CHAPTER.

1
INTRODUCTION
The Good and services tax (GST) is the biggest and substantial indirect tax reform since the
year 1947. The main idea of GST is to take over existing taxes like value-added tax, excise
duty, service tax and sales tax. GST will be levied on manufacturing sales and consumption of
goods and services and is expected to address the tumble effect of the existing tax structure and
result in uniting the country economically. Its main objective is to maintain a belief in the basic
structure and design of the CGST, SGST and SGST between states.

GST is a new story of VAT (value added tax) which gives a widespread setoff for input tax
credit and contains many indirect taxes from state and national level. The main aim of GST is
to create a single, unified market which will benefit the development of a country’s economy.
India is a democratic country and therefore the GST will be implemented parallel by the central
and state governments respectively. In this article, I have discussed GST and highlighted its
objectives. Consequently, I also put a light on the possible challenges, threats, opportunities
that GST brings to strengthen the free financial market. Finally, the paper examines draw out a
conclusion.

On 1st July 2017, India witnessed the launch of the Goods & Services Tax in India. It was the
historic moment of India which was the culmination of 14-year long journey which began in
December 2002 when the Kelkar’s Task force on indirect taxes suggested a comprehensive
Goods and service tax based on the value added tax principal. Our study specifically focuses
on the impact of GST on financial market. Various stock indices data of BSE and NSE were
taken before and after the implementation of GST. A paired test was applied and found out that
there is a significant difference between pre and post implementation of GST.

Indian Financial market new tax reformed scheme was introduced to generate government’s
revenue equally between the state and center. This scheme was introduced by the center
government because of the conflicts made by the state governments between the state and
center. Although, it was necessary because various types of tax were implemented by the state
governments which vary from one state to another state of the country. Earlier policy was like
a tax upon tax implemented on the goods and services and it was again between producers and
consumers, which we call as one type of monopoly, broken by the center government.

1
This Goods and Service Tax introduced in Indian financial markets reflects on the small scale
and medium scale manufacturing units. Generally, it was a slogan “One Nation, One Tax and
One Market” and finally termed as GST.

GST is considered as an indirect tax for the whole nation that would make India one unified
common market. It is a tax which is imposed on the sale, manufacturing and the usage of the
goods and services. It is a single tax that is imposed on the supply of the goods and services,
right from the manufacturer to the customer. The credits of the input taxes that are paid at each
stage will be available in the subsequent stage of value addition which makes GST essentially
a tax only on the value addition on each stage. The final consumers will bear only the tax
charged by the last dealer in the supply chain with the set of Benefits that are at all the previous
stages.

Taxes that the governments impose on their people and businesses would be the major source
of revenue for any country around the world. India is not an exception to it. India too earns
revenue from taxes, both direct and indirect taxes such as, Income Tax, VAT, Service Tax,
customs and excise duty among others. Indian financial market is characterized by the presence
of a distorted indirect tax structure leading to the biggest obstacle hindrance to investors
industries for doing business in India. Hence, it shall be hampering the growth of the industries
and contradict the National Program of 'Make in India'. Efforts undertaken by the Government
of India are aimed to increase the degree of trustworthiness for investors on Indian socio-
economic scenario. Goods and Services Tax in India is proposed to be the maiden reform.

2
The proposed GST is a long pending and much awaited tax reform which India is hoped to iron
out the wrinkles in the existing indirect taxation system. This comprehensive tax policy is
expected to be one of the most important contributors to the India growth story. The proposed
reform through introduction of GST would bring about a searching gain the legal provisions
for imposing duty/tax liability in stages of manufacture, sale (inter-state/intra-state) of goods,
rendering of services and shall stand replaced with the place of supply, where the final
consumption enjoyment and use of goods and services were made. Goods and Services Tax
(GST) is an indirect tax which was introduced in India on 1 July 2017 and was applicable
throughout India which replaced multiple cascading taxes levied by the central and state
governments. It was introduced as The Constitution (One Hundred and First Amendment)
following the passage of Constitution 122nd Amendment Act Bill. All economic decisions of
the GST have an immediate impact on the price behaviour of the financial market. Hence, in
the current study an attempt to investigate the impact of implementation of the GST in India
on 1July, 2017 on to the Indian financial market.

The introduction of the Goods and Services Tax (GST) is a very significant step in the field of
indirect tax reforms in India. By amalgamating a large number of Central and State taxes into
a single tax, GST will mitigate ill effects of cascading or double taxation in a major way and
pave the way for a common national market. From the consumers point of view, the biggest
advantage would be in terms of reduction in the overall tax burden on goods, which is currently
estimated to be around 25%-30%. It would also imply that the actual burden of indirect taxes
on goods and services would be much more transparent to the consumer. Introduction of GST
would also make Indian products competitive in the domestic and international markets owing
to the full neutralization of input taxes across the value chain of production and distribution.
Studies show that this would have a boosting impact on economic growth. Last but not the
least, this tax, because of its transparent and self-policing character, would be easier to
administer.

3
STUDY OF GST:-
Goods and service tax (GST) is an indirect tax which was introduced in India on 1st July 2017
and was applicable throughout India which replaced multiple cascading taxes levied by the
central and state governments. 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. GST was
initially proposed to replace a slew of indirect taxes with a unified tax and was therefore set to
dramatically reshape the country’s 2-billion-dollar economy. The rate of GST in India is
between double to four times that levied in other countries like Singapore.

The GST to be demanded by the centre of intra-state supply of products as well as

administrations would be known as the Central Goods and Services Tax (CGST) and that to be
imposed by the states would be known as the State Goods and Services Tax (SGST).
Correspondingly Integrated Goods and Services Tax (IGST) will be exacted and managed by
Centre on each between state supply of products and ventures.

GST is utilization-based duty i.e., the duty ought to be gotten by the state in which the
merchandise or administrations are devoured and not by the state in which such products are
made. IGST is intended to guarantee consistent stream of information assess credit starting
with one state then onto the next. One state needs to Bargain state, in this manner making the
procedure less demanding.

4
GST supply, once the color of the government, for which Centre provides color for what the
United States can call, CGST, GST. The disadvantages of such products, the company logo
GST logo in all colures under the Kedah Centre Application use. Believing that we went
according to the GST and Kedah in the state or goods that are involved in collar management
is done in the collar of the government. AUG Government Loan Program collar terrace use to
provide consistent information. Therefore, the process of applying, but not for everyone, the
government should only analyse the collar of public spending.

Fundamentally, the $2.4-trillion economy is attempting to transform itself by doing away with
the internal tariff barriers and subsuming central, state and local taxes into a unified GST. The
rollout has renewed the hope of India’s fiscal reform program regaining momentum and them
widening the economy. Then again, there are fears of disruption, embedded in what’s perceived
as a rushed transition which may not assist the interests of the country. Will the hopes triumph
over uncertainty would be determined by how our government works towards making GST a
“Good and Simple Tax.

The market where investment instruments like bonds, equities and mortgages are traded is
known as capital market. Capital market is a financial market in which long- term productive
is used. The primary role of this market is to make investment from investors who have surplus
funds to the ones who are running a deficit. The purpose of these markets is to channel savings
into is long-term productivity investments.

Introduction of GST would be a very significant step in the field of indirect tax reforms in India.
By amalgamating many Central and State taxes into a single tax and allowing set-off of prior-
stage taxes, it would mitigate the ill effects of cascading and pave the way for a common
national market. For the consumers, the biggest gain would be in terms of a reduction in the
overall tax burden on goods, which is currently estimated at 25%-30%. Introduction of GST
would also make our products competitive in the domestic and international markets. Studies
show that this would instantly spur financial growth. There may also be revenue gain for the
Centre and the States due to widening of the tax base, increase in trade volumes, improved tax
compliance. Last but not the least, this tax, because of its transparent character, would be easier.

5
Under the GST regime, an Integrated GST (IGST) would be levied and collected by the Centre
on inter-State supply of goods and services. Under Article 269A of the Constitution, the GST
on supplies during interstate trade or commerce shall be levied and collected by the
Government of India and such tax shall be apportioned between the Union and the States in the
manner as may be provided by Parliament by law on the recommend the Goods and Services
Tax Council. A GST Council would be constituted comprising the Union Finance Minister.

The GST combines several Central and State taxes listed in Table 1. In some way,s the reform
is a unique experiment in both Central and State governments giving up their tax autonomy in
favor of harmonization of the domestic consumption tax system. The GST comprises of a
Central GST (CGST), State GST(SGST) and Inter-state GST (IGST). The tax is designed to
be destination based and the revenue from inter-state transactions is put in the IGST account
and eventually distributed according to destination through a clearing house mechanism. The
Constitution was amended to create GST as a joint tax of the Centre and States (Article 269
A), to be administered by a new Constitutional body – the GST Council chaired by the Union
Finance Minister and with Finance Ministers or other ministers nominated by each of the States
and Union Territories with legislatures as Members. The Union Revenue Secretary is the
Secretary of the Commission, and a separate Secretariat was set up to oversee the functioning
of the Council. The decisions taken in the council should have at least two-thirds majority.

The taxpayers are required to electronically file a single return for CGST, SGST, IGST and
GST Compensation cases. Initially, a fully automated system with 100 per cent matching
invoices for ITC was envisaged with taxpayers required to submit three returns GSTR -1,
GSTR-2, and GSTR-3 every month and a final annual return at the end of the year. GSTR -1
was required to furnish the details of outward supplies. This information along with the
information from tax deducted at source on government transactions and e-commerce supplies
are shared electronically with the registered recipients in Form GSTR- 2A based on which
GSTR- 2 was to be filed containing information on inward supplies. GSTR – 3 was auto-
populated within formation from the two forms. However, the system failed because the
businesses as well as service providers were not ready, and the system itself could not cope
with the large number of registered taxpayers. After repeated postponement, a separate
simplified self-assessed summary form GSTR-3B was to be filled as a temporary measure.
The GST has been implemented with very high expectations of achieving a simpler, more
transparent, more revenue productive and less distorting tax. Even after two years of
6
implementation, the tax has been evolving and is continuing to undergo a number of changes
through the decisions taken by the GST Council. Nevertheless, the time is opportune to take
stock of the progress in implementing the tax, analyses its revenue implications and economic
impact and identify further challenges and reform areas to reach the goal of raising revenue
productivity and minimizing the three associated costs to the economy namely, administrative
cost, compliance cost and the distortion cost.

Section 2 briefly lays out the salient features of the GST implementation in India, Section 3
analyses the productivity gains, saving on administration and compliance costs and revenue
implications of the tax, Section 4 examines the remaining cascading elements in domestic
consumption tax, identifies other distortions required to enhance revenue productivity and
reduce inefficiency from the tax. The reform proposals are summarized in Section 5.
Introduction of GST would also make our products competitive in the domestic and
international markets. Studies show that this would instantly spur economic growth. There may
also be revenue gain for the Centre and the States due to widening of the tax base, increase in
trade volumes and improved tax compliance. Last but not the least, this tax, because of its
transparent character, would be easier to administer.

7
Evolution of GST in India

In 2000, the Vajpayee Government started discussion on GST by setting up an Empowered

Committee, headed by Asim Dasgupta (West Bengal Finance Minister) to design the GST
model. Thereafter, the Task Force on Implementation of the Fiscal Responsibility and Budget
Management Act, 2003 (Chairman: Vijay Kelkar) recommended the removal of all inefficient
and distortionary taxes so that India obtains the efficiencies of a single national tax, and
suggested a comprehensive GST based on VAT principle. The idea of moving towards a GST
was proposed in 2005 by the then Union Finance Minister, P. Chidambaram, in his budget
speech for the year 2005-06 where he observed that the entire production-distribution chain
should be covered by a goods and services tax that encompasses both the Centre and the States.
He reiterated his idea in the 2006-07 budget speech and proposed April 1, 2010 as the date for
introducing GST. Towards this objective, an Empowered Committee (EC) of State Finance
Ministers was to work with the Central Government to prepare a roadmap for introduction of
GST. The final version of the report of EC was presented in the form of ‘A Model and Roadmap
for Goods and Services Tax in India’ on April 30, 2008.

After receiving comments on the report from Government of India and concerned officials of
the State Governments and considering their recommendations, the EC released the First
Discussion paper on Goods and Services Tax in India on November 10, 2009, to obtain the
inputs of industry, trade bodies, and people at large. On 22nd March 2011, the Constitution
(115th Amendment) Bill was introduced in the Lok Sabha to operationalize the GST and enable
Centre and States to make laws for levying of GST. However, the Bill lapsed with the
dissolution of the 15th Lok Sabha. Thereafter, on 19th December 2014, the Constitution (122nd
Amendment) Bill, 2014, was introduced in the Lok Sabha to address various issues related to
GST. It is noteworthy that the introduction of GST required a Constitutional amendment as the
Constitution did not express power either in the Central Government or State Government to
levy tax on the ‘supply of goods and services. While the Centre was empowered to tax services
and goods up to the production stage, the States had the power to tax sales of goods. The
Constitution (122nd Amendment) Bill, 2014 was passed by the Lok Sabha on 6th May 2015
after which the Rajya Sabha passed the Bill with 9 amendments on 3rd August 2016. The Lok
Sabha then passed the modified Bill on 8th August 2016. After getting approval of half of the
States, it was sent to the President for his assent which was given on 8th September 2016. Thus,
the road to GST rollout was cleared and the process of enactment was completed.
8
TYPES OF TAXES UNDER GST

Central Goods and Services Tax (CGST): It is the GST levied on the ‘Intra -State’ supply of
goods or services by the Centre. CGST stands for Central Goods and Services tax. It replaced
all the previous taxes under the Central Government. Some examples of such taxes are central
surcharges& cess and central excise duty. CGST is levied on the movement of goods within a
state.

