Introduction

Goods and Services Tax (GST) is an indirect tax levied in India on the sale of goods and

services. Goods and services are divided into five tax slabs for collection of tax - 0%, 5%, 12%,

18% and 28%. Petroleum products and alcoholic drinks are taxed separately by the individual

state governments. There is a special rate of 0.25% on rough precious and semi-precious stones

and 3% on gold. In addition a cess of 22% or other rates on top of 28% GST applies on few

items like aerated drinks, luxury cars and tobacco products.

The tax came into effect from July 1, 2017 through the implementation of One Hundred and First

Amendment of the Constitution of India by the Modi government. The tax replaced existing

multiple cascading taxes levied by the central and state governments. The tax rates, rules and

regulations are governed by the Goods and Services Tax Council which comprises finance

ministers of centre and all the states. GST simplified a slew of indirect taxes with a unified tax

and is therefore expected to dramatically reshape the country's 2.4 trillion dollar economy.

Evaluation of GST

The reform process of India's indirect tax regime was started in 1986 by Vishwanath Pratap

Singh, Finance Minister in Rajiv Gandhi’s government, with the introduction of the Modified

Value Added Tax (MODVAT). Subsequently, Prime Minister P V Narasimha Rao and his

Finance Minister Manmohan Singh, initiated early discussions on a Value Added Tax (VAT) at

the state level. A single common "Goods and Services Tax (GST)" was proposed and given a go-

ahead in 1999 during a meeting between the Prime Minister Atal Bihari Vajpayee and his

economic advisory panel, which included three former RBI governors IG Patel, Bimal Jalan and
C Rangarajan. Vajpayee set up a committee headed by the Finance Minister of West Bengal,

Asim Dasgupta to design a GST model.

The Ravi Dasgupta committee was also tasked with putting in place the back-end technology and

logistics (later came to be known as the GST Network, or GSTN, in 2017) for rolling out a

uniform taxation regime in the country. In 2002, the Vajpayee government formed a task force

under Vijay Kelkar to recommend tax reforms. In 2005, the Kelkar committee recommended

rolling out GST as suggested by the 12th Finance Commission.

After the defeat of the BJP- ledNDA government in the 2004 Lok Sabha election and the election

of a Congress-led UPA government, the new Finance Minister P Chidambaram in February 2006

continued work on the same and proposed a GST rollout by 1 April 2010. However, in 2010,

with the Trinamool Congress routing CPI(M) out of power in West Bengal, Asim Dasgupta

resigned as the head of the GST committee. Dasgupta admitted in an interview that 80% of the

task had been done.

In the 2014 Lok Sabha election, the Bharatiya Janata Party-led NDA government was elected

into power, this time under the leadership of Narendra Modi. With the consequential dissolution

of the 15th Lok Sabha, the GST Bill – approved by the standing committee for reintroduction –

lapsed. Seven months after the formation of the Modi government, the new Finance Minister

Arun Jaitley introduced the GST Bill in the Lok Sabha, where the BJP had a majority. In

February 2015, Jaitley set another deadline of 1 April 2017 to implement GST. In May 2016, the

Lok Sabha passed the Constitution Amendment Bill, paving way for GST. However, the

Opposition, led by the Congress, demanded that the GST Bill be again sent back to the Select

Committee of the Rajya Sabha due to disagreements on several statements in the Bill relating to
taxation. Finally in August 2016, the Amendment Bill was passed. Over the next 15 to 20 days,

18 states ratified the Constitution amendment Bill and the President Pranab Mukherjee gave his

assent to it.

A 22-members selected committee was formed to look into the proposed GST laws. After GST

Council approved the Central Goods and Services Tax Bill 2017 (The CGST Bill), the Integrated

Goods and Services Tax Bill 2017 (The IGST Bill), the Union Territory Goods and Services Tax

Bill 2017 (The UTGST Bill), the Goods and Services Tax (Compensation to the States) Bill 2017

(The Compensation Bill), these Bills were passed by the Lok Sabha on 29th March, 2017. The

Rajya Sabha passed these Bills on 6th April, 2017 and were then enacted as Acts on 12th April,

2017. Thereafter, State Legislatures of different States have passed respective State Goods and

Services Tax Bills. After the enactment of various GST laws, Goods and Services Tax was

launched all over India with effect from 01 July 2017. the Jammu and Kashmir state legislature

passed its GST act on 7 July 2017, thereby ensuring that the entire nation is brought under an

unified indirect taxation system. There was to be no GST on the sale and purchase of securities.

That continues to be governed by Securities Transaction Tax (STT).

Launch

The President Launching Goods and Services Tax (GST) on 1st July 2017

The Goods and Services Tax was launched at midnight on 1 July 2017 by the then President of

India, Pranab Mukherjee, and the Prime Minister of India Narendra Modi. The launch was

marked by a historic midnight (30 June – 1 July) session of both the houses of parliament

convened at the Central Hall of the Parliament. Though the session was attended by high-profile

guests from the business and the entertainment industry including Ratan Tata, it was boycotted
by the opposition due to the predicted problems that it was bound to lead to for the middle and

lower class Indians. It is one of the few midnight sessions that have been held by the parliament -

the others being the declaration of India's independence on 15 August 1947, and the silver and

golden jubilees of that occasion. After its launch, the GST rates have been modified multiple

times, the latest being on 18 January 2018, where a panel of federal and state finance ministers

decided to revise GST rates on 29 goods and 53 services.

