A PROJECT REPORT

on
Goods And Services Tax

Submitted in partial fulfilment of the requirement for the award of the degree of

BACHELOR OF COMMERCE

Submitted to
Department of Commerce
SHAMBHU DAYAL (P.G.) COLLEGE, GHAZIABAD
AFFILIATED TO C.C.S. UNIVERSITY, MEERUT U.P.

Session : 2023-24
Supervised by:

Submitted by:

Ritika tyagi
Roll Number: 210024303174

B.com 3rd year

 CERTIFICATE

This is to certify that Miss RITIKA TYAGI has worked

And duly completed her project work for the degree
of Bachelor in Commerce under the faculty of
Commerce. Project is entitled, “GOODS AND
SERVICES TAX” under my supervision .I further
certify that the entire work has been done by the
Learner under my guidance and that no part of it has
been Submitted previously for any degree of
diploma of any University.
 DECLARATION

I, RITIKA TYAGI hereby declare that the work, which

is Being presented in the project entitled “ GOODS
AND SERVICE TAX ” in Partial fulfillment of the
requirement for the award of Bachelor of Commerce
(B.Com) degree, is an authentic Record of my own
work carried out under the supervision of
___________________ The matter embodied in this
project Has not been submitted by me for the award
of any other
Degree.
Date:-01-04-2024
 ACKNOWLEDGEMENT

To list who all have helped me is difficult because

they are so numerous and the depth is so enormous.
I would like to acknowledge the following as being
idealistic channels and fresh dimensions in the
completion of this project. I take this opportunity to
thank the University for giving me chance to do this
project. I would like to thank my Principal,
_______________ for providing the necessary
facilities required for completion of this project. I
take this opportunity to thank our Coordinator Mrs.
Aditi Grag for her moral support and guidance. I
would like to thank College Library, for having
provided various reference books and magazines
related to my project. Lastly, I would like to thank
each and every person who directly and indirectly
helped me in the completion of the project
especially my parents and peers who supported me
throughout my project.
 CONTENTS

• Introduction to Goods and service tax (GST)

• Evolution of GST
• Literature Review
• Objective of study
• Concept of GST
• Objective and advantages of GST
• Characteristics of GST
• Proposed benefit of GST
• The Structure of GST in India
• Levy or charge of GST
• Advantages and Disadvantages of GST
• Impact of GST across sector
• Time value and supply of GST
• Challenges of GST in Indian context
• Conclusion
• Reference
• Bibliography
Introduction to Goods and
Services Tax (GST)
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 set-offs which would
eliminate the burden of all cascading effects.
Presently, services sector in India constitutes a tax
base with vast potential which has not been
exploited as yet. It is in this context that GST is
justified as it has subsumed under it almost all the
services for the purpose of taxation. Since major
Central and State indirect taxes have got subsumed
under GST, the multiplicity of taxes has been
substantially reduced which, in turn, would
decrease the operating costs of the country’s tax
system.
In a nutshell, GST is a comprehensive indirect tax
levy on manufacture, sale and consumption of
goods as well as services at the national level. GST
is an indirect tax for the whole of India to make it one
unified common market. GST is designed to give
India a world class tax system and improve tax
collections. It would end the long-standing
distortions of differential treatment of
manufacturing sector and services sector. GST will
facilitate seamless credit across the entire supply
chain and across all States under a common tax
base.
 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 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.
The Constitution (122nd Amendment) Bill, 2014 was
passed by the Lok Sabha on 6th May, 2015 after
which the Rajya Sabha passed the Bill with 9
amendments on 3rd August, 2016. The Lok Sabha
then passed the modified Bill on 8th August, 2016.
After getting approval of half of the States, it was
sent to the President for his assent which was given
on 8th September 2016. Thus the road to GST rollout
was cleared and the process of enactment was
completed.

India has, since launching the GST on July 1,

2017, implemented the following tax rates:
• A 0% tax rate applied to certain foods, books,
newspapers, homespun cotton cloth, and hotel
services.
• A rate of 0.25% applied to cut and semi-
polished stones.
• A 5% tax on household necessities such as
sugar, spices, tea, and coffee.
• A 12% tax on computers and processed food.
• An 18% tax on hair oil, toothpaste, soap, and
industrial intermediaries.
 • The final bracket, taxing goods at 28%, applies
to luxury products, including refrigerators,
ceramic tiles, cigarettes, cars, and
motorcycles.
The previous system, with no GST, implies that tax is
paid on the value of goods and margin at every stage
of the production process. This would translate to a
higher amount of total taxes paid, which is carried
down to the end consumer in the form of higher
costs for goods and services. The implementation of
the GST system in India is, therefore, a measure that
is used to reduce inflation in the long run, as prices
for goods will be lower.
 Literature Review
Poonam, 2017 in her study , she had cleared that
GST would be a very important step in the field of
indirect taxation. The cascading and double
taxation effects can be reduced by combing
central and state taxes. Consumer’s tax burden
will approximately reduce to 25% to 30% when
GST is introduced. After introduction of GST
concept, Indian manufactured products would
became more and more competitive in the
domestic and international markets. This taxation
system would instantly encourage economic
growth.
GST with its transparent features will prove easier
to administer .In this paper the author has tried to
attempt to spot the concept of GST & its current
status in India. Paper has tried to give information
about GST system. The study also aims to be
familiar with the advantages and challenges of
GST in Indian scenario.
Shefali Dani has proposed that GST regime is a
half-hearted attempt to rationalize indirect tax
structure. Approximately more than 150 countries
have implemented GST concept. As per
researcher government of India must study the
GST regime set up by various Countries and also
their fallouts before implementing gst.
IT is the need of hour that, the government must
make an attempt to insulate the vast poor
population of India, against the inflation due to
implementation of GST. There is no doubt, GST
will simplify its existing indirect tax system and
will have to help to remove inefficiencies created
by the existing current heterogeneous tax system,
only if there is a clear consensus over issues of
threshold limit, revenue rate, and inclusion of
petroleum products, electricity, liquor and real
estate.

