CHAPTER I

INTRODUCTION
GST is the most ambitious and remarkable indirect tax reform in India’s post-Independence
history. Its objective is to levy a single national uniform tax across India on all goods and
services. GST has replaced a number of Central and State taxes, made India more of a national
integrated market, and brought more producers into the tax net. By improving efficiency, it can
add substantially to growth as well as government finances. Implementing a new tax,
encompassing both goods and services, by the Centre and the States in a large and complex
federal system, is perhaps unprecedented in modern global tax history. GST is a tax on goods
and services with comprehensive and continuous chain of set-off benefits up to the retailer
level. It is essentially a tax only on value addition at each stage, and a supplier at each stage is
permitted to set-off, through a tax credit mechanism, the GST paid on the purchase of goods
and services. Ultimately, the burden of GST is borne by the end-user (i.e. final consumer) of
the commodity/service.

With the introduction of GST, a continuous chain of set-off from the original producer’s point
and service provider’s point up to the retailer’s level has been established, eliminating the
burden of all cascading or pyramiding effects of an indirect tax system. This is the essence of
GST. GST taxes only the final consumer. Hence the cascading of taxes (tax-on tax) is avoided
and production costs are cut down. As already noted, prior to the introduction of GST, the
indirect tax system of India suffered from various limitations. There was a burden of tax-on-
tax in the pre-GST system of Central excise duty and the sales tax system of the States. GST
has taken under its wings a profusion of indirect taxes of the Centre and the States. It has
integrated taxes on goods and services for set-off relief. Further, it has also captured certain
value additions in the distributive trade. There is now a continuous chain of setoffs which
would eliminate the burden of all cascading effects.

1.2 GST (GOODS AND SERVICES)

The reference of GST was first made in the Indian Budget in 2006-07 by the Finance
Minister Mr. P. Chidambaram as a single centralized Indirect tax. The GST constitution (
122nd) Amendment Bill 2014 was introduced on December 19, 2014 and passed on May 06,
2015 in the Lok Sabha and yet to be passed in the Rajya Sabha. The bill seeks to amend the
constitution to introduce Goods and Services tax vide proposed new article 246 A. This
article gives power to Legislature of every state and parliament to make laws with respect to
goods and services tax where the supplies of goods or of service take place. Recently, Union
Minister Mr. Arun Jaitley said that GST could be implemented as early as January 1, 2016.

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 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 taking into
account 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 9 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 vest
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 sale of goods. Since the GST regime requires
goods and services to be simultaneously taxed by both the Central and State Governments, a
Constitutional amendment was needed.

Why is tax important?

Taxes are an important source of government revenue. They fund essential services such as
healthcare, education, sanitation, public transport and useful infrastructure. In addition, taxes
are important for the development of roads, defense systems and administrative functions.

Who is called the father of GST?

Former prime minister Atal Bihari Vajpayee is credited with founding GST in India and is
often referred to as the 'Father of GST in India'. During his period, the primary steps in the
direction of GST were taken, consequently disposing of the signs of destiny.

Types of tax levied as GST

Under this system, there are three taxes that need to be paid: CGST, SGST, and IGST.

1. CGST is the tax that the central government collects on a sale within a single state (for
example, a transaction happening within West Bengal)

2. SGST is the tax that the state government collects on a sale within the respective state (for
example, a transaction happening within West Bengal)

3. IGST is the tax that the central government collects on sales between states (for example, a
transaction happening between West Bengal and Rajasthan)

How is GST calculated?

To calculate 18% GST on the total, you simply multiply the total amount by 18% (or 0.18).
For example, if the total amount is Rs. 1000, the GST amount would be Rs. 180 (1000 x 0.18).

What is GST basics?

GST, or Goods and Services Tax, is an indirect tax imposed on the supply of goods and
services. It is a multi-stage, destination-oriented tax imposed on every value addition, replacing
multiple indirect taxes, including VAT, excise duty, service taxes, etc.
What is Indirect tax?

Indirect tax is the tax levied on the consumption of goods and services. It is not directly levied
on the income of a person. Instead, he/she has to pay the tax along with the price of goods or
services bought by the seller.

Which country has no GST?

GST in the USA

The USA does not have any federal Value Added Tax levied on goods and services.

How much GST on gold?

3% GST

GST on gold purchase in India attracts 3% GST (1.5% CGST + 1.5% SGST) rate on the value
of gold. So, if the value of gold being purchased is Rs. 10,000 the total GST payable on the
transaction will be Rs. 300.

What is GST formula easy?

If a product is sold at Rs. 1,000 and the GST rate applicable is 18%, then the net price calculated
will be = 1,000+ (1,000X (18/100)) = 1,000+180 = Rs. 1,180.

Who runs GST?

Composition of the Goods and Services Tax Council

It consists of the following members: The Union Finance Minister as the Chairperson. The
Union Minister of State in charge of Revenue or Finance. The Minister responsible for Finance,
Taxation, or any other nominated Minister from each state government.

Which country GST first?

