PROJECT PROPOSAL

SUBMITTED TO THE
FACULTY OF COMMERCE
DAYALBAGH EDUCATIONAL INSTITUTE

TITLE:

IMPACT OF GST ON SMALL TRADERS

IN INDIA

BY:
LAKSHMI PRIYA
B.COM HONS. (5th SEMESTER)

Under the supervision of

Mrs. Shipra Satsangi
FACULTY OF COMMERCE
DAYALBAGH EDUCATIONAL INSTITUTE

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 INDEX

INTRODUCTION 3

I. PRE - GST TAX STRUCTURE

II. OVERVIEW OF GST

RESEARCH PAPERS 5

REVIEW OF LITERATURE

I. BENEFITS OF GST

II. TAXES TO BE SUBSUMED UNDER GST

III. RATE STRUCTURE

IV. HOW GST WORKS?

SIGNIFICANCE OF THE STUDY 9

PROBLEM STATEMENT 9

OBJECTIVE OF THE STUDY 10

RESEARCH METHODOLOGY 10

I. PRIMARY
II. SECONDARY

PROPOSED CHAPTERISATION 10

LIMITATIONS OF THE STUDY 10

BIBLIOGRAPHY OR REFERENCES 11

ANNEXURES

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 Introduction
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. Cascading tax revenues have differential impacts on firms in the
economy with relatively high burden on those not getting full offsets.

Taxes are classified under two categories namely direct and indirect taxes. The largest difference
between these taxes is their implementation. Direct taxes are paid by the assessee while indirect
taxes are levied on goods and services.

o Direct taxes are levied on individuals and corporate entities and cannot be transferred to
others. These include income tax, wealth tax, and gift tax.

o Indirect taxes are not directly paid by the assessee to the government authorities. These are
levied on goods and services and collected by intermediaries (those who sell goods or offer
services).

Traditionally India’s tax regime relied heavily on indirect taxes including customs and excise. Revenue
from indirect taxes was the major source of tax revenue till tax reforms were undertaken during
nineties. The major argument put forth for heavy reliance on indirect taxes was that the India’s
majority of population was poor and thus widening base of direct taxes had inherent limitations.
Another argument for reliance on indirect taxes was that agricultural income was not subjected to
central income tax and there were administrative difficulties involved in collecting taxes. However, it
became evident that indirect taxes lead to undesirable effects on prices and allocation of resources.
The Government of India constituted Indirect Taxation Enquiry Committee in 1976 to study the
structure of indirect taxes, central, state and local level taxes and suggest policy reforms. The
committee found a major problem with indirect tax regime as it had caused unintended distortion in
the allocation of resources and cascading effects. The committee recommended that indirect taxation
should move towards taxation of final products and introduce modified form of value added tax.
However, a major obstacle in rationalization of indirect tax system was the levy of tax on
commodities by government at different levels viz., centre, state and local authorities. This multiple
taxation provides incentives for tax evasion and undermines efficiency. Further, there is lack of
uniformity in the pattern of commodity taxation resulting in harassment to the public by multiple tax
authorities. Heavy reliance on indirect taxes for raising revenue was also found to increase cost and
fuel inflation.

The Government then introduced modified value added tax i.e., MODVAT. The system of MODVAT
was progressively converted into VAT and CENVAT was introduced at centre level. Subsequently,
after Constitutional Amendment empowering the Centre to levy taxes on services, these service taxes
were also added to CENVAT in 2004-05.

