or goods is supplied to a taxable person, the GST charged is known as
Input Tax.

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 4.9 GST Software

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

2 No desktop for installation: -

As the software is hosted on cloud, user need not have a desktop system for installation
of our software.
19
 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

4.10 GST Rates Comparison existing tax system vs new tax system

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.

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
20
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

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

21
 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

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

22
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
23
 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

4.11 GST Return Procedure

 GST Monthly Returns

Gst return procedure 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:

24
  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)

 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.

25
• 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

26
 CHAPTER V: DATA ANALYSIS

5.1 GST Calculation

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.

27
 5.2 GST Benefit (Comparison Chart)

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

28
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.

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%.

5.3 GST Benefit to common man

The country will benefit immensely in three ways from the GST:

First: -

The GST will greatly boost the GDP. Lesser taxes leads, to lower prices of goods
and services. Lower prices lead, to increased purchasing power of the consumers.
Increased purchasing power leads to more demand of the goods and services. More
demands lead to more production. More production leads to Higher GDP. Hence,
GST will boost the GDP.

Second: -

The GST will facilitate ‘Make in India’ by converting the geographical landscape
of the country into a single market. Despite being one country, India is a union of 30

29
or more markets. Too many taxes in the current system like the Central Sales Tax
(CST) on inter-state sales of goods; numerous intra-state taxes; and the extensive
nature of countervailing duty exemptions, favour imports over domestic production.
GST would get rid of the CST and subsume most of the other taxes. And since, it
will also be applicable on imports, the major tax factor working against ‘making in
India’ will disappear, greatly boosting the production and in turn exports. This will
ultimately help bridge the current account deficit.

Third: -

The GST would improve tax governance in two ways.

One, like the value added tax (VAT), it is a self-collecting and self-enforcing tax.
What it essentially means it that the companies buying supplies from outside parties
will insist on tax payment on goods supplied as without this they can’t get setoffs on
their own final product sales.
Two, due to the dual monitoring structure of the GST – one by the states and
another by the Centre – it is difficult to evade tax. Even if one set of tax authorities
overlooks or fails to detect evasion, there is the possibility that the other overseeing
authority may not.
To reap these benefits, it is important that the GST is well-designed and the
revenue-neutral rate is such that protects revenue, simplifies administration,
encourages compliance, avoids adding to inflationary pressures, and keeps India in
the range of countries with reasonable levels of indirect taxes.

Understand this with a hypothetical numerical example.

30
 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

31
 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

32
 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.

5.4 Impact of GST (Overall)

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. Crossutilization of credit between Central GST
and State GST would not be allowed.

33
 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 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
binvestment costs, costs of training in GST of people at each level starting
from junior/mid to higher level managerial staff, management
group/stakeholders.

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

34
 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.

(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.

5.5 Impact of GST (In 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

35
 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.

• 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

36
CHAPTER V: LIST OF TAXES NOT COVERD UNDER GST

37
 Stamp Duty
 Electricity Cess
 Extra Entertainment Tax Levied by Local Bodies
 Property Tax
 Entry Fee at Municipal Corporation Border
 Road Tax
 Toll Tax

CHAPTER VI: LIMITATION OF GST

38
 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 profitable.

39
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

40
CHAPTER VII: RESEARCH QUESTIONNAIRE

 Are you satisfied with the implementation of GST?

45%
55% Yes
No

 Are you satisfied with the deadlines given for GST compliances?

52%

51%

51%

50%

50%

49%

49%

48%
Yes No

Series 1 Series 2

 Can the GST return filling portal be made more effective ?

41
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Yes No

Yes No

 Has GST impacted your procurement/distribution supply chain ?

60%

50%

40%

30%

20%

10%

0%
Yes No May be

Column1 Column2 Column3

 How has GST impacted the pricing of your product/services?

42
50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%
Increased in prices Decreased in prices Neutral

Increased in prices Decreased in prices Neutral

CHAPTER VII: CONCLUSION

43
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.

44
CHAPTER VIII: 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

45
• 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.

CHAPTER IX: 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

46
• http://www.financialexpress.com/economy/what-is-gst-act-2017-full-
detailsspecifications-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/

47