France was the first country to introduce a Goods and Services Tax (GST) in 1954, according
to Testbook and Journal of Rural Development and CD Jain College of Commerce. They
implemented it as a value-added tax (VAT) system.
Which country is 100% tax-free?

Monaco: Monaco is a sovereign city-state on the French Riviera that has no income tax for
residents and businesses. Kuwait: The oil-rich Arab country located on the Persian Gulf, is
another country with no income tax

How GST is important for India

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.

Benefits of Goods and Services Tax (GST)

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.

GST rates in India at a glance

 Exempted categories: 0
 Commonly used Goods and Services: 5%
 Standard Goods and Services fall under 1st Slab: 12%
 Standard Goods and Services fall under 2nd Slab: 18%
 Special category of Goods and Services including Luxury
 Goods: 28%.

Salient Features of GST in India

The salient features of GST in India have been highlighted below:

1. Supply as the base: GST would be applicable on “supply” of goods or services as against
the erstwhile concept of tax on the manufacture of goods or on sale of goods or on provision
of services.

2. Destination-based tax: As opposed to the previous principle of origin based taxation, GST
would be based on the principle of destination based consumption taxation.
3. Dual GST: The Centre and the States would simultaneously levy tax on a common base.
The GST to be levied by the Centre would be called Central GST (CGST) and the GST to be
levied by the States (including Union territories with legislature) would be called State

4 GST (SGST). Union territories without legislature would levy Union territory GST
(UTGST). Inter-State supply: An integrated GST (IGST) would be levied on interstate supply
of goods or services. This would be collected by the Centre so that the credit chain is not
disrupted. Imports of goods and services would be treated as inter-State supplies and would be
subject to IGST. (This would be in addition to applicable customs duties).

Advantages of GST

1. Elimination of Cascading Tax Effect

One of the major benefits of GST is the elimination of the cascading effect of taxes, commonly
referred to as “tax on tax.” This has led to reduced overall tax burdens on goods and services.

Example:

Pre-GST Regime: A business consultant charges Rs. 50,000 for services and levies a 15%
service tax (Rs. 7,500). The consultant buys office supplies worth Rs. 20,000 and pays a VAT
of 5% (Rs. 1,000). The total outflow is Rs. 8,500.

Post-GST Regime: The same business consultant would charge 18% GST (Rs. 9,000) on
services, but the GST on office supplies would be deductible, resulting in a net outflow of Rs.
8,000.

2. Higher Threshold for Registration

Under the VAT system, businesses with a turnover above Rs. 5 lakh had to pay VAT (this limit
varied between states). Under GST, the threshold has increased to Rs. 20 lakh, offering relief
too many small businesses.

3. Simplified Compliance

GST has simplified tax compliance. Under the previous system, businesses had to file
multiple returns for VAT, service tax, and excise duties. With GST, only one return needs to
be filed, reducing the burden of tax compliance.
4. Composition Scheme for Small Businesses

Small businesses with an annual turnover between Rs. 20 lakh and Rs. 75 lakh can opt for the
Composition Scheme, reducing their tax liability and simplifying compliance further.

5. Online Registration and Returns

The GST system is fully digitized, allowing businesses to register and file returns online. This
system has proven particularly beneficial for start-ups and businesses in remote areas.

6. Improved Logistics and E-commerce Operations

Before GST, companies often had to maintain multiple warehouses to avoid state-level taxes
like CST and entry taxes. With the introduction of GST, inter-state movement restrictions have
been reduced, leading to more efficient warehouse management and logistics.

7. Bringing Unorganized Sectors under Regulation

Sectors like textile and construction, which were largely unregulated, have now been brought
under the purview of GST. This has increased transparency and accountability.

Disadvantages of GST

1. Increased Compliance Costs

Businesses, especially smaller ones, had to upgrade their accounting systems to be GST-
compliant, which incurred costs for software upgrades and employee training. Additionally,
many small businesses have had to hire tax professionals to handle GST compliance, increasing
operational costs.

2. Lower Threshold for GST

Under the previous excise duty system, only businesses with an annual turnover of over Rs.
1.5 crore had to pay taxes. However, under GST, this threshold has been reduced to Rs. 40
lakh, bringing more businesses under the tax net.

3. Burden on SMEs

Businesses operating in multiple states must register for GST in each state. This has increased
the compliance burden, especially for small and medium-sized enterprises (SMEs) that must
issue GST-compliant invoices, maintain digital records, and file returns regularly.
4. Lack of Infrastructure and Awareness

The GST system relies heavily on digital platforms, but many states lack the infrastructure to
implement it effectively. Moreover, many businesses, particularly in rural areas, lack the
awareness and resources to comply with GST, leading to inadvertent non-compliance and
penalties.

5. Complex Transition Process

The transition from the old tax regime to GST posed significant challenges for businesses,
especially in understanding the new laws and regulations. Many businesses faced delays and
confusion in adapting to the new system.
 CHAPTER II

GST DAY TO DAY LIFE

As most of our readers are already aware, the GST council has finalized the GST rates across
different goods & service categories. The tax range is divided into the different slabs i.e. 0%,
5%, 12%, 18% & 28%. Let's see how your life changes with the introduction of GST and how

Much more or less you need to shell out from your pocket.