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 Despite all the various changes the overall taxation system continues to be complex and has various
exemptions. The Government of India constituted a Task Force on implementation of Fiscal
Responsibility and Budget Management Act, 2003 (FRBMA) to chalk out a framework for fiscal
policies to achieve FRBM targets. The Report of the Task Force on implementation of the FRBMA,
chaired by Dr. Vijay Kelkar, submitted its Report in July 2004. It has recommended introduction of a
national VAT on goods and services (GST) which would help improve the revenue productivity of
domestic indirect taxes and enhance welfare through efficient resource allocation. The Joint Working
Group of the Empowered Committee of the State Finance Ministers submitted its report on the
proposed Goods and Services Tax (GST) to the Finance Minister in November 2007. A dual GST, one
for the Centre and other for the states, was to be implemented by 1 April 2010

GOODS AND SERVICE TAX (GST)

Goods and Services Tax (GST) is an indirect tax that replaced multiple cascading taxes levied by
the central and state governments. It was introduced in India on 1 July 2017 and was applicable
throughout India. It was introduced as The Constitution (One Hundred and First Amendment) Act
2017, following the passage of Constitution 122nd Amendment Bill. The GST is governed by a GST
Council and its Chairman is the Finance Minister of India.

The single GST replaced several former taxes and levies which included: central excise duty, services
tax, additional customs duty, surcharges, state-level value added tax and Octroi.

There are 3 applicable taxes under GST: CGST, SGST, IGST. Transactions made within a single state are
levied with Central GST (CGST) by the Central Government and State GST (SGST) by the State
governments. For inter-state transactions an Integrated GST (IGST) is levied by the Central
Government. Import of goods would be treated as inter-State supplies and would be subject to IGST
in addition to the applicable customs duties. Exports will be treated as zero-rated supplies which
means no tax will be payable on exports of goods or services. However, exporters can claim input tax
credit. For example, a manufacturer's total tax on output comes to Rs. 5,000 while tax paid on input
(purchases) is Rs. 3,000. In this case, the manufacturer needs to deposit only Rs. 2,000 (Rs. 5,000 -
Rs. 3,000) as tax, after claiming credit of Rs. 3,000, thus reducing the overall incidence of tax on final
product. But credit available to the recipient (the manufacturer in this case) only if invoice is
matched. So GST helps in checking evasion of taxes.

GST is a consumption-based tax, therefore, taxes are paid to the state where the goods or services
are consumed, not the state in which they were produced.

Under GST, goods and services are taxed at the following rates, 0%, 5%, 12% ,18% and 28%.

• A lower rate for essential structure.

• Standard rate for general goods.

• Special rates for precious metals.

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 RESEARCH PAPERS

Sr. No. Author Year Topic

1 Lourdunathan F 2017 A study on implementation of goods and services tax
and Xavier P (GST) in India: Prospectus and challenges

Objectives 1. To study the inexplicit opinions among the Manufactures, traders

and society about the Goods and Services Tax (GST).
2. To study about the Challenges of Introduction of Goods and
Service Tax (GST in India).
3. To Study on Prospects in Implementation of Goods and services
Tax (GST) in India
GST will bring One Nation and One Tax market.
Provide relief to producers and consumers by providing wide and
comprehensive coverage of input tax credit set-off, service tax set
off and subsuming the several taxes.
Efficient formulation of GST will lead to resource and revenue gain
Conclusion for both Centre and States majorly through widening of tax base and
improvement in tax compliance.
Electronic processing of tax returns, refunds and tax payments
through ‘GSTNET’ without human intervention, will reduce
corruption and tax evasion and
will also reduce scope for black money generation.

