this article gives an overview of Goods and services tax in india

1. An impact of GST in India
M JAYA CHANDRA
19L31E0007
MANAGERIAL COMMUNICATION AND SOFT SKILLS
DEPARTMENT OF MBA

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TABLE OF CONTENTS
References and bibliography
1
SNO PARTICULAR
1 introduction
2 GST in brief
3 How GST effects Indian economy
4 implementation
5 conclusion

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1
Introduction to GST
Before the implementation of Goods and services tax in India.
There is a complex tax structure in India. In this structure the
taxes are classified into two types. They are
 Direct tax
 Indirect tax
Direct tax: Direct tax is the tax which is charged directly on the tax payer.
For e.g. property tax and income tax.
In other words direct tax is that tax that is deducted from one's salary.
Direct taxation in India is taken care by the Central Board of Direct Taxes (CBDT); it
is a division of Department of revenue under Ministry of Finance.
Indirect Tax: Indirect tax is not directly levied on the taxpayers. This tax is often
levied on goods and services which results in their higher prices. A few examples of
indirect taxes in India include service tax, central excise and customs duty, and value
added tax (VAT).
Major Central Taxes
 Income Tax
 Central Goods & Services Tax(CGST)
 Customs Duty
 Integrated Goods & Services Tax(IGST)
Major State Taxes
 State Goods & Services Tax(SGST)

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 Stamp Duty & Registration
direct taxes imposed in India?
Some of the important direct taxes imposed in India are mentioned below:
 Income Tax- It is imposed on an individual who falls under the
different tax brackets based on their earning or revenue and they have
to file an income tax return every year after which they will either need
to pay the tax or be eligible for a tax refund.
 Estate Tax– Also known as Inheritance tax, it is raised on an estate or
the total value of money and property that an individual has left behind
after their death.
 Wealth Tax– Wealth tax is imposed on the value of the property that a
person possesses.
Indirect tax imposed in india
 Customs Duty- It is an Import duty levied on goods coming from outside the
country, ultimately paid for by consumers and retailers in India.
 Central Excise Duty– This tax was payable by the manufacturers who would then
shift the tax burden to retailers and wholesalers.
 Service Tax– It was imposed on the gross or aggregate amount charged by the
service provider on the recipient.
 Sales Tax– This tax was paid by the retailer, who would then shifts the tax burden
to customers by charging sales tax on goods and service.
 Value Added Tax (VAT)– It was collected on the value of goods or services that
were added at each stage of their manufacture or distribution and then finally passed
on to the customer.
Disadvantages of this indirect tax
It shows difficulty to pay the taxes by consumer.

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It is a complex structure for all types of people
Revenue generation is very difficult to the government.
It gives loses to all types of consumers.
Evolution of GST in India
The idea of a Goodsand Services Tax (GST) for India was first mooted
sixteen years back, during the Prime Ministership of Shri Atal Bihari
Vajpayee. Thereafter, on 28th February, 2006, the then Union Finance
Minister in his Budget for 2006-07 proposed that GST would be introduced
from 1st April, 2010. The Empowered Committee of State Finance Ministers
(EC), which had formulated the design of State VAT was requested to come
up with a roadmap and structure for the GST. Joint Working Groups of
officials having representatives of the States as well as the Centre were set
up to examine various aspects of the GST and draw up reports specifically
on exemptions and thresholds, taxation of services and taxation of inter-State
supplies. Based on discussions within and between it and the Central
Government, the EC released its First Discussion Paper (FDP) on GST in
November, 2009. The FDP spelled out the features of the proposed GST and
has formed the basis for the present GST laws and rules.
In March 2011, Constitution (115th Amendment) Bill, 2011 was introduced
in the Lok Sabha to enable levy of GST. However, due to lack of political
consensus, the Bill lapsed after the dissolution of 15th Lok Sabha in August
2013.
On 19th December, 2014, The Constitution (122nd Amendment) Bill 2014
was introduced in the Lok Sabha and was passed by Lok Sabha in May
2015. The Bill was taken up in Rajya Sabha and was referred to the Joint
Committee of the Rajya Sabha and the Lok Sabha on 14th May, 2015. The
Select Committee submitted its report on 22nd July, 2015. Thereafter, the
Constitutional Amendment Bill was moved on 1st August 2016 based on
political consensus. The Bill was passed by the Rajya Sabha on 3rd August
2016 and by the Lok Sabha on 8th August 2016. After ratification by
required number of State legislatures and assent of the President, the
Constitutional amendment was notified as Constitution (101st Amendment)

