GST BILL

SHAIKH MOHD HAMJA

TYBMS (FINANCE)
13301B0153

SUMMARY
GST which is goods and services tax (GST) is aimed at creating a single,
unified market that will benefit both corporates and the economy. Govt of
India wants to implement it and wants to diminish the taxation complexity
in India but the path is still being obscure. As important objective of GST is
to remove double taxation structure and middle main tax evasion which will
create only one uniform tax system and will reduce the tax burden on
corporate and individual also.
On the other hand it will help to boost up Indian economy as overall tax is
being less so the production cost will be low and will boost up export and
competency of Indian Industries. Even putting the GST in place will give a
relax on tax burden to organized market which it could not enjoy before of
unorganized sector and will make the overall market more competitive.
On the contrary RNR which will increase the tax rate is placing questions
whether it will improve tax collection and what should be the right
percentage.
Adding to it implication of GST also raising another issue as how the
revenue from tax will be shared among the states and the discontent among
the states to share their revenue in the first five years and what will it be
after that.
As there was not clear answer some of the tax in GST will be under states
control and what those are and how much control will handover to states,
making the implementation far from sight.

GST (Goods & Services Tax)

GST stands for Goods and Services Tax, and is proposed to be a
comprehensive indirect tax levy on manufacture, sale and consumption of
goods as well as services at the national level. It will replace all indirect
taxes levied on goods and services by the Indian Central and State
governments. It is proposed to be implemented from April 2016.
The introduction of Goods and Services Tax (GST) would be 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, it would mitigate
cascading or double taxation in a major way and pave the way for a common
national market.
From the consumer point of view, the biggest advantage 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 Indian products
competitive in the domestic and international markets. Studies show that
this would instantly spur economic growth.
Last but not the least, this tax, because of its transparent character, would
be easier to administer.
Presently India has a dual tax system for taxation of Goods and Services.
The tax system is described by Central Taxes and State Taxes, which may be
further described as EXCISE DUTY, SERVICE TAX, VAT AND CUSTOM
DUTY. INDIA has VAT mechanism which was introduced in year 2005 which
is working on input tax credit principle but this limited to Intra-State
transaction. However this problem is not for service sector, as service tax is
levied by central government.
Due to non-availability of tax credit for inter-state transactions of Goods
consumer suffers double taxation burden of VAT.

Benefits of GST to various Stake holders

For the Centre and the States
According to experts, by implementing the GST, India will gain $15 billion a
year. This is because, it will promote more exports, create more employment
opportunities and boost growth. It will divide the burden of tax between
manufacturing and services.

For individuals and companies

In the GST system, taxes for both Centre and State will be collected at the
point of sale. Both will be charged on the manufacturing cost. Individuals
will be benefited by this as prices are likely to come down and lower prices
mean more consumption, and more consumption means more production,
thereby helping in the growth of the companies.

What is GST?
GST is goods and service tax. It is an indirect tax which will replace all
indirect taxes levied at central and state level.
Not only will the taxation system will become simpler, GST is also expected
to help in the economic growth. GST will help avoid the double taxation.

Recent developments for implementing GST

-GST bill passed in Lok Sabha
-States will be given relief for five years from the implementation date of
GST.
-Finance Minister indicates that 27% GST would be too high; may be
decided around 18% on consultation.

Impact on Indian economy

The bill is slated to improve the Indian Economy. Due to simpler taxation
system, foreign players may be attracted to invest in India and the conditions
of doing business in India will improve.

Pros

Cons

Boost for the Indian economy

Higher tax rate than the present

Easy tax system

May lead to more occurrences of

avoidance of tax

Foreign investors will be attracted

to Indian market

States prospering at their own

merit may have to share their own
revenues with other states which
are not doing well
Share of states in inter-state
transactions
still
not
clearly
defined or accepted by states