Research Problem
The concept of Goods and Service Tax (GST)
is one of the biggest revolution in decades
around the world. But it seems that India is
taking very slow steps to meet target. This
research intends to focus on understanding
concept of goods and service tax and its
impact on Indian economy.
Objectives Of The Study

1. To study the concept of Goods and

Services Tax (GST)
2. To study the impact of GST on Indian
Economy
3. To understand how GST will work in India.
Concept Of Goods and Service
Tax

GST or Goods and Services Tax is applicable

on supply of goods and services. It will
replace the current taxes of excise, VAT and
service tax. Currently there are different VAT
laws in different states. This creates
problems, especially when businesses sell to
different states. Also, most businesses have
to pay and comply with 3 different taxes –
excise, VAT, and service tax.GST will bring
uniform taxation across the country and
allow full tax credit from the procurement of
inputs and capital goods which can later be
set off against GST output liability. This
reform gives equal footing to the big
enterprises as well as SMEs. The aim of GST
is thus to simplify tax hurdles for the entire
economy. Who will have to pay GST?GST will
be paid by all manufacturers and sellers. It
will also be paid by service providers such as
telecom providers, consultants, chartered
accountants etc.
However, being an indirect tax, GST will be
ultimately borne by the end consumers, just
like in the current process What kind of GST
will be implemented in India? India will
implement the Canadian model of Dual GST,
i.e., both the Centre and State will collect
GST. GST is a destination based tax system.
Supply of goods and services are base for
charging tax. GAT is very comprehensive
indirect taxation system on manufactured
product and services, sale and consumptions
of goods and services at national level.GST is
going be one of the biggest tax reform after
independence till the date.
GST is very comprehensive indirect taxation
system on goods manufactured and services
provided. It is one of the biggest tax reform in
country. Clause 366(12A) of the Constitution
Bill defines GST as Goods and services taxdz
means any tax on supply of goods, or
services or both except taxes on the supply of
the alcoholic liquor for human consumption.
Further the clause 366(26A) of the Bill defines
Services means anything other than Goods.
Thus it can be said that GST is a
comprehensive tax levy on manufacture, sale
and consumption of goods and service sat a
national level. The proposed tax will be levied
on all transactions involving supply of goods
and services, except those which are kept out
of its purview
Objectives and Advantages of
Goods and Services Tax
1. Tomake tax rate uniform throughout
the country: Only of the main objective of
GST is to have uniformity of indirect tax rates
throughout the country. GST rates are same
throughout the country. Earlier there were
different rates of Sales Tax/Value Added Tax
in the States. Its motto is One Nation, One
Market. The main objective or advantage of
GST is single tax structure right the
manufacturing.
2. To
remove cascading effect of
Taxes: Cascading effect of taxes means levy
of tax on tax. GST is levied only towards the
net value added portion and not towards the
full portion of value as the taxpayer enjoys
input tax credit. Goods and services will cost
less due to removal of cascading effect of
taxes. Due to input tax credit, GST would be
finally paid by the consumer for the goods
and services purchased.
3. To Simplify Taxation Process: GST is a
comprehensive indirect tax. The taxes which
have been subsumed in GST include:
 (i) Central Excise Duty (except on petroleum
products),
(ii) Service Tax,
(iii) Value Added Tax levied by the
State Government,
(iv) Central Sales Tax,
(v) Additional Customs Duties,
(vi) Entry Tax,
(vii) Entertainment Tax,
(viii) Luxury Tax,
(ix) Tax on Lotteries, etc.
Thus, GST has integrated different tax line and it
prevents multiple tax layers imposed on goods
and services.
GST reduces the burden of taxes and ensure
compliance of tax payment. The number of
compliances is lesser. Thus, GST simplifies
taxation process and helps in ease of doing
business. This is a huge benefit for the business
enterprises.
4. Tomake Indirect Tax Management
Effective: The State Government and
Central Government has to administer now
mainly one indirect tax, i.e., GST after
 implementation of GST. Therefore,
administration of GST will be more effective.
As a result, tax evasion is likely to reduce.
Previously, management of indirect taxes was
a complicated tax for the Government.
5. Toattract more Foreign Direct
Investment: Goods and Services Tax helps
in ease of doing business. Therefore, it will
attract more Foreign Direct Investment.
6. Simple
and Easy online
Procedure: GST returns are filed online.
The online procedure is simple and easy.
Online filing of GST returns helps in making
tax administration corruption free.
7. Composition Scheme for Small
Businesses: Composition Scheme is a
simple and easy scheme under GST for small
tax payers as they can get rid of GST
formalities and pay GST at a fixed rate of
turnover. This scheme can be opted by small
tax payer whose turnover is less than the
prescribed limit and is not engaged in making
inter-State supplies.
8. Enhanced Productivity of
Logistics: After abolition of octroi and entry
 tax restriction on inter statement movement
of goods has reduced. This has increased the
productivity of logistics companies.
9. Creation of Common National
Market: GST has given a boost to India’s tax
to Gross Domestic Product ratio which helps
in promoting economic efficiency and long-
term growth. GST has led to uniform tax law
and it has formed a common national market.
10. Regulation of Unregulated and
Unorganised Sector under GST: GST
has brought unregulated and unorganised
sectors such as textiles and construction
under regulation .
Characteristics of Goods and
Services Tax
1. Comprehensive Indirect Tax: GST is a
comprehensive indirect tax. It has subsumed 17
indirect taxes levied by the State Governments and
the Central Government under the earlier indirect
tax regime. GST has integrated various taxes on
goods and services into one unified tax. Thus, GST
has brought about unified tax regime.

2. Consumption or Destination Based Tax:

GST is payable in the state in which goods and
services are finally consumed. Thus, it is a
consumption or destination based tax.

3. Same GST Rates throughout the country:

The motto of GST is One Nation One Tax One
Market. Under the GST regime, the GST rates are
same throughout the country. Earlier, the rates of
VAT/Sales Tax were different in the States.

4. Tax on Supply of Goods and Services: GST is

a tax on supply of goods and services, or both,
except taxes on supply of alcoholic liquor for human
consumption. At present petroleum products will be
out of GST. Petroleum products can be brought into
the GST network if the GST Council so decides.
Petroleum products means petroleum crude, high
speed diesel, motor spirit, i.e., petrol, natural gas
and aviation turbine fuel.
The word used is “Supply” as against the earlier
concept of tax on the manufacture of goods or on
sale. Therefore, stock transfers and branch transfers
will also come under the GST net. GST is charged by
the registered person/tax payer from the purchaser
of goods and services.