Sr. No. Author Year Topic

2 Prof. Dr. Suresh, 2016 Goods and service tax (gst) in india and its impact on
Kumar Dhameja, indian economy
Deepak Kumar,
Manika Dhameja
Objectives 1. To study the various aspects of Goods and Services Tax system in
India.
2. To analyze the Impact of Goods and Services Tax (GST) on Indian
Economy.
3. To understand the Structure of Goods and Services Tax in India
Conclusion GST is all set to integrate State economies and boost overall
economic growth.
There would be only one tax, that too at the national level,
monitored by the central government
India is a centralized democratic and therefore the GST will be
implemented parallel by the central and state governments as CGST
and SGST respectively.
The goods and services Tax will indeed be a further significant
improvement towards a comprehensive indirect tax reforms in the
country. Integration of goods and services taxation would give India a
world class tax system and improve tax collections
It would end distortions of differential treatments of manufacturing
and service sector.
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 THEORETICAL REVIEW OF GST
Tax policies play an important role on the economy. The main source of revenue for government of
India is from tax. Direct and indirect taxes are the two main sources of tax revenue. When the impact
and incidence falls on same person (i.e., taxpayer) it is called direct tax. When the impact and
incidence falls on different person that is when burden can be shifted to other person it is called
indirect tax. The indirect tax system is previously mired in multi-layered taxes levied by the Centre
and state governments at different stages of the supply chain such as excise duty, octroi, central sales
tax (CST) and value-added tax (VAT), among others. First Indirect Tax Reform occurred in India when
the Modified Value Added Tax (MODVAT) was introduced for selected commodities in 1986 to
replace the Central Excise Duty. The other reforms are the introduction of service tax in 1994,
decision to introduce VAT in 1999, introduction of Constitution Amendment Bill on GST in
2011.

Indirect taxes have always been contributing more than direct taxes to the Government’s Revenue.
Services solely contribute a major part of the whole Gross Domestic Product (GDP), subsequently, it
shows the major contribution of Services in taxes also. Service sector does not only dominate the
GDP contribution but attracts the foreign investment towards the Indian Economy. Service Sector
contributes significantly in export as well as provide a large scale employment. India’s services sector
covers a wide variety of activities such as trade, hotel and restaurants, transport, storage and
communication, financing, insurance, real estate, business services, community, social and personal
services, and services associated with construction.

As a significant step towards the reform of indirect taxation in India, the Central Government has
introduced the Goods and Service Tax (GST). GST is a comprehensive indirect tax on manufacture,
sale and consumption of goods and services throughout India and subsume many indirect taxes
levied by the Central and State Governments. GST is implemented through Central GST (CGST),
Integrated GST (IGST) and State GST (SGST).

Goods and Service Tax is a tax on goods and services, which is leviable at each point of sale or
provision of service, in which at the time of sale of goods or providing the services the seller or
service provider can claim the input credit of tax which he has paid while purchasing the goods or
procuring the service.

I. BENEFITS OF GST:
 For business and industry:

a. Easy compliance: A robust and comprehensive IT system would be the foundation of the
GST regime in India. Therefore, all tax payer services such as registrations, returns,
payments, etc. would be available to the taxpayers online, which would make compliance
easy and transparent.

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 b. Uniformity of tax rates and structures: GST will ensure that indirect tax rates and
structures are common across the country, thereby increasing certainty and ease of doing
business. In other words, GST would make doing business in the country tax neutral,
irrespective of the choice of place of doing business.

c. Removal of cascading: A system of seamless tax-credits throughout the value-chain, and

across boundaries of States, would ensure that there is minimal cascading of taxes. This
would reduce hidden costs of doing business.

d. Improved competitiveness: Reduction in transaction costs of doing business would

eventually lead to an improved competitiveness for the trade and industry.

e. Gain to manufacturers and exporters: The subsuming of major Central and State taxes in
GST, complete and comprehensive set-off of input goods and services and phasing out of
Central Sales Tax (CST) would reduce the cost of locally manufactured goods and services.
This will increase the competitiveness of Indian goods and services in the international
market and give boost to Indian exports. The uniformity in tax rates and procedures across
the country will also go a long way in reducing the compliance cost.

 For Central and State Governments:

a. Simple and easy to administer: Multiple indirect taxes at the Central and State levels are
being replaced by GST. Backed with a robust end-to-end IT system, GST would be simpler
and easier to administer than all other indirect taxes of the Centre and State levied so far.

b. Better controls on leakage: GST will result in better tax compliance due to a robust IT
infrastructure. Due to the seamless transfer of input tax credit from one stage to another in
the chain of value addition, there is an in-built mechanism in the design of GST that would
incentivize tax compliance by traders.

c. Higher revenue efficiency: GST is expected to decrease the cost of collection of tax
revenues of the Government, and will therefore, lead to higher revenue efficiency.