Introduction:
GST is a comprehensive tax levy on manufacture, sale and consumption of
goods and services at a national level. GST is a part of proposed tax reforms
in India. GST has been commonly accepted by world and more than 140
countries have acknowledged the same. Generally the GST ranges between
15%- 20% in most of the countries.
Despite the success with VAT, there are still certain shortcoming in
structure in the levy of VAT both at Central level and State level. If VAT is
considered to be a major improvement over the pre-existing Central excise
duty at the national level and the sales tax system at the State level, then
GST will be a further significant breakthrough the next logical step
towards a comprehensive indirect tax reform in the country.
However, the paper makes some crucial assumption such as pegging the
revenue-neutral rate in the range of 6.2 percent and 9.4 percent. The
revenue-neutral rate is the rate for GST that will not make a net difference
to the overall tax collection of centre and states.
The Goods and Services Tax(GST) is a value added tax that will replace all
the indirect taxes levied on goods and services by the government, both
central and states, once it is implemented. The basic idea of this bill is to
create a single, cooperative and undivided Indian market to make the
economy stronger and powerful.

Motives behind the GST:

Subsume all indirect taxes at the centre and the state level

One-Country-One-Tax
Reduce the cascading effect of taxes on taxes.
Increase productivity and transparency; increase tax-GDP ratio.
Reduce/Eliminate tax evasion and corruption

Pros of GST Bill:

GST is a transparent tax and also reduce number of indirect taxes.
Cost of doing business will be lower because there will be no hidden charges.
Benefit people as prices will come down which in turn will help companies
as consumption will increase.

The taxation burden to be split equitably between manufacturing and

services.

Benefit of GST for the Centre and the States

According to experts, by implementing the GST, India will gain $15 billion a
year. This is because, it will promote more exports, create more employment
opportunities and boost growth. It will divide the burden of tax between
manufacturing and services.
Cons of GST in India
GST in India would impact negatively on the real estate market. It would add
up to 8 percent to the cost of new homes and reduce demand by about 12
percent.
Some Economist says that CGST (Central GST), SGST (State GST) are
nothing but new names for Central Excise/Service Tax, VAT and CST.
Conclusion
The macroeconomic impact of a change to the introduction of the GST is
significant in terms of growth effects, price effects, current account effects
and the effect on the budget balance.
A change in the tax mix from income to consumption-based taxes is likely to
provide a fruitful source of revenue.
The aggregate consumer price impact of the introduction of the GST in India
on the macro-economy was both limited and temporary.

Shailesh

GST or Goods and Services Tax is considered as major Tax reform policy in India which
will be implemented from January 2016 if passed in next Parliament session. Most
Economist are very positive about GST implementation. We have brought you some
Facts about GST which you should know, this includes advantages and disadvantages
of GST as well. You can include some points in comment section also.
The Goods and Service Tax (GST) is a new form of indirect tax which will replace others
like service tax, sales tax, octroi, central and state sales tax imposed under the current
multi-tax system. It was expected to be a single tax levied by the central government on
the production of goods and services. Currently, each state imposes a different tax. So,
each state was counted as a different market by businesses. It is a huge task to move
goods from one state to another due to differential taxes. GST will remove such
demarcation and create a unified market. This is expected to help ease movement of
goods across states and reduce costs for businesses.

The Goods and Services Tax is one of the main items on the finance agenda of the BJP
government. Finance Minister Arun Jaitley has said that it can raise Indias GDP by one
to two per cent.As the Lok Sabha takes up the GST Bill, here is your cheat sheet to the
debate:
1- Constitutional Amendment Bill Number

Officially, the Constitution (One Hundred and Twenty-Second Amendment) Bill

2014.

2- When it Was introduced In Parliament

It was introduced in the Lok Sabha on December 19, 2014 by Finance Minister
Arun Jaitley.

3- Main Objective Of GST Bill

The Bill seeks to amend the Constitution to introduce a goods and services tax
(GST) which will subsumes various Central indirect taxes, including the Central
Excise Duty, Countervailing Duty, Service Tax, etc. It also subsumes State value
added tax (VAT), octroi and entry tax, luxury tax, etc.

4-Insert A New Article In Indian Constitution

The Bill inserts a new Article in the Constitution make legislation on the taxation
of goods and services a concurrent power of the Centre and the States.

5- Restriction On States for Taxing

The Bill seeks to shift the restriction on States for taxing the sale or purchase of
goods to the supply of goods or services.

6-To Establish GST Council

The Bill seeks to establish a GST Council tasked with optimising tax collection for
goods and services by the State and Centre.