Members of the Congress boycotted the GST launch altogether. They were joined by members

of the Trinamool Congress, Communist Parties of India and the DMK. The parties reported that

they found virtually no difference between the GST and the existing taxation system, claiming

that the government was trying to merely rebrand the current taxation system. They also argued

that the GST would increase existing rates on common daily goods while reducing rates on

luxury items, and affect many Indians adversely, especially the middle, lower middle and poorer

classes. The GST model of India has been modeled on the taxation system of France.
Collections of GST

Month Collections Change

January ₹86,318 crore (US$13 billion)

December ₹86,703 crore (US$13 billion)

November ₹80,808 crore (US$12 billion)

October ₹83,346 crore (US$13 billion)

September ₹92,150 crore (US$15 billion)

August ₹90,699 crore (US$14 billion)

July ₹92,283 crore (US$14 billion)

Collection Of GST
94000
92000
90000
88000
86000
84000
82000
80000 Collection Of GST
78000
76000
74000

Figure 3: GST Share in Total Tax Collection

Source: Finance Ministry

Taxation scheme

Taxes subsumed

The single GST (goods and service taxes) replaced several former taxes and levies which

included: central excise duty, services tax, additional customs duty, surcharges, state-level value

added tax and Octroi. Other levies which were applicable on inter-state transportation of goods

have also been done away with in GST regime. GST is levied on all transactions such as sale,

transfer, purchase, barter, lease, or import of goods and/or services. India adopted a dual GST

model, meaning that taxation is administered by both the Union and State Governments.

Transactions made within a single state are levied with Central GST (CGST) by the Central

Government and State GST (SGST) by the State governments. For inter-state transactions and

imported goods or services, an Integrated GST (IGST) is levied by the Central Government. GST

is a consumption-based tax/destination-based tax, therefore, taxes are paid to the state where the

goods or services are consumed not the state in which they were produced. IGST complicates tax

collection for State Governments by disabling them from collecting the tax owed to them directly

from the Central Government. Under the previous system, a state would only have to deal with a

single government in order to collect tax revenue.

HSN code in GST

HSN (Harmonized System of Nomenclature) is an 8-digit code for identifying the applicable rate

of GST on different products as per CGST rules. If a company has turnover up to RS. 1.5 Crore

in the preceding financial year then they need not mention the HSN code while supplying goods
on invoices. If a company has turnover more than 1.5 Cr but up to 5 Cr then they need to

mention the 2 digit HSN code while supplying goods on invoices. If turnover crosses 5 Cr then

they shall mention the 4 digit HSN code on invoices.

Rates

The GST is imposed at variable rates on variable items. The rate of GST is 2.5% for soaps and

28% on washing detergents. GST on movie tickets is based on slabs, with 18% GST for tickets

that cost less than Rs. 100 and 28% GST on tickets costing more than Rs.100 and 5% on

readymade clothes. The rate on under-construction property booking is 12%.[27] Some industries

and products were exempted by the government and remain untaxed under GST, such as dairy

products, products of milling industries, fresh vegetables & fruits, meat products, and other

groceries and necessities.

Checkposts across the country were abolished ensuring free and fast movement of goods.[

The Central Government had proposed to insulate the revenues of the States from the impact of

GST, with the expectation that in due course, GST will be levied on petroleum and petroleum

products. The central government had assured states of compensation for any revenue loss

incurred by them from the date of GST for a period of five years. However, no concrete laws

have yet been made to support such action. GST council adopted concept paper discouraging

tinkering with rates.

E-Way Bill

An E-Way Bill, a GSTN project under the Goods and Services Tax, is required to be generated

for every inter-state movement of goods beyond 10 kilometres (6.2 mi) and the threshold limit of

₹50,000 (US$770).
OBJECTIVES OF THE STUDY

The study has been geared towards achieving the following objectives:

1) To understand the concept of Goods and Services Tax

2) To understand the evolution of GST in India

3) To examine the salient features of Goods and Services Tax

4) To study the impact of GST on Indian Economy and challenges in implementing GST
RESEARCH METHODOLOGY

The research paper is an attempt of exploratory research, based on the secondary data sourced

from various journals, magazines, articles and media reports. Available secondary data was extensively

used for the study. The investigator also procures the required data through secondary survey.
Different Slab Rates in India under GST

Goods and Services Tax is going to bring about an economic revolution in the country. Finance

Minister Arun Jaitley along with GST Council has finalized the four slab tax structure for goods

and services in the country. Mr. Jaitley is confident that GST will not be inflationary and the

rates will ease tax burden on common man as they are lower than existing rates in the market.

Different slabs of GST range from 5 percent to 28 percent.

Main Four slabs of GST

The four slabs of GST has been set at 5%, 12%, 18% and 28% for different goods and services.

The government had earlier provided rates of 6%, 12%, 18% and 26%. Food items and other

essential items have been kept at zero rates to keep inflation under control. Commonly used

items will be taxed at 5% while luxury items such as luxury cars, aerated drinks are kept at peak

rate of 28% along with an additional cost. This additional cost and another clean energy cess will

create revenue for the government which will be used to compensate states for loss of revenue

during the implementation of Goods and Services Tax.

Basic food stuffs like wheat, rice, milk will be exempted from GST. Manufactured goods will be

levied with 18% tax. Almost 81% of goods will be included in the first three brackets of taxes,

that is, lower than 18%. 28% tax slab will cover only 19% of items. 50% of items in retail will

not be taxed to keep prices and inflation low.

Also, there was an announcement pertaining to taxation of tobacco products that will be taxed at

65%. Products like soap, hair oil, toothpaste etc. Will be taxed at 18% while currently it is been

taxed at 28%. Indian sweets will be charged with 5% tax.

Many States are trying to keep state-specific items out of the list. Uttar Pradesh is trying to keep

puja items out of the tax structure whereas other states are lobbying to keep cotton yarn and silk

yarn out of the tax bracket.

An additional GST tax is expected to be implemented for precious metals like gold that are

currently charged with only 1% VAT.

For Standard Goods and Services, here are two slabs of GST; 12% and 18%. Majority of

taxpayers fall under the category of Standard Goods and Services. For special category of Goods

and Services, a tax of 28% will be levied.

Other Slab Rates

There are other slabs rates which government set they are 0.25%, 2.50 % and 3% some of the

products which comes under this slab rates are as

0.25%- Rough industrial diamonds including unsorted rough diamonds to face 0.25% instead of

3% of GST

2.5%- On soaps and colgates their is a charge of 2.5% of GST

3%- On gold and silver their is a charge of 3% of GST

Exempted items

As per the government, almost 50% of commonly used items such as food grains are excluded

from GST. Education, healthcare and railway travel will also be exempted from GST. Goods

transportation and cab aggregates will be charged with 5% GST. Hotels and restaurants that use

transportation services will attract different taxes. Five star hotels, horse race betting and cinema

will be charged with the oak rate of 28%. For Telecom and Financial Services will be charged

with 18% tax, as earlier. People belonging to the income slab of Rs. 2.5-2 lakh will be charged

with 5% tax.