State Goods and Services Tax (SGST): It is the GST Levied on the ‘Intra -State’ supply of
goods or services by the State. The GST collected by the State Government is known as SGST,
which is applicable on transactions within its geographical boundaries. Under the new tax
regime, previous state taxes like entertainment tax, VAT, and State Sales tax became non-
functional.

Union Territory Goods and Services Tax (UTGST): It is the GST levied on the supply of
goods and services that takes place in any of the Union Territories of India. UTGST stands for
Union Territory Goods and Services tax, applicable to the transaction of goods and services in
the Union Territories. It is levied on the supply of products in Andaman and Nicobar Islands,
Lakshadweep, Daman Diu, Chandigarh, and Dadra and Nagar Haveli.

Integrated Goods and Services Tax (IGST)

It is the GST levied on the ‘Inter-State’ supply of goods or services and is collected by the
Centre. IGST is the sum of CGST and SGST/UTGST and is levied by enter on all interstate
supplies. IGST stands for Integrated Goods and Services tax. It is generally applicable during
interstate transactions, i.e., transactions between two different states. Among the types of GST,
levied on supplies of products and services between two states, even on exports and imports.

9
STRUCTURE OF GST

GST Council has specified multi-tier tax structure of 0%, 5%, 12%, 18% and 28% as applicable
to different categories of goods and services. The latest category list is asunder:

(1) No Tax Category

It includes goods like sanitary napkin, deities made of stone, raw material used in rooms, and
fortified milk, fresh fruits & vegetables. It also includes services like hotels and lodges who
carry a tariff below Rs 1000.

(2) 5% Tax Category

It includes goods like skimmed milk powder, fish fillet, frozen vegetables, tea, coffee, spices,
pizza bread, kerosene, coal, fertilizers, electric vehicles and so on. Services like railways and
airways are also included.

(3) 12% GST Category

It includes good like frozen meat products, butter, cheese, ghee, pickles, sausages &fruit juices,
jewellery box, ayurvedic & homeopathy medicines, wooden frames for painting and
photographs. Business Class air tickets and movie tickets below Rs 100also fall in this
category.

(4) 18% GST Category

Preserved vegetables, flavoured refined sugar, cornflakes, pasta, past Ries and cakes, detergents
are some notable items in this category. It also includes services of restaurants located inside
hotels with tariffs between Rs 2500 and Rs 7500 and above, outdoor catering & movie tickets
priced above Rs 100.

(5) 28% GST Category

This includes over 200 goods, mainly sunscreen, pan masala, automobiles, dishwasher,
vending machines. Services like five-star hotels with tariff exceeding Rs7500.

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Imports of Goods and Services will be treated as inter-state supplies and IGST will be levied
on import of goods and services into the country. The incidence of tax will follow the
destination principle and the tax revenue in case of SGST will accrue to the State where the
imported goods and services are consumed. Full and complete set-off will be available on the
GST paid on import on goods and services.

Exports will be treated as zero rated supplies. No tax will be payable on exports of goods or
services; however, credit of input tax credit will be available and same will be available as
refund to the exporters. The Exporter will have an option to either pay tax on the output and
claim refund of IGST or export under Bond without payment of IGST or claim refund of Input
Tax Credit (ITC). Securities have been specifically excluded from the definition of goods as
well as services. Thus, the transaction in securities shall not be liable to GST.

It is some of these aspects of the proposed GST that are the subject matter of this paper. We
focus on the essential questions relating to the Dual GST design, and first discuss the need for,
and the objectives of GST reform. We then describe alternatives to the Dual GST already
endorsed by the Empowered Committee, not because they are superior in any way to the Dual
GST, but to allow a fuller discussion of the trade-offs involved in the choice among them.
Subsequent sections consider the question of tax base and rate, and proper treatment of various
components of the tax base (e.g., food, housing, and financial services) in light of international
best practices. The last section provides a discussion of the issues that arise in the taxation of
cross- border transactions, both inter-state and international. An important question in this
regard is the feasibility of, and the rules for, taxation of inter-state supplies of services.

11
NEEDS AND IMPORTANCE OF GST:

▪ The deeper the understanding of Indirect tax, the earlier foothold can be made over the
competitor. Hence the study is very important.
▪ The deeper the understanding, the earlier companies can understand the relief they get
for procurement of raw material the earlier they get the cost advantage.
▪ The study also helps the companies to understand the tax burden on consumers which
affects the sales.
▪ The study will also help the companies to understand the experience and expectation of
the consumers related to the price.
▪ GST is aimed at reducing corruption and sales without receipts.
▪ GST reduces the need for small companies to comply with excise, services tax and
VAT.
▪ The possibility of tax evasion is minimized completely with GST coming into action.
▪ The Indian financial market where investment instruments like bonds, equities and
mortgages are traded is known as capital market. Capital market is a financial market
in which long- term productive is used.
▪ The primary role of this market is to make investment from investors who have surplus
funds to the ones who are running a deficit. The purpose of these markets is to channel
savings into long-term productivity investments.
▪ To bring about the uniformity in the System of Indirect taxation. To remove the
cascading effects of Tax. To bring about the economic integration. Generally, the Taxes
are imposed at various rates among various states in India. So, there is a huge loss of
revenue to the central as well as state government. Through GST a uniform tax rate is
followed all over the country and so that there will no such loss of revenue.
▪ Reduces complexities and increases a greater number of economic transactions.
▪ The GST brings about a competitive pricing. As all the products are taxed uniformly
across the country, the various forms of indirect taxes will remove and which in turn
products and increases the consumption which in turn will be more beneficial for the
companies.
▪ Generally, the main aim of GST is to bring about the single tax system which will
reduce the cost of production for the manufacturers, so that it will be a big boost for
those producers who made their products at lower cost and involves in international
trade that is exports.

12
 ▪ As it is the Single Tax system, the tax burden for starting industrial units will be
reduced; As a result, when more industries were created it will ultimately result on more
employment.
▪ Through GST the government receives more amount of Tax revenue which will be
utilized for the services to the public.
▪ As there is more transparency in the system of GST and since it is a system of single
taxation, the chances of corruption will be very low.
▪ The Country is said to have one market economy, as through GST the number of
numerous markets divided by various tax will be avoided. To avoid the Tax burden of
the common consumers and the public by making it into a single tax system.

Before state level VAT was introduced by States in the first half of the first decade of this
century, sales tax was levied in States since independence. Sales tax was plagued by some
serious flaws. It was levied by States in an uncoordinated manner the consequences of which
were different rates of sales tax on different commodities in different States. Rates of sales tax
were more than ten in some States, and these varied for the same commodity in different States.
Inter-state sales were subjected to levy of Central Sales Tax.

As this tax was appropriated by the exporting State credit was not allowed by the dealer in the
importing State. This resulted into exportation of tax from richer to poorer states and cascading
of taxes. Interestingly, States had power of taxation over services from the very beginning.
States levied tax on advertisements, luxuries, entertainments, amusements, betting and
gambling.

13
A report, titled "Reform of Domestic Trade Taxes in India", on reforming indirect taxes,
especially State sales tax, by National Institute of Public Finance and Policy under the
leadership of Dr. Amaresh Bagchi, was prepared in 1994. This Report prepared the ground for
implementation of VAT in States. Some of the key recommendations were; replacing sales tax
by VAT by moving over to a multistage system of taxation; allowing input tax credits for all
inputs, including on machinery and equipment; harmonization and rationalization of tax rates
across States with two or three rates within specified bands; pruning of exemptions and
concessions except for a basic threshold limit and items like unprocessed food; zero rating of
exports, inter-State sales and consignment transfers to registered dealers; taxing inter- State
sales to non-registered persons as local sales; modernization of tax administration,
computerization of operations and simplification of forms and procedures.

The taxable event under GST shall be the supply of goods or services or both made for
consideration in the course or furtherance of business. The taxable events under the existing
indirect tax laws such as manufacture, sale, or provision of services shall stand subsumed in
the taxable event known as ‘supply’.

14
The GST will reshape the indirect tax structure by dissolving majority of indirect taxes like
excise, sales and services levies prevailing in the country. This will definitely do away with the
complex indirect tax structure of the country; hence will improve the ease of doing business in
the country. According to the International Monetary Fund, the adoption of the Goods and
Service Tax (GST) could help raise India, term gross domestic’s product (GDP) growth to over
8 percent and create a single national market for enhancing the efficiency of the movement of
goods and services. There is no doubt that the current structure of the GST is expected to lead
a temporary rise in inflation but be assured that it will typically last for a year. Because the
inflation in the second year after GST implementation will benefit favourably as the numbers
would be compared to already high figures of the first year of implantation.

The traditional distinctions between goods and services (and for other items such as land and
property, entertainment, and luxuries) found in the Indian Constitution have become archaic.
In markets today, goods, services, and other types of supplies are being packaged as composite
bundles and offered for sale to consumers under a variety of supply-chain arrangements. Under
the current division of taxation powers, neither the Centre nor the States can apply the tax to
such bundles in a seamless manner. Each can tax only parts of the bundle, creating the
possibility of gaps or overlaps in taxation. The second major concern with the exclusion of
services from the state taxation powers is its negative impact on the buoyancy of State tax
revenues. With the growth in per capita incomes, services account for a growing fraction of the
total consumer basket, which the states cannot tax.

Right now, the taxation structure in the Indian financial market is divided in two forms.
❖Direct Taxes

❖Indirect taxes

Direct taxes are levied where the liability cannot be passed on to someone else. For Example-
Income Tax, Income Tax is paid where you earn the income, and you alone are liable to pay
the tax on it.

15
FEATURES OF GST:

❖ GST is applicable on ‘supply’ of goods or services as against the present concept on

the manufacture of goods or on sale of goods or on provision of services.
❖ GST is based on the principle of destination-based consumption taxation as against the
present principle of origin-based taxation.
❖ It is a dual GST with the Centre and the States simultaneously levying tax on a common
base. GST to be levied by the Centre would be called Central GST(CGST)and that to
be levied by the States would be called State GST (SGST).
❖ An Integrated GST (IGST) would be levied an inter-state supply (including stock
transfers) of goods or services. This shall be levied and collected by the Government of
India and such tax shall be apportioned between the Union and the States in the manner
as may be provided by Parliament by Law on the recommendation of the GST Council.
❖ Import of goods or services would be treated as inter-state supplies and would be
subject to IGST in addition to the applicable customs duties.
❖ CGST, SGST & IGST would be levied at rates to be mutually agreed upon by the Centre
and the States. The rates would be notified on the recommendation of the GST Council.
In a recent meeting, the GST Council has decided that GST would believe at four rates
viz. 5%, 12%, 16% and 28%. The schedule or list of items that would fall under each
of these slabs has been worked out. In addition to these rates, access would be imposed
on “demerit” goods to raise resources for providing compensation to States as States
may lose revenue owing to the implementation of GST.
❖ GST would apply on all goods and services except Alcohol for human consumption.
❖ GST on five specified petroleum products (Crude, Petrol, Diesel, ATF & Natural Gas)
would by applicable from a date to be recommended by the GSTC.
❖ Tobacco and tobacco products would be subject to GST. In addition, the Centre would
have the power to levy Central Excise duty on these products.

16
 Tax can be
deposited by
internet banking,
NEFT/RTGS,
debit/credit card
and over the
Tax impossed counter
on commodities Concept of TDS
and sevices for certain
causes an all specifird
round price categories
spiral
FEATURES
OF
GST
Provisional
release of 90% Concept of TCS
refund to forE-Commerce
exporters within companies
7 days

Refund to be
granted within
60 days

❖ Tax Can be deposited by internet banking, NEFT / RTGS, debit / credit card and over
the counter.
❖ Concept of TDS for certain specified categories.
❖ Concept of TCS for E-Commerce Companies.
❖ Refund to be granted within 60 days.
❖ Tax imposed on commodities and services cause and all-round price spiral
❖ Provisional release of 90% refund to exporters within 7 days.

When considering GST and its impact on the Indian Financial Market, customs duty on
exporting goods has reduced. So now production units save money while producing goods and
while shipping them. This two-way savings has lured many production units to export their
goods, increasing the export quantity.

There are many economic areas of state legislations, regulations and policies that impact or
inhibit competition in the markets. The existing complex and multilayered indirect tax structure
has fragmented Indian market into 29 state markets by tax barriers which adversely affected
India’s competitiveness. For example, while the central Sales Tax is a tax on the export of
goods from one. state to another, the levies such as entry tax and octroi are taxes on import of
goods into a local area. Administration of these taxes requires the erection of check posts or
physical barriers, and this violates the principle of common market within the country.

