INDIRECT TAX REFORMS: FACILITATIVE TAX REGIME

 Taxes whether direct or indirect plays a very important role in national building
 In the scheme of indirect taxes Central Board of Excise & Custom (CBEC), a statuary
body constituted under Central Board of Revenue Act 1963, has been tasked with
formulation and implementation of policy concerning indirect taxes which creates a
competitive, predictable & clean tax policy environment.
 Following the policy of 'RAPID' (Revenue, Accountability, Probing, Information,
Digitization), which would go some distance in fostering a non-adversarial and facilitative
tax regime, CBEC has taken a lot of initiatives to improve the ecosystem for doing
busiess in India.

Some Initiatives Under Taken By CBEC

(i) Make in India: To provide a level playing field to domestic private sector in defence
manufacturing, customs and central excise duty exemptions to defence supplies and
central excise duty exemptions to defence PSU’s and ordinance factory boards have
been withdraw.
(ii) Preparatory steps towards implement of GST:

(a) Excise duty of 1 percent imposed on jewellery.

(b) To reduce multiplicity of taxes, 13 cesses levied by other ministries and administered by
Department of Revenue are being abolished.
(c) Service Tax imposed on all services provided by the Government or Local authority to a
business entity, except service that are specifically exempted or covered by any other
entry in negative list.

(iii) Ease of Doing Business:

(a) Customs clearance facilitation committee (CCFC) has been setup to address the issues
relating to custom clearance and infrastructure.

(b) SWIFT (Single Window Interface for Facilitating Trade) clearance from 01.04.2016
onwards allowing traders to lodge their clearances documents electronically at a single
point only with the customs.

(c) CBEC enabled that all importers, exporters shipping lines and air lines shall file custom
documents under digital signature with effect from 1 Jan. 2016 which will help in
reducing the physical/manual submission of documents.

(d) E-payment of central excise and service tax refunds and rebates through RTEGS/NEFT
implemented.
(e) Number of Central Excise returns filed by manufacturers reduced from 27 to 13.

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(f) CENVAT credit rules amended to improve credit flows and also time limit for CENVAT
credit of duty/tax paid on inputs increased from 6 months to 1 year.

(iv) Dispute Resolution and Litigations Management

(a) To encourage compliance and early dispute resolution,the penalty provisions in customs,
central excise and service tax have been rationalised.

(b) Threshold limit, below which appeals can't be filed by the department in CESTAT
(Custom Excise and Service Tax Appellate Tribunal) and High Courts, hss been raised
to 10 lakhs and 15 lakhs respectively.

(c) Pre show cause notice consultation has been made mandatory at the level of principal
commissioner/commissioner in all the cases where duty involved is above Rs. 50 lakhs.
All these efforts of CBEC has led to perceptible change in policies of Tax Department by way
of becoming liberal in friendly to tax player. Also the reforms taken with regard to clearance
procedures pertaining to imports and exports have improved the scorecard of India in
logistics performance India (LPI) – (a survey done by world bank group on trade logistics)
taking India to 35th position from 54th position.
Goods and Service Tax (GST)
Tax reforms being integral to country's development need to be improved time to time and
therefore even the developed countries like UK & US too understood reforms in last few
years and thus India is no exceptions to such tax reforms.
Why GST?

Presently, Central Government levies Tax on manufacture, provisions of services, interstate

sale of goods and states levy tax on retail sale (VAT), entry of goods in state (entry Tax),
Purchase tax etc.
 This fractured mandate of taxation leaves a lot of gap in supply chain and also leaves
cascading effects of taxes on produces and consumers.
 Also the variety of VAT tax laws in country with different tax rates divides country into
separate economic spheres.
 While the tax to GDP ratio may be progressive, tax to demographic population is
abysmal, and hardly 2% population pays tax, therefore, government needs to bring more
and more people into the tax net and raise the tax collection buoyancy and GST stands
as a critical tax reform in this regard.
Advantages of GST:
GST is expected to make consumer the "King" and so the constitution (122 nd amendment)
Bill was passed by Lok Sabha in May 2015 and then Rajya Sabha. The advantages are:-
1) Will help to create a unified national market bringing transparency, giving boost to foreign
investment and "Make in India" by bringing the concept of "One country one tax"
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2) It will prevent cascading of taxes as Input Tax credit will b available across goods and
services at every stage of supply.