5. No Tax on due to Input Tax credit: Goods and

Services Tax belongs to family of Value Added Tax.
GST is levied on the incremental value of the goods.
Further, Input Tax Credit (in short, ITC) is allowed
which avoid cascading effect of taxes. Every
registered taxable person who carries on business
at any place in India is entitled to credit of tax on
inputs admissible to him which will be credited to
the electronic credit ledger of such person in the
records of the Government. Thus, there is no tax on
tax.

6. Collection of GST by Registered

Person/Tax payer: GST can be collected only by a
person/tax payer who is registered under the Central
Goods and Services tax Act, 2017.
Person includes:
(a) an individual
(b) Hindu Undivided Family
(c) a company
(d) a firm
(e) a Limited Liability Partnership
(f) an association of persons
(g) any corporation established by or under any
Central Act, State Act or a Government Company
(h) any body corporate
(i) a cooperative society
(j) a local authority
(k) Central Government or State Government

7. GST Collected is Payable to the

Government: GST is collected on supply of goods
and services. GST collected on supply of goods
and/or services, after deduction of GST paid on
purchases of good and/or services, is payable to the
Government.

8. Multiple Rate Structure: GST has multiple rate

structure. GST rates for goods include 5%, 12%,
18%, 28% and 3%. GST rates for services are 5%,
12%, 18% and 28%.
 Proposed Benefits of GST
1. Dynamic common market: GST would make
India a dynamic common market and result in
generation of positive externalities. By ensuring
uniformity of indirect tax rates across the country, it
will substantially improve the ease of doing
business.
2. Elimination of cascading effect: Under GST,
provision of seamless input tax credit across
transactions will avoid tax cascading, eliminate
double taxation and improve resource allocation.
3. Efficiency: Subsuming of all major indirect taxes
will result in the removal of inefficient taxes. With as
single tax to be paid, manufacturers will become
more competitive and this could lead to growth in
exports.
4. Reduced compliance costs: Harmonisation of
tax rates and laws along with seamjless input tax
credits and a sound IT infrastructure is expected to
lead to reduced compliance costs. As all the
taxpayer services like registrations, payments,
returns etc. will be available online, the compliance
process would become simpler.
5. Reduction in tax evasion: Uniform rates of
taxation would reduce the incentive for tax evasion
by eliminating rate arbitrage opportunities between
neighbouring states and that between intra-State
and inter-State sales.
6. Improved collection efficiency: GST is also
desirable from the point of view of tax policy and
collection. Even if the taxes are lowered, the
revenue of the Union and the states is expected to
be buoyant due to less evasion. A single rate across
all goods and services will eliminate classification
disputes and make tax assessment more
predictable. Harmonisation of tax assessment, levy
and collection procedures across states will reduce
compliance costs, limit evasion, enhance
transparency and improve collection efficiency.
7. Revenue generation: By controlling tax leakage
from the system and having a wider base, GST would
generate more tax revenues for both the Central and
State Governments.
8. Encourages savings and investment: As GST is a
tax on consumption and not on income, so the tax
system inherently encourages savings and
investments instead of consumption. Further, input
tax credit would lead to a decrease in the cost of
capital goods and provide boost to investments.
9. Improved efficiency of logistics: Due to GST
implementation, the restriction on inter-State
movement of goods is likely to be lessened and the
logistics sector is anticipated to start consolidating
warehouses across the country. In the erstwhile
indirect tax structure, decisions related to logistics
and distribution centres were based on tax
considerations as opposed to operational
efficiency. With GST in place, these decisions will
now be based on operational efficiency and
warehouses would be set up at locations that would
help in reaching customers faster and reduce costs.
10. Regulation of the unorganized sector: For a
large unorganized sector that exists in business,
GST has provisions for online compliances and
payments, and availing of input credit only when the
supplier has accepted the amount, thereby bringing
accountability and regulation to these businesses.
11. Export competitiveness: With GST in place, the
export industry in India would be able to have
internationally competitive prices due to the smooth
process of claiming input tax credit and the
availability of input tax credit on services. The
exports of goods or services would be a zero rated
supply under GST implying that GST would not be
levied on export of goods or services. All this, in turn,
would provide a push to government’s ‘Make in
India’ campaign. Para 2.3 Introduction to GST 12
taxmann®
12. Higher threshold for registration: As per the
current VAT structure, any business with a turnover
of more than ` 5 lakh (in most states) is liable to pay
VAT (different rates in different states). Similarly, for
service tax, service providers with turnover less than
` 10 lakhs are exempted. Under GST this threshold
has been increased to ` 20 lakhs thus exempting
many small traders and service providers.
13. Composition scheme for small businesses:
The composition scheme under the GST regime is a
method of levy of tax designed for small taxpayers
whose turnover is up to ` 1 crore (` 75 lakhs in case
of 9 Special Category States). Those who opt for this
scheme can file returns on a quarterly basis unlike
the others who have to file returns on a monthly
basis. Under the scheme, small businesses,
manufacturers and restaurants will be subject to a
GST rate of 0.5%, 1% and 2.5% respectively on
turnover. The Composition scheme has been
designed to simplify and reduce the burden of
compliance for smaller taxpayers.
14. Benefits to consumers: The final price of goods
is expected to be lower due to seamless flow of
input tax credit between the manufacturer, retailer
and supplier of services. Average tax burden on
companies is likely to come down which is expected
to reduce prices and hence benefit the consumer.