 For the consumer:

a. Single and transparent tax proportionate to the value of goods and services: Due to
multiple indirect taxes being levied by the Centre and State, with incomplete or no input
tax credits available at progressive stages of value addition, the cost of most goods and
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 services in the country today are laden with many hidden taxes. Under GST, there would be
only one tax from the manufacturer to the consumer, leading to transparency of taxes paid
to the final consumer.

b. Relief in overall tax burden: Because of efficiency gains and prevention of leakages, the
overall tax burden on most commodities will come down, which will benefit consumers.

II. Taxes to be subsumed under GST

Central Excise Duty

Additional Excise Duty

CENTRAL INDIRECT TAXES AND LEVIES

Service Tax

Additional Customs Duty commonly known

as Countervailing Duty

Special Additional Duty of Customs

State Value Added Tax/Sales Tax

Entertainment Tax (other than the tax levied

by the local bodies), Central Sales Tax (levied
by the Centre and collected by the States)

STATE INDIRECT TAXES AND LEVIES

Octroi and Entry tax

Purchase Tax

Luxury tax

Taxes on lottery, betting and gambling

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 III. GST RATES FOR GOODS AND SERVICES

The Goods and Services Tax (GST) has been one of the key things that has caught the attention of the
market given its implications on earnings of companies. The government has categorized items in five
major slabs - 0%, 5%, 12%, 18% and 28%.

The GST Council in its 23rd meeting on November 10, 2017 recommended widespread changes in
the Goods and Services Tax (GST). The council has decided to keep the highest 28% tax on luxury and
sinful items as a result 177 items have been shifted to the 18% bracket. GST on many items have also
been reduced.

List of goods and services taxed under various GST slabs:

GST CATEGORY
ITEMS
RATE (GOODS/SERVICES)

Goods No tax will be imposed on items like jute, fresh meat,

fish chicken, eggs, milk, butter milk, curd, natural honey,
fresh fruits and vegetables, flour, besan, bread, prasad,
salt, bindi, sindoor, stamps, judicial papers, printed
books, newspapers, bangles, handloom, bones and horn
cores, bone grist, bone meal, etc.; hoof meal, horn meal,
Cereal grains hulled, Palmyra jaggery, Salt - all types,
Kajal, Children's' picture, drawing or colouring books,
No tax Human hair, Khadi purchased from Khadi and Village
(0%) Industries stores, Clay idols, brooms, Cotton seed oil
cake, charkha, Guar meal, hop cone, certain dried
vegetables, unworked coconut shell and fish, and
bangles of lac/shellac.
Services Hotels and lodges with tariff below Rs 1,000,
Grandfathering service has been exempted under GST.
Rough precious and semi-precious stones will attract GST
rate of 0.25 per cent, admission to "protected
monuments

Rough industrial diamonds including unsorted rough

0.25%
diamonds to face 0.25% instead of 3% GST.