3) The potential of India being the most dynamic economic in developing world, gets
hampered by array of state by state taxcodes as it discourages the 'ease of doing
business' Uniform State GST (SGST) and integrated GST (IGST) will reduce the
incentive of evasion by eliminating state arbitrage.
4) GST replaces 15 excising state and federal taxes by help India to increase its economic
growth by 0.5 and 2% points.

5) Also GST will help promoting 'co-operative federalism' wherein centre and state work
together for nation's benefit.
6) Greater use of IT will reduce human interface reducing "tax terrorism" which will go long
way in reducing corruption.
7) Will provide more transparent basis for applying the WTO's National Treatment Principle
on import of goods by charging additional duty of customs (CVD).
8) It will boost export & manufacturing activity, generating more employment and thus
increase GDP with gainful employment, leading to substantive economic growth and
reducing poverty.
9) Efficient neutralization of tax especially for exports will make Indian products more
competitive in international market.
10) The average tax burden on companies will come down which will reduce prices of
products therefore more consumption which in turn leads to more production, thus
making India a "Manufacturing hub".
The GST is being hailed as mother of all economic reforms in India which will inspire the
confidence of manufactures and investors to push the economy forward and propel GDP
growth further.

QUESTIONS
Q.1GST is hailed as mother of all economic reforms in India and the biggest tax reform since
1991 as described by New York Times". In this context discuss the need of GST in
Indian economy and the advantages it can bring. (200 words)
Q.2Following the policy of "RAPID", CBEC has taken lot of initiatives for improving the
ecosystem for doing business in India. Explain the initiatives taken by CBEC in this
context (200 words).
BLACK MONEY MEANACE: GOVERNMENT ON WAR FOOTING
In India, black money refers to funds earned on the black market, on which taxes have not
been paid. In February, 2012, director of CBI said that Indians have US $ 500 bn of illegal
funds in foreign tax havens. To curb this black money government had tighten is belt and
 4
shown its commitment to tackle this menace by several initiative/measures which are
discussed briefly in following sections.

(A) S.I.T. (Special Investigation Team) in May 2014 headed by M.B. Shah called for:
 Complete ban on cash transaction over 3 lakh to curtail black money and limit of Rs. 15
lakh on cash holding. It suggested, that if industry is required to hold more cash, then
permission of commissioners of Income Tax is needed.
 Panel has asked RBI (Reserve Bank of India) to develop an institutional mechanism,
with revenue department to share export-import & forex transaction information with
investigative agencies to curb illicit financila flow out of country.
 Mandatory quoting PAN Card identification for transaction above Rs. 2 lakh from Jan 1,
2016.
(B) Income Declaration scheme-2016: It was a major step taken by government to
unearth black money from domestic market. IDS 2016 was kept open from 1st June 2016
to 30th September 2016 for four months.
 It provided opportunity to person who had not paid full taxes to come & declare their
undisclosed income and assets.
 Under I.D.S., 64275 declarations were filed with an aggregate of Rs. 65,250 crore worth
of until undeclared income which is likely to rise further.
(C) Undisclosed Foreign Income and assets and Imposition of Tax Act, 2015: It to
unearth black money stashed outside the country. The act came into force from 1st July
2015.
 It provided for one time compliance window to declare assets held abroad and pay due
taxes and penalty on value of these assets.
 The amount involved in these 644 declaration was 4,164 crores. The amount received by
way of tax & penalty upto 31st December 2015 is 2,428.4 crore.
(D) International Treaties: The information pacts with other countries will make it difficult to
stash black money in overseas accounts. For example:
 Indo US Foreign Account Tax Compliance Act (FATCA) to ensure that tax is paid on
income generated from wealth abroad.

 Initiative for signing Automatic Exchange of Information Treaty with all major countries
including Switzerland.
 All this has helped government to file 164 prosecutions cases of the 175 cases of black
money started overseas in HSBC's bank account worth Rs. 8000 crore.
 Detection of Rs. 5000 crore of undisclosed deposits in foreign account by International
consortium of Investigative Journalist (ICIJ).
 Similarly investigation in the Panama Papers has led to 250 references being made to
other countries asking for details about tax evaders, bank accounts etc.
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(E) Revising DTAA's (Double Taxation Avoidance Agreement): Tax evaders have often
exploited Loopholes in existing tax treaties with low or zero tax jurisdictions like
Mauritius, Singapore, and Cyprus ensuring complete tax avoidance. Therefore,
government is on spree to revise the DTAA's. For Example:
 India & Mauritius amended DTAA in May 2016, which allowed India to levy capital gains
tax from sale of shares of an Indian company from April 1, 2017 onwards.
 The Singapore treaty amendment are being negotiated and will be automatically being
amended from April 1, 2017, as it is under same protocol as Mauritius.