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Act 2016 on 8th September, 2016. The Constitutional amendment paved
way for introduction of Goods and Services Tax in India.
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 Goodsand 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. T 2015. 6 on 08.09.2016
Thereafter, State Legislatures of different States have passed respective State
Goods and Services Tax Bills. After the enactment of various GST laws,
GST was launched with effect from 1st July 2017 by Sh.Narendra Modi,
Hon'ble Prime Minister of India in the presence of Sh.Pranab Mukherjee, the
then President of India in a mid-night function at the Central Hall of
Parliament of India.

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2
GST in brief
GST Council structure
As per Article 279A of the amended Constitution, the GST Council is a joint
forum of the Centre and the States, and consists of the following members: -
Union Finance Minister
The Union Minister of State, in-charge of Revenue, Min. of Finance
The Minister In-charge of Finance or Taxation or any other Minister nominated by each Stat
The Council is empowered to make recommendations to the Union and the
States on the following:-
(a) the taxes, cesses and surcharges levied by the Union, the States and the
local bodies which may be subsumed in the goods and services tax;
(b) the goods and services that may be subjected to, or exempted from the
goods and services tax;
(c) model Goods and Services Tax Laws, principles of levy, apportionment
of Integrated Goodsand Services Tax and the principles that govern the
place of supply;
(d) the threshold limit of turnover below which goods and services may be
exempted from goods and services tax;

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(e) the rates including floor rates with bands of goods and services tax;
(f) any special rate or rates for a specified period, to raise additional
resources during any natural calamity or disaster;
(g) special provision with respect to the States of Arunachal Pradesh, Assam,
Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim,
Tripura, Himachal Pradeshand Uttarakhand; and
(h) the date on which GST shall be levied on petroleum crude, high speed
diesel, motor spirit (petrol), natural gas and aviation turbine fuel
(i) any other matter relating to the goods and services tax, as the Council
may decide.
The mechanism of GST Council would ensure harmonisation on different
aspects of GST between the Centre and the States as well as amongst the
States. It has been provided in the Constitution (One Hundred and First
Amendment) Act, 2016 that the GST Council, in discharge of various
functions, shall be guided by the need for a harmonized structure of GST
and for the development of a harmonized national market for goods and
services.
The Constitution (One Hundred and First Amendment) Act, 2016 provides
that every decision of the GST Council shall be taken at its meeting by a
majority of not less than 3/4th of the weighted votes of the Members present
and voting. The vote of the Central Government shall have a weightage of
1/3rd of the votes cast and the votes of all the State Governments taken
together shall have a weightage of 2/3rd of the total votes cast in that
meeting. One half of the total number of members of the GST Council shall
constitute the quorum at its meeting.
On 12th September,2016 the Union Cabinet under the Chairmanship of the
Hon'ble Prime Minister approved setting up of GST Council and creation of
its Secretariat as follows:
(a) GST Council as per Article 279A of the amended Constitution;
(b) GST Council Secretariat, with its office at New Delhi;
(c) Secretary (Revenue) as the Ex-officio Secretary to the GST Council;
(d) Inclusion of the Chairperson, Central Board of Excise and Customs
(CBEC), as a permanent invitee (non-voting) to all proceedings of the GST
Council;
(e) One postof Additional Secretary to the GST Council in the GST Council
Secretariat (at the level of Additional Secretary to the Government of India),

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and four posts of Commissioners in the GST Council Secretariat (at the level
of Joint Secretary to the Government of India).
The Cabinet also decided to provide for adequate funds for meeting the
recurring and non-recurring expenses of the GST Council Secretariat, which
shall be borne by the Central Government. The GST Council Secretariat
shall be manned by officers taken on deputation from both the Central and
State Governments.
Launch[edit]
The GST was launched at midnight on 1 July 2017 by the President of India,
and the Government of India. 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 sessionwas attended by high-
profile guests from the business and the entertainment industry
including Ratan Tata, it was boycotted bythe opposition due to the predicted
problems that it was bound to lead for the middle and lower class
Indians.[12][13] 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.[13] After