17
The central and state governments also resort to granting plethora of product and area-based
tax exemption from time to time under pressure which create distortion and hinder competition.
For an instance at present 330 products are exempted under central taxes (excise duty/ Customs
duty) and nearly 100 products under state VAT. Certain geographical areas exempt taxes on
all products. The impact analysis of these exemptions is not known as to whether they achieve
stated objective in long run. Whereas the loss of revenue to the exchequer due to such tax
exemptions leads to fiscal deficit and high tax rates on other products and activities adding to
market distortion and inflation.

The Central and the State Governments need to undertake a review of existing policies, laws
or regulations from the competition perspective and undertake a competition impact assessment
of proposed policy, law and regulations before these are finalized. Coordinated calibration of
tax reform, is extremely important to evolve competitive tax system in the country.

This report highlights the problems in existing tax structure and its adverse impact on the Indian
financial market and completion. It also suggests the way forward for rational tax structure.
With GST, taxes of the State and Central Government have been merged. This has removed
the cascading effect of taxes, reducing the burden on the buyer and the seller. So even if it may
look like one big chunk of tax to be paid, you pay lesser hidden taxes.

18
BENEFITS OF GST

GST stands for Goods and Services Tax which is levied on the supply of goods or services or
both in India. GST subsumes several existing indirect taxes which were earlier levied by the
Centre and State Governments including Central Excise duty, Service Tax, VAT, Purchase
Tax, Central Sales Tax, Entry Tax, Local Body Taxes, Octroi, Luxury Tax, etc.

It brings benefits to all the stakeholders’ viz. industry, government and the citizens. It is
expected to lower the cost of goods and services, boost the economy and make our products
and services globally competitive. GST will make India a common national market with
uniform tax rates and procedures and removes the economic barriers, thereby paving the way
for an integrated economy at the national level. By subsuming most of the Central and State
indirect taxes into a single tax and by allowing a set-off of prior-stage taxes for the transactions
across the entire value chain, GST would mitigate the ill effects of cascading and thereby
improve competitiveness of Indian Industry.

GST is a destination-based consumption tax. It has been designed so that tax is collected at
every stage and the credit of tax paid at the previous stage is available to set off the tax to be
paid at the next stage of transaction thereby eliminating cascading of taxes. This eradicates “tax
on tax” and allows cross utilization of input tax credits which benefit the industry by making
the entire supply chain tax neutral.

GST will give a major boost to the ‘Make in India’ initiative of the Government by making
goods or services produced or provided in India competitive in the national and international
markets. Further, all imported goods will be charged with integrated tax (IGST) which will be
equivalent to Central GST + State GST. This brings parity in taxation on local and imported
products.

Under the GST regime, exports are zero rated in entirety unlike the earlier system where a
refund of some taxes was not allowed due to the fragmented nature of indirect taxes between
the Centre and the States. All taxes paid on the goods or services exported or on the inputs or
input services used in the supply of such export goods or services shall be refunded.

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The principle of exporting only the cost of goods or services and not taxes would be followed.
This will boost Indian exports thereby improving the balance of payments position. Exporters
are being facilitated by grant of provisional refund of 90% of their claims within seven days of
issue of acknowledgement of their application, thereby resulting in the easing of position with
respect to cash flows.

GST is expected to bring buoyancy to the Government Revenue by widening the tax base and
improving the taxpayer compliance. GST is likely to improve India’s ranking in the Ease of
Doing Business Index and is estimated to increase the GDP by 1.5% to 2%.

GST prevents cascading of taxes by providing a comprehensive input tax credit mechanism
across the entire supply chain. Such a seamless availability of Input Tax Credit across goods
or services at every stage of supply will enable streamlining of business operations. Uniform
GST rates will reduce the incentive for evasion by eliminating rate arbitrage between
neighboring States and that between intra and inter-State sales.

Harmonization of laws, procedures and rates of tax makes compliance easier and simple. There
are common definitions, common forms/ formats, common interface through GST portal
resulting in efficiencies and synergies across the board. This will also remove multiple taxation
of same transactions and inter-State disputes like the ones on entry tax and e-commerce
taxation existing today. All this will also help in reduction in compliance costs, alleviate the
need for multiple record keeping for a variety of taxes leading to lesser investment of resources
and manpower in maintaining records.

Common procedures for registration of taxpayers, refund of taxes, uniform formats of tax
return, common tax base, common system of classification of goods or services along with
timelines for every activity will lend greater certainty to taxation system.

GST is largely technology driven. The interface of the taxpayer with the tax authorities is
through the common portal (GSTN). There are simplified and automated procedures for
various processes such as registration, returns, refunds, tax payments, etc. All processes, be it
of applying for registration, filing of returns, payment of taxes, filing of refund claims etc., are
done online through GSTN. The input tax credit will be verified online. Electronic matching
of input tax credit all - across India will make the process more transparent and accountable.
20
This will encourage a culture of compliance. This will greatly reduce the human interface
between the taxpayer and the tax administration leading to speedy decisions.

The average tax burden on trade and industry is likely to come down, which is expected to
reduce prices resulting in more consumption, which in turn means more production and thereby
boosting the growth of the industries. The removal of cascading of taxes and increased
transparency will make the citizens more informed about the taxes they pay while purchasing
goods or services. GST will boost domestic demand, create more opportunities for domestic
business and drive job creation. GST might not be the panacea for all the ills of the indirect tax
system but is also not far from that.
One Nation, One Market, One Tax

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IMPACT OF GST ON VARIOUS SECTOR

The GST is said to have a positive impact on the economy as a whole. But when it comes
to sectoral-wise classification, the GST have both positive as well as negative impact on
each of the sectors. Here are some sectors given and its GST is given below.

1. Technology (Information technology and IT)

The GST system of indirect taxation has made the duty on the manufacturing goods from
14% to 18-20%. As a result, the prices of the software products will be at high which will
give either a neutral or slightly negative impact on the Technology Sector as a whole. But
they will be benefited through the reduction of tax and benefits of other industries and can
somewhat mitigate it.

2. Telecommunications
The telecommunications sector is presently paying the tax at the rate of 14% which is
expected to be increased during the GST regime. And it is assumed to be around18% which
will be expected to be passed over to the customers and this gives a picture that GST will
adversely affect this sector. Through the GST regime there will be huge changes in the
telecom industry.

3. Pharmaceuticals
Presently, the Pharmacy companies are paying taxes around 15-20%. Since there is no clear
picture of tax treatment for Pharmacy if it is less than 15% it would be a positive impact on
the Sector but if it is above 15%then it will cause some slight negative impact.

4. Automobiles
The Automobile industry is currently paying a tax rate of a range between 30-45%. And it
is expected that after GST the rate will be around 18% which will be a huge positive for
the automobile industry and which will be profitable to both the Manufacturers/ dealers and
the ultimate consumers. The standard and the social status of the consumers get uplifted.
There will be a huge boom in the Automobile

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 5. Financial Services

The Financial services such as banking, Stock Trading firms are currently paying14.5% as VAT
which is likely to be increased to 18 to 22% soon under the GST regime. And the services are
likely to be costlier.

6. Textiles

Currently, the Textile industry is paying the tax at the rate of nearly 12.5% plus surcharges and
which varies upon the MRP of the products. Since there is no clear idea about the tax rate of
this industry under the regime of GST it is expected at the rates of 15% which will be having
a moderate impact on the industry. This moderate impact may either be neutral or slightly
negative when compared to the other present system of taxation. But they will be benefited
through the reduction of cost in transportation, savings etc.

7. Media and Entertainment

The tax rate for the Media is around 22% as of now and since the authority for the levy of taxes
remains to be the right of the local bodies, it is expected that the cinema fares are expected to
come down after the GST regime and the cost of DTH and cable television services are likely
to become costlier. There is somewhat either neutral or slightly negative impact of GST on the
Media and Entertainment Industry.

8. Consumer Durables

The current of tax rate of this industry is around the range between 23- 25 percent. And under
the GST regime it is lower around 15 – 18% which will be positive impact to this industry.

9. Cement

The cement industry currently pays the tax at the rate of 25% currently. And, after the GST
regime, it is expected to be fixed at the rate of 18 to 20%. This will be a major relief for the
companies of that industry. And the logistics tax also is to be reduced; it would be a double
benefit for all the industries involved in manufacturing.

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 10. Real Estate

Real estate contributes about nearly 7.3% of India’s GDP and it is the generator of employment
immediately after IT. Real estate is said to get a positive impact under the GST regime
immediately after its implementation. It is expected that since there is a single system of
Taxation under GST, all other forms of indirect taxation will be removed which results on
reduction of property prices and the cost of construction. Thus, we can have a positive impact
of GST on the Real estate sector.

11. Food sector:

The Indian restaurant business nowadays, is price a staggering INR 247,680 crores and is
developing at a yearly rate of 11 November – calculable to hit INR 408,040crores by 2018.
National restaurant Association of India Food Service Report 2016estimates that by 2021
restaurant industry will alone contribute 2.1% to the GDP of India. The total food service
market today stands at INR 3.09 lakh crores and has grown at 7.7% since 2013. This is
projected to grow to INR 4.98 lakh crores at CAGR of 10% by 2021. This year alone the Indian
restaurant sector will create direct employment for 5.8 million people and contribute a
whooping INR 22,400crores by way of taxes to the Indian economy.

Post GST, the government is seeing the chance to come up with an extra assortment of INR
17,000 – 26,000 crores through nearer monitoring of tax levy and assortment from the
unorganized section. In short, the restaurant business is clearly a hot section, and this needs an
in-depth insight on the impact of GST on restaurants and also the associated stakeholders –
both owners, yet as food-lovers across the nation who step out to dine once in an exceedingly
while. GST tax system would affect the restaurants and food service business in many ways
such as:

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• Before GST implementation the hospitality and restaurant industry were overwhelmed by
multiple taxes (Service tax, VAT and luxury tax). In Food and beverages bills, service tax
is applied on 40% of the bill or 5.8% apart from VAT. In case of social functions, the
applicable service tax rate after 30% abatement is10.15%

• Under GST, uniformity of tax rates and applicability of single rate is the single largest
advantage. GST helps in better utilization of input credit and it also benefits to end user in
terms of lower prices. GST helps restaurants industry in attracting more and more
customers and leads to enhanced revenues to the government.

• With the growing organized food services industry and coming up of new food ordering
and delivery start-ups, the market is worth 2.5 Lakh crore and would contribute
significantly to the revenues of the country.

• Goods and Services Tax would be collected at every stage of selling and buying of goods
or services based on the input tax credit method. This method will allow GST registered
businesses to claim tax credit to the value of GST they paid on buying of goods or services
as part of their normal viable activity.

• Taxable product and services aren’t distinguished from each other and are taxed atone rate
during a provide chain until the products or services reach the buyer. Administrative
responsibility would typically rest with one authority to levy tax on product and services.
Exports would be zero-rated, and imports would be levied constant taxes as domestic
product and services adhering to the destination principle.

• The introduction of goods and Services Tax (GST) would be a major step within their form
of indirect taxation in India. Amalgamating many Central and State taxes into one tax
would mitigate cascading or double taxation, facilitating a standard national market.

• The simplicity of the tax ought to cause easier administration and enforcement. From the
buyer point of view, the most important advantage would be in terms of are duction within
the overall tax burden on product, that is presently calculable at25%-30%, free movement
of products from one state to a different without stopping at state borders for hours for
payment of state tax or entry tax and reduction in paperwork to an oversized extent.

25
IMPACT OF GST ON FAST-MOVING CONSUMER GOODS:

After Demonetization, GST has been one of the biggest transformations that India has seen in
years. Amidst the hustle bustle going around the nation, GST became a game changer for the
Indian Economy, certainly affecting the “Aam Aadmi” to the Business Entrepreneurs as well.
From boosting up the consumer goods-industry (FMCG Industry) to bring forth varied benefits
to the economy, the new Goods and Services Tax (GST) regime can make the market go up
within the shortest time.

is quite evident that GST has made a visible change in the Indian Economy and FMCG, fourth
largest sector in the economy, is amidst one of them to witness the same. The fact is undeniable
that FMCG is one of the fastest growing sectors of the Indian Economy. VAT, Service Tax,
Excise duty, Central sales tax etc must be paid by the FMCG Sector under the current GST
Regime. The Consumer Packed Goods or we can say the FMCG (Fast Moving Consumer
Goods) current tax rate is nearly 22-24%; though the expected rate is 18-20%, which would be
highly greeted by the major FMCG industry players. For CST, CVD, and SAD there was no
credit available under the current tax regime; contrary to that, GST would include the input
credit for all the GST payments made during business.

26
FALL IN THE LOGISTICS COST:
The benefit under the GST Regime would be visible and considerable saving amount of
expenses on logistics can be seen in FMCG Industry. The total cost of the distribution of the
FMCG industry sums up to 2-7%, which might fall to 1.5% after the complete implementation
of GST. A huge impact and change will be seen in terms of cost reduction owing to the payment
of tax, smoother supply chain management, removal of CST, claiming input credit, under the
GST Scenario. The result will lead to cheaper consumer goods.