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 Goods Items such as fish fillet, apparel below Rs 1000,
packaged food items, footwear below Rs 500, cream,
skimmed milk powder, branded paneer, frozen
vegetables, coffee, tea, spices, pizza bread, rusk,
sabudana, kerosene, coal, medicines, stent, lifeboats,
Cashew nut, Cashew nut in shell, Raisin, Ice and snow,
Bio gas, Insulin, Agarbatti, Kites, Postage or revenue
stamps, stamp-post marks, first-day covers, Branded
food, walnuts, dried tamarind, roasted gram, Dhoop
batti, Corduroy fabric, saree fall, Paper mache items,Oil
cakes, Duty Credit Scrips,Cotton quilts(quilts not
exceeding Rs 1000 per piece),corals,Rosaries and prayer
beads,Hawan samagri,Grass, leaf and reed and fibre
5% products,including mats, pouches, wallets, mangoes
sliced dried, Khakra and plain chapati / roti, branded
Namkeens, Ayurvedic, Unani, Siddha, Homeopathy
medicines; Paper waste or scrap; Real Zari; Plastic waste,
parings or scrap; Rubber waste, parings or scrap; Hard
Rubber waste or scrap; Paper waste or scrap; Real Zari;
Cullet or other waste or scrap of Glass; E-Waste; Biomass
briquettes; Desiccated coconut, Narrow woven fabric
including cotton newar [with no refund of unutilised
input tax credit; Idli and dosa batter; Finished leather;
chamois and composition leather; Coir cordage and
ropes, jute twine, coir products; Fishing net and fishing
hooks; Worn clothing; Fly ash brick; aircraft tyres, puffed
rice chikki, flour of potatoes, chutney power, fly sulphur
recovered in refining crude and fly ash.
Services All restaurants, restaurants of hotels with room tariff of
less than Rs 7,500, Food parcels, Textile job work,
Transport services (Railways, air transport); Supply of e-
waste

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 Goods Apparel above Rs 1000, frozen meat products , butter,
cheese, ghee, dry fruits in packaged form, animal fat,
sausage, fruit juices, Bhutia, namkeen, Ayurvedic
medicines, tooth powder, agarbatti, colouring books,
picture books, umbrella, sewing machine, cellphones,
Ketchup & Sauces, All diagnostic kits and reagents,
Exercise books and note books, Spoons, forks, ladles,
skimmers, cake servers, fish knives, tongs, Spectacles,
corrective, Playing cards, chess board, carom board and
other board games, like ludo, rubber band, Wood, stone,
metals, marble idols, Table and kitchenware,Batters,
including idli / dosa batter, Textile caps,sprinklers,Cotton
quilts(quilts exceeding Rs 1000 per piece),Statues,
statuettes, pedestals,ceramic articles, porcelain items,
ornamental articles, bells, gongs, non-electric of base
12% metal,animal carving material, synthetic filament yarn,
such as nylon, polyester, acrylic, etc; artificial filament
yarn, such as viscose rayon, Cuprammonium; Sewing
thread of manmade staple fibres; Yarn of manmade
staple fibres
On Nov 10, 2017, these items have been shifted from
18% to 12% tax bracket: Condensed milk, Refined sugar
and sugar cubes, Pasta, Curry paste, mayonnaise and
salad dressings, mixed condiments and mixed seasoning,
Diabetic food, Medicinal grade oxygen, Printing ink,
Hand bags and shopping bags of jute and cotton, Hats
(knitted or crocheted), Parts of specified agricultural,
horticultural, forestry, harvesting or threshing
machinery, Specified parts of sewing machine,
Spectacles frames, Furniture wholly made of bamboo or
cane
Services State-run lotteries, Non-AC hotels, business class air
ticket, fertilisers, Work contracts