India has Double Tax Avoidance Agreements with 82 nations, including all popular tax haven
countries.
(F) Non-Intrusive Target Evaders:
 The upgradation of IT capabilities has led to non-intrusive methods of detection of tax
evasion. According to Ministry of Finance, Rs. 16000 crore, have been collected by using
this method.
 ‘Project Insight’ will allow government to collate all information available with Income Tax
Department from various sources and profile it systematically for people using PAN
(Permanent Account Number) details.
(G) Benani Transaction Act: Investment in property or real estate is used commonly to
park unaccounted money, and therefore Parliament has approved Benani Transaction
(Prohibition) Amendment Act in August 2016.

 It widened the definition of Benami transaction to include a transaction made in a fictions

name; where owner is not aware of or denies the knowledge of the ownership of
property.
 Also the penalty provision have been made stricter: i.e. penalty under amended act will
be rigrous imprisonment of 1 year – 7 years and fine to 25%.
 For providing wrong information, rigorous imprisonment of 6 months – 5 years and fine
upto 10%.
Conclusion/Way Forward
With all major economics of world uniting against the cause of eradicating black money,
seen from base erosion and profit sharing (BEPS) agreement and multilateral information
exchange pacts it will become difficult to carry out tax evasion.
Nevertheless the steps taken by Indian government like use of technology such as project
insight, making much of income tax filling online, reducing tax terrorism, bringing GST etc.
can help unearth & stop black money. But now the focus should move on discouraging cash
transaction and encourage card payments in economy to curb black money circulation.

QUESTION
 6
Q1.India's black economy or shadow economy is humungous & complex leading to
underdevelopment in economy. Critically comment on recent black money laws and
initiatives taken by government to curb this menace. (200 words)

GST: GAME CHANGER FOR INDIAN ECONOMY?

Introduction
In order to make India a manufacturing hub, as it will create employment for burgeoning
youth, it is imperative that the foreign investors / companies find the environment to be
conducive here.
 But major impediment to this is, uncertain & unpredictable indirect tax regime.
 To address this, constitution amendment bill for Goods & Service Tax (GST) has
been approved and will be implemented from April 2017 which is going to replace all
multi staged taxes by centre & state giving birth to unified tax structure.
 GST – the most significant tax reform since independence for India [which is now
also a Asia's third largest economy] will benefit in:

Now, let us see some of its (GST) – sectoral impact on Indian economy.
Sectoral Impact
(a) Real Estate Sector:
 Construction – the second largest employer after agriculture, constituting 7.4% of India's
GDP in 2013-14.
 But under current indirect tax regime the industry has been embroiled in dispute and
various types of taxes are involved from construction to sale to property – for example
Service tax, Value Added Tax (VAT), Stamp Duty, Building cess on Construction etc.-
Which leads to cascading of taxes and higher cost burden on house purchasers.
 The proposed GST regime law would subsume many indirect tax law and this will benefit
the sector like cement & steel further reducing the construction cost.
 Also it will result in transparency in real estate sector which will reduce tax evasion
through more efficient transaction & tracking methods.

(b) Health Care Sector

 One of the major concerns of this industry is the current inverted duty structure which
affects domestic manufacturing making input cost higher than output cost, therefore
discouraging investment.
 GST may either remove inverted duty structure or allow refund of accumulated credit and
this will act as a growth catalyst for this sector.
 7
 Since 8 different taxes are levied in pharmaceutical industry, GST would help
simplifying it and shed positive impact on industry.