WAREHOUSE:
Many of the companies, according to their convenience and to enjoy a lot of tax
benefits/holidays/exemptions, under the current tax regime set up their warehouses in the states
like Himachal Pradesh and Uttaranchal. The dilemma is still there, to whether all the tax
holidays, benefits and exemptions would be there or not, once GST is implemented. Since the
costing is one of the major parts of any company, thus, major companies like ITC, Hindustan
Unilever, Nestle, Dabur & Cadbury are still anxious regarding the migration of Tax
holidays/exemptions.

INFLATION IN THE EFFECTIVE TAX RATE:

Aerated beverages have been given the highest rate slab of 28% under GST, with an additional
tax of 12%. According to the varied Beverage companies, 40% is the effective tax rate for the
sweetened aerated water and flavoured water, which is not in line with the stated policy of
maintaining uniformity with the existing weighted average tax that is below 40%. This has
been very disappointing for varied companies like Coca-Cola India, Dabur India Ltd, Red Bull
India PVT. Ltd, Pepsi Co India Holdings PVT. Ltd, and Pearl Drinks Ltd, as stated by the
Indian Beverages Association (IBA). Estimates by Euro ministers International, a market
research firm, states that Carbonated Beverages in Indian Market is projected to grow by 3.7%
every year between 2017 and 2021. A different study shows by research firm Nielsen, a
consumption of 5.9 billion Liters of soft drinks was seen in the year 2015.

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IMPACT OF GST ON TELECOM SECTOR:

India's telecom industry has created nothing short of a revolution when it comes to connecting
the country. India had 1 billion active mobile connections in January2018 and as per a survey
conducted by IMAI-Kantar IMRB, mobile internet users are expected to reach 500 million by
June 2018.

However, over the last few years, the industry has been hit with a double whammy. First, the
entry of Reliance's Jio led to a shakeout with several small players exiting the business and a
squeeze on operator margins. More recently, the introduction of the Goods and Services Tax
in 2017 led to collective groans as the GST rate on the telecom industry was set at 18%, 3%
more than the 15% paid under the previous tax regime. While the headline rate is high, Central
Telecom Minister Manoj Sinha had stated that the tax rate after accounting for input credits
will be closer to 16%. Telecom operators have so far been compelled to absorb the costs due
to the hypercompetitive conditions. The additional compliance load on the service providers is
also quite extensive for the players to be unenthusiastic about the new tax regime.

The Effect of GST on the Telecom Industry can be mainly classified under additional monetary
costs and compliance procedures.

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MONETARY IMPACT

FUEL NOT UNDER GST

India's 75% of cell towers are still run on diesel. Diesel attracts taxes of ~100% and hence is a
huge component of the fuel costs. Since fuel has been kept outside the ambit of GST, India's
telecom infrastructure companies cannot set off their tax liabilities against the taxes paid on
fuel.

LIABILITIES DUE TO REVERSE CHARGES MECHANISM (RCM)

As per the GST provisions on RCM, if a registered dealer purchases goods or services of more
than Rs 5,000 per day from an Unregistered Dealer (URD) within the state, the registered dealer
is liable to pay GST on behalf of the URD. While this provision has been suspended up to 30th
June 2018, if implemented, it puts a substantial monetary and compliance cost on large,
registered dealers and especially for telcos as they regularly employ services of small dealers
for the maintenance of cell towers.

COMPLIANCE IMPACT

CIRCLE VS STATE

Telcos are required to acquire licenses from the Department of Telecom for providing various
services. While International Long Distance (ILD) and National Long Distance (NLD) licenses
are provided on a pan-India basis, some telephone licenses are provided on a circle basis. These
circles may include several states or parts of them. For example, Mumbai city is one circle
while Maharashtra & Goa (ex-Mumbai) is a separate circle. Companies so far have maintained
circle wise accounts to accurately account for license charges, fees, etc. To comply with the
GST tax filing rules, they have had to change their accounting and apportion costs and fees.

FILING TAX RETURNS IN EVERY STATE OF OPERATION

Previously, each telecom operator had one central tax registration number and filed returns 2-
3 times a year. However, under the GST norms, telecom operators are required to obtain a GST
Registration Number for each of the states they have operations in and file 2-3 returns in every
state per month.

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GST BENEFICIARIE:

The products that are widely consumed inclusive of toothpaste, hair oil, soaps, all have been
enclosed in the 18% slab, which is lower than the 22-24% tax rate. Keeping the Frozen
Vegetables and Branded Cheese have been under the 5% rate list that are largely neutral with
the previous rates were around 3-4%. Cereals have been exempted, so are likely to become
more affordable. Being already in the bracket of 4-6%, Coffee, Tea, and Sugar have not seen
any impact on the prices. Most of all items are in the 18% tax bracket or might be below that.
The minor category falls in the 28% tax slab.

IMPACT OF GST ON E- COMMERCES:

As per the study conducted by the Internet and Mobile Association of India, the e-commerce
market is estimated to have crossed Rs. 211,005 Crore in December 2016, followed by a report
that online retail revenue of $100 billion is expected to be generated by the year 2020.

The pace, with which the Electronic Commerce in India has grown, resulted in the conception
of online marketplaces. An e-commerce platform owned by the E-commerce Operator
inclusive of the Flipkart, Snapdeal and Amazon are included in the marketplace. Scroll down
to see some of the features of a marketplace model:

30
❖ Allows Third-party Sellers to register and simultaneously selling online on their
platform.

❖ Benefit for the third-party sellers as they gain access to larger customer base that are
registered with the marketplace.

❖ Items purchased by the customers on such platforms/marketplaces are either shipped

by the third-party seller /merchant or through the well-curated fulfilment centre
managed by the Marketplace Operator.

❖ Such marketplaces charge a subscription fee on the sale value from listed sellers.

❖ Customers gain access to varied sellers and prices for desired products. An initiative
taken by government to allow foreign direct investments under this kind of model to
promote the e-commerce marketplace business:

The emerging dominance of the marketplaces has provided retailers with an additional
channel of sales and reaches which was beyond belief for an offline user. A huge section
of sellers along with the millions of Stocks Keeping Units (SKUs) are affiliated with
the marketplaces. Specific to this section, GST has come up with its own rules and
regulations as well, since there is a significant increase in the number of sellers and their
business.

31
PRE-GST MECHANISM OF RESTAURANTS AND FOODSERVICE
BUSINESSES:

Before implementation of GST, Value Added Tax (VAT) system was applied in all the sectors
of the economy. Value Added Tax (VAT) is levied on things that are sold-out in an improved
form, where value is added to an item before it’s sold-out to you. One has to pay VAT on
product and services at varied stages of their production, distribution and sale. In restaurants,
VAT isn’t indictable on pre-packaged things like drinkable, bottled alcohol and food. However,
it’s applicable on food and drinks prepared within the restaurant kitchens. VAT varies from
state to state, and even inside the states, it differs based on the sort of product. It could be
anywhere between 5 to 20.

Service tax is charged 14% and in tandoor with Swachh India cess of 0.5% the amount adds
up to 14.5% for us. With addition to Krishi Kalyan Cess of 0.5% from1 June 2016 to this would
create overall 15 % of the service tax. Ideally, service tax ought to be obligatory solely on 400th
of the value of the bill that is assumed to be the quality service expense, as opposed to the
remaining 60 minutes that’s the staple of the food and beverages ordered by the client. This
implies that the service tax is indictable solely on 400th of the bill and not on the complete
quantity. Thus, on the complete bill, the service tax chargeable are 5.8% (6% from June 1).

A dealer with turnover up to `1 crore per year elect composition scheme under preview of
MPVAT and susceptible for payment of composition money @ 3% on cooked food VAT is
leviable @5% on cooked foods and snacks provided by a restaurant.

• VAT is leviable @20% on Cold drinks and @14% on alternative non-food items.
• Entry Tax is additionally payable @1% on staple and incidental product utilized in the
manufacture of cooked food.
• Luxury Tax is additionally payable by out of doors caterers @10% underneath EAT
Act with the sale price being deducted on that tax is vulnerable to be duly submitted
under MPVAT Act here hospitals and academic institutions are exempted.
• Under MP VAT Act tax on sale of alcoholic liquor to customers is levied @ 5%

32
POST-GST MECHANISM OF RESTAURANTS AND FOOD SERVICE
BUSINESSES:

This new tax regime divides the product into 5 categories those that are excluded from tax, 5%,
12%, 18% and 28%. Dinning at a restaurant was much simpler prior to GST enrolment. There
we’ve got our food; we tend to pay the bill, and we leave. Back then, we had to pay 3 further
charges: the service charge, Service tax and value added tax (VAT). However, lack of data
regarding GST, given a chance for restaurant owners to dupe any customers by making them
pay additional. To lead on smarter front here’s what customers ought to understand.

Firstly, the charge collected as service charge isn’t a tax. The restaurants do not levy service
charge by government order, they conduct it on their own. However, if customer don’t wish to
pay, they don’t need to. It’s utterly customer’s decision whether they wish to pay the charge or
not. If restaurants forcing a customer to pay service charge it is susceptible for being sued under
a consumer court.

On the tax front, you’ve got to pay two taxes: service tax and value added tax. GST has
subsumed both taxes and replaced them. For eating in Non-A/C restaurant, tax of pay 12%is to
be paid. This 12% comprises of 6% as Central GST and 6% State GST. Local delivery
restaurants are under the same rates. However, if you’re in an AC restaurant, irrespective of
the fact that alcohol is served or not, a total of 18% of the tax is paid.

All pre-processed and packaged food/snack sold out from restaurant seek 12% tax from
customers. The restaurants having license to serve liquor (with full ITC) can levy a tax of 18
per cent, whereas those not having the facility of air-conditioning or heating system at any time
throughout the year and not having license to serve liquor (with full ITC) can levy tax of 12
per cent. The 5-star hotels can come back under the highest slab of 28 per cent GST. The 6%
service tax on liquor across segments has been effectively withdrawn.

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ISSUES THAT ARE BEEN FACED IN THE GST

SCENARIO KEY ISSUES

HIGHER COMPLIANCE COSTS:

With the introduction of the Model GST Law, the same casts an obligation on every electronic
commerce operator for the collection of tax at source and deposit applicable GST when the
payments are to be made to the suppliers. These scenarios will surlily increase the responsibility
and the burden on electronic commerce operators owing to their large vendor base. Since the
current GST regime considers the e-commerce players as services providers and thus are
required to comply with one central services tax -legislation. Under GST, additional
compliances will also be required by the electronic commerce operators, in the state where the
supplier is located.

Availability of Credit only when Tax is paid:

The Credit can only be claimed on taxes that have to be paid to the credit of the government.

Tax on the Stock Transfers:

With the implementation of GST, under this model, some of the specific transactions without
the considerations would also be treated as supplies. Subject to GST, the Intra-state and inter-
state stock transfers, amidst the branches/warehouses of a single e-commerce unit, would be
deemed to be supplies; though the tax paid would be available as credit to the entity, hence
resulting in cash flow blockages

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Discounts on Pre-Supply:

Discounts at the time of supply or even before that, which are permitted in the normal course
of trade practice and reflected in invoices will not be a part of the transaction value.

Discounts on post-supply:

Discounts on after effective supply are included in the 'transaction value' only in cases where
such post-sale discount, as per agreement, is known at or before the time of supply, and
specifically linked to relevant invoices. Under the VAT Regime, VAT authorities are focused
on insisting to include these discounts in the assessable value and e-commerce retailers in
general, to avoid disputes on the charge VAT on non-discounted price.

With the introduction of the regulation’s requirements, the online seller community has
compelled the same to embrace GST regime. Scroll down to check the compliance:

▪ No threshold for GST registration

▪ No Benefit under Composition Scheme
▪ Tax Collection at Source by Marketplace Operator
▪ The government has taken steps to simplify the tax constitution by the introduction of
GST & promoting trade followed by keeping a check on tax evasion. Scroll to know
how Implementation of GST will impact E-commerce marketplaces:
▪ Standard Pricing with Standard tax
▪ Blocked Working Capital issue faced by Online marketplaces
▪ Separating out Unregistered merchants from e-commerce
▪ Compliance issue in case of returns and refund

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 CHAPTER.2

REVIEW OF LITERATURE

1. Pinki Et Al., 7 (2014) authors in the paper have explored the concept of GST, the need
to introduce it in India, the hurdles in introducing it in India and suggestions to overcome
the same. The paper also discusses the benefits of introducing GST at the earliest. The
authors have discussed the options to introduce the dual GST in India which could be
Concurrent Dual GST, National GST or State GST. Under the concurrent dual GST, the
better option was the one where GST is applied on both goods and services. The other
option explored was whether the Central GST would be on goods and services, but state
GST would be only on goods since state to collect GST in services is difficult to determine.
This option also recommended one single return with both CGST and SGST details and
PAN based registration. The authors have also discussed the constitutional amendments
required if GST is ever to be introduced since without the amendment taxing both goods
and services using one tax is not possible. The paper also highlights the issues in the credit
mechanism in the CGST/SGST model since it is difficult to practically implement in terms
of determination of place where service is taxable. The other challenges to introduction of
GST in India highlighted are the availability of strong IT network, infrastructure and
programmes, agreement on other provisions like basic threshold, exemption to
goods/services, rates to be applied, etc.