While different rates have been set for different items, it is only a few days before we see how it

impacts citizens of the country.

GST Tax Slab Rates List for Different Goods

5% GST Tax Slab 12% GST Tax Slab 18% GST Tax Slab 28% GST Tax Slab

Items Items Items Items

 Biscuits  Waffles and

 Sugar  Ghee
wafers coated

with chocolate

 Flavoured
 Tea  Butter
refined sugar

 Sunscreen
5% GST Tax Slab 12% GST Tax Slab 18% GST Tax Slab 28% GST Tax Slab

Items Items Items Items

 Sliced Mango  Fruit juice  Cakes

 Dye

 Ayurvedic  Almonds  Pastries

Medicine  Hair clippers

 Sugar boiled  Preserved

 Skimmed milk confectionery vegetables  Ceramic tiles

 ICDS Food  20-litre  Soups  Paint

Packages packaged

drinking water

bottle  Suitcase  Wallpaper

 Milk food for

babies

 Drip Irrigation  Vanity case  Washing

System machine

 Edible oils
5% GST Tax Slab 12% GST Tax Slab 18% GST Tax Slab 28% GST Tax Slab

Items Items Items Items

 Biodiesel and  Briefcase  Water heater

 Khakra & select

Plain Chapati biopesticides

 Chocolates  Vacuum cleaner

 Roasted coffee  Mechanical

beans Sprayers  Ice cream  Dishwasher

 Packed paneer  Hearing aid  Chewing  Automobiles

parts and Gum/Bubble Motorcycles

accessories Gum

 Frozen

vegetables  Aircraft for

 Bamboo wood  Pasta personal use

building joinery

 Cashew nuts

 Instant food  Pan masala

 Packed coconut mixes

5% GST Tax Slab 12% GST Tax Slab 18% GST Tax Slab 28% GST Tax Slab

Items Items Items Items

water
 Spices  Bidis

 Corn flakes

 Fertilizer-grade
 Unbranded  Weighing
Phosphoric Acid
Namkeen  Curry paste machine ATM

 Preparations of
 Pizza bread  Mayonnaise  Vending
vegetables
machines

 Rusk  Salad dressings

 Fruits
 Aerated water

 Sabudana  Mixed
 Nuts
condiments

 Fish fillet
 Pickle
 Mixed

seasonings

 Packaged food
5% GST Tax Slab 12% GST Tax Slab 18% GST Tax Slab 28% GST Tax Slab

Items Items Items Items

items
 Murabba

 Branded

garments
 Fertilizers
 Chutney

 Footwear
 Footwear upto
 Jam priced above
₹500
₹500

 Jelly
 Apparels
 Headgear
upto₹1,000

 Namkeen

 Soap
 Real Zari

 Bhujia,

 Hair oil
 Agarbatti

 Frozen meat
5% GST Tax Slab 12% GST Tax Slab 18% GST Tax Slab 28% GST Tax Slab

Items Items Items Items

products
 Domestic LPG  Deodorants

 Packaged dry
 Straw,  Preparation for
fruits
basketware facial make-up

articles,

esparto
 Animal fat
 Shaving
sausage,

 Velvet Fabric

(No Input Tax  After-shave

 Non-AC
Refund) items
restaurants

 Tamarind  Shampoo
 State-run
Kernel Powder
lotteries

 Washing

 Mehndi Paste Powder

 Exercise books
5% GST Tax Slab 12% GST Tax Slab 18% GST Tax Slab 28% GST Tax Slab

Items Items Items Items

 Scientific and  Notebooks  Detergent

technical

instruments

 Work contracts  toothpaste

 Floor covering

 Apparel above  tampons

₹1000

 Plastic Waste

 toiletries

 Tooth powder

 Satellites and

payloads  kajal pencil

 Spoons sticks

 Coir mats

 Umbrella  tissues
5% GST Tax Slab 12% GST Tax Slab 18% GST Tax Slab 28% GST Tax Slab

Items Items Items Items

 Rubber Waste  Cake servers  computers

 Matting  Sewing machine  printed

 Insulin  Ladles  circuits

 Paper Waste  Forks  printers

 Medicines  Tongs  monitors

 Stent  Skimmers  camera

 Braille  Fish knives  speakers

5% GST Tax Slab 12% GST Tax Slab 18% GST Tax Slab 28% GST Tax Slab

Items Items Items Items

watches

 Mobile  CCTV

 Braille

typewriters
 Manmade Yarn  Electrical

transformer

 Cullet or Scrap
 Diagnostic kits
of Glass
& reagents  Optical fiber

 Braille paper
 Nil Sewing  Bidi Patta

Thread of

manmade
 Hearing aids
filaments  Mineral water

 Postage
 Sewing Thread  Tissues
stamps
of Manmade
5% GST Tax Slab 12% GST Tax Slab 18% GST Tax Slab 28% GST Tax Slab

Items Items Items Items

Staple Fibres
 Biomass  Poster Colours

Briquettes

 Glasses for
 Modelling
corrective
 Revenue Paste for
spectacles and
stamps Children
flint buttons

 First day  Envelopes

 Playing cards
covers

 Some parts of
 Ludo
 Stamp-post pumps

marks

 Carom board
 Steel products

 Chess board
 Plain Shaft
GST Tax Slab Rates List for Different Services
GST Tax
Services
Slabs
AC and Non AC Restaurants
Takeaway Food
Restaurants in hotels with a room tariff less than ₹7,500 (no input credit for these
restaurants)
Transport services like railways and airways
Transport of passengers by air in economy class
Supply of tour operators’ services
Selling of space for advertisement in print media
5%
Small restaurants with turnover of Rs. 50 Lakhs
Transport of passengers by motor cabs and radio taxis
Tailoring services
Small house-keeping service providers (No input credit available)
Crude and petroleum product transportation
Job work for footwear and leather goods