The Council will consist of the Union Finance Minister (as Chairman), the Union
Minister of State in charge of revenue or Finance, and the Minister in charge of
Finance or Taxation or any other, nominated by each State government.

7- GST council Main Authority To decide Tax

The GST Council will be the body that decides which taxes levied by the Centre,
States and local bodies will go into the GST; which goods and services will be
subjected to GST; and the basis and the rates at which GST will be applied.

8- Exceptions to GST

Under the Bill, alcoholic liquor for human consumption is exempted from GST.

Also, it will be up to the GST Council to decide when GST would be levied on
various categories of fuel, including crude oil and petrol.

The state governments wanted to exclude taxes on petroleum and alcohol

products from the purview of GST.

This is because, these items account for significant portion of the states
revenues.

This was a key issue of discussions between the centre and the states.

It has now been decided that alcohol will be exempt from GST. Petroleum
products too will be excluded from GST initially.

It would be slowly included in the purview of GST later.

9-Inter state Trade Tax

The Centre will levy an additional one per cent tax on the supply of goods in the
course of inter-State trade, which will go to the States for two years or till when
the GST Council decides.

10 -Parliament Power to Decide compensation to states

Parliament can decide on compensating States for up to a five-year period if

States incur losses by implementation of GST.

Currently, the state government has a separate tax structure from the central
government.

State tax rates are often higher than the central governments rates.

The GST levied by the centre was to replace the state taxes too.

This means state governments would lose out on key revenue.

This is why they have been at loggerheads with the central government for
compensation.

Finally, the central government has decided to compensate the states for all the
losses incurred in the first three years.

Further, it will pay 75% and 50% of the losses in the fourth and fifth year
respectively.

Shashank

What is the GST bill ?

The Goods and Services Tax(GST) is a value added tax that will replace all the indirect
taxes levied on goods and services by the government,both central and states,once it is
implemented.
The basic idea of this bill is to create a single, cooperative and undivided Indian market
to make the economy stronger and powerful.

Pros of GST bill :

GST is a transparent tax and also reduce number of indirect

taxes.With GST implemented a business premises can show the tax applied in the
sales invoice.

GST will not be a cost to registered retailers therefore there will be no hidden
taxes and and the cost of doing business will be lower.

Benefit people as prices will come down which in turn will help companies as
consumption will increase.

There is no doubt that in production and distribution of goods, services are

increasingly used or consumed and vice versa. Separate taxes for goods and services,
which is the present taxation system, requires division of transaction values into
value of goods and services for taxation, leading to greater complications,
administration, including compliances costs. In the GST system, when all the taxes
are integrated, it would make possible the taxation burden to be split
equitably between manufacturing and services.
GST will be levied only at the final destination of consumption based on VAT
principle and not at various points (from manufacturing to retail outlets). This will
help in removing economic distortions and bring about development of a
common national market.

It will also help to build a transparent and corruption free tax

administration.Presently, a tax is levied on when a finished product moves out

from a factory, which is paid by the manufacturer, and it is again levied at the retail
outlet when sold.
Benefit of GST for the Centre and the States
According to experts, by implementing the GST, India will gain $15 billion a year. This is
because, it will promote more exports, create more employment opportunities and boost
growth. It will divide the burden of tax between manufacturing and services.
Benefit of GST for individuals and companies
In the GST system, taxes for both Centre and State will be collected at the point of sale.
Both will be charged on the manufacturing cost. Individuals will be benefited by this as
prices are likely to come down and lower prices mean more consumption, and more
consumption means more production, thereby helping in the growth of the companies.
Some of Disadvantages/Cons of GST in India are given below
Some Economist say that GST in India would impact negatively on the real estate
market. It would add up to 8 percent to the cost of new homes and reduce demand by
about 12 percent.
Some Economist says that CGST(Central GST), SGST(State GST) are nothing but new
names for Central Excise/Service Tax, VAT and CST.

Almost 140 countries have already implemented the GST including Australia,
Canada,Germany,Japan and Pakistan.
France was the first country to implement GST in 1954.