2. Rashid Et Al.,8 (2014) In this paper the authors study impact of GST in Malaysia since
it is proposed to introduce GST in Malaysia in 2015. The GST is being introduced mainly
to increase the revenue collections of the government and reduce the deficit. The authors
have studied the impact of the introduction of this GST and its relation to certain indicators
like the consumer price index and the structural balance. For this the relation between these
factors and the GST are studied for Singapore, Thailand and Indonesia so that whilst
implementing GST in Malaysia the administration can adopt the best practice. The paper
recommends transparency in implementing GST and review of the rates/base of GST after
5years and rectification based on the 5-year experience.

36
3. Jaiprakash (2014) in his research study mentioned that the GST at the Central and the
State level are expected to give more relief to industry, trade, agriculture and consumers
through a more comprehensive and wider coverage of input tax set-off and service tax
setoff, subsuming of several taxes in the GST and phasing out of CST. Responses from
industry and from trade have been indeed encouraging. Thus, GST offers us the best way
to broaden our tax base and we should not miss these opportunities to introduce it when the
circumstances are quite favorable, and the economy is enjoying steady growth with only
mild inflation.

4. Saravanan Venkatachalam, 10 (2014) Has analyses the post effect of the goods and
service tax (GST) on the national growth on ASEAN States using Least Squares Dummy
Variable Model (LSDVM) in his research paper. He stated that seven of the ten ASEAN
nations are already implementing the GST. He also suggested that the household final
consumption expenditure and general government consumption expenditure are positively
significantly related to the gross domestic product as required and support the economic
theories. But the effect of the post GST differs in countries.

5. G. Garg, et al. (2015) Analysed the impact of GST on Indian tax scenario. He tried to
highlight the objectives of the proposed GST plan along with the possible challenges and
opportunity that GST brings. He concluded that GST is the most logical steps towards the
comprehensive indirect tax reform in our country since independence. GST is leviable on
all supply of goods and provision of services as well combination thereof. All sectors of
economy i.e. the industry, business including Govt. departments and service sector shall
have to bear impact of GST. All sections of economy viz., big, medium, small-scale units,
intermediaries, importers, exporters, traders, professionals and consumers shall be directly
affected by GST. One of the biggest taxation reforms in India – the Goods and Service Tax
(GST) is all set to integrate State economies and boost overall growth. GST will create a
single, unified Indian market to make the economy stronger. Experts say that GST is likely
to improve tax collections and Boost India’s economic development by breaking tax
barriers between States and integrating India through a uniform tax rate.

37
6. Kumar (2017) They conducted a study on a total respondent of 115, out of which 11 were
CAs and 104 were taxpayers, examining the teething troubles faced by taxpayers, charted
accountants and senior tax practitioners. The period of study was July–October 2017. The
data was collected from the respondents via a structured questionnaire and SPSS was used
for the statistical analysis. The statistical techniques used were correlation and ANOVA.
Suggestions made by the respondents were also taken into consideration. The results of the
study showed that there was a lack of awareness about GST in the public.

7. Lourd Nathan F And Xavier P., 19 (2016) studied inexplicit opinion of manufacturers,
traders and society. It also included challenges and prospectus of GST in future in India.
Centre and state level taxes also discussed in this paper. Various states are shown in which
GST is followed for growth of economy. Some issues such demonetisation issue,
inappropriate time, political issues, rate for manufacturers and traders, impact on working
and cash flow and implementation in unorganised sectors became some main issues in path
of GST.

8. B, Mitrapriya, 27 (2017) Stated GST as a Game changer in Indian Economy. The paper
showed that GST reduced complexity of various taxes and removed cascading effect. Tax
structure shown in paper in which various tax rates included. Impact on Tax incidence
included various sectors such as Telecom, E- Commerce, Automobile, real estate, banking
and consumer goods. Impact on input tax credit showed that there would be availability of
cross credit utilization in CGST and SGST.

9. Kapoor Kapil, 28 (2017) critically examined GST implementation, models, mechanisms,

issues and challenges. Development stages GST in India studied in this paper. Exclusions
from GST which are petrol alcohol, tobacco, Diesel and some benefits such as simplicity,
transparency, cascading effect, reduction in burden of tax revenue collection, economic
growth and no tax for exporters are included in this paper. Challenges also studied in the
paper. So, the paper concluded that the proper implementation of GST will lead to
economic growth.

38
10. Nayyar, A., & Singh, I. (2018) highlighted background of the taxation system, the GST
concept along with significant working, comparison of Indian GST taxation system rates
with other world economies and also presented in-depth coverage regarding advantages to
various sectors of the Indian economy after leaving GST and outlined some challenges of
GST implementation. The study found that GST will improvise tax collections and boost
up India's economic development and break all tax barriers between Central and State
Governments.

11. Maruthi, M. V. (2020) researcher stated that in November 2017, the GST Council
announced its decision to exempt taxation on a total of two hundred frequently bought Fast-
Moving Consumer Goods (FMCG). The tax status of various fastmoving consumer goods
(FMCG) has been a subject of considerable ambiguity. The tax implications of a buy-one-
get-one promotion are ambiguous. The implementation of promotional plans by FMCG
firms is not readily apparent.

12. Govindan, P. (2019) investigated the revenue collection of Goods and Service Tax
(GST) month-wise and its growth. It also examined the total number of 3 (b) and GSTR I
return filed in Goods and Service Tax (GST) month, quarter wise, and its growth rates as
of 30th April 2019 in India. The review explored the macroeconomic impact of GST on
GDP growth, investment, and export potential, with a specific focus on its implications
for the corporate landscape.

13. Banerjee, S., & Agrawal, P. (2018). This review focused on the impact of GST on tax
compliance behavior among businesses and individuals. It analyzed various factors that
influence tax compliance, such as the simplicity of the tax system, tax rates, and the ease
of filing tax returns. The paper highlighted the issues after the implementation of GST in
India Before implementation of GST in India, Government of India collected indirect taxes
in the various names. Direct tax is mostly defined clearly to taxpayers, but indirect tax does
not define clearly because it collected by government to each stage manufacturer to
customer. For clearing of indirect tax government of India introduced biggest tax reforms
after independence since 1947 in the name of GST.

39
14. Ramkumar, M. G. (2021). The study pointed out that in the past, each fastmoving
consumer goods (FMCG) enterprise needed to undergo registration as a separate legal
entity to engage in trade with one another. Furthermore, certain jurisdictions grant
businesses exemption from taxes. Consequently, numerous consumer goods corporations
with a multinational presence established their operations in the area. The introduction of
the Goods and Services Tax (GST) has resulted in a certain level of uncertainty regarding
tax returns for these enterprises.

15. Alie, A. H., Iqbal, J., Ahmed, S., & Bhat, A. A. (2019). The tax rates on fast-moving
consumer goods (FMCG) have either been reduced or maintained at the same level as the
previous regime. Fastmoving consumer items, such as packaged food and other non-
durables, are subject to indirect paper taxes, such as VAT. With the implementation of the
Goods and Services Tax (GST), it can be observed that factories tend to incur lower tax
liabilities. Nonetheless, the Goods and Services Tax (GST) also has an impact on Consumer
Assets. The industry of fast-moving consumer goods and its challenges related to
diminishing profitability.

16. Dani (2016) tried to understand how the proposed GST regime might hamper the growth
and development of the country. The study showed that the dual GST in India would lead
to political as well as economic issues, because its implementation would require
coordination among the 29 states and the 7 Union Territories, while the states would have
minimum say in rate determination. The study also highlighted that the GST rates are also
much higher than the pre-GST tax rates. Finally, the study opined that the GST structure is
likely to succeed only if the country has a strong IT structure, and India being a budding
state as far as internet connectivity is concerned, it is unlikely to achieve much success. The
study concludes that GST will be able to simplify the existing indirect tax regime only if
there is a clear consensus over issues such as threshold limit, revenue rate and inclusion of
items such as petroleum products, electricity, liquor and real estate in the GST structure.

40
17. Agarwal (2017). They conducted a study on the people’s perception regarding GST on a
sample size of 200 respondents informing the Agra region. Judgment sampling was used,
in which only those having some knowledge of GST were chosen. The mean and one-
sample t-test were used for data analysis. The results showed that GST was perceived as a
very good tax reform for India and people believed that GST would relieve the tax burden
on common man as well as businessmen. People also confirmed that GST would initially
increase inflation in the country but in the long run, it would be beneficial. The study also
highlighted that for the common people, it was difficult to grasp the aspects associated with
GST was difficult to understand which contributed to negative perceptions about it. The
study further opined that although GST would enhance tax collections by the government,
small businesses would be affected very badly by its implementation.

18. Joseph And Kanakavalli (2017). They conducted a study on the socio-economic
background of consumers to understand the level of awareness about GST and its major
applicable rates among consumers. The study further provided consolidated suggestions
regarding GST being put forward by consumers. The study used both primary and
secondary data. Primary data was collected through a survey among 50 respondents via
questionnaire and the secondary data was collected from the Internet to understand the
benefits of GST. The study concluded that 94% of the respondents were aware of GST
implementation ,40.4% were aware of the various categories of rates applicable under GST.

19. Murugaiyan, Jeyanthi and Siddharth (2017). Gave an overview about the new GST Bill
in India. The study also investigated the level of awareness in the public about GST and
provided some suggestions based on the findings. The study was conducted on only 40
respondents, out of which almost 80% did not have any idea about the proposed tax rates
in GST, while 60% disagreed that GST would reduce the tax burden and only 32.5%
believed that the prices of goods would reduce after implementing GST. The study
suggested that the government should increase awareness about GST among illiterate
people, women and businesspeople via short films.

41
20. Ramya, N., & Sivasakthi, D. (2017). This comprehensively analyzed the impact of Goods
and Services Tax (GST) on various sectors. Like food, Housing and Construction, FMCG,
rail, financial services, Information Technology enabled services, and small enterprises.
Additionally, the study assessed how GST has influenced the Make in India initiative and
the competitiveness of Indian manufacturers in domestic and international markets

21. Saravanan Venkadasalam (2014). Has analyzed the post effect of the goods and service
tax (GST) on the national growth on ASEAN States using Least Squares Dummy Variable
Model (LSDVM) in his research paper. He stated that seven of the ten ASEAN nations are
already implementing GST. He also suggested that the household final consumption
expenditure and general government consumption expenditure are positively significantly
related to the gross domestic product as required and support the economic theories. But
the effect of the post GST differs in countries. Philippines and Thailand show significant
negative relationship with their nation’s development. Meanwhile, Singapore shows a
significant positive relationship. It is undeniable that those countries implementing GST
always encounter growth. Nevertheless, the extent of the impact varies depending on the
governance, compliance cost and economic distortion. The positive impact of GST depends
on the neutral and rational design of the GST in such a way that it is simple, transparent
and significantly enhances involuntary compile.

22. Prof. Pooja's. Kawle And Prof. Yogesh. L. Aher (2017) concluded that a single tax will
help to maintain simplicity and transparency by treating all goods and services equal
without giving special treatment to some types of goods and services. It will reduce the
litigation on classification of issues. It is also said that implementation of GST in Indian
framework will lead to commercial benefits which VAT has not given and hence it would
essentially lead to economic development. GST may assure the possibility of overall gain
for industry, trade, agriculture and also to central and state government.

23. Pandey, M. K. (2020). suggested that the work contract was not clearly defined in the pre-
GST era. The rate of tax on goods as well as services were different in different states
without input tax credit. However, in the new GST law the work contract was treated as a
composite supply. However, the rate of GST is higher than pre-GST law on construction
sectors which burden on consumers.

42
24. Taru Maheshwari, Mukta Mani (2023) The study has reviewed the existent literature on
the effect of good and services tax (GST) on various sectors of the Indian economy. The
purpose of the study is to analyse the findings of the number of studies which have been
published for different sectors, so as to be able to present a broad picture about the influence
of GST on various sectors in the country. A systematic literature review has been performed
based on 114 studies by focusing on the findings of the papers. The result of the paper
highlights the impact of GST on 14 sectors of the Indian economy, and it has been
envisaged that GST has a positive effect on agriculture, automobile, healthcare, logistics,
manufacturing, retail and textile sector. Insurance and power sectors are negatively
affected. Banking, FMCG, IT, e-commerce and real estate sector have mixed effect.