Business class air tickets

Hotels, inns, guest houses, which have a room tariff of Rs.1000 and above but less
than Rs.2500 per room per night
12%
Metro and monorail construction
Mining and drilling for crude or natural gas
Common effluent treatment plants
Restaurants in hotels with tariff at over ₹7,500 Outdoor Catering (input tax credit to
be available)
Hotels, inns, guest houses, which have a room tariff of Rs.2500 and above but less
18% than Rs.5000 per room per night
IT services
Telecom services
Theme parks, water parks and alike
Race club betting & gambling
Five-star Hotels
28% Entertainment & Cinema
Hotels, inns, guest houses, which have a room tariff of Rs.5000 and above per
room per night
GST IN WORLD

 Presently,there are around 160 countries that have implemented GST/VAT in some form

or other. In some countries,VAT is the substitute for GST

 GST was first introduced in France in the year 1954. It was consequently after France

that countries like Japan, South Korea, UK and Australia implemented the GST law.

In India,

 GST was first conceptualized and given a go ahead in 1999 during a meeting between the

then PM Atal Bihari Vajpayee and his economic advisory panel which included three

former RBI governors IG Patel, Bimal Jalan and C Rangarajan.

 In 2000 Vajpayee government started full fledged discussion on GST by setting up an

expert panel

 In 2006 congress government — Finance minister P.Chidambaram in his budget speech

sets an ambitious April 1, 2010 as deadline for GST implementation. Later congress

could not implement because of BJP and other oppositions during congress regime

opposed it

 Now in 2017, during BJP rule it is implemented.

Few intriguing facts:

 As of now, 90% of the world's population is covered under GST.

 India is 161th country to launch GST.

 India's GST rate is the highest in the world.

 The maximum tax slab i.e. 28% is the highest among more than 140 countries.
  2nd highest is Argentina with 27%.

 Goods and service tax network (GSTN) can handle 1.2 lakh transactions every second

amounting to ₹320 crore per month.

 July 1 will be known as “GST day”.

 It is the single biggest tax reform after independence.

 GST has replaced 17 taxes and 23 cess.

 India has chosen the Canadian model of dual GST as it has a federal structure.

France was the 1st country to introduce GST in 1950. Till now more rhan 150 countries have

adopted GST successfully. Following table shows the country showing GST with the rate of

GST:

Country Year Implementation Current Rate In %

AUSTRALIA 2000 10
FRANCE 1954 19.6
BELGIUM 1971 21
NEW ZEALAND 1986 15
SWEDAN 1969 25
GERMANY 1968 19
DENMARK 1967 25
SINGAPORE 1993 7
THAILAND 1992 7
INDONESIA 1984 10
GST In India

India as world’s one the biggest democratic country follows the federal tax system for

levy and collection of various taxes. Different types of indirect taxes are levied and collected at

different point in the supply chain. The centre and the states are empowered to levy respective

taxes as per the constitution of India. The Value Added Tax (VAT) when introduced was

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. Now the Goods and Services Tax (GST) will be

further significant breakthrough towards a comprehensive indirect tax reform in the country.

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

empowered committee. The committee was headed by Asim Dasgupta, Finance Minister in

Government of West Bengal. But an announcement to GST for the first time was made by

Palaniappan Chidambaram, the Union Finance Minister, during budget of 2007-08 that it would

introduced from 1 April 2010 and that the empowered committee of State Finance Ministers, on

his request would work with the Central Government to prepare a road map for introduction of

GST in India

After this announcement, the Empowered Committee of State Finance Ministers decided

to set up a Joint Working Group on 10 May 2007, with the Adviser to the Union Finance

Minister and the Member-Secretary of Empowered Committee as co-conveners and the

concerned Joint Secretaries of the Department of Revenue of Union Finance Ministry and All

Finance Secretaries of the states as its members. The Joint Working Group, after intensive

internal discussions as well as interaction with the experts and representatives of Chambers of

Commerce and Industry, submitted its report to the Empowered Committee on 19 November

2007.
 In April, 2008 the Empowered Committee (EC) submitted a report titled “A Model and

Roadmap for Goods and Services tax (GST) in India” containing broad recommendations about

the structure and design of GST. In response to the report, the Department of Revenue made

some suggestions to be incorporated in the design and structure of proposed GST. Based on

inputs from Government of India and states, the EC released its First Discussion Paper on Goods

and Services Tax in India on 10 November 2009 with the objective of generating a debate and

obtaining inputs from all stakeholders.

Mr. Pranab Babu, (Hon’ble Union Home Minister of Finance Pranab Mukherjee) has

made a remark in his Budget Speech of 2010 that an efforts will be made to introduce GST in

India from April 2011. This deadline was subsequently extended to April 2012. Ex- Finance

Minister Mr. P. Chidambaram in his Budget Speech of 2013 -14 while apologizing for the failure

to meet the April 2012 deadline announced further postponement of the same to April 2014.

Then after missing so many deadlines finally new government came into power in May 2014.

The Constitution (One Hundred and Twenty Second Amendment) Bill, 2014 was

introduced in the Lok Sabha by Finance Minister Mr. Arun Jaitley on 19 December 2014. The

Bill was passed by the House on 6 May 2015, receiving 352 votes for and 37 against. All no

votes came from members of the AIADMK. The Indian National Congress, which opposed the

Bill, walked out of the House before voting began. Although the BJD and the CPI (M) had

previously opposed the Bill, at the time of voting they cast their votes in favour. The

Government attempted to move the Bill for consideration in the Rajya Sabha on 11 May 2015.

However, members of opposition repeatedly stalled the proceedings of the House. In order to

appease the opposition for further scrutiny of the Bill, Jaitley moved a motion to refer the Bill to

Select Committee.
MEANING, ORIGIN AND TYPES OF GST

The introduction of VAT was one of the major reforms in indirect taxes in India at the

state & Central level. If that was the major reforms in indirect taxes then GST would be

advancement over the current existing system. Goods and Services Tax (GST) is a broad based

and a single comprehensive tax levied on goods and services consumed in country.