Ravi
The Goods and Services Tax (GST) is a value added tax that will replace all
indirect taxes levied on goods and services by the Government, both Central and
States, once it is implemented. The GST is all set to consolidate all State
economies. This will be one of the biggest taxation reforms that will take place in
India once the Bill gets officially the green signal to implement. The basic idea is
to create a single, cooperative and undivided Indian market to make the
economy stronger and powerful. The GST will see a significant breakthrough
towards an all-inclusive indirect tax reform in the country.In the year 2000, for
the first time the idea of initiating the GST was made by the then BJP
Government under the leadership of Atal Behari Vajpayee. An empowered
committee was also formed for that, headed by Asim Dasgupta (the then Finance
Minister of the West Bengal Government). The committee was formed to design
the model of the GST and at the same time inspect the preparation of the IT
department for its rollout. In 2011, the previous United Progressive Alliance (UPA)
Government also introduced a Constitution Amendment Bill to facilitate the
introduction of the GST in the Lok Sabha but it was rejected by many States.
What is GST?

The GST is basically an indirect tax that brings most of the taxes imposed on
most goods and services, on manufacture, sale and consumption of goods and
services, under a single domain at the national level. In the present system,
taxes are levied separately on goods and services. The GST is a consolidated tax
based on a uniform rate of tax fixed for both goods and services and it is payable
at the final point of consumption. At each stage of sale or purchase in the supply
chain, this tax is collected on value-added goods and services, through a tax
credit mechanism.
The proposed model of GST and the rate
A dual GST system is planned to be implemented in India as proposed by the
Empowered Committee under which the GST will be divided into two parts:
State Goods and Services Tax (SGST)
Central Goods and Services Tax (CGST)
Both SGST and CGST will be levied on the taxable value of a transaction. All
goods and services, leaving aside a few, will be brought into the GST and there
will be no difference between goods and services. The GST system will combine
Central excise duty, additional excise duty, services tax, State VAT entertainment
tax etc. under one banner.The GST rate is expected to be around 14-16 per cent.
After the combined GST rate is fixed, the States and the Centre will decide on the
SGST and CGST rates. At present, 10 per cent is levied on services and the
indirect taxes on most goods is around 20 per cent.
Advantages of GST
Introduction of a GST is very much essential in the emerging environment of the
Indian economy.
There is no doubt that in production and distribution of goods, services are
increasingly used or consumed and vice versa. Separate taxes for goods and
services, which is the present taxation system, requires division of transaction
values into value of goods and services for taxation, leading to greater
complications, administration, including compliances costs. In the GST system,
when all the taxes are integrated, it would make possible the taxation burden to
be split equitably between manufacturing and services.
GST will be levied only at the final destination of consumption based on VAT
principle and not at various points (from manufacturing to retail outlets). This will
help in removing economic distortions and bring about development of a
common national market.
It will also help to build a transparent and corruption-free tax administration.
Presently, a tax is levied on when a finished product moves out from a factory,
which is paid by the manufacturer, and it is again levied at the retail outlet when
sold.
Benefits of GST
For the Centre and the StatesAccording to experts, by implementing the GST,
India will gain $15 billion a year. This is because, it will promote more exports,
create more employment opportunities and boost growth. It will divide the
burden of tax between manufacturing and services.For individuals and