The Structure of GST in India

In the context of India, it is important to note
that both the state and the centre need to
benefit from GST. With this aim in mind, the
GSTC introduced a dual GST mode that
distributed powers to both Centre and States to
levy the tax concurrently.
Accordingly, the current GST structure
comprises of the following components:
1. Central GST (CGST)
CGST is levied by the Central Government of
India on the intra-state supply of goods and
services. The transaction value is defined as
the price actually paid or payable for the said
supply of goods or services.
2. State GST (SGST)
GST imposed by specific State governments on
the intra-State trade and services or trade
within the state is called SGST(State-GST). Here
the revenues are earned by the State govt. due
to SGST as the transaction occurred within the
state.
3. Union Territory GST (UGST)
In case of Union territories such as Chandigarh,
instead of State govt. the GST is collected by
the Central administration and is referred to as
UGST
4. Integrated GST (IGST)
IGST would be collected by the central
government on the inter-state transactions of
goods and services. Centre would levy IGST
(CGST plus SGST) on all inter-state
transactions of taxable goods and services.
With dual GST, it is naturally a matter of
concern which component of GST is applicable
to whom and when.
To determine this, it is first important to
ascertain the location of the supplier of the
goods/ services and the consumer. Location
defines whether a combination of SGST and
CGST will be applicable or only IGST.
 Levy or charging of GST
The following are the provisions regarding levy of
GST in summarised form:
1. Levy by registered supplier of goods and/or
services: GST is levied, i.e. charged by the supplier
of goods or services, or both, who is registered
under the GST Act. It is levied each time when the
goods or services, or both, are supplied and at the
prescribed rate of GST.
2. On intra-State Supply: When the supply is intra-
state (e.g., when the supplier is located in Delhi and
place where goods are supplied is also in Delhi),
both CGST and SGST are charged at half the
prescribed rate. For example, if the GST rate is 18%,
then both CGST and SGST will be charged @ 9%
each.
3. On inter-State supply: When the supply is inter-
state i.e. outside the state (e.g., if the supplier is
located in Delhi and goods are supplied in Haryana),
IGST is charged at the prescribed rate. For example,
if the GST rate is 18%, then IGST will be charged at
18%.
4. Value on which GST is charged: When goods are
sold, GST is levied by the seller of the goods at the
prescribed rate on the net sale value after adjusting
trade discount and also cash discount, if any, given
at the time of sale.
5. Input GST and Output GST: Input GST is paid on
Inward Supply. Inward Supply, in relation to a
person, means receipt of goods or services or both
whether by purchase, acquisition or any other
means with or without consideration. Inward supply
may be good (inputs or capital goods) or of input
services. In simple words, Input GST is the GST paid
by the purchaser of goods or services or both on the
purchases.
Input GST is paid on Outward Supply. Outward
Supply, in relation to a taxable person, means
supply of goods or services or both, whether by sale,
transfer, barter, exchange, licence, rental, lease or
disposal or any other mode, made or agreed to be
made by such person in the course or furtherance of
business. In simple words, Output GST is the GST
levied and collected by the seller of goods or
services or both for and on behalf of the
Government.
6. Input Tax Credit and Set-off of Input GST
against Output GST: GST paid by a registered
taxable person on purchase of goods and/or
services which can be set-off against the Output
GST is called the Input Tax Credit. GST paid on
purchases, i.e. Input GST is set-off against GST
collected on sales, i.e. against Output GST in the
prescribed manner, except where input tax credit is
not allowed. Where Input GST can be set-off against
Output GST, Input GST is not treated as cost of the
goods purchased, asset purchased, etc. Similarly,
Output GST is not treated as income. Input GST is
treated as an asset until it is set-off against Output
GST. After setting-of Input GST against Output GST
the balance of the Output GST is payable to the
Government. Until it is paid, it is shown as liability.
Usually Output GST is more than the Input GST.
However, if Input GST is more than the Output GST,
the excess of Input GST over Output GST is
receivable from the Government. Until it is received,
it is shown as an asset.
The manner in which Input GST is set-off against
Output GST has been ex- plained later in this
chapter.
The Input Tax Credit (In short, ITC) is the tax paid by
the buyer on purchase of goods and/or services
which is used to reduce his tax liability on the sale of
goods and/or services. Thus, businesses can reduce
their tax liability on sale of goods and/or services by
claiming credit to the extent of GST paid on
purchases.