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its launch, the GST rates have been modified multiple times, the latest being
on 22 December 2018, where a panel of federal and state finance ministers
decided to revise GST rates on 28 goods and 53 services.[14]
Members of the Congress boycotted the GST launch altogether.[15] 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.[citation needed] 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
poorerincome groups.[16].
TAX
Taxes subsumed
The single GST subsumed several taxes and levies, which included central
excise duty, services tax, additional customs duty, surcharges, state-
level value added tax and Octroi.[17][18] Other levies which were applicable
on inter-state transportation of goods have also been done away with in GST
regime.[19][20] 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
HSN is a 4 to 8-digit codefor identifying the applicable rate of GST on
different products as per CGST rules of government of India. If a company

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has turnover up to INR 15 million in the preceding financial year then they
need not mention the HSN codewhile supplying goods on invoices. If a
company has turnover more than INR 15 million but up to INR 50 million,
then they need to mention the first two digits of HSN codewhile supplying
goods on invoices. If turnover crosses INR 50 million then they shall
mention the first 4 digits of HSN codeon invoices.[22]
Rate
The GST is imposed at variable rates on variable items. The rate of GST is
18% for soaps and 28% on washing detergents. GST on movie tickets is
based on slabs, with 18% GST for tickets that costless than Rs. 100 and
28% GST on tickets costing more than Rs.100 and 28% on commercial
vehicle and private and 5% on readymade clothes.The rate on under-
construction property booking is 12% Some industries and products were
exempted by the government and remain untaxed under GST, such as dairy
products, productsofmilling industries, fresh vegetables & fruits, meat
products, and other groceries and necessities.
Checkposts acrossthe country were abolished ensuring free and fast
movement of goods
The Central Government had proposedto 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 supportsuchaction. GST council adopted conceptpaper
discouraging tinkering with rates.

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E-Way Bill
An e-Way Bill is an electronic permit for shipping goods any another similar
to a waybill. It was made compulsory for inter-state transport of goods from
1 June 2018. It 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$720).[29]
It is a paperless, technology solution and critical anti-evasion toolto check
tax leakages and clamping down on trade that currently happens on a cash
basis. The pilot started on 1 February 2018 but was withdrawn after glitches
in the GST Network. The states are divided into four zones for rolling out in
phases by end of April 2018.
A unique e-Way Bill Number (EBN) is generated either by the supplier,
recipient or the transporter. The EBN can be a printout, SMS or written on
invoice is valid. The GST/TaxOfficers tally the e-Way Bill listed goods
with goods carried with it. The mechanism is aimed at plugging loopholes
like overloading, understating etc. Each e-way bill has to be matched with a
GST invoice.
Transporter ID and PIN Codenow compulsory from 01-Oct-2018.

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It is a critical compliance related GSTNproject under the GST, with a
capacity to process 75 lakh e-way bills per day.
Intra-State e-Way Bill
The five states piloting this project are Andhra Pradesh, Gujarat, Kerala,
Telangana and Uttar Pradesh, which account for 61.8% of the inter-state e-
way bills, started mandatory intrastate e-way bill from 15 April 2018 to
further reduce tax evasion.[30] It was successfully introduced in Karnataka
from 1 April 2018.[31] The intrastate e-way bill will pave the way for a
seamless, nationwide single e-way bill system. Six more states Jharkhand,
Bihar, Tripura, Madhya Pradesh, Uttarakhand and Haryana will roll it out
from 20 April 18. All states are mandated to introduce it by May 30, 2018.
Reverse Charge Mechanism
Reverse Charge Mechanism (RCM) is a system in GST where the receiver
pays the tax on behalf of unregistered, smaller material and service
suppliers. The receiver of the goods is eligible for Input Tax Credit, while
the unregistered dealer is not.
In a notification on 29 January 2019, the Indian government implemented
the Reverse Charge Mechanism which started from 1 February 2019 as per
the GST acts and amendments. Exemptions up to INR 5000 were removed
effectively
Goods keptoutside the GST
 Alcohol for human consumption (i.e., not for commercial use).
 Petrol and petroleum products (GST will apply at a later date), i.e.,
petroleum crude, high-speed diesel, motor spirit (petrol), natural gas,
aviation turbine fuel.