25. Taru Maheshwari, Mukta Mani, Ajay Singh (2024) GST implementation in India is a
macroeconomic event that changed the operating conditions and profitability of businesses.
This study attempts to empirically test the market reaction of GST implementation on
seventeen sectors of the Indian economy through the event-study methodology.
Additionally, we assess the semi-strong efficiency of the Indian stock market during the
event. Findings show that the event has heterogeneously affected different sectors as the
FMCG sector is positively affected while the Pharmaceutical and Power sectors are
adversely affected. The IT sector is moderately positively affected whereas, consumer
durable, energy, media, metal, oil, and reality are moderately negatively impacted. We also
infer that the market exhibits thorough efficiency of semi-strong form. The study is unique
in its analysis of the sector-wise impact of GST implementation in India. This study is also
useful for investors in making investment strategies and for policymakers to observe the
policy impact on the stock market.

43
 CHAPTER. 3

RESEARCH & METHODOLOGY

1. Primary data collection: -

In this project I have collected primary data with the help of a structure questionnaire. The
questionnaire was sent to the respondent in the form of ‘GOGGLE FORM’.
In the structured questionnaire TEN questions were included.

2. Secondary data collection: -

In this project I have also collected data from secondary. The secondary sources include,
A. Research paper
B. Book
C. Newspaper
D. Companies’ official website
E. Internet

3. Sample designed: -
In this project I have used a random sampling method to sample the data
In total 100 samples are chosen which are from my friend circle, locality, family, etc.

44
3.1 OBJECTIVE OF STUDY

• To understand the impact on both Primary as well as Secondary market.

• To understand the impact on various sectors of the market.

• To understand the benefits as well as the problems faced by both small scale and large
organizations.

• To compare the expected impact with the actual impact.

• To understand the impact on pricing due to subsumed taxes.

• To study the short term and long-term impact of GST on Indian financial markets.

• To study the challenges and benefits of implementation of GST.

• GST application and research issues.

• The main objective of GST in the center of the country is to Production

• GST, one of the main ones, eliminates all taxes (VAT), income tax and VAT.

45
LIMITATION OF STUDY:

Although the study was carried out with extreme enthusiasm and careful planning there are
several limitations which handicapped the research viz.
TIME CONSTRAINTS:
The time stipulated for the project to be completed is less and thus there are chances that some
information might have been left out, however due care is taken to include all the relevant
information needed.
SAMPLE SIZE:
Due to time constraints the sample size was relatively small and would have been more
representative if I had collected information from more respondents.
ACCURACY:
It is difficult to know if all the respondents gave accurate information; some respondents tend
to give misleading information.
VALIDITY:
GST rates may vary in future and the policies will keep changing so data does not provide
foresee of what the impact will be on the financial markets after the changes

Every scientific study has certain limitations, and the present study is no more exception.
These are:
❖ The sample size was small and cannot be applied to the entire population.
❖ GST launched a tax system, so some complications are faced by the people.
❖ The sample size is very small compared to the total population of the region.
❖ The study was conducted with the basic assumption that the information given by the
respondent is factual and represents their true feelings and behavior.
❖ It is very difficult to check the accuracy of the information provided.
❖ Since all the products and services are not widely used by all the customers.
❖ It is difficult to draw realistic conclusions based on the survey.

46
 CHAPTER. 4
DATA ANALISIS & INTERPRETATION

Data collection is the process of gathering and measuring information on variables of interest,
in an established systematic manner that enables Researcher to answer stated research
questions, test hypotheses, and evaluate outcomes. The data collection component of research
is common to all fields of study including physical and social sciences, humanities, business,
etc. While methods vary by discipline, the emphasis on ensuring accurate and honest collection
remains the same. The goal for all data collection is to capture quality evidence that then
translates to rich data analysis and allows the building of a convincing and credible answer to
questions that have been posed. Regardless of the field of study or preference for defining data
quantitative, qualitative, accurate data collection is essential to maintaining the integrity of
research. Both the selection of appropriate data collection instruments existing, modified, or
newly developed and clearly delineated instructions for their correct use reduce the likelihood
of errors occurring. Data collection is one of the most important stages in conducting research.
Researchers can have the best research design in the world but if researchers cannot collect the
required data, he/she will not be able to complete his/her project. Data collection is a very
demanding job which requires planning, hard work, patience, perseverance and more to be able
to complete the task successfully. Data collection starts with determining what kind of data
required followed by the selection of a sample. From a certain population. After that, you need
to use a certain instrument to collect the data from the selected sample.

Data is organized into two broad categories: qualitative and quantitative.

There are two types of Data Collection:

1) Secondary Data

2) Primary Data

47
 ➢ Secondary Data Collection:

Secondary data is the data that has already been collected through primary sources and made
readily available for researchers to use for their own research. It is a type of data that has already
been collected in the past. Sources of secondary data include books, personal sources, journals,
newspapers, websites, government record etc. Secondary data are known to be readily available
compared to that of primary data. It requires very little research and need for manpower to use
these sources.

⮚ PRIMARY DATA

Data that has been collected from firsthand experience is known as primary data. Primary data
has not been published yet and is more reliable, authentic and objective. Primary data has not
been changed or altered by human beings; therefore, its validity is greater than secondary data.

❖ Importance of Primary Data: -

In statistical surveys it is necessary to get information from primary sources and work on
primary data. For example, the statistical records of female population in a country cannot be
based on newspaper, magazine and other printed sources. Research can be conducted without
secondary data, but research based on only secondary data is least reliable and may have biases
because secondary data has already been manipulated by human beings. One of such sources
is old and secondly, they contain limited information as well as misleading and biased.

❖ Sources of Primary Data: -

Sources for primary data are limited and at times it becomes difficult to obtain data from
primary source because of either scarcity of population or lack of cooperation. Following is
some of the sources of primary data. Experiments: Experiments require an artificial or natural
setting in which to perform logical study to collect data. Experiments are more suitable for
medicine, psychological studies, nutrition and for other scientific studies. In experiments the
experimenter has to keep control over the influence of any extraneous variable on the results.

48
Methods of Primary Data Collection

1 Questionnaire:

It is the most used method in survey. Questionnaires are a list of questions either open-ended
or close-ended for which the respondents give answers. Questionnaires can be conducted via
telephone, mail, live in a public area, or in an institute, through electronic mail or through fax
and other methods.

2 Interview:

The interview is a face-to-face conversation with the respondent. In an interview the main
problem arises when the respondent deliberately hides information otherwise it is an in-depth
source of information. The interviewer can not only record the statements the interviewee
speaks but he can observe the body language, expressions and other reactions to the questions
too. This enables the interviewer to draw conclusions easily.

3 Observations:

Observation can be done while letting the observing person know that s/he is being observed
or without letting him know. Observations can also be made in natural settings as well as in an
artificially created environment

4 Survey:

Survey is the most used method in social sciences, management, marketing and psychology to
some extent. Surveys can be conducted in different ways. In recent time Online Survey is very
famous tool, which is used to collect primary data.

There are four main survey data collection methods – Telephonic Surveys, Face-to-face Paper
Surveys, and Online Surveys.

49
 a) Telephone Surveys:

Telephone surveys require much lesser investment than face-to-face surveys. Depending on
the required reach, telephone surveys cost as much or a little more than online surveys.
Contacting respondents via the telephonic medium requires less effort and manpower than the
face-to-face survey medium. Respondents are also highly likely to choose to remain
anonymous in their feedback over the phone as the reliability associated with the researcher
can be questioned.

b) Personal Interview or Face-to-face Surveys:

Gaining information from respondents via face-to-face mediums is much more effective than
the other mediums because respondents usually tend to trust the surveyors and provide honest
and clear feedback. Researchers can easily identify whether their respondents are
uncomfortable with the questions asked and can be extremely productive in case there are
sensitive topics involved in the discussion. This method works face-to-face as the data
collection can collect as accurate information as possible.

c) Paper Surveys:

The other commonly used survey method is paper surveys. These surveys can be used where
laptops, computers, and tablets cannot go, and hence they use the age-old method of data
collection: pen and paper. This method helps collect survey data in field research and helps
strengthen the number of responses collected and the validity of these responses.

d) Online Surveys:

Online surveys or web surveys are popular data collection tools that help organizations collect
input. Online Surveys are structured questionnaires used to collect data from a target audience
for a specific purpose. Creating online surveys is quite simple. Online Surveys come with an
array of advantages, the most impressive being their ease of use. Not only are online surveys
easy to create, but they are simple to distribute and collect feedback as well.

50
DATA ANALYSIS BASED ON PRIMARY DATA
1. AGE :

The image is a pie chart displaying the age group distribution of 106 responses. The chart is
divided into five age categories, with corresponding percentages:

• Below 20 (Blue): 44.3%,

• 21-30 (Red): 47.2%,
• 31-40 (Orange): A small proportion
• 41-50 (Green): A slightly smaller proportion
• Above 50 (Purple): The smallest proportion

From this data, most respondents are in the 21-30 age group (47.2%), followed closely by
those below 20 (44.3%). The remaining age groups (31 and above) make up a much smaller
fraction of the total responses.

51
2. GENDER:

This chart represents the gender distribution of 107 survey respondents. The breakdown
is as follow:

• Female: 52.3% (in blue)

• Male: 47.7% (in red)

The data shows a nearly equal distribution between male and female participants, with
a slight majority being female.

3. QUALIFICATION:

The pie chart depicts the distribution of educational qualifications among 107 respondents,
divided into three categories:

• Undergraduate (Blue): 70.1% of the respondents fall under this category, making it
the largest group.
• Graduate (Red): 27.1% of the respondents are graduates.
• Postgraduate (Orange): 2.8% of the respondents are postgraduates, representing the
smallest portion.

52
4. OCCUPATION:

This pie chart displays the occupational distribution of 106 respondents. The two categories
represented are "Student" and "Employee:

• Students: Represent 71.7% of the total respondents, indicating that most participants in
this survey are students.
• Employees: Make up 28.3% of the respondents, forming a smaller but significant
portion of the group.
5. AWARENESS ABOUT GST:

The pie chart presents the "Level of Awareness about GST," where respondents were asked to
rate their knowledge on a scale from 1 to 5: 1 = Expert Knowledge ,5 = No Knowledge

• 1 (Expert Knowledge): 13.1%

• 2: 19.6%
• 3: 34.6% (Largest group)
• 4: 16.8% & 5 (No Knowledge): 15.9%.

53
6. DO YOU BELIEVE GST HAS SIMPLIFIED TAX STRUCTURE INDIAN?

This pie chart represents responses to the question: "Do you believe GST has simplified
the tax structure in India?" based on 107 responses.

• 61.7% (Blue) responded Yes, indicating they believe GST simplified the tax structure.
• 16.8% (Red) responded No, indicating they do not think GST simplified tax system.
• 21.5% (Orange) responded Not sure, indicating uncertainty about its impact.

7. HOW DO YOU PERCEIVE THE IMPACT OF GST ON THE INDIAN ECONOMY ?

This pie chart represents survey responses on the perceived impact of GST (Goods and
Services Tax) on the Indian economy from 107 participants:
• Very Positive (21.5%): Indicates a highly favorable perception.
• Somewhat Positive (40.2%): Shows a moderately positive view, making up majority.
• Neutral (29.9%): Reflects no strong opinion on the impact.
• Somewhat Negative and Very Negative (minimal): Suggest a minor portion
perceiving a negative impact.

54
8. GST IMPROVED TAX COMPLIANCE AMONG BUSINESSES?

This pie chart shows survey responses on whether GST has improved tax compliance
among businesses from 107 participants:

• Yes (57.9%): Indicates that a majority believe GST has improved tax compliance.
• No (15.9%): A smaller segment disagrees with this view.
• Not Sure (26.2%): Reflects uncertainty
9. GST AFFECTED THE INDIAN STOCK MARKET?

This pie chart presents survey responses on the impact of GST on the Indian stock market
from 107 participants:

• Increased Market Growth (41.1%): A significant portion believes GST boosted

market growth.
• No Significant Impact (43.9%): The majority see GST as having little or no effect.
• Caused Market Volatility (15%): A smaller group perceives market instability due to
GST.

55
10. FINANCIAL SECTOR HAS BEEN MOST AFFECTED BY GST?

The pie chart shows the financial sector affected by GST based on 107 responses:
• Mutual Funds & Investments (38.3%) are perceived to be the most impacted.
• Banking & NBFCs (27.1%) follow in the level of impact.
• Insurance Sector (19.6%) holds the third position.
• Brokerage & Stock Trading (15%) is the least affected.
11. GST INCREASED THE COST OF FINANCIAL SEVICES LIKE BANKING,
INSURANCE, AND MUTUAL FUNDS ?

The pie chart shows responses to the question: "Has GST increased the cost of financial
services like banking, insurance, and mutual funds?" Among 107 respondents:

• 56.1% answered "Yes" (agreeing that GST has increased costs)

• 16.8% answered "No" (disagreeing)
• 27.1% were "Not sure"

56
12. GST MADE INVESTMENT IN FINANCIAL PRODUCT?

The pie chart shows the responses to whether GST has made investments in financial
products (stocks, mutual funds, insurance) attractive. Out of 107 respondents:

• 56.1% (blue) believe it made investments more attractive.

• 23.4% (red) feel it made investments less attractive.
• 20.6% (orange) see no change.
13. GST HAS INCREASED TRANSPARENCY IN THE FINANCIAL SECTOR ?