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 Goods Most items are under this tax slab which include
footwear costing more than Rs 500, Trademarks,
goodwill, software, Bidi Patta, Biscuits (All categories),
flavoured refined sugar, pasta, cornflakes, pastries and
cakes, preserved vegetables, jams, sauces, soups, ice
cream, instant food mixes, mineral water, tissues,
envelopes, tampons, note books, steel products, printed
circuits, camera, speakers, Kajal pencil sticks, Headgear
and parts thereof, Aluminium foil, Weighing Machinery
[other than electric or electronic weighing machinery],
Printers [other than multifunction printers], Electrical
Transformer, CCTV, Optical Fiber, Bamboo furniture,
Swimming pools and padding pools, Curry paste;
mayonnaise and salad dressings; mixed condiments and
mixed seasonings, Tractor parts, raincoats, Medical
grade disposable gloves, Computer monitors(up to 20
inch),Custard powder, Rice rubber rolls for paddy de-
husking machine, Kitchen gas lighters, poster Colour;
Modelling paste for children amusement; Fittings for
loose-leaf binders or files, letter clips, letter corners,
paper clips, indexing tags and similar office articles, of
base metal; staples in strips; aircraft engines.
18%
On Nov 10 these items were moved from 28% to 18%
bracket:
Wire, cables, insulated conductors, electrical insulators,
electrical plugs, switches, sockets, fuses, relays, electrical
connectors
Electrical boards, panels, consoles, cabinets etc for
electric control or distribution
Particle/fibre boards and ply wood. Article of wood,
wooden frame, paving block
Furniture, mattress, bedding and similar furnishing
Trunk, suitcase, vanity cases, brief cases, travelling bags
and other hand bags, cases
Detergents, washing and cleaning preparations
Liquid or cream for washing the skin
Shampoos; Hair cream, Hair dyes (natural, herbal or
synthetic) and similar other goods; henna powder or
paste, not mixed with any other ingredient;
Pre-shave, shaving or after-shave preparations, personal
deodorants, bath preparations, perfumery, cosmetic or
toilet preparations, room deodoriser
Perfumes and toilet waters
Beauty or make-up preparations
Fans, pumps, compressors
Lamp and light fitting

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 Primary cell and primary batteries
Sanitary ware and parts thereof of all kind
Articles of plastic, floor covering, baths, shower, sinks,
washbasins, seats, sanitary ware of plastic
Slabs of marbles and granite
Goods of marble and granite such as tiles
Ceramic tiles of all kinds
Miscellaneous articles such as vacuum flasks, lighters,
Wrist watches, clocks, watch movement, watch cases,
straps, parts
Article of apparel & clothing accessories of leather, guts,
furskin, artificial fur and other articles such as saddlery
and harness for any animal
Articles of cutlery, stoves, cookers and similar non
electric domestic appliances
Razor and razor blades
Multi-functional printers, cartridges
Office or desk equipment
Door, windows and frames of aluminium.
Articles of plaster such as board, sheet,
Articles of cement or concrete or stone and artificial
stone,
Articles of asphalt or slate,
Articles of mica
Ceramic flooring blocks, pipes, conduit, pipe fitting
Wall paper and wall covering
Glass of all kinds and articles thereof such as mirror,
safety glass, sheets, glassware
Electrical, electronic weighing machinery
Fire extinguishers and fire extinguishing charge
Fork lifts, lifting and handling equipment,
Bull dozers, excavators, loaders, road rollers,
Earth moving and levelling machinery,
Escalators,
Cooling towers, pressure vessels, reactors
Crankshaft for sewing machine, tailor's dummies,
bearing housings, gears and gearing; ball or roller
screws; gaskets
Electrical apparatus for radio and television
broadcasting
Sound recording or reproducing apparatus
Signalling, safety or traffic control equipment for
transports
Physical exercise equipment, festival and carnival
equipment, swings, shooting galleries, roundabouts,
gymnastic and athletic equipment
All musical instruments and their parts

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 Services Restaurants in hotel premises having room tariff of Rs
7500 and above, telecom services, IT services, branded
garments and financial services, Outdoor catering.

Goods In total 50 luxury and sin products will be taxed at 28%

which includes Bidis, molasses, pan masala, aerated
water, paint, sunscreen, wallpaper, ceramic tiles, water
heater, dishwasher, weighing machine, washing
machine, ATM, vending machines, vacuum cleaner,
28%
automobiles, motorcycles, aircraft for personal use
Services Private-run lotteries authorized by the states, race club
betting, cinema will attract tax 28 per cent tax slab under
GST.

IV. How Will New Taxation System GST Work?

GST is a destination-based tax, as against the present principle of origin based taxation. The new tax
regime follows a multi-stage collection mechanism wherein tax is collected at every stage and the
credit of tax paid (input tax credit) at the previous stage is available as a set-off at the next stage of
transaction. This helps to eliminate "tax on tax" or the cascading impact of tax. GST shifts the tax
incidence near to the consumer and benefits the industry through better cash flows and better
working capital management. From consumer point of view, GST helps to bring down overall tax.