Goods and Services Tax (GST) is a comprehensive tax levy on manufacture, sale and

consumption of goods and services at the national level. GST is similar to the VAT system

which is a value added tax on goods with an Input Tax Credit (ITC) mechanism but GST also

includes services. Thus GST would be applicable on supply of goods and services as against the

present concept of tax.

GST is a value added tax on goods and services that is paid by the final consumer while

the retailer will be taking credit of the tax he has paid while buying goods for retailing. So in this

all the services of retailer or the chain behind him is taxed apart from the actual value of

production of that good.

This can be better understand with the help of an example, suppose that there is a chain of

manufacturer, wholesale dealer and the retailer and the GST is 10%. Suppose the manufacturer

purchases the inputs worth Rs. 100 for producing a good worth Rs. 140. He will pay net GST of

Rs. 4 by taking the tax credit of Rs. 10 paid on the inputs. Similarly the wholesaler who buys this

good and sells it for Rs. 150 will pay net GST of Rs. 1 and the retailer who sells it for Rs. 170

will pay net GST of Rs. 2 by taking the tax credit for his purchase which comes to be Rs. 15.

In the other words the GST is designed as a value-added tax, which means starting from

the manufacturer to the wholesaler and then retailer, each person will pay tax only on the value
addition done by him. So, suppose a manufacturer purchases inputs worth Rs. 40 and then

produces a good worth Rs. 100, then with a 10 % GST rate, his tax liability will turn out to be

only Rs. 6 (10 % of 60). This is because he gets to set-off the tax paid on the inputs against the

tax he pays on the final goods produced.

Ex-CAG Mr. Vinod Rai in his inaugural address to the National Conference on GST

describe the concept as “An integrated scheme of taxation that does not discriminate between

goods and services and is part of the proposed tax reforms that centre on evolving an efficient

and harmonized consumption tax system in the country. ” GST was originated in France in 1954

and today it has spread to over 150 countries. The taxable event for the GST will be the supply of

goods and the supply of services. The current taxable events such as manufacture, sale of goods

and rendering of services will not be relevant for GST. GST is of two types: (a) Single GST and

(b) Dual GST. Many countries have unified GST. However, in countries like Brazil and Canada

there is dual system wherein GST is levied both by the Central Government and the State

Governments. In India due to federal structure there shall be dual GST system. This will

comprise of:

• Central GST (CGST) which is levied by the Centre

• State GST (SGST) which is levied by the State

• Integrated GST (IGST) which is levied by the Central Government on inter-state supply of

goods and services.

PREVIOUS INDIAN INDIRECT TAXATION STRUCTURE & ITS

LIMITATIONS

Presently India has a dual tax system for taxation of Goods and Services. The tax system

is described by the 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

2005 but this system suffers from limitations. Due to non-availability of tax credit for inter-state

transactions of goods, consumer suffers double taxation burden of VAT.

Impact of GST as compared to the previous scenario

Goods from producer to wholesaler Present taxes GST (Rs.)

(Rs.)

Cost of production 80,000 80,000

Producers margin of profit 20,000 20,000

Producer’s price 1,00,000 1,00,000

Central Excise duty at 14% 14,000 Nil

VAT at 12.5% 14250 Nil

Central GST at (expected rate )12% Nill 12,000

State GST at (expected rate) 8% Nill 8,000

Total Price 1,28,250 1,20,000

Goods from producer to wholesaler Present taxes GST (Rs.)

(Rs.)

Cost of production 80,000 80,000

Producers margin of profit 20,000 20,000

Producer’s price 1,00,000 1,00,000

Central Excise duty at 14% 14,000 Nil

VAT at 12.5% 14250 Nil

Central GST at (expected rate )12% Nill 12,000

State GST at (expected rate) 8% Nill 8,000

Total Price 1,28,250 1,20,000

There is a clear difference between the price of the product calculated under VAT system

and the price of the product calculated under the Goods and Services Tax (GST) system.

Let us take an Example to understand this clearly:

In the above example, you can note that the tax paid on the sale within the state can be claim

against the tax paid on sale outside state in GST system, which is not possible in the current tax

system. The credit of CGST cannot be taken against the SGST and the credit of SGST cannot be

taken against the CGST but both credits can be taken against IGST
Tax Collected Every Month Till February 2018

Month Tax collected(in crores)

July 2017 ₹ 92283

August 2017 ₹ 90669

September 2017 ₹ 92150

October 2017 ₹ 83346

November 2017 ₹ 80808

December 2017 ₹ 86703

January 2018 ₹ 86318

February 2018 ₹ 85174

GST Collections in Rs. Cr.

95000 92283 92150
90669
90000
86703 86318
85000 83346
80808
80000

75000
July August September October November December January

Figure 1: GST Collections in Rs. Cr.

Source: Finance Ministry
 Figure 2: GST Collections in Rs. Cr. With top performer/ Laggards states and UT
Source: Times of India, Delhi dated on 28 February 2018

Goods and Services Tax (GST) collections has slipped yet again in January 2018 after showing
signs of a revival in December in what could further queer the pitch for the Centre to keep up
with the budgeted fiscal math for FY18. The Centre collected Rs.86, 318 crore in revenue from
the Goods and Services Tax in January. Of the Rs. 86,318 crores collected under GST for
January, Rs.14,233 crores have been collected as CGST, Rs.19,961 crores has been collected as
SGST, Rs.43,794 crores collected as IGST & Rs. 8,331 crores collected as Compensation Cess.

TOP PERFORMERS AND LAGGARDS:

Punjab, Chandigarh and Gujarat are the top contributors among all states and Union Territories
(UTs) in the first six months (July 1 to January 31) of the rollout of the Goods and Services Tax
(GST) regime. A&N Islands, Lakshadweep and Manipur are among laggard states and UTs.
. WHY IS GST COLLECTION SLIDING FROM SEPTEMBER TO DECEMBER 2017?

1. Reduced tax rates: Barring a blip in the month of September, the GST collection has seen a
consistent downslide. The prima facie reason behind the slip is the decision to slash GST rates on
a range of items. In November, the GST Council cut rates on more than 210 items, 180 of which
were in the highest slab of 28 per cent. The move meant that only 50 items were left in the
topmost slab. The council in fact went beyond the recommendations of the fitment committee
which had suggested keeping 62 items in the highest bracket. The rationalisation naturally
resulted in lower revenues.