The pie chart shows responses to whether GST has increased transparency in the financial
sector. Out of 107 respondents:

55.1% (blue) said Yes.

24.3% (orange) are Not sure.

20.6% (red) said No.

57
14. YOUR OPINION ON THE GST RATE FOR BANKING AND FINANCIAL
SERVICES?

The pie chart shows opinions on the 18% GST rate for banking and financial services from
107 respondents:

• 42.1% (blue) believe it is too high.

• 31.8% (red) find it reasonable.
• 15.9% (orange) think it should be lowered.
• 10.3% (green) have no opinion.

15. GST AFFECTED FOREIGN INVESTMENT IN INDIAN FINANCIAL MARKET?

The pie chart illustrates how GST has affected foreign investments (FDI/FII) in the Indian
financial market, based on 107 responses:

• 45.8% (blue) believe it has encouraged more investment.

• 43% (red) think it has had no major impact.
• 11.2% (orange) feel it has discouraged foreign investments.

58
16. WHAT ARE THE BIGGEST CHALLENGES BUSINESSEES FACE DUO TO
GST IN FINANCIAL SECTOR?

The pie chart highlights the biggest challenges businesses face due to GST in the financial
sector, based on 107 responses:

• 36.4% (red) cited complexity in tax filing.

• 26.2% (blue) mentioned higher compliance costs.
• 21.5% (green) indicated other challenges.
• 15.9% (orange) pointed to increased cost of financial services.

17.DO YOU THINK GST NEEDS FURTHER REFORMS FOR BETTER IMPACT
ON THE FINANCIAL SECTOR?

The chart depicts survey responses on whether GST (Goods and Services Tax) requires
further reforms for a better impact on the financial sector. Out of 107 responses:

• 64.5% (Yes) believe reforms are necessary.

• 21.5% (No) think no changes are needed.
• 14% (Not sure) are uncertain.

59
DATA ANALYSIS BASED ON SECONDARY DATA

The Goods and Services Tax (GST) on July 1, 2017, marked a major shift in India's indirect
tax regime. It replaced multiple central and state taxes, aiming to create a unified market,
improve tax compliance, and boost economic growth. The impact of GST on the Indian
financial market has been significant, influencing various sectors, stock market performance,
foreign investment, and overall economic stability.

The study focused on comprehensive study of secondary data collected from various books,
National and International journals, government reports published from various websites which
focused on various aspects of Goods and Service tax. The term ‘supply’ is wide in its import
covers all forms of supply of goods or services or both that includes sale, transfer, barter,
exchange, license, rental, lease or disposal made or agreed to be made for consideration by a
person in the course or furtherance of business. It also includes import of service. The model
GST law also provides for including certain transactions made without consideration within
the scope of supply.

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.
Research design is purely and simply the framework for a study that guides the collection and
analysis data. In this project the two basic types of research design aroused.

The present research is exploration in nature. Since GST is a new phenomenon in India, there
are hardly any studies in this area. Especially 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. 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 phenomena are called research
methodology.

60
All research projects must start with exploratory research. This is a preliminary phase and is
essential to obtain a proper definition of problem in hand. The major emphasis is on the
discovery of ideas and insights. The exploratory study is particularly helpful in breaking broad
and vague problems into smaller, more precise sub problem statements. Exploratory research
is also used to increase the familiarity with the problem under investigation.

It is the design that one simply describes something such as demographic characteristics of
people. The descriptive study typically concerned with determining frequency with which
something occurs or how two variables are very together.

The period cover in the present study is from 2016-17 to 2020-21 i.e. the implementation of
demonetization and GST and after. This paper is based on 4 secondary data. The Study is
completely descriptive and analytical based on Journals articles, News Papers, RBI reports,
CMIE reports, research papers, a review paper is used. The present paper aims to identify and
discuss critical issues related to demonetization and GST. This paper tries to find out the cost
and benefits bear by the Indian economy due to the twin blow of Demonetization and GST
implementation as well. The paper also tries to find out the expected rate of growth of the
economy after the Demonetization and GST. Finally, the study tries to conclude that how it
would be disrupted and benefit the economy in the long run.

The demonetization and GST were the two powerful strokes taken by the government of India
to solve the emerging issue which persisted in the country. Both Demonetization and GST can
be regarded as game-changers of India's Financial Market. The motive behind the
Demonetization is to remove corruption as well as improve the cashless payment system in the
country. On the other hand, the main motive behind the introduction of GST is to remove the
cascading effect of tax on the cost of goods and services. It was believed that demonetization
and GST would change the future path of the Indian economy.

All research in a major GST only focuses on the process of law and the impact on the general
consumer market in primary India. However, in the current study, the impact of GST on the
industry has occurred. This study is descriptive in nature, and it used exploratory techniques.
The data for the study were gathered from the secondary sources such as journals and articles
published online and offline on various newspapers and websites. The present tax system
allows diversity of taxes, the introduction of GST is likely to unique it. Many areas of Services
which are untaxed. After the introduction of GST, they will also get covered.

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This analysis is based on secondary data collected from government reports, financial
institutions, market research agencies, and economic studies

1. Overview of GST and Its Framework

GST is a value-added tax levied on the supply of goods and services. It follows a multi-tier tax
structure with rates of 0%, 5%, 12%, 18%, and 28%, depending on the type of goods and
services. It subsumed taxes like VAT, service tax, excise duty, and octroi, leading to a more
transparent and efficient tax system.

2. Key Impacts of GST on the Indian Financial Market

2.1. Stock Market Reaction to GST Implementation

The stock market responded positively to GST in the long run, despite initial volatility.

Short-Term Market Reaction

❖ In the months leading up to GST, markets were uncertain, leading to short-term

volatility.
❖ Small businesses and unorganized sectors faced challenges in transitioning to GST.

Long-Term Market Gains

❖ Post-GST indices like Sensex and Nifty experienced steady growth.

❖ NSE data showed that FMCG and banking stocks performed well due to better tax
compliance.
❖ Auto and logistics sectors benefited from the removal of inter-state taxes.

2.2 Impact on Foreign Direct Investment (FDI)

❖ The introduction of a unified tax system made India more attractive to foreign
investors.
❖ The World Bank’s "Ease of Doing Business" report showed India climbing from
130th place in 2016 to 63rd place in 2020, partly due to GST.
❖ Sectors such as e-commerce, manufacturing, and infrastructure saw increased
foreign capital inflows

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2.3 Effect on Banking and Financial Services

❖ Financial services, including banking, insurance, and asset management,

became subject to 18% GST, increasing costs for customers.
❖ Compliance improved with digital tax filing, benefiting financial institutions.
❖ The demand for tax consultancy and fintech solutions surged, leading to new
investment opportunities.

2.4 Impact on GDP Growth and Inflation

❖ Initial Slowdown: India’s GDP slowed to 5.8% in Q1 2018 due to GST

implementation challenges.
❖ Long-Term Gains: By 2019, GDP growth stabilized as businesses adapted to the
new tax system.
❖ Inflation saw temporary spikes, especially in sectors like automobiles and real
estate, due to input tax credit delays.

2.5 Effect on Corporate Profitability

❖ Companies benefiting from input tax credit and streamlined supply chains saw an
improvement in profit margins.
❖ A PwC India report found that 40% of businesses experienced cost reductions due
to better tax efficiency.
❖ The real estate sector, however, faced lower demand due to higher tax burdens
on under-construction properties.

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3. Sector-Wise Analysis of GST Impact

3.1 FMCG and Consumer Goods

❖ Positive impact due to reduction in logistics costs and the availability of input tax
credit.
❖ Companies like HUL, Nestlé, and ITC saw improved profit margins and stock
performance.

3.2 Automobile Industry

❖ Initially faced with price increases due to higher tax rates on luxury cars but
eventually stabilized.
❖ The industry benefited from lower supply chain inefficiencies and increased
transparency.

3.3 Real Estate

❖ Faced short-term downturn due to higher GST on under-construction properties

(12%).
❖ Affordable housing saw some relief due to GST exemptions, benefiting
homebuyers.

3.4 Logistics and Supply Chain

❖ One of the biggest beneficiaries, with logistics costs falling by 20% as interstate
tax barriers were removed.
❖ Companies expanded warehousing networks, leading to increased investments
in infrastructure.

3.5 Small and Medium Enterprises (SMEs)

❖ Initial challenges in GST compliance due to digital tax filing requirements.

❖ GST simplified business operations over time, enabling SMEs to expand
nationally.

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4. Challenges of GST Implementation

Despite its benefits, GST faced some challenges:

❖ Compliance burden:
o Frequent rule changes created confusion.
o Small businesses struggled with return filling.
❖ Technical issues:
o The GSTN (GST Network) portal faced initial glitches.
o Refund delays affected working capital for exporters.
❖ Higher service tax:
o Businesses in sectors like banking and telecom had to pay higher tax rates
(18%) and increase costs.
❖ Revenue shortfall for states:
o Some states lost revenue after GST replaced local taxes, requiring
compensation from the central government.

5. GST Revenue Collection Trends (2017-2024)

❖ In 2017-18, the total GST collection was ₹7.2 trillion.

❖ By 2023-24, revenue increased to ₹16.2 trillion, reflecting better compliance.
❖ GST revenue growth has been steady, indicating improved tax administration.

6. Future Outlook of GST and the Financial Market

❖ Simplification of GST rates: Expected to reduce compliance costs.

❖ Inclusion of petroleum and electricity under GST: Could enhance transparency.
❖ Expansion of the tax base: More businesses may come under GST, increasing
revenue collection.
❖ Further FDI growth: GST improvements may attract higher foreign investments.

GST has significantly impacted India's financial market, improving compliance, boosting
foreign investment, and benefiting key industries. While challenges remain, including
compliance burdens and sector-specific hurdles, continuous refinements in GST
policies are expected to strengthen India’s economic framework in the long run

65
Here are some graphs on different sectors in the financial market.

1. Stock market

This graph shows the performance of the Sensex and Nifty 50 indices from 2015 to 2023.
The stock market experienced steady growth after the introduction of GST in 2017, with
significant surges in 2021-2023 due to improved investor confidence and economies

2. GST on difference sectorial indies

This bar chart illustrates the impact of GST on different sectoral indices. The FMCG and
banking sectors benefited from GST, seeing index growth, while the auto sector had
moderate gains. However, the real estate sector faced a decline due to higher taxation
on under-construction properties.

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 3. India’s GDP Growth rate before and after GST

This graph shows India's GDP growth rate from 2015 to 2023. After GST implementation
in 2017, there was a temporary slowdown, with GDP growth dropping to 5.8% in 2019.
However, the post-pandemic recovery in 2021 led to a strong rebound.

4. FDI Inflows before and after GST

This bar chart shows the increase in Foreign Direct Investment (FDI) inflows across key
sectors after GST implementation. The manufacturing and e-commerce sectors saw the
highest rise, benefiting from a simplified tax structure. The real estate sector, however,
experienced only a slight increase due to higher taxation on under-construction
properties.

67
5. GST revenue collection trends from 2017 to 2024.

This graph illustrates the growth in GST revenue collection from 2017 to 2024. Despite
initial implementation challenges, revenue steadily increased, reflecting improved
compliance and economic recovery post-pandemic

The pre sent study is based on secondary data. The secondary data were collected through well
designed plan formulated for this study purposes. So, the data was collected from the internet,
e-journals, union budget speech, working papers etc. The collected data were classified
according to the scope of analysis and tabulated for the purpose of interpretation and
presentation of data. The purposes of analysis of secondary data, various statistical tools like
percentage, mean, deviations etc. were used. GST is an indirect tax which will include almost
all the indirect taxes of central.

Government and states governments into a uniform or whole tax. As the name suggests it will
be levied on both goods and services at all stages of value addition. It has dual models including
central goods and service tax (CGST) and states goods and service tax (SGST). CGST will
subsume indirect taxes like central excise duty, central sales tax, service tax, special additional
duty on customs; counter veiling duties whereas indirect taxes of state governments like state
vat, purchase tax, luxury tax, octroi, tax on lottery and gambling will be replaced by SGST.

68
The GTMA approach allows for analysis of highly directed graphs with many nodes in place,
and the complexity of the graph is high, to draw any useful results from the actual
visualizations. Many software allows for the matrix approach application for handy and easy
computations. This approach is chosen for its compatibility with any number of nodes and
attributes. The concept fully characterizes the selection problem considered, as it contains all
possible structural components of the attributes and their relative importance Rao (2007). In
the case of even small deviations in permanent functions may lead to significant changes in
satisfaction index and thus allowing for natural ranking of factors for in the descending order
of satisfaction or ascending order of index of places with necessary improvement.

❖ A single registration for both CGST & SGST will reduce transaction costs and unnecessary
wastages. To make this more effective the Government must provide the necessary IT
infrastructure & integration of States level with the Union.

❖ With the introduction of GST, Tax on Tax i.e., multiplicity of taxation will be eliminated.
Several taxes currently levied on each level of transaction will be reduced. This will help clear
up the confusion created by existing indirect taxes and also reduce the paperwork associated
with them.

❖ Consumers will benefit the most as the average tax burdens will be reduced with the
introduction of GST. The implementation of GST will help reduce the corruption in the
country, because GST reduces the multiple tax system.