Input tax credit: This means that at the time of paying tax on output manufacturers or service
providers, for example, can reduce the tax by the amount they have already paid on inputs.

An Illustration

Stage 1 | The Manufacturer: Let’s assume a manufacturer of shirts buys a raw material to weave a
cloth – thread, buttons, tailoring equipment which cost him Rs 100, a sum that includes a tax of Rs 10.
With the available raw material, the manufacturer manufactures a shirt. The manufacturer adds
value to the materials in the process of creating the shirt. Let us assume the value added by him to
be Rs. 30. Then the gross value of the shirt becomes Rs 130, (Rs 100 + 30). At a rate of 10%, the tax on
output on shirt will then be Rs 13. But under GST, he can set off this tax Rs 13 against the tax, as he
has already paid on raw material and inputs Rs 10. Therefore, the effective GST incidence on the
manufacturer is only Rs.3 this way Rs.13-10, making GST a tax only on the value added.

Stage 2 | The Distributor or Service Provider: The consecutive stage is that of the good passing from
the manufacturer to the wholesaler, a service provider. The wholesaler buys it for Rs.130 and adds on

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 value which is the margin of for assumption say Rs.20. Then the gross value of the goods the
wholesaler sells would then becomes a total of Rs 150 (Rs130 + 20). A 10% tax on this amount will
become Rs 15. But again, under GST, one can set off the tax on his output Rs 15 against the tax on his
purchased good from the manufacturer Rs 13. Thus, ultimately the effective GST incidence on the
wholesaler is only Rs.2 (15 – 13).

Stage 3 | The Consumer: Finally a retailer buys the shirt from the wholesaler. He adds a margin of
Rs.10 to his purchase of Rs.150. Therefore the gross value of the shirt he sells goes up to Rs.160
(Rs.150 + 10). At this stage the tax a 10% will be Rs.16. By setting off this tax (Rs.16) against the tax on
his purchase from the wholesaler (Rs 15), the retailer brings down the effective GST incidence on
himself to Rs.1 (16 –15). Thus we come to an conclusion of the total GST on the entire value chain
from raw material i.e. input suppliers (who can claim no tax credit since they haven’t purchased
anything themselves) through the manufacturer, wholesaler and retailer is Rs 10+3+2+1 = Rs 16 as a
grand total, which is finally borne by the consumer.

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 SIGNIFICANCE OF THE STUDY

This research will help in understanding the concept of goods and Services Tax (GST) on small traders
in India. This research will benefit to businesses and to the consumers also. They will get to
understand the single and transparent tax structure that has removed the cascading effects of
previous taxation system.

PROBLEM STATEMENT

Even after almost a month of the launch of GST in India, people and businesses are still struggling into
accept it completely. While many people have already adjusted themselves to the new GST based tax
system, many others are still struggling with the shortcomings of GST and the extent of adjustment
they are supposed to make. Common men are facing new problems every day in the post-GST era.
Small retailers and shopkeepers are the ones suffering the most. While unorganised cash based small
wholesalers were still recovering from the impacts of last year’s demonetization, GST has further
added to their losses. the biggest impact will be in the unorganised sector that will have to start
maintaining proper GST compliant bills and invoices if they wish to survive in the post-GST regime.
GST compliance, return filing and payments all have to be done online. Many small businesses are not
tech-savvy and do not have the resources for fully computerized compliance. Even as the rest of the
nation gets ready to go digital, businesses in small cities across India face a huge technology problem
in the days ahead.