 GST will also result in operational efficiency by streamlining the supply chain which will
add 2% to India's pharmaceutical market size.
 All this will eventually help consumers by making health case & medicines affordable
which is already a big goal for government.
(c) Banking & financial services sector:
The banking and financial services in India are taxed at 14.5% service tax while GST is
expected to be 18-20%. Therefore, making these services costlier.
Also GST is a destination based tax, it might be challenge to determine the destination of
certain services which may lead to difficulty in determining state GST, central GST or
interstate GST on B2B and B2C transaction. B2C and B2B are 2 forms of commercial
transactions which means Business to consumer and business to business transaction
respectively.
(d) Travel, Tourism & Hospitality:
This industry has multiple taxes levied by both center and state and it is expected that under
GST, supplies to hotel and restaurants will be subjected to a single tax.
 R & D cess, payable on franchise fees and technical know-how, is likely to be subsumed
under GST thus simplifying compliance procedures and reducing multiple taxes.
 At the moment in India hotels currently levy taxes in range of 20% compared with just 2-
5% average range across globe making travelling higher.
 Therefore on the whole GST will reduce cascading effects & lack of credits therefore,
cheaper hotel prices for consumers.
(e) Education Sector:
 Education of country's youth will decide how the economy will flourish, helping in
advancement of country.
 In India, Education is provided by both public & private sector and the priority has always
been low cost education to one & all and thus this sector enjoys lot of tax exemption
which is likely to continue even after GST implementation.

 In case if it doesn't then the sector can avail input credit or CENVAT credit on the duty
paid on purchase of inputs & services – thus, overall it is likely to bring the final cost
down for industry.
(e) Impact on Common Man:
 Goods today are taxed at 12.5% (excise duty) & plus 5-15% (VAT) which are passed to
end consumer making it costlier. GST capped at 18%, price of goods can be significantly
reduced for consumers.
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 Eating out could be cheaper as right now we pay service tax +VAT both. Leading to
18.5% tax whereas GST will cost single tax of 18%.

 Phone bills to get costlier as states are expected to decide service tax. Also service
consumed by common man like transportation, railways, banking, air travel etc. may
become expensive.

 Buying car and LED's to get cheaper. For example- at present for Rs. 20,000 LED TV we
pay 24.5% tax making it 24,900. In GST regime 18% tax making it 23,600.00.
 Online buying of bags,shoes,electronics will be costlier as e-commerce industry comes
into a tax net &will have to pay tax deducted at source for every purchase from its
sellers.
Conclusion:
After going through sectorial impact of GST, one can assess that GST could be a game
changer and beneficial not only to common man but also to economy as a whole converting
India to a unified national market with simplified tan regime.
QUESTION
Q.1GST will have a far reaching impact on almost all the sectors in Indian economy,
therefore described as a reform measure of unparalleled importance in independent
India. In this content discuss the major sectors and impact of GST on them (200 words).
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GST: ONE NATION, ONE TAX
Introduction:

India is all set to join the select club of nations such as Canada, Australia, Singapore and
Malaysia which have GST as a indirect tax system with its 122nd constitutional amendment
bill (101st Amendment) enabling centre and state to levy GST concurrently.

What is GST?
 Simplified tax structure applied on both goods and services.
 Applicable on supply of goods or services as against prevailing system of tax on
manufacture of goods & provision of services.
 A destination based tax as against the existing system of origin based tax.
In order to introduce GST from financial year 2017-18, the government needs to set the
process in motion with:
 Goods & Services Council: the apex body of centre & state.
 GST Network: for providing all kinds of information technology support.
 GST Rates Law: to finalize the GST rates.
Now, let us see into the details of these processes required for GST implementation:
(I) GST Council:
An apex body comprising of centre and state for GST, has been empowered to prepare nitty-
gritty of GST and also to resolve disputes.
Structure
 Council is headed by Union Finance Minister.
 Union Minister of State for finance, minister incharge of finance or taxation or any other
minister nominated by each state government will be the members.
 Therefore, total of 33 members with 2 members from centre, one from each 29 states
and 2 union territories.
Functions

It will make recommendations to the union and states on important issues related to GST
such as goods and services that may be exempted from GST, model GST laws, principles,
that govern place of supply threshold limits, special rates for raising additional resources etc.
Voting
 Central government will have a weightage of 1/3rd of total votes.
 State & Union Territory will have 2/3rd of total votes.
 Decision to be taken will require 3/4th of total votes.
Key Decisions by GST council
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1. Threshold limit: The exemption threshold limit is fixed at Rs. 20 lakh and this will be 10
lakhs for business in 7 north eastern states and 3 hill states (J & K, Himachal Pradesh,
Uttrakhand).
2. Cross Empowerment: It is agreed that states will get exclusive control over all dealers
upto annual turnover of Rs. 1.5 crore and for traders with revenue above Rs. 1.5 crore,
there will be dual control and cross empowerment of officials of centre and state.
3. Composition Scheme: Reaching on consensus for composition scheme it was decided
that traders with gross turnover upto 50 lakhs will pay 1-2% tax and this will aim to
facilitate small traders.
Also the floor rate of tax for central GST and state GST will not be less than 1%.
(II) Goods & Service tax Network (GSTN):
It is a non-government and private limited company and has been mandated to:
1. Provide common and shared IT Infrastructure & Services to the Central & State
government, tax payers and other stakeholders.
2. ncourage and collaborate with GST suvidha providers (GSP's) to roll out GST
application for providing services to stakeholders.
3. Carry research, study best practices and provide training to tax authorities & other
stakeholder.
4. Assist Tax authorities in improving tax compliance and transparency of Tax
Administration system.