The present paper is based on descriptive as well as exploratory research. It is descriptive in

the sense that proper description has been made regarding the concept of GST in India. It is
exploratory in the sense that various impacts of GST on Indian economy which can be positive
as well as negative have been identified. The present study is based on secondary data and the
various secondary sources include books, journals, magazines, newspapers, websites etc.

69
 CHAPTER. 5

FINDINGS AND SUGGESTIONS

FINDINGS:

The implementation of GST had a significant impact on the Indian financial market, with both
short-term disruptions and long-term benefits. One of the most noticeable effects was on stock
market volatility. The initial uncertainty surrounding GST led to fluctuations in stock prices,
as investors were unsure of how the new tax regime would affect corporate profitability and
economic growth. However, as businesses and investors adjusted to the new system, market
stability improved. Sectors such as FMCG, automobiles, and logistics experienced growth due
to the advantages of input tax credit and the reduction of inter-state tax barriers. On the other
hand, industries like real estate and services faced temporary slowdowns due to higher
compliance costs and structural tax changes. Over time, the stock market responded positively
as businesses adapted to GST, leading to improved investor confidence.

The banking and financial services sector also witnessed significant changes post-GST
implementation. One major challenge was the increased compliance burden, as banks were
required to register separately in every state where they operated. This led to higher operational
costs, as financial institutions were unable to claim tax credit on certain services. Despite these
initial difficulties, GST promoted digital transactions and enhanced transparency in banking
operations. Additionally, the removal of cascading taxes on loans and other financial products
contributed to better credit availability and liquidity in the financial system. As banks adapted
to the new compliance framework, their operational efficiency improved, reducing the negative
impact on profitability.

Foreign portfolio investment (FPI) in India was initially affected by the uncertainty
surrounding GST, as investors hesitated due to concerns about compliance and tax refund
mechanisms. However, as the tax structure became more streamlined and predictable, India
emerged as a more attractive investment destination. The clarity in tax policies and reduced
business unpredictability encouraged foreign investors, leading to increased FPI inflows,
particularly in sectors that benefited from GST reforms, such as manufacturing, e-commerce,
and consumer goods.

70
Corporate earnings and business performance also underwent significant shifts due to GST.
Large corporations benefitted from input tax credits, which lowered their operational costs and
boosted profitability. Retail, logistics, and consumer goods companies saw improved supply
chain efficiencies, leading to better financial performance. However, small and medium
enterprises (SMEs) faced initial difficulties in adapting to GST due to compliance requirements
and refund delays. The construction and pharmaceutical industries also experienced
disruptions, as changes in tax slabs and delays in refunds impacted their cash flow. Despite
these short-term challenges, businesses that successfully integrated GST into their financial
planning witnessed long-term growth and profitability.

Market liquidity and capital flow improved with the introduction of GST, as the elimination of
multiple indirect taxes led to a more structured financial system. The formalization of
businesses under GST allowed better access to credit from financial institutions, strengthening
overall economic stability. Additionally, the push towards digital tax compliance encouraged
the growth of financial technology (FinTech) and digital payments, further modernizing India's
financial landscape. With reduced tax evasion and better revenue collection, the government
was able to channel funds into economic development, indirectly supporting financial market
growth.

Despite these positive outcomes, certain challenges remain in the implementation of GST.
Frequent changes in tax rates and compliance requirements created confusion for businesses
and investors, affecting financial planning and market confidence. Refund delays, particularly
for exporters and SMEs, disrupted cash flow and working capital cycles. To maximize the
benefits of GST, further simplification of compliance procedures and faster refund processing
are necessary. A stable policy framework and consistent tax structure will play a crucial role
in ensuring the continued positive impact of GST on the financial market.

71
SUGGESTION:

The introduction of the Goods and Services (GST) in India in 2017 marked a significant
transformation in the country’s taxation system, directly impacting various sectors, including
the financial market. By replacing a complex web of indirect taxes with a unified tax structure,
GST enhanced market transparency and streamlined compliance processes. Financial
institutions, including banks, non-banking financial companies (NBFCs), insurance firms, and
stock market participants, experienced notable changes in their operations and cost structures.
With companies now operating in a more structured tax environment, stock markets saw an
influx of domestic, foreign investments, making India a more attractive investment destination.

One of the most immediate effects of GST was observed in the banking and NBFC sectors.
Prior to GST, financial services were subject to various indirect taxes, often leading to
inefficiencies in taxation and increased compliance burdens. With the introduction of an 18%
GST rate on financial services, the cost of banking transactions, loan processing fees, and
insurance premiums increased. While this posed an initial challenge for consumers, it brought
much-needed uniformity in taxation, reducing legal ambiguities. Additionally, the adoption of
digital invoicing and automated tax reporting under GST helped financial institutions enhance
operational efficiency and shift towards a more technology-driven ecosystem.

The impact of GST was also felt in the stock market, particularly in sectors that benefited from
input tax credit mechanisms, such as FMCG, logistics, and manufacturing. The elimination of
interstate taxes significantly improved supply chain efficiency, reducing costs for businesses
and enhancing corporate profitability. As a result, investors witnessed stronger performance in
stock indices such as NIFTY and SENSEX. Additionally, foreign institutional investors (FIIs)
found India’s tax regime more structured and predictable post-GST, leading to a rise in foreign
portfolio investments (FPIs). However, certain industries, such as real estate and financial
services, experienced short-term volatility due to initial implementation challenges, tax rate
adjustments, and increased compliance requirements. Despite these fluctuations, the long-term
outlook for the financial market remained positive as businesses adapted to the new tax
structure.

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The insurance and mutual fund industries also underwent significant changes under GST.
Before its implementation, these sectors were taxed at lower rates, making investment in
insurance policies and mutual funds more cost-effective. However, with the imposition of an
18% GST rate, insurance premiums and mutual fund service charges saw an upward revision,
leading to higher costs for policyholders and investors. While this initially discouraged
investment in these financial instruments, companies responded by offering tax-efficient
investment products and enhanced benefits to customers. Over time, increased financial
literacy and growing investor awareness helped the mutual fund and insurance industries regain
their momentum, reinforcing their role in India’s expanding investment culture.

The simplification of tax structures under GST also played a crucial role in attracting foreign
direct investment (FDI) and strengthening India’s financial markets. By eliminating multiple
tax barriers and improving the ease of doing business, GST encouraged multinational
corporations and global investors to expand their presence in India. This led to an increase in
capital inflows, benefiting both large and small businesses. Additionally, lower logistics costs
and efficient tax compliance mechanisms resulted in higher profitability for companies, further
fueling investor interest in the stock market. As a result, financial markets experienced greater
stability, improved liquidity, and enhanced economic activity, positioning India as a
competitive player in the global economy.

Despite its many benefits, the implementation of GST was not without challenges. The initial
phase was marked by technical glitches, frequent tax rate revisions, and compliance difficulties
for businesses, particularly small and medium enterprises (SMEs). Many financial service
providers face difficulties in transitioning to the new system due to the complexity of tax
calculations and digital filing requirements. However, over time, government interventions,
policy adjustments, and the integration of advanced technology solutions helped resolve these
issues. Today, GST continues to evolve, with further refinements aimed at simplifying
compliance and ensuring greater efficiency in the financial market. Moving forward, the
ongoing digitization of financial transactions and continuous policy reforms are expected to
enhance the overall impact of GST on India’s financial ecosystem, solidifying its role as a key
driver of economic growth and investment expansion.

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 CHAPTER. 6

CONCLUSION

GST has affected the entire economy and markets with the cost of production going high in all
the sectors. As the cost goes high the profit is lower, so the companies raise the prices of the
products and services to cover the costs that have increased due to these taxes. Whereas in
some cases the tax rate which was earlier charged is seen to be lowered by GST, but the GST
panel may increase the tax rate in such items in the coming days. It has affected various sectors
of financial markets as the profits are hit by the Indirect Tax reform. This has also led to
volatility in the stocks of some companies.

The proposed GST regime is a half-hearted attempt to rationalize indirect tax structure. More
than 150 countries have implemented GST. The government of India should study the GST
regime set up by various countries and their fallouts before implementing it. At the same time,
the government should try to insulate the vast poor population of India against the likely
inflation due to implementation of GST. Efficient formulation of GST will lead to resources
and revenue gain for both Centre and States majorly through widening of tax base and
improvement in tax compliance. It can be concluded that GST also has a positive impact on
various sectors and industry. Although implementation of GST requires concentrated efforts of
all stake holders namely, Central and State Government, trade and industry. Thus, necessary
steps should be taken.

The GST is very crucial tax reform since independence of India, so it must be better handled
with utmost care and analyzed well before implementing it. And, the government, both central
and state must conduct awareness programmed and various literacy programmed about GST
to its various stakeholders. Although the GST implementation aims to upsurge the taxpayer
base, largely SMEs into its opportunity, it presents a problem of compliance and related charges
for them. Nevertheless, GST will make the MSMEs more competitive in the long run and will
make the playing arena level between big enterprises and them. Additionally, the Indian
MSMEs would be able to compete with the international market goods and competition coming
from cheap price epicenters such as China, Philippines, and Bangladesh and thrive in the world
8 market scenario.

74
After a thorough analysis of the above literature, it can be concluded that GST will provide
relief to producers and consumers by subsuming the several indirect taxes in India. The Study
of literature indicates that the implementation of Goods and Services Tax helps in better
utilization of resources and makes the taxation system environment friendly. The taxes for both
Centre and States will be collected at the point of sale. Both will be charged on the
manufacturing cost. Individuals will benefit from this as prices are likely to go down. The lower
price of goods increases consumption, and more consumption leads to higher production
thereby leading to economic growth and development of the country.

It is therefore suggested that there be provided a suitable clarification that in cases where
registration is taken only for the purpose of section 9(3) i.e. payment of tax under reverse charge
the provisions of section 9(4) will not be triggered.

It is suggested that it be suitably clarified that if a dealer receives interest, he would be eligible
to optimize the Composition Scheme. Similar clarity is also required for inclusion/exclusion of
non-operational income e.g. interest/dividend while calculating aggregate turnover for
computing limit of Rs. 20 L for registration purpose u/s 22 & 24 of CGST Act,2017. Section
2(30) of the CGST Act, 2017 defines Composite supply as a supply made by a taxable person
to a recipient consisting of two or more taxable supplies of goods or services or both, or any
combination thereof, which are naturally bundled and supplied in conjunction with each other
in the ordinary course of business, one of which is a principal supply

75
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88. https://vakilsearch.com/blog/gst-analysis-and-opinions/
89. https://images.app.goo.gl/fGgtYgEMfBKfJUxM7
90. https://images.app.goo.gl/2xc2NjDBoifRgorN9
91. https://images.app.goo.gl/k994PfNDJxCNoNcK6
92. https://images.app.goo.gl/3EQHJaHCbf2egwqAA
93. https://images.app.goo.gl/nNBeJmZWT3jM6Yn39
94. https://www.ijfmr.com/special-issues/2/187.pdf
95. https://en.wikipedia.org/wiki/Goods_and_Services_Tax_(India)_Revenue_Statistics
96. https://en.wikipedia.org/wiki/Tax
97. https://www.wikiwand.com/en/articles/Goods_and_Services_Tax_(India)
98. https://www.drishtiias.com/to-the-points/paper3/goods-and-services-tax-gst-1
99. https://blog.saginfotech.com/gst-impact-on-gdp-india#
100. https://en.wikipedia.org/wiki/Value-added_tax

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APPENDIX

Level of Awareness about GST

(Rate on scale of 1to 5, where 1= Expert Knowledge, 5 = No Knowledge.)
o 1
o 2
o 3
o 4
o 5

Do you believe GST has simplified the tax structure India?

o Yes
o No
o Not sure

How do you perceive the impact of GST on the Indian economy?

o Very positive
o Somewhat positive
o Neutral
o Somewhat negative
o Very negative

Has GST improved tax compliance among businesses?

o Yes
o No
o Not sure

How has GST affected the Indian stock market?

o Increased market growth

o No significant impact
o Caused market volatility

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Which financial sector has been most affected by GST?

o Banking & NBFCs

o Mutual fund & investments
o Insurance sector
o Brokerage & stock trading

Has GST increased the cost of financial services like banking, insurance, and mutual Funds?

o Yes
o No
o Not sure

Has GST made investment in financial products (stock, mutual fund, insurance) more or less
attractive?

o More attractive
o Less attractive
o No change

Do you feel GST has increased transparency in the financial sector

o Yes
o No
o Not sure

What is your opinion on the GST rate (18%) for banking and financial services?

o Too high
o Reasonable
o Should be lowered
o No opinion

How has GST affected foreign investments (FDI/FII) in Indian financial market?

o Encouraged more investment

o No major impact
o Discouraged foreign investments

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What are the biggest challenges businesses face due to GST in the financial sector?

o Higher compliance cost

o Complexity in tax filling
o Increased cost of financial services
o Other

Do you think GST needs further reforms for a better impact on the financial sector?

o Yes
o No
o Not sure

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