OBJECTIVES OF THE STUDY

 To study in detail the system and salient features of GST model

 To study and analyze to what extent the small traders got affected through post
implementation of GST

 To suggest measures which can ease of the complexities for small traders

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 RESEARCH METHODOLOGY
Population: Small traders of South Delhi

Sample Size: 15

This study will be based on both primary and secondary data:

Primary Data Collection Methods: The primary data will be collected through questionnaire specially
designed for this survey

Secondary Data Collection Methods: Secondary data will be gathered from the relevant journals, web
sites and other sources.

PROPOSED CHAPTERISATION
Chapter 1 : Introduction

o Pre - GST tax structure

o Overview of GST

Chapter 2 : Literature Review

o Benefits of GST

o Taxes to be subsumed under GST

o Rate structure

o How GST works?

Chapter 3 : Research Design

o Significance of the study

o Problem statement

o Objective of the study

o Research methodology

o Limitations

Chapter 4 : Data Analysis and Interpretation

Chapter 5 : Findings, Suggestions and Conclusion

Bibliography or references
Annexure

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 LIMITATIONS OF THE STUDY

 The shortage of time will limit the number of samples in to minimum

 The advanced statistical tools not used for analysis

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 BIBLIOGRAPHY or REFERENCES

 Goods and Services Tax (India), https://en.wikipedia.org/wiki/Goods_and_Services_Tax_(India),

Wikipedia, 6 November, 2017, Accessed: Oct 23, 2017

 A quick guide to India GST rates in 2017,

https://economictimes.indiatimes.com/news/economy/policy/a-quick-guide-to-india-gst-rates-in-
2017/articleshow/58743715.cms, The Economic Times, Oct 08, 2017, Accessed: Oct 23, 2017
 About GST in India, http://www.gstindia.com/about/, gstindia.com, no date, Accessed: Oct 3, 2017

 How GST Works in India, https://www.indiafilings.com/learn/how-gst-works-in-india/, India filings, 16

Feb., 2017, Accessed: 15 Nov, 2017

 How Will New Taxation System GST Work? Explained In 10 Points, https://www.ndtv.com/india-news/how-
will-new-taxation-system-gst-work-explained-in-10-points-1716974, NDTV, June 29, 2017, Accessed: 16
Nov, 2017

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 ANNEXURE
QUESTIONNAIRE
IMPACT OF GST ON SMALL TRADERS IN INDIA

The following questionnaire is designed to enable you to tell us your experiences with the application
of GST on small businesses. We are particularly keen to learn that how GST has impacted the small
traders in India and your contribution will help us in analyzing the impact of GST on small traders. The
focus is on actual experiences rather than theoretical potential.

If you complete this box with your contact details, we can get in touch with you for any clarification of
the issues you have raised.

Firm’s name : Name of the person :

Address :
Email Id : Phone No. :

Type of business: _________________________________

SURVEY QUESTIONS

Q.1. Have you faced practical difficulties in compliances under the previous tax requirements?
o Yes
o No

Q.2. With prior to the above question If you answer is yes, give any example.
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________

Q.3. Have you ever encountered technical problems with the tax (eg, uncertainty as to whether GST
applied to a transaction you were involved with).
o Yes
o No

Q.4. With prior to the above question If you answer is yes, give any example.
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________

Q.5. Is the available legislation in relation to the GST satisfactory or do you feel need for more clarity?
o Yes - Satisfactory
o No – Need more clarity

Q.6. Do you see a rise in the demand for your products or services by customers?
o Yes
o No

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 Q.7. Do you think the provisions in relation to imports and exports in GST are clear?
o Yes
o No

Q.8. Do you think GST is easier to comply with or difficult?

o Easier
o Not much easier
o Difficult

Q.9. Do you think GST is a fair tax?

o Yes
o No

Q.10. Is the tax slabs of GST @ 5%, 12%, 18% and 28% are fair?
o Too Low
o Too High
o Just Right

Q.11. Do you use the services of external consultants for current service tax matters?
o Yes
o No

Q.12. Do you support GST?

o Yes
o No

Q.13. What suggestions do you have to remove complexities from GST?

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

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