5. Develop tax payer profiling utility (TPU) for central and state tax administration.
(III) GST Rates:
The empowered committee of the finance minister suggested two guiding principle for
finalising GST rates:
a. That the GST rates should help the present taxation rate to gradually come down in
becoming citizen friendly.
b. The amount collected to taxation after GST should be adequate enough so that the
centre & state governments are able to maintain their present level of revenue.
Therefore the four rates:

1. Food grains to be : 0% tax (i.e. Nil rate)

2. Items of common consumption – 5% (i.e. Merit Rate)
3. Ultra luxeries, demerit & sin goods at 28%

4. 2 standard rates of 12% and 18% under GST.

Conclusion:
 GST will bring benefit not just for the industry/business but also for masses.
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 This new system will not only reduce multiplicity of taxes, cascading effects but also it
will bring revenue gain for centre & state due to widening of tax base and improved tax
compliance.
QUESTIONS
Q. GST the 101st conditional amendment has been setup to usher the era of economic
reforms from financial year 2017-18, helping India, to join the club of nation having
uniform indirect tax regime. Explain the processes which government needs to set in
motion to introduce this reform. (200 words)

GOODS AND SERVICE TAX: THE INTERNATIONAL EXPERIENCE

Introduction:
The most awaited economic reform, GST – for a simplified and uniform tax rate were passed
in parliament on 3rd August 2016.
 This GST by subsuming CENVAT (Central VAT) and state VAT, reduces the burden of
taxes on consumers and simplifies the compliance of taxation norms for industries &
investors.
 But this GST being a destination based tax will shift from state of origin to state of
consumption which will led to loss of revenue for manufacturing and developed states.
 Therefore, consumption or destination states (like Odisha, Uttar Pradesh, Bihar &
Kerala) stand to gain while origin states (like Tamil Nadu, Gujarat, Maharashtra) stand to
lose.
International Experience:
1. The international Experience shows that the success of GST depends mostly on
model & effective implementation.
For Example: Experience in countries like Australia, Canada and New Zealand shows that
this results in better fiscal finance and price stability
2. International experience also shows that inflation went up in short term as lot of new
services and goods taxed under GST which were not taxed earlier.
Therefore, on one hand there is possibility of mitigation of cascading effects and increased
revenue base for government; on the other hand, there is possibility of spike in prices also.
3. The macro economic indicators like GDP growth rate, fiscal balance, current account
balance, Tax – GDP ratio have improved in most of countries. For example: Canada,
Australia, New Zealand, Singapore and U.S. etc.
Therefore, making these economics more competitive generating revenues through better
exports & leading to price stability.
4. Similar to Indian context, it is only Canada that has concept of dual GST.
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In Canada, the GST replaced the manufacturer's Sales Tax and came into force in 1991
leading to better macro economic performance in terms of growth, government finance, tax
revenues etc. in post GST period.
International Experience Lessons:
1. The main challenge encountered by most GST countries was that of GST's
inflationary nature especially when the effective tax rate is higher than what prevailed
earlier.
For instance, Singapore saw spike in inflation in 1994, when it introduced GST.

Therefore, it is important for administrators to keep tabs on how prices move after GST's
implementation.
2. Another key lesson, is that businesses need to start early with the implementation
process to be GST ready.
As for example: Malaysian Government received strong resentment even after providing one
& half year for GST preparedness.
Given the complex GST model in India, and the need for businesses to undergo a
transformation to adapt to the GST regime, it will be quite challenging for Indian government
to tackle.
3. The international experience's lesson also suggest that it is necessary to keep
exemptions in GST minimum as keeping exemptions list long will not enhance states
fiscal autonomy, making tax base narrower etc.