2. Quarterly filing for small traders: In October, the GST Council had decided to allow
taxpayers with Rs 1.5 crore to file quarterly returns instead of the then existing monthly filing.
Hinging hopes on this fact, analysts are of the opinion that the revenue collection will step up in
December, which coincides with a quarter-end. The figures for December collection will be
available in the month of January. More than 16.50 lakh composition dealers, who are also
eligible for quarterly filings, will pay their taxes in December.

3. Poor compliance: As per the latest figures, out of the 99.01 lakh taxpayers, 53.06 lakh returns
have been filed for November, a data which points towards tepid compliance. Last month, the
finance ministry had said in a statement that tax compliance may not be up to the mark as key
features of GST, such as invoice matching, e-way bills, as well as reverse charge mechanism
have been postponed. The leakage in compliance has been a constant feature since the roll out of
the new tax regime and the government is hoping to plug it with the introduction of e-way bills,
slated in February. An e-way bill will have to be generated for all movement of goods - within or
outside a state - amounting to more than Rs 50,000 by prior online registration of the
consignment. Karnataka, Rajasthan and Uttarakhand already have the system in place. Nine
more states and one union territory are likely to have the e-way bill system since February.

‘1.03 crore taxpayers’

“The total revenue received under GST for January (received in January/February up to February
25) is Rs.86318 crore. About 1.03 crore taxpayers have been registered under GST so far till
February 25, 2018.” The government had collected Rs.86, 703 crore in December from GST
“While the GST revenues and number of return filers are gradually increasing or are same as
compared to the last month, the tax base and revenue numbers have certainly not reached
expected levels.”

The government added that while 17.65 lakh dealers have so far been registered under the
Composition Scheme, 1.23 lakh of these have opted out of the Scheme and have become regular
taxpayers. “Till February 25, there were 16.42 lakh Composition Dealers that are required to file
returns every quarter and the rest... are required to file monthly returns,” the release said.

Of the total collected, Rs.14, 233 crore came as Central GST, Rs.19, 961 crore as State GST,
Rs.43, 794 crore as Integrated GST and Rs.8, 331 crore as compensation cess.

Goods and services tax (GST) collections dipped marginally in January to Rs 86,318 crore as
traders continue to avoid payments due to loopholes. Data showed that compliance remained
patchy and collections in January remained a little lower than the previous month. Separate
numbers released by the finance ministry also showed that filing levels varied across the country,
with 88% of the traders in Punjab filing returns, while it was less than a quarter in Andaman &
Nicobar Islands.

Gujarat, UP, Haryana, Rajasthan, Delhi and West Bengal too reported over 70% filing, but
Maharashtra and Tamil Nadu were among states which fared much lower, despite being among
the more developed ones. Across the country, nearly 70% of the over one crore businesses filed
GST returns, official data showed.

BUDGET 2017-18: GST BIGGEST EARNER FOR THE GOVERNMENT:

Goods and Services Tax, which subsumed more than a dozen of levies, stood as the highest
contributor for the government in terms of collecting revenues. Hailed as the biggest tax reform
since Independence, GST single-handedly contributed 32.8 per cent of the total revenues in
2017-18, data from the budget document showed. The collections in the form of corporate taxes
held the second spot with 27.3 per cent share in the total revenues.
Type of GST Corporate Personal Excise Customs Others
Tax Tax Income
Tax

Share in 32.8 27.3 23.3 11.4 5 0.2

%

Share in Percentage
GST Corporate Tax Personal Income Tax Excise Customs Others
5% 0%
12%

33%

23%

27%

Figure 3: GST Share in Total Tax Collection

Source: Finance Ministry

Referring to public finances, Union Finance Minister Arun Jaitley said in a post budget
conference that in 2017-18 (ending March 2018), the government will be "receiving GST
revenues only for 11 months, instead of 12 months" which "will have fiscal effect".

States issued Rs 283.98 bn as GST compensation During July to December 2017:

The Centre has released Rs 283.98 billion as GST compensation to states for July-December,
with Karnataka getting a major pie. In written reply to a Rajya Sabha question; Finance
Minister Arun Jaitley said states are protected from any revenue loss on account of
implementation of the new indirect tax regime under the Goods and Services Tax law.
A total of Rs 283.98 billion has been released to the states as compensation for the period July-
December 2017," he said. The government has lowered the indirect tax revenue collection
forecast in the revised estimates by Rs 518.56 billion to Rs 8.75 trillion in the current fiscal. As
per the Budget estimates, over Rs 9.26 trillion was to be collected from indirect taxes. During
July-December 2017, Rs 41.30 billion has been released as compensation to Karnataka, followed
by Rs 28.38 billion to Punjab, Rs 25.32 billion to Gujarat, Rs 21.19 billion to Bihar, Rs 19.11
billion to Rajasthan and Rs 15.20 billion to Uttar Pradesh, among various states.

States Karnataka Punjab Gujarat Bihar Rajasthan Uttar

Pradesh

Compensation 41.30 28.38 25.32 21.19 19.11 15.20

Amount by
Central
Government on
Account of
Revenue Loss to
States (Rs. In
billions)
Overall achievements of the GST

Total cess

The amount collected through cess flows into compensation fund, which is used to compensate

states for revenue losses on account of implementation of GST

The two states: Maharashtra and Uttar Pradesh, alone comprise about 24 per cent of the total

cess collections of Rs 30,224 crore

Total revenue

Despite various reservations about GST, the revenue collection of Rs 6,100 crore has brought

some relief for the state as it was anticipated that the collection might go down.