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3
How GST impacts Indian Economy
Impact of GST on the Indian Economy
GST is here! How is our economyand the businesses coping with this
new tax policy? Let our experts tell you about the same.
Updated on Nov28, 2019 - 12:28:55 PM
GST the biggest tax reform in India founded on the notion of “onenation,
one market, one tax” is finally here. The moment that the Indian government
was waiting for a decadehas finally arrived. The single biggest indirect tax
regime has kicked into force, dismantling all the inter-state barriers with
respect to trade. The GST rollout, with a single stroke, has converted India
into a unified market of 1.3 billion citizens. Fundamentally, the $2.4-trillion
economy is attempting to transform itself by doing away with the internal
tariff barriers and subsuming central, state and local taxes into a unified
GST.
The rollout has renewed the hope of India’s fiscal reform program regaining
momentum and widening the economy. Then again, there are fears of
disruption, embedded in what’s perceived as a rushed transition which may
not assist the interests of the country.
Will the hopes triumph over uncertainty would be determined by how our
government works towards making GST a “good and simple tax”. The idea
behind implementing GST across the country in 29 states and 7 Union
Territories is that it would offer a win-win situation for everyone.
Manufacturers and traders would benefit from fewer tax filings, transparent
rules, and easy bookkeeping; consumers would be paying less for the goods
and services, and the government would generate more revenues as revenue
leaks would be plugged. Ground realities, as we all know, vary. So, how has
GST really impacted India? Let’s take a look.

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 Reduces tax burden on producers and fosters growth through more
production. The current taxation structure, pumped with myriad tax
clauses, prevents manufacturers from producing to their optimum capacity
and retards growth. GST will take care of this problem by providing tax
credit to the manufacturers.
 Different tax barriers, such as check posts and toll plazas, lead to wastage
of unpreserved items being transported. This penalty transforms into
major costs due to higher needs of buffer stockand warehousing costs. A
single taxation system will eliminate this roadblock.
 There will be more transparency in the system as the customers will know
exactly how much taxes they are being charged and on what base.
 GST will add to the government revenues by extending the tax base.
 GST will provide credit for the taxes paid by producers in the goods or
services chain. This is expected to encourage producers to buy raw
material from different registered dealers and is hoped to bring in more
vendors and suppliers under the purview of taxation.
 GST will remove the customduties applicable on exports. The nation’s
competitiveness in foreign markets will increase on account of lower costs
of transaction.
Gst: the short-term impact
From the viewpoint of the consumer, they would now have pay more tax for
most of the goods and services they consume. The majority of everyday
consumables now draw the same or a slightly higher rate of tax.
Furthermore, the GST implementation has a costof compliance attached to
it. It seems that this costof compliance will be prohibitive and high for the
small scale manufacturers and traders, who have also protested against the
same. They may end up pricing their goods at higher rates.
What the future looks like
Talking about the long-term benefits, it is expected that GST would not just
mean a lower rate of taxes, but also minimum tax slabs. Countries where the

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Goods and Service Tax has helped in reforming the economy, apply only 2
or 3 rates – one being the mean rate, a lower rate for essential commodities,
and a higher tax rate for the luxurious commodities. Currently, in India, we
have 5 slabs, with as many as 3 rates – an integrated rate, a central rate, and
a state rate. In addition to these, cess is also levied. The fear of losing out on
revenue has kept the government from gambling on fewer or lower rates.
This is very unlikely to see a shift anytime soon;though the government has
said that rates may be revisited once the RNR (revenue neutral rate) is
reached.
The impact of GST on macroeconomic indicators is likely to be very
positive in the medium-term. Inflation would be reduced as the cascading
(tax on tax) effect of taxes would be eliminated. The revenue from the taxes
for the government is very likely to increase with an extended tax net, and
the fiscal deficit is expected to remain under the checks. Moreover, exports
would grow, while FDI (Foreign Direct Investment) would also increase.
The industry leaders believe that the country would climb several ladders in
the ease of doing business with the implementation of the most important tax
reform ever in the history of the country.