For example, a trader sells goods to consumer

and collects GST based on the goods sold and the
place of destination. Let us assume that selling
price of the good is ` 10,000 excluding GST and the
rate of applicable GST is 18%. The consumer will,
therefore, pay a total of ` 11,800 for the goods
including GST of ` 1,800. Without, ITC, the trader
will have to pay ` 1,800 to the Government as GST.
With ITC, the trader can reduce the tax that he will
have to pay to the Government.
Let us assume further that he has purchased those
goods for ` 9,440 including GST ` 1,440. The trader
can claim ` 1,440 as input tax credit and reduce his
original tax liability of ` 1,800 by ` 1,440. The trader
will be required to pay only ` 360 (i.e. ` 1,800 – `
1,440) to the Government. Thus, Input GST can be
set-off against output GST.
7. GST belongs to family of Value Added Tax: As
stated above, Input GST can be set-off against
output GST. It means that GST is levied on the
incremental value of the goods and/or services.
Thus, it belongs to the family of Value Added Tax.
8. Cases where Input Tax Credit is not available:
GST paid is not allowed to be set-off against Output
GST in some cases. In other words, Input Tax Credit
is not allowed in certain cases. Where Input Tax
Credit is not allowed, GST paid is not treated as
Input GST. GST paid debited to Expense Account or
capitalised, depending on the circumstances.
In the following cases, Input Tax Credit is not
allowed:
(a) Motor Vehicle for transportation of persons
having approved seating
capacity of not more than 13 persons (including
driver), except when they are used for making the
following taxable supplies:
(i) further supply of such motor vehicles; or
(ii) transportation of passenger; or
(iii) imparting training on driving such motor
vehicles.
(b) Vessels and aircraft except when they are used
for a purpose similar to those mentioned in (a) (i), (a)
(ii) and (a) (iii) above.
(c) Services of general insurance.
(d) Servicing, repair and maintenance insofar as they
relate to motor vehicles referred to in point (a) or
vessels and aircraft referred to in point (b).
(e) Food and beverages
(f) Outdoor catering
(g) Beauty treatment
(h) Health Services
(i) Cosmetic and health surgery
(j) Leasing of motor vehicles, vessels and aircraft
referred to in point ( a) except when used for the
purposes mentioned (a) (i), (a) (ii) and (a) (iii).
(k) Life insurance and health insurance.
(l) Membership of clubs.
(m) Membership of health and fitness centres.
(n) Travel benefits extended to employees on
vacation such as leave or home travel
9. Reversal of GST Paid: Input GST paid on
purchase of goods and/or services is reversed in the
following cases:
(a) Purchases Return;
(b) Goods taken by the proprietor for personal use;
(c) Goods given as charity or donation;
(d) Goods lost by theft or destroyed by fire, floods, or
any other natural calamity;
(e) Goods distributed as free samples;
(f) Rebate received on purchases; and
(g) Good used as furniture.
10. Reversal of GST collected: Output GST
collected on sale of goods and/or services is
reversed in the following cases:
(a) Sales return;
(b) Cash discount allowed after the invoice has been
made.
11. No GST on certain Supplies: GST is not levied on
the following supplies:
(a) Education Services;
(b) Health Services (Consulting only);
(c) Electricity and water services;
(d) Salaries and Wages;
(e) Interest;
(f) Supply of Services to the Government;
(g) Supply to Embassies of other countries; and
(h) Supply to United Nations Organisation.
Note: GST Council reviews, from time to time, the
GST rates and goods and services on which GST is to
be levied to be abolished. In the GST Council
meeting held in July, 2022, it has imposed GST on
hospital rooms where charges are more than `
5,000 per day. Thus, on certain health services GST
has been imposed.
12. No GST on Advance to Suppliers and from
Customers: GST is not charged when advance is
received from customers for supply of goods or
services. Similarly, GST is not paid on advance given
to the suppliers for purchase of goods or services.
13. Reverse Charge: Reverse charge means the
liability to pay tax by the recipient of supply of goods
or services or both, instead of supplier of such
goods or services or both.
Recipient of the goods and/or service is liable to pay
tax on the notified categories of supply of goods
and/or services.
Example In case of Goods Transport Agency, the
Government has given option to it to deposit the GST
or it may ask the factory, etc. to whom the services
are supplied to deposit the GST for supply of service.
If the Goods Transport Agency opts not to deposit
GST itself, supply of services by any goods transport
agency in respect of goods by road to any factory is
one such supply of services. In this case, supplier of
service is goods transparent agency and recipient of
service is any factory registered under or governed
by the Factories Act, 1948. GST will be payable by
the factory and not by the goods transport agency.
Goods on which tax is payable under reverse charge
include bidi wrapper leaves (i.e. tendu leaves),
tobacco leaves, silk yarn, etc.
Services on which tax is payable under reverse
charge include services by goods transport agency,
legal service, sponsorship service, import of service
i.e., payment of fees outside India, etc.
14. Accounts to be Debited and Credit: It is
explained as follows:
(a) When ITC on GST Paid is Allowed
For CGST paid: Input CGST is debited
For SGST paid: Input SGST is debited
For IGST paid: Input IGST is debited
(b) When GST Paid is Reversed
For CGST paid is reversed: Input CGST is credited
For SGST paid is reversed: Input SGST is credited
For IGST paid is reversed: Input IGST is credited
(c) When GST is collected
For CGST collected: Output CGST is credited
For SGST collected: Output SGST is credited
For IGST collected: Output IGST is credited
(d) When GST is collected is Reversed
For CGST collected is reversed: Output CGST is
debited
For SGST collected is reversed: Output SGST is
debited
For IGST collected is reversed: Output IGST is
debited
15. Exempt Supply: Exempt supply means supply of
any goods or services or both which attract nil rate
of GST or which is wholly exempt from GST.
16. Electronic Cash Ledger: Electronic Cash
Ledger is maintained by the Government on the GST
Portal. It is the Government record of the GST
deposited by a registered taxable person. In this
ledger, GST paid is credited by the Government in
the account of the registered taxable person who
pays it and GST collected by him/it is debited in
his/its account. The cash register segregates
information headwise such as IGST, CGST, SGST
and Cess.

What Becomes costlier, Cheaper:

Will GST help home buyers?
With the introduction of the Goods and Services Tax
(GST), the total incidence of tax will increase from
5.5 per cent to 12 per cent. However, developers will
be able to avail of input credit, on all the goods and
services purchased and spent in the construction of
the property.
Shrikant Paranjape, president of CREDAI Pune
Metro, maintains that “The impact of the GST on
property prices, will be difficult to gauge at this
stage because of the lack of clarity on abatement for
land value. In a product, where the major raw
material is not covered by the GST and the
completed unit is also not covered by the GST, the
tax input benefit will be hard to calculate or justify.
Only the market forces, the ready reckoner rates
and time, will decide whether and how much benefit
will be passed on by the developers to the
purchasers.”
Moreover, the prices of input materials can also be
volatile. Cement and steel prices can soar, without
warning. Similarly, sand is always in short supply
and not available in the monsoons. Hence, it is likely
that these industries may not pass on the entire
benefit of tax credit.
Another important factor that needs to be examined,
is the stage of construction. If the project is at an
advanced stage, where substantial cost has already
been incurred before the application of the GST, very
little input credit will be available and very less
benefit will be passed on. If the project is at an early
stage, more benefits can be passed on.

How are banks affected by the

GST?
Construction Industry has two major Game Change
one in form of RERA and now GST impact. The old
litigation in work contract and many landmark
decision on service tax and vat laws now no more
valid. The construction entity to rework on cost
structure by doing post and pre GST impact
analysis.
They say ‘Change is the only constant’ but in order
to succeed, change is not only constant but it is also
inevitable. After many reforming initiations like
“Housing for all” and RERA, the next thing that Real
Estate along with all other sector is looking forward
to is the Goods and Services Tax. GST is set to get
implemented on 1st July 2017. There are various
goods and services which will have different rates
prescribed by GST, which may impact their cost. A
homebuyer henceforth will have to pay 12% GST to
purchase a under construction house. If we look at
the current scenario, real estate sector was heavily
taxed, therefore 12% single tax structure is definitely
a welcome move. We believe that existing multiple
indirect taxes on the sector is higher and tax impact
under GST would be neutral. While the impact of
GST on various sectors and goods is now known,
industry experts are still divided over how GST will
impact real estate going ahead as clarity on the tax
slabs for services is still awaited.
Together with RERA, GST will go a long way in
ensuring transparency in the realty sector and
growing buyer confidence. The existing channels
include issues of multiple taxation, amounting to
indirect taxes and no uniformity. GST coupled with
Real Estate Regulatory Act that has come into effect
on May 1, 2017, would ensure efficiency in the realty
sector. GST will free homebuyers and investors from
the hassle of paying several state taxes at different
levels, therefore removing the double taxation
impact. Therefore 12% tax rate under GST regime
looks favourable to the industry.
If we talk about nitty-gritty’s of the GST for real
estate sector, in some cases, even input credit will
be more than the GST levied on the finished product,
but a developer can claim a maximum credit to the
extent of the GST he would be paying on the finished
product. As per the provisions of GST, it can be
expected that GST may lead to input cost deflation
for construction industry as credit of taxes paid on
various inputs used in the construction activities will
be available which is not available in current tax
regime.
GST is also likely to boost foreign investment and
benefit the NRI community for investment in real
estate because of a seamless all-inclusive channel
available. The simplification of taxation is probably
the most positive aspect of GST and it will promise
well for foreign investments. It will also raise the
confidence of the NRI market to invest in Indian real
estate. From the consumer point of view, the major
advantage would be in terms of decrease in the
overall tax burden on goods. Currently it is
estimated about 25%-30%. GST will help in free
transport of goods without stopping at the state
borders for long hours for payments of state tax or
entry tax from one state to another state. This will
reduce in paperwork to a great extent as well.
Advantages and Disadvantages of
GST
Advantages of GST
These are some prominent benefits of GST in India –