Total traders

IGST is shared between the centre and the states, where goods or services have been supplied

from Maharashtra

The level of IGST indicates the volume of exports from Maharashtra to other states. Maharashtra

also tops in GST returns filed, in absolute numbers

Out of 8.64 lakh assesses who were supposed to file returns, over 6 lakh have done so in

Maharashtra.This comes to nearly 70 per cent of the total assesses

Figure 4: GST Share Collection State Wise
Source: India Today Newspaper
Uttar Pradesh

UP stands 2nd in return-filing, at 4.16 lakh returns filed out of 5.67lakh assesses. The state

collected Rs 3,549crore through cess levied on sin and luxury goods

Tamil Nadu

Tamil Nadu stands 2nd with respect to SGST collection, having collected Rs 8,739 crore, which

is about half of the SGST amount raised by Maharashtra.

Karnataka

Karnataka ranks 3rd with cess collection of Rs 3,110 crore and SGST collection of Rs 7,736

crore.

Chhattisgarh

Chhattisgarh ranks 4th with raising Rs 2,288 crore as cess.

Gujarat

Gujarat ranks 4th in SGST collection by collecting Rs 7,375 crore

IMPACT OF POST GST ON INDUSTERIES

GST – Analysis and Opinions

GST has brought in ‘one nation one tax’ system, but its effect on various industries is slightly

different. The first level of differentiation will come in depending on whether the industry deals

with manufacturing, distributing and retailing or is providing a service.

Impact of GST on Manufacturers, Distributor, and Retailers

GST is a boost competitiveness and performance in India’s manufacturing sector. Declining

exports and high infrastructure spending are just some of the concerns of this sector. Multiple

indirect taxes had also increased the administrative costs for manufacturers and distributors and

with GST in place, the compliance burden has eased and this sector will grow more strongly.

But due to GST business which was not under the tax bracket previously will now have to

register. This will lead to lesser tax evasion.

Impact of GST on Service Providers

As of March 2014, there were 12, 76,861 service tax assessees in the country out of which only

the top 50 paid more than 50% of the tax collected nationwide. Most of the tax burden is borne

by domains such as IT services, telecommunication services, the Insurance industry, business

support services, Banking and Financial services, etc. These pan-India businesses already work

in a unified market and will see compliance burden becoming lesser. But they will have to

separately register every place of business in each state.

Sector-wise Impact Analysis

Logistics

In a vast country like India, the logistics sector forms the backbone of the economy. We can

fairly assume that a well organized and mature logistics industry has the potential to leapfrog the

“Make In India” initiative of the Government of India to its desired position.

E-commerce

The e-commerce sector in India has been growing by leaps and bounds. In many ways, GST will

help the e-com sector’s continued growth but the long-term effects will be particularly

interesting because the GST law specifically proposes a Tax Collection at Source (TCS)

mechanism, which e-com companies are not too happy with. The current rate of TCS is at 1%.

Pharma

On the whole, GST is benefiting the pharma and healthcare industries. It will create a level

playing field for generic drug makers, boost medical tourism and simplify the tax structure. If

there is any concern whatsoever, then it relates to the pricing structure (as per latest news). The

pharma sector is hoping for a tax respite as it will make affordable healthcare easier to access by

all.

Telecommunications

In the telecom sector, prices will come down after GST. Manufacturers will save on costs

through efficient management of inventory and by consolidating their warehouses. Handset

manufacturers will find it easier to sell their equipment as GST has negated the need to set up

state-specific entities, and transfer stocks. The will also save up on logistics costs.

Textile

The Indian textile industry provides employment to a large number of skilled and unskilled

workers in the country. It contributes about 10% of the total annual export, and this value is

likely to increase under GST. GST would affect the cotton value chain of the textile industry
which is chosen by most small medium enterprises as it previously attracted zero central excise

duty (under optional route).

Real Estate

The real estate sector is one of the most pivotal sectors of the Indian economy, playing an

important role in employment generation in India. The impact of GST on the real estate sector

cannot be fully assessed as it largely depends on the tax rates. However, the sector will see

substantial benefits from GST implementation, as it has brought to the industry much-required

transparency and accountability.

Agriculture

The agricultural sector is the largest contributing sector the overall Indian GDP. It covers around

16% of Indian GDP. One of the major issues faced by the agricultural sector is the transportation

of agri-products across state lines all over India. GST will resolve the issue of transportation.

FMCG

The FMCG sector is experiencing significant savings in logistics and distribution costs as the

GST has eliminated the need for multiple sales depots.

Freelancers

Freelancing in India is still a nascent industry and the rules and regulations for this chaotic

industry are still up in the air. But with GST, it will become much easier for freelancers to file
their taxes as they can easily do it online. They are taxed as service providers, and the new tax

structure has brought about coherence and accountability in this sector.

Automobiles

The automobile industry in India is a vast business producing a large number of cars annually,

fueled mostly by the huge population of the country. Under the previous tax system, there were

several taxes applicable to this sector like excise, VAT, sales tax, road tax, motor vehicle tax,

registration duty which will be subsumed by GST.

Startups

With increased limits for registration, a DIY compliance model, tax credit on purchases, and a

free flow of goods and services, the GST regime truly augurs well for the Indian startup scene.

Previously, many Indian states had different VAT laws which were confusing for companies that

have a pan-India presence, especially the e-com sector. All of this has changed under GST.
CHALLENGES IN IMPLEMENTATION OF GST

There are following challenges in implementing GST throughout the country:

State reluctant to implement GST:

Under GST the taxes would be levied on the basis of destination principle (i.e. taxed in state

where goods & services are sold /rendered) and state government is fearful of losing money.

Central government should come up with revenue sharing model to solve state’s grievances.

Legislative challenge/ Federal character:

India is a federal democratic country where both Centre and State Government Exists. Any

change in the taxation powers of federal or state government requires amendments of Indian

Constitution by two third majorities of its members present and it is also to be ratified by more

than 50% state legislative assemblies. Centre Government has already amended “The

Constitution (One Hundred and Twenty Second Amendment) Bill, 2014” in Lok Sabha. Now it

has to be approved by Rajya Sabha. Central Government should take all opposite parties into

confidence and get this Bill passed by Rajya Sabha. Moreover State governments should be

convinced to adopt GST bill in their respective states.