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4
Implementation of GST
Implementation
The year 2017 will forever be etched in Indian history as the year that saw
the implementation of the biggest and most important economic reform
since Independence - the Goods and Services Tax (GST). The reform that
took more than a decadeof intense debate was finally implemented with
effect from 1 July 2017, subsuming almost all indirect taxes at the Central
and State levels.
GST, which was publicised as ‘one nation, one tax’ by the government, aims
to provide a simplified, single tax regime in line with the tax framework
applicable in several major economies across the Globe. This single tax has
helped streamline various indirect taxes and brought in more efficiencies in
business. GST law in India is a comprehensive, multi-stage, destination-
based tax that is levied on every value addition.
The implementation of the GST got overwhelming supportfrom the
industry. The industry took this as an opportunity to redefine supply-chain
model, customise IT processes, and evaluate internal and external
arrangements to safeguard interest and minimise their tax costs.
As the GST journey progressed, there was a growing realisation of its far-
reaching impact. Industry faced various challenges, ranging from new and
unique concepts, complex documentation, high tax rates of certain goods
and services to complex or unclear treatment of several common
transactions. The matching conceptfor claiming credits, adverse and

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contrary advance rulings, ambiguity on aspects relating to Anti-Profiteering,
GST refunds etc. are some of the emerging challenges that the businesses
should be mindful of.
However, it should also be appreciated that the authorities have been quick
to address public concerns by issuing a series of notifications, clarifications,
press releases and FAQs, to resolve a wide range of issues.
There is hope that GST 2.0, which is at the works currently, will be a much
improved version compared to the first one. The government has come out
with new return filing process. There have been multiple reduction in tax
rate for various goods. With the objective to curb tax evasion, the
government has also introduced the E-way bill system across India, to track
movement of goods.
LEVY OF GST
 It is a dual levy with State/Union territory GST and Central GST
 Intra-state supplies attract CGST + SGST/UTGST
 Inter-state supplies IGST which is the sum total of CGST and
SGST/UTGST
Exclusions under gst
 Basic Customs duty on import of goods into India
 Petroleum products (petrol, diesel, ATF, natural gas and crude oil)
 Alcohol for human consumption
 Stamp duty and Real Estate

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GST rate classification
 0% - Essential food and medicines, newspaper, education services,
residential accommodation
 0.25% - Diamonds, other precious stones
 3% - Gold, silver, platinum, articles of jewellery
 5% - Common use items, sweets, restaurant services, tour operator services
 12% - Frozen meat, butter and cheese, Namkeens, Milk beverages
 18% - Standard rate for goods and services
 28% - Luxury and sin goods suchas motor vehicles (additional cess imposed
on certain luxury goods)

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5
Conclusion
BENFITS OF GST TO INDIAN ECONOMY
 Removal of bundled indirect taxes such as VAT, CST, Service tax, CAD,
SAD, and Excise.
 Less tax compliance and a simplified tax policy compared to current tax
structure.
 Removal of cascading effect of taxes i.e. removes tax on tax.
 Reduction of manufacturing costs due to lower burden of taxes on the
manufacturing sector. Hence prices of consumer goods will be likely to
come down.
 Lower the burden on the common man i.e. public will have to shed less
money to buy the same products that were costly earlier.
 Increased demand and consumption of goods.
 Increased demand will lead to increase supply. Hence, this will ultimately
lead to rise in the production of goods.
 Control of black money circulation as the system normally followed by
traders and shopkeepers will be put to a mandatory check.
 Boost to the Indian economy in the long run.
 Wider tax base
 Elimination of cascading effect of multiple indirect taxes
 Rationalisation of tax structure

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 Harmonisation of Centre and State administrations


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Challenges of GST In India

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References and
bibliography
1 www.gst.gov.in
2 www.pwc.in
3 economictimes.indiatimes.com
4 www.wikipedia.org
5 www.deskera.in
6 www.investindia.gov.in
And many more

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