Example: New Zealand has the least number of exemptions and the most comprehensive
coverage of GST.
4. Also the government needs to go for a successful 'Digital India' programme as GST
will require a state of art IT infrastructure and ensuring this high speed. IT connectivity
across states with huge geographical disparity will be a challenge in such a short time.
Conclusion:
From the international experiences & lessons learnt there is no denying that acceptance of
GST by general public, businesses and firms would not be an easy task but with (1) advance
planning and extending adequate time to industry, (2) continued dialogues between
business & administrators, (3) engaging with industry on implementation of planning, (4)
Timely release of legislative documents, have proven to aid in smooth GST implementation
in many countries.
Some Facts Related to GST – Implementation globally:
 Around 160 countries in world have implemented VAT/GST.
 ASEAN – 7 countries
ASIA – 19 countries
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EUROPE – 53 Countries
AFBICA – 44 countries

 France – was one of the first country to implement GST in 1954, followed by
Germany – 1968
United Kingdom - 1973

 Typically GST a unified tax system but countries like Canada & Brazil have dual GST
like India.
QUESTION

Q. The international experience shows that success of a GST depends mostly on model in
its effective implementation. Seeing India's complexity discuss the international
experience & their lessons learned that can help India in smooth implementation and
working of GST.

GST: REJUVENATING THE MANUFACTURING SECTOR

 India is projected to be the 'Youngest Nation' in world by 2020 and average age of our
population will be around 29 years.
 Also we will have surplus youth of 47 million whereas world will be facing shortage of 56
million.
 Therefore, this richness of our demographic dividend should be utilize properly to
achieve higher GDP and the manufacturing.
 Sector has great potential to absorb these youth& also making them skillful.
 Manufacturing sector contributes approx 16% to GDP over a period of time; therefore, it
is necessary to focuss on its growth perspective.
National Manufacturing Policy and Make in India
 To break the vicious circle & stagnation of manufacturing sector, government of India
has formulated 'National Manufacturing Policy'.

 The policy first of its kind for manufacturing sector as it addresses areas of regulation,
infrastructure, skill development technology, availability of finance, exit mechanism etc.
which will help the sector to trigger its growth and set a target of achieving 25% of GDP
by 2025.
 To achieve the same "National Investment and Manufacturing Zone' (NIMZ) has been
created through which the congenial infrastructure support is provided.

 NIMZ planned to have single window to provide solution and approvals to the sector and
contribute in ease of doing regulations and law.
 14
 All these steps will encourage multi-national companies to invest and boost India's
manufacturing sector and help 'Make in India' & 'Skill India' mission to come true.

Role of GST as a tax reform for Manufacturing Sector

 The policies and taxation laws need to be redefined and reformulated in order to
customize them with changing economy.

 Government has initiated series of tax reforms like tax concessions, tax reduction, tax
holidays, simplifying tax formalities, and GST etc. to facilitate faster economic
development. Let us now look into how GST effects this sector majorly:

(a) Multiplicity of indirect taxes and their cascading effects on input cost is the major
challenge for manufacturing sector which the GST 'single indirect tax code' will help in
rationalizing.
(b) This multiplicity of tax codes across states also is a problem as it makes inter state trade
less competitive. GST will break this inter state barriers and will develop common
national market.
(c) Due to implementation of GST, the cost of production is expected to reduce by 15-25%
on indirect tax which will help in curbing inflationary situation and better profitability for
the sector.
(d) Along with GST, government has taken initiative to create litigation free, investor friendly
environment to make India a hub of global manufacturing.
(e) For startups, government has made provisions that the profits for three out of first 5
years would be eligible for 100% deduction. This will give promotion to startup in
manufacturing sector also.
(f) To promote small sectors, government has reduced the corporate tax rate for relatively
small enterprises i.e. companies with turnover not exceeding Rs. 5 crores.
(g) To reduce cost & improve competitiveness among domestic manufacturing industries,
government has reduced custom and excise rates on certain inputs to 'Make in India'
scheme attractive.
Conclusion:
Indian manufacturing sector is primarily resource driven than technology driven and
therefore the input cost and taxes make the sector more challenging.
 Therefore, the sector can be strengthened through fiscal intervention like tax concession,
tax reduction, especially on import of technology and research & development for this
sector.
 Also, implementation of GST would go to long way and help promote 'Make in India'
which will give much relief to manufacturing sector.
QUESTION
 15
Q. Indian manufacturing sector is primarily resource driven rather than being technology
driven and therefore, subsequent tax reforms can help boost this sector. In this context
discuss the role played by 'GST' (Goods & Service Tax) as a tax reform (200 words)