companiesIn the GST system, taxes for both Centre and State will be collected at
the point of sale. Both will be charged on the manufacturing cost. Individuals will
be benefited by this as prices are likely to come down and lower prices mean
more consumption, and more consumption means more production, thereby
helping in the growth of the companies.Items not under GSTAlcohol, tobacco,
petroleum products
Bottlenecks in the implementation of GST
Though the Government wants the GST Bill to be implemented by April 2016,
there are certain bottlenecks which need to be taken care of before that:
What preparations are needed at the level of Central and State Governments for
implementing the GST?
Whether the Government machinery is efficient enough for such an enormous
change?
Whether the tax-payers are ready for such a change?
What will be the impact on the Governments revenue?
How will the manufacturers, traders and ultimate consumers be affected?
Will GST help the small entrepreneurs and small traders?
Status of implementation of GST
To be fully viable by law in all the States, the GST Bill needs to be passed by a
two-thirds majority in both Houses of Parliament and by the legislatures of half of
the 29 States. In December 2014, Finance Minister Arun Jaitley introduced the
constitutional amendment Bill of the GST in the Lok Sabha. He announced that
the GST would be a major reform in Indias taxation system since 1947, which
would reduce transaction costs for business and boost the economy.Earlier, the
Bill was rejected by a few States saying that it does not include the issues of
compensation, entry tax and the tax on petroleum products. Jaitley while
introducing the Bill said that all efforts have been taken to make sure that the
States do not suffer any loss of revenue with the implementation of the GST. The
States will receive Rs 11,000 crore this fiscal year so that it would compensate
the losses suffered by them for decline in Central sales tax (CST) and
subsequently financial assistance would be provided for a five-year period.All
said and done, the GST Bill which was conceived way back in the year 2000 has
not seen the light of the day as yet. If everything goes well, most likely the Bill
will be legislated by April 2016. According to a study by the National Council of
Applied Economic Research (NCAER), full implementation of the GST could
expand Indias growth of gross domestic product by 0.9-1.7 percentage points.
By removing the system of multiple Central and State taxes, the GST can help in
reducing taxation and filing costs and expand business profitability, thereby
attracting investments and promoting GDP growth. Simplification of tax norms
can help in improving tax compliance and increasing tax revenues.

Sangeet

GST is proposed to be a comprehensive indirect tax levy on manufacture, sale and

consumption of goods as well as services at national level. It will replace all the indirect taxes
levied on goods and services by central and state government. The introduction of GST
would be a very significant step in the field of indirect tax reforms in India. By amalgamation
of central and state taxes into a single tax, it would mitigate cascading or double taxation in a
major way and pave the way for common national market.
From consumer side, the biggest advantage 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 Indian product competitive in the domestic and International market. It would instantly
spur economic growth. It would be transparent and would be easier to administer.
CURRENT SCENARIO
India has dual tax system. It has VAT mechanism which is introduced in year 2005, which is
limited to Intra-State transaction. But this problem is not for service sector as service tax is
levied by central government.
BENEFITS OF GST

India will gain $15 bn a year since it will promote more exports, create more
employment and boost growth.
Central and state tax will be collected at the point of sale.
Prices are likely to come down and lower price means more consumption which
means more production, helping in growth of the company.
It will boost annual economic growth by 2%

Sameep
In 2000, Vajpayee Government started discussion on GST by setting up an
empowered committee. The committee was headed by Asim Dasgupta, (Finance
Minister, Government of West Bengal). It was given the task of designing the GST
mode.
What is GST
The Goods and Service Tax (GST) is a Value Added Tax (VAT) to be implemented
in India, It will replace all indirect taxes levied on goods and services by the
Indian Central and State governments. It is aimed at being comprehensive for
most goods and services.

Which other nations have a similar tax structure

Almost 140 countries have already implemented the GST. Most of the countries
have a unified GST system. Brazil and Canada follow a dual system where GST is
levied by both the Union and the State governments.
France was the first country to introduce GST system in 1954.

Read Also: India after GST Impact of GST in India industry

Some of advantages of GST in India is given below

GST is a transparent Tax and also reduce numbers of indirect taxes. With GST
implemented a business premises can show the tax applied in the sales invoice.
GST will not be a cost to registered retailers therefore there will be no hidden
taxes and the cost of doing business will be lower.
Under Goods and Services Tax, the tax burden will be divided equally between
Manufacturing and services.
GST can also help to diversification of income sources for Government other than
income tax and petroleum tax.
Benefit people as prices will come down which in turn will help companies as
consumption will increase.
Biggest benefit will be that multiple taxes like central sales tax, state sales tax,
entry tax, license fees, turnover tax etc will no longer be present and all that will
be brought under the GST.
It is estimated that India will gain $15 billion a year by implementing the Goods
and Services Tax
It would promote exports.
Raise employment and boost growth.

GST Disadvantages(Disadvantages of GST in India)

Some Economist say that GST in India would impact negatively on the real
estate market. It would add up to 8 percent to the cost of new homes and reduce
demand by about 12 percent.
Some Economist says that CGST, SGST and IGST are nothing but new names for
Central Excise/Service Tax, VAT and CST.