• It Eliminated the Cascading Tax Effect

GST is an indirect tax that helps to bring indirect tax
regimes under one umbrella. This eliminates the
cascading tax effect or tax on tax process efficiently.

To understand the impact of such elimination, let’s

glance through this example below.

- Pre-GST Regime

A business consultant extends services at Rs.50000

and levies a service tax at the rate of 15%, i.e.
Rs.7500 (50000×15%). The consultant purchased
office supplies at Rs.20000 and paid VAT at the rate
of 5% without any deduction, i.e. Rs.1000
(20000×5%). The total cash outflow would amount
to Rs.8500.

- Post-GST Regime
A business consultant’s cash outflow will amount to
–

GST levied on services at the rate of 18%, i.e.

Rs.9000 (50000×18). The GST applied to office
supplies is subject to deduction. So, the net GST
amounts to Rs.8000 (9000-1000)

• Higher Threshold Limit

With the implementation of GST norms, the
minimum threshold limit for registration has
increased.

Previously, under the VAT regime, all businesses

with a turnover above Rs.5 lakh (limit used to vary
among states) had to pay VAT. However, under this
new GST regime, this threshold limit increased to Rs
20 lakh, providing relief to several small service
traders.

• Lesser Number of Compliances

Under the previous tax regime, both service tax
and VAT extended different compliances.

For instance, excise returns were filed monthly

whereas, in the case of service tax, companies and
Limited Liability Partnership filed them monthly, and
partnerships and proprietorships filed them
quarterly.

Conversely, in the case of VAT, the filing of returns

varied largely. Nevertheless, with GST in the picture,
taxpayers are now required to file only one return.

• Composition Scheme
Businesses with an annual turnover between Rs.20
lakh and Rs.75 lakh are eligible to lower their taxes
with the help of the Composition Scheme. This
option has not only lowered the applicable tax rate
but has also reduced the compliance burden to a
great extent.

This pointer proves a vital parameter to weigh

the advantages and disadvantages of GST.

• Hassle-free Online Process and Reduced

Litigation
Taxpayers can now register with GST and file tax
returns online.

The simple interface and hassle-free approach have

made the process less cumbersome. It is believed
that start-ups are among the most benefited. Also, it
has proved useful in establishing clarity regarding
taxation jurisdiction between State and Central
government and, in turn, facilitating smooth
assessment.

• Improved Logistics
Previously, to avoid CST and state entry taxes, the
Indian logistic companies used to maintain multiple
warehouses across states. Furthermore, such
warehouses had to operate below their capacity.
However, with GST, restrictions on inter-state
movement have reduced significantly.

Resultantly, warehouse operators and e-commerce

aggregators are now able to set up warehouses at
the most convenient locations. This has allowed
them to get rid of unwarranted logistic expenses and
has increased profitability.

Other than these, GST has brought unorganised

industries like textile and construction under its
regulation and has made them accountable.
Regardless, to gauge all advantages and
disadvantages of GST successfully, it is crucial to
know about its drawbacks in detail as well.

Disadvantages of GST
The major drawbacks are as follows –

• Increased Operational Cost

GST had directed businesses to update their old
accounting to GST-compliant software or ERP to
keep their businesses running.

Nonetheless, the cost of purchasing, installation of

software, along training employees to use GST-
compliant software can be quite substantial. Also,
adherence to GST norms has increased the
operational cost for small businesses as more firms
are now forced to hire tax professionals to become
more GST-compliant.

• A Higher Tax Burden for SMEs

Under the old tax regime, only businesses with an
annual turnover of more than Rs.1.5 crore had to
pay excise duty. However, under this new tax
regime, businesses with an annual turnover of over
Rs.40 lakh must pay GST.

• Compliance Burden
This taxation regime has made it mandatory for
companies to register with GST in all states they
operate in. The entire process of registering with the
regulating body, issuing GST-compliant invoices,
maintaining digital record keeping, and filing returns
have increased the burden on SMEs and others
significantly.
Additionally, the infrastructure of all states in India
is not equipped to implement the e-governance
model followed by GST.

• Penalties and Fines

• There's a lack of awareness and resources to
comply with the GST system. Many GST
taxpayers fail to understand the nuances of the
system resulting in no or less payment of the
tax. The ultimately attracts penalties and fines
which elevates their costs.
Resultantly, several companies find it challenging to
adopt or transition into this regime. Based on this
information, a tax-paying individual can develop a
better understanding of the advantages and
disadvantages of GST. In turn, it will help them
develop ways to maximise their GST-related benefits
and find ways around its shortcomings effectively.
 GST impact across sectors-
TECH
GST will eliminate multiple levies. It will also allow
deeper penetration of digital services.
Duty on manufactured goods will increase from 14-15%
to 18%, so electronic products would be expensive.

FMCG

Companies could stir substantial savings in logistics and

distribution costs as requirement for countless sales
depots will be eliminated.. FMCG companies have to pay
around 24-25% tax and GST would help in reduction of
tax. Reduction of overall tax rates, is expected to
generate saving.

ECOMMERCE
GST will help create a single unified market across India
and allow free movement and supply of goods in every
part of the country. It will also eliminate the cascading
effect of taxes on customers which will bring efficiency
in product costs. It may increase the workload for
ecommerce firms and push up costs.