Infrastructure:

IT infrastructure is a key component for success of GST. Without a well-designed and well-

functioning IT system, the benefits of GST will remain elusive. In case of VAT also Centre had

broad IT infrastructure, but it was a major issue with the states. Therefore both Centre and State

needs to develop a High standard IT infrastructure to get the fruits of Goods and Services Tax.
Rate of Tax:

The major challenge in implementing GST is to determine the rate of tax. GST rate should be

such rate which generates at least the same revenue to the state and Centre as generated in

current tax structure. Till now there has been no official announcement regarding GST rates in

India but Finance Minister said that GST Rate should be around 18%.

Consent of States

For implementing it is critical that GST bill is passed by the respective state Governments in

state assemblies so as to bring majority. This is a herculean task. Revenue Neutral Rate (RNR):

It is one of Prominent Factor for its success. We know that in GST regime, the government

revenue would not be the same as compared to the current system. Hence, through RNR

Government is to ensure that its revenue remains the same despite of giving tax credits.

Threshold Limit in GST

While achieving broad based tax structure under GST, Both empowered committee and Central

Government must ensure that lowering of threshold limit should not be a “taxing” burden on

small businessmen in the country

Robust IT Network

Government has already incorporated Goods and service tax network (GSTN). GSTN has to

develop GST portal which ensure technology support for registration, return filing, tax payments,

IGST settlements etc. Thus there should be a robust IT backbone Extensive Training to Tax

Administration Staff
GST is absolutely different from existing system. It, therefore, requires that tax administration

staff at both Centre and state to be trained properly in terms of concept, legislation and

Procedure.

Additional Levy on GST

The Purpose of additional Levy is to compensate states for loss of revenue while moving to GST.

We acknowledge that fundamental purpose of GST is to make “INDIA” as one state where inter-

state movement of goods is common. In this situation, it would defeat the very purpose of GST

in the country.
BENEFITS OF GST

1. The main reason to implement GST is to abolish the cascading effect on tax. A product on

which excise duty is paid can also be liable to VAT. Suppose a product A is manufactured in a

factory. As soon as it releases from factory, excise duty has to be paid to central government.

When the product A is sold in same state then VAT has to be paid to the State Government. Also

no credit on excise duty paid can be taken against output VAT. This is termed as cascading effect

since double taxes is levied on same product.

2. GST will lead to more transparent and neutral manner to raise revenue.

3. Price reduction as credit of input tax is available against output tax.

4. Simplified and cost saving system as procedural cost reduces due to uniform accounting for all

types of taxes. Only three type of account; CGST, SGST & IGST have to be maintained.

5. GST is structured to simplify the current indirect system. It is s long term strategy leading to a

higher output, more employment opportunities and economy boom.

6. It is beneficial for both economy and corporations. The reduced tax burden on companies will

reduce production cost making exporters more competitive.

7. GST will reduce transaction costs for taxpayers through simplified tax compliance.

8. It will result in increased tax collections due to wider tax base and better conformity.

Overall introduction of Goods and Services Tax (GST) will be panacea for Indian economy.

Studies show that this would instantly spur economic growth. Introduction of GST would also

make Indian products competitive in the domestic and international markets. 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%. Last but not the least, this tax, because of its

transparent character, would be easier to administer

BENEFITS OF GST TO VARIOUS STAKEHOLDERS

GST will offer following benefits to its various stakeholders;

For the Centre and the States:

According to experts, by implementing GST, India will gain $ 15 Billion a year. This is because

it will promote more exports, create more employment opportunities and boost growth.

For individuals and companies:

In the GST system, taxes for both Centre and State will be collected at one point of sale. Both

will be charge on manufacturing cost. Individuals will be benefited by this as prices are likely to

come down. Lower price mean more consumption, more consumption means more production

and thereby helping in the growth of the companies.

CONCLUSION

The concept of GST was proposed in India few years back. Its implementation is still in

progress but with the arrival of new Government we can hope for its speedy review and

application in real world. The new Government is in favour of GST and it is very much

justifiable because we saw in this paper, that the concept of GST have many positive

implications. If we sum up few we can easily say that GST will make Indian tax system least

complicated and most efficient. And the step has been taken by the new government by

introducing the bill in the Lok Sabha.

The said bill has got the approval of Lower House of parliament i.e. Lok Sabha. Now the bill is

pending with the Upper House i.e. Rajya Sabha where Government has no clear majority and it

is relying on the support of opposition parties to get bill passed.

Government should be very clear with the fact that for smooth working of GST, the Information

Technology/ Infrastructure should also be properly developed throughout India. Government

should take the state government into confidence to implement the GST. Moreover every effort

should be taken so that no item left without coming into the preview of GST otherwise the core

purpose of introducing GST will get fail. Some parties are opposing the proposed GST with

certain objections & willing to see it passed with some amendments. So it’s better to discuss and

settle down those objections to come up with healthy GST.

Bibliography

[1] Budget Speech by Union Finance Minister, Government of India in 2007-08 & 2009-10.

[2] The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014

[3] Purohit, M. C., & Purohit, V. K. (2010). Goods and Service Tax in India. Delhi: Foundation

for Public Economics and Policy Research.

[4] Herekar,P.M.(2012) , “Evaluation of impact of Goods and Service Tax (GST)”, Indian

Streams Research Journal, Vol.2, No. 1,PP. 1-4.

[5]Neha & Sharma,M. (2014), “A Study on Goods and Services Tax in India”, Research Journal

of Social Science and Management, Vol. 3, No. 10, PP. 119-123.

[6]Kumar, N. (2014), “Goods and Services Tax in India: A Way Forward”, Global Journal of

Multidisciplinary Studies, Vol. 3, No. 6, PP. 216-225.

[7]Garg, G. (2014), “Basic Concepts and Features of Good and Service Tax in India”,

International Journal of Scientific Research and Management, Vol. 2, No. 2, PP. 542-549

Websites

[8] http://finmin.nic.in/GST/Empowered%20Committee%20of%20SFM%20%20First%20Di

scussion%20paper.pdf

[9]http://www.finmart.com/blog/gst-india-goods-service-tax/

[10] http://gst.customs.gov.my/en/Pages/default.aspx

[11] http://papers.ssrn.com/sol3/papers.cfm?abstract_id=16822 60