Footwear: Be ready to shell out more for footwear which costs more than Rs 500 as the GST
rate is kept at 18% as compared to the earlier 14.41%. However, the rate for footwear costing
below Rs 500 is reduced to 5%.

Garments: Buying your next shirt or trouser will cost you a little less as the GST rate for
ready-made garments is reduced to 12% from the existing 18.16%.

Cab & taxi rides: Even booking your cab is slightly cheaper now as the tax rate is reduced to
5% from 6% for any taxi booked online like on Ola, Uber or Meru.

Airline ticket: There is no change for an economy flight ticket price but GST for a business
class ticket will attract 12% rate.7

Jewellery: Gold investment will be slightly more expensive due to a higher GST rate.

Buying real estate: If you are planning to buy an under construction real estate property, Then
you will stand to get more benefit than a ready to move in property. Your builder will get input
tax credit and can pass on the same to you in terms or reduced prices.

Hotel stay: For a room rent of less than Rs 1,000, there won’t be any GST, but in case it is
more than Rs 5,000 then it will have a GST rate of 28%.

Buying a car: Most of the cars across different segments will become cheaper but the same
will not be applicable for hybrid cars as the GST rate is 28% on all the vehicles irrespective of
its make, model or engine capacity and also depends on a particular car segment.

Mobile bills: Your phone bill is set to rise by 3% because GST on telecom services is 18%
than an earlier 15%.
STATEMENT OF PROBLEM

With the implementation of the Goods and Services Tax or the GST, there is so much talk
about the new tax system all over India. While it is important to understand what the GST is
and how it impacts different industries, we must also look at how it will change our daily lives.
In this article, we are going to see how the GST will affect the cost of services that we use on
a daily basis. Before we begin, let’s take a look at the evolution of service tax in India. The
taxation of services began in 1994 (as soon as the government realised that services made up
about 40% of our GDP), at which time a 5% service tax was levied upon three services:
telephone, non-life insurance, and tax brokerage services. Three more services–advertising,
courier and radio pager services–soon followed in 1996. In the following year (1997), the
service tax base was expanded from six to 15 services (including air travel, renting marriage
halls, service provided by recruitment agencies, etc.).

While the service tax of 5% remained constant for a decade (until the 2002-2003 financial
year), it was increased to 8% in 2003. In 2004, two new tax conditions were added: an education
cess of 2% of ST (service tax) was introduced, and the service tax was increased from 8-10%,
making the total service tax equivalent to 10.2%.

With this understanding, let’s take a step into the future and analyse how the GST will change
our daily lives in 2022.
 CONCLUSION:

This study highlighted the overall overview of GST in friends and relatives. The Government
to put in more effort to ensure that Consumers have a clear understanding and develop a
positive perception towards GST, leading to its acceptance. Good understanding among
customers is important as it can generate a positive perception towards the taxation policy. In
day to day life have to save money from their income. The implementation of GST will
demystify the complexity of the taxes associated with the services we use on a daily basis. With
all that said it will certainly eliminate, or at the very least control, the lack of uniformity in
prices and service tariff rates across the country, making it fair for the earning class of every
state.
 SUGGESTIONS:

 We have to do reduce the tax burden on household goods because of stable income of
people
 There should be incentive for people who are below poverty line.
 QUESTIONNAIRE

1. NAME:

2. GENDER:

3. AGE:

a) 18 – 25 b) 25 -30 c) 30 -40 d) 40 above

4. PROFESSIONAL STATUS:

a) Auditors b) business c) financial Manager c) industrialist

5. MONTHLY INCOME

a) 50000 b) 30000 – 50000 c) below 30000

6. Are you affecting from GST day to day life?

a) Yes b) no c) maybe

7. In which GST is affecting for you?

a) Banking and insurance services b) education c) glossary d) household expenses

8. When you will pay GST?

a) Monthly b) quarterly c) year

9. GST is to pay difficult before and now

a) Agree b) neutral c) strongly agree d) strongly disagree

10. GST is a very good tax forms for India

a) Agree b) disagree c) neutral d) strongly agree e) strongly disagree

11. GST has increased the tax burden on day to day

a) Agree b) disagree c) neutral d) strongly agree e) strongly disagree

12. GST will increase the Tax collection of GOVT.

a) Agree b) disagree c) neutral d) strongly agree e) strongly disagree

13. Goods and Service Tax (GST) encourage individuals to save part of their Income

a) Agree b) disagree c) neutral d) strongly agree e) strongly disagree

14. Submit suggestion if any:-

 REFERENCE:

Book:

 Customers Perception towards GST (Good & Service Tax)

 nitibhasinchapter2

Website:

 www.gst.com
 https://khatabook.com/blog/impact-of-gst-on-different-sectors/
 https://www.dnaindia.com/business/report-gst-impact-in-your-day-today-life-2543135