TELECOM
Handset prices likely to come down/even out across states.
Manufacturers are further likely to come through with flying
colours on to consumers charge benefits they will earn from
consolidating their warehouses and efficiently managing
inventory. For handset makers, GST will require ease of doing
job as they take care of no longer require to strengthen state
adamant entities and relinquish stocks to them and invest
heavily into logistics of creating warehouses in each state
across the country.
Call charges, data rates will go up if tax rate in the GST regime
exceeds 15%. Tower firms won't be able to set off their input
duty liabilities if petro-products continue to stay outside GST
framework.

AUTOMOBILES
On road price of vehicles could drop by 8%. Lower price can be
construed as indirect stimulus to boost the volume. The
demand for commercial vehicles may increase. GST will help in
reducing the time at check-posts, and will ease logistics
hurdles. With fleet productivity increasing, operators may not
feel the need to expand the midterm.

MEDIA
Service tax and entertainment tax are levied on DTH, film
producers and multiplex players. GST will captivate major
critical point and dreariness in businesses. Taxes could go
down by 2-4%.
Multiplex chains will amass on revenues as there will be in a
superior way uniform load, unlike current high outlay of
entertainment thorn in one side levied by different states. It may
lower the average ticket price and increase the footfalls in
multiplex.GST will be a carrying a lot of weight boon to silver
screen producers and studios that currently conclude service
tax on most of their charge, but cannot charge input credit on
creative services as they fall under the negative list. Under GST,
they will be able to claim credit of these services also, which will
help is lowering the overall cost.

INSURANCE
Insurance policies: life, health and motor will begin to cost more
from April 2017 as taxes will increase.
 AIRLINES
Airlines may become expensive, as service tax will be replaced
by GST. Earlier service tax on air tickets were 5.6% on economy
class and 8.4% on business class . Now rate of GST on
economy class would be 5% and 12% on business class.

CEMENT
Currently tax rates on cement are 27% - 32% but GST will bring
down the rate to 18-20%. It will help in reduction in logistics
costs. India is second largest producer of cement in the world.

CONCLUSION
GST will be a very noteworthy step in the field of indirect tax
reforms in India. Multiple taxes are eliminated and there is only
a single tax. GST will make taxation easy for the industries.
Customer will also be benefitted as the overall tax burden on
goods and services are reduced. GST will also make Indian
products competitive in the global markets. GST will be easier
to administer. Once implemented, the proposed taxation
system holds great promise in terms of sustaining growth for the
Indian economy.

GST Rates Around The World

India 5-28%

France 20%

New Zealand 15%

Australia 10%

Canada 13-15%

Malaysia 6%

Singapore 7%

UK 20%

Ukraine 20%

Vietnam 10%

Thailand 7%

Indonesia 10%

Germany 19%

Denmark 25%

An overview on how GST impacts

Business
Understanding the Goods and Services Tax (GST)

The goods and services tax (GST) is an indirect federal

sales tax that is applied to the cost of certain goods and
services. The business adds the GST to the price of the
product, and a customer who buys the product pays the
sales price inclusive of the GST. The GST portion is
collected by the business or seller and forwarded to the
government. It is also referred to as Value-Added
Tax (VAT) in some countries.
Most countries with a GST have a single unified GST
system, which means that a single tax rate is applied
throughout the country. A country with a unified GST
platform merges central taxes (e.g., sales tax, excise duty
tax, and service tax) with state-level taxes (e.g.,
entertainment tax, entry tax, transfer tax, sin tax, and
luxury tax) and collects them as one single tax. These
countries tax virtually everything at a single rate.
Time, Place and Value of Supply
Under GST 3 types of taxes can be charged in the invoice.
SGST and CGST in case of an intra-state transaction and
IGST in case of an interstate transaction. But deciding
whether a particular transaction is inter or intrastate is not
an easy task.
Think about an online training where customers are sitting
in different parts of the world.
To help address some of these situations, the IGST act
lays down certain rules which define whether a
transaction is inter or intrastate. These rules are called the
place of supply rules.
Why are time place and value of supply important?
Time of supply means the point in time when
goods/services are considered supplied’. When the seller
knows the ‘time’, it helps him identify due date for
payment of taxes.
Place of supply is required for determining the right tax to
be charged on the invoice, whether IGST or CGST/SGST
will apply.
Value of supply is important because GST is calculated on
the value of the sale. If the value is calculated incorrectly,
then the amount of GST charged is also incorrect
Time of Supply
Time of supply means the point in time when
goods/services are considered supplied’. When the seller
knows the ‘time’, it helps him identify due date for
payment of taxes.
CGST/SGST or IGST must be paid at the time of supply.
Goods and services have a separate basis to identify their
time of supply. Let’s understand them in detail.
Time of Supply for Services
Time of supply of services is earliest of:
Date of issue of invoice
Date of receipt of advance/ payment.
Date of provision of services (if invoice is not issued within
prescribed period)
Let us understand this using an example:
Mr. A provides services worth Rs 20000 to Mr. B on 1st
January. The invoice was issued on 20th January and the
payment for the same was received on 1st February.
In the present case, we need to 1st check if the invoice
was issued within the prescribed time. The prescribed
time is 30 days from the date of supply i.e. 31st January.
The invoice was issued on 20th January. This means that
the invoice was issued within a prescribed time limit.
The time of supply will be earliest of –
Date of issue of invoice – 20th January
Date of payment = 1st February
This means that the time of supply of services will be 20th
January.
Time of Supply under Reverse Charge
In case of reverse charge the time of supply for service
receiver is earliest of:
Date of payment*
30 days from date of issue of invoice for goods (60 days for
services)
*w.e.f. 15.11.2017 ‘Date of Payment’ is not applicable
for goods and applies only to services. Notification No.
66/2017 – Central Tax
For example:
M/s ABC Pvt. Ltd undertook service of a director Mr. X
worth Rs. 50,000 on 15th January. The invoice was raised
on 1st February. M/s ABC Pvt Ltd made the payment on
1st May.
The time of supply, in this case, will be earliest of –
Date of payment = 1st May
60 days from date of date of invoice – 2nd April
Thus, the time of supply of services is 2nd April.
Place of supply
 It is very important to understand the term ‘place of
supply’ for determining the right tax to be charged on the
invoice.
Here is an example:

Location of Service Place of Nature of GST

Receiver supply Supply Applicable

Maharashtra Maharashtra Intra-state CGST + SGST

Maharashtra Kerala Inter-state IGST

Place of Supply of Goods

Usually, in case of goods, the place of supply is where the
goods are delivered.
So, the place of supply of goods is the place where the
ownership of goods changes.
What if there is no movement of goods. In this case, the
place of supply is the location of goods at the time of
delivery to the recipient.
For example: In case of sales in a supermarket, the place
of supply is the supermarket itself.
Place of supply in cases where goods that are assembled
and installed will be the location where the installation is
done.
For example, A supplier located in Kolkata supplies
machinery to the recipient in Delhi. The machinery is
installed in the factory of the recipient in Kanpur. In this
case, the place of supply of machinery will be Kanpur.
Place of Supply for Services
Generally, the place of supply of services is the location of
the service recipient.
In cases where the services are provided to an
unregistered dealer and their location is not available the
location of service provider will be the place of provision
of service.
Special provisions have been made to determine the
place of supply for the following services:
Services related to immovable property
Restaurant services
Admission to events
Transportation of goods and passengers
Telecom services
Banking, Financial and Insurance services.
In case of services related to immovable property, the
location of the property is the place of provision of
services.
Example 1:
Mr. Anil from Delhi provides interior designing services to
Mr. Ajay(Mumbai). The property is located in Ooty(Tamil
Nadu).
In this case, place of supply will be the location of the
immovable property i.e. Ooty, Tamil Nadu.
Example 2:
A registered taxpayer offers passenger transport services
from Bangalore to Hampi. The passengers do not have
GST registration. What will be the place of supply in this
case?
The place of supply is the place from where the departure
takes place i.e. Bangalore in this case.

Value of Supply of Goods or Services

Value of supply means the money that a seller would want
to collect the goods and services supplied.
The amount collected by the seller from the buyer is
the value of supply.
But where parties are related and a reasonable value may
not be charged, or transaction may take place as a barter
or exchange; the GST law prescribes that the value on
which GST is charged must be its ‘transactional
value’. This is the value at which unrelated parties would
transact in the normal course of business. It makes sure
GST is charged and collected properly, even though the
full value may not have been paid.
Challenges of GST in Indian Context
GST or Goods and Service Tax is a comprehensive indirect
tax on manufacture, sale and consumption of goods and
services throughout India, to replace taxes levied by the
central and state governments. Goods and Service Tax was
introduced as The Constitution (One Hundred and First
Amendment) Act 2016, following the passage of Constitution
122nd Amendment Bill. GST will be the biggest reform in
Indian taxation since 1947, but various challenges has been
estimated for its successful implementation.
• 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.
• Numbers of enactments of statutes: There will two
types of GST laws, one at a centre level called
‘Central GST (CGST)’ and the other one at the state
level – ‘State GST (SGST)’. As there seems to have
different tax rates for goods and services at the
Central Level and at the State Level, and further
division based on necessary and other property
based on the need, location, geography and
resources of each state.
• 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.
• Clubbing Taxes: The biggest challenge of GST
implementation is bringing all the indirect taxes
under one roof, which is the biggest feature of GST.
There has been opposition asking to including
purchase tax by a few states. Other states are
reluctant about alcohol, tobacco products coming
under GST. This is due to the fact that a major chunk
of state revenue is derived from these products.
• Statutory Requirements: As the imposition of GST
will be delegated to both state and central
government, the constitution has to grant powers to
both through an amendment. It is seen as a difficult
task as the law expects at least two-thirds majority
from the members of the parliament and that isn’t
easy given the current political scenario of the
country.
• Make-shift Arrangements: State governments are
demanding compensation from the central
government as they foresee a major dent in the
revenue due to CST losses. This is asked for the first 5
years after the implementation of GST, for which the
central government has agreed to 3 years. A final
conclusion is yet to be drawn.
• Framework For Tax Disputes: There has to be a
uniform legal procedure for tax disputes and
litigations to avoid any confusion.
• Defining Inter-State Transactions: With the
transportation services available everywhere, the
place of sale and consumption may not be the same.
This makes it difficult to go forward with revenue
allocation. Hence, it becomes important to define
procedures to tackle such problems.
• Infrastructure For The Collection Process: Proper
infrastructure has to be designed to track the
movement of goods and services between states,
collection and monitoring revenue, identify defaulters
etc.
• Determining GST Rates: This is a major step in ensuring the
success of GST. Arriving at rates which are conducive to
both the government and public is will be a daunting task.
 Conclusion
Taxation plays an significant role in the development of
the economy as it impacts the efficiency and equity. It is
expectated that a good system should control income
distribution and at the same time it will also endeavour
to generate tax revenue which will support government
expenditure on public services and development of
infrastructure. GST will have positive impact on Indian
economy. GST have faced lots of controversy and
opposition in terms of its implementation. Finally the
GST bill has been passed and it ready to roll out in
market. Time will only decide whether it will have
positive impact or negative impact. International trade ,
firms and consumer will have new system of tax which is
level and more transparent. The new system of taxation
is considered to be more improved system over the pre-
existing central excise duty at the national level and
sales tax system at state level. The new tax will be
significant breakthrough and a logical step towards a
comprehensive indirect tax reforms in the country.GST
is not only Vat plus service tax but it is major
improvement over previous VAT system. A single of tax
will help maintain simplicity and transparency by
treating all goods and services equal without giving a
special treatment to some types of goods and services. It
will reduce the litigation on classification of issues. It is
also said that implementation of GST in Indian
framework will lead to commercial benefits which VAT
has not given and hence it would essentially lead to
economic development. GST may assure the possibility
of overall gain for industry , trade , agriculture and also
to central and state government. Now Indian consumer
need to have professionalism to acknowledge the GST. It
is sure that India will join the international standards of
taxation , corporate laws and managerial practices and
also be among the world leaders.
 REFERENCES

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Agarwal, D. S. (2016). Basic concepts of GST.
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 Bibliography
➢ Reference books:-
Taxmann GST
GST Tariff of India, R.K. Jain
Goods and service tax, Dr. H.C. Mehrota & Prof.
V.P. Agarawal
The simplified Indian GST Law, CA Prakhar Jain

➢ Weblinks :-
https://gstcouncil.gov.in/

https://ijcrt.org/

https://www.incometax.gov.in/iec/foporatl

https://jgateplus.com/home/

https://edurav.in//

https://www.gst.gov.in/

https://en.m.wikipedia.org