A Research Paper on Conceptual Framework and its Implementation of GST in India
Charanjeet kaur Manisha Arora
Assistant Professor Assistant Professor
CT Institute of Higher Studies CT Institute of Higher Studies
[email protected] [email protected]
GST has take the place of almost 17 of the existing state and central indirect taxes such as central excise duty, additional customs duty, VAT, entertainment tax, service tax etc. Goods and Service tax is an indirect tax imposed on the supply of goods and services. The tax came into force from July 1 2017. In 2017 the GST Bill was passed in the Lok Sabha and Rajya Sabha. The aim of research paper is to show the benefit and drawback of GST after its implementation. The GST bill is one the biggest tax changer in India . GST is a tax only on value addition at each stage. . The aim of GST is to remove cascading effect i.e. tax on tax. GST is an indirect tax levy on manufacturing, sale and consumption of goods and services at a national level. The central government will charge CGST and the state will charge SGST respectively.
France was the first country to put into effect GST in the year 1954 in the last 63 years more than 160 countries over the word have adopted GST. The idea of GST in Indian was suggested by kelkar task force in 2004. Government of India had issued first discussion paper in November 2009. In the year 2011, 115th GST constitution amendment bill was framed but could not be placed before the house of parliament. In 2014 122 GST constitutional amendment bill was introduced in lok Sabha on 19-12-2014 and was passed by lok Sabha on 6-5-2015mand sent for concurrence to Rajya Sabha. On June 14, 2016 the Minister of finance released draft model law on GST in public domain for views and suggestions. GST bill passed in Rajya Sabha on 3rd august 2016 on 3-8-2016 the constitution 122nd amendment bill 2014 was passed by Rajya sabha with certain amendments. After the passage of the amendment bill in the Rajya sabha and changes subsequently ratified and passed by the lok Sabha unanimously, the bill was adopted by a majority of state legislature where in approval by at least 50% of the state assemblies were required. After ratification of the bill, the bill was sent to President for his assent. President of India gave his final assent on 8 September 2016 thus 122nd constitutional amendment bill was converted to 101st GST constitutional Amendment act 2016. The constitution 101st Amendment Act came into force which empowers both the states and centre to levy this tax .The principal aim of GST is to abolish cascading effect i.e. tax on tax. After the implementation of GST, all other taxes like Value Added Tax, Sales Tax will be abolished and a uniform tax system on goods and services will be followed. GST will reduce the overall tax difficulty of customer. GST system is that where tax is levied both by central as well as by state government.
GST is to be levied on supply of goods and services. GST is a containing indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level.
On July 1st, 2017, India shifted to a new tax system – one that aims at converting the entire nation into a single market. GST would apply to all goods other than petroleum, motor spirit, diesel, aviation turbine fuel and natural gas and alcoholic liquor for human consumption.
Objective of Study
To grasp the concept of GST
To identify benefits of GST after implementation.
To study the advantages and disadvantages of GST
GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into force on 1st July 2017; Goods & Services Tax Law in India is a complete , multi-stage, destination-based tax that is levied on every value addition.
In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of goods and services. This law has take place of many indirect tax laws that previously existed in India.
GST is one indirect tax for the whole country.
Features of Goods and Services
Central govt and state govt have been given power of levy and collection of GST.
GST to be leived on supply of goods or services therefore it is known as Destination based.
The GST levied by the Centre would be called Central GST and that to be levied by the states would be called State GST
An Integrated GST would be levied on inter-state supply of goods or services. This would be collected by the centre.
Import of goods or services would be treated as inter-state supplies and would be subject to IGST in addition to applicable custom duties.
There is GST council the function of which shall be of advisory and will consist of Finance minister/ Taxation of each state. Council decide the various rules and provisions
7. State taxes that would be classify within GST are:a)VAT/ Sales Taxb)Entertainment Taxc)Luxury Taxd)Taxes on Lottery, betting and gambling.e)Surcharges & Cesses.
8. GST would apply to all goods & services except Alcohol for human consumption, Electricity and Real Estate
BENEFITS OF GST
Reduction in Multiplicity of Taxes
Reduction in Double Taxation
To reduce the Tax evasion and Corruption
This will lead to higher revenue efficiency in the treasur of government
The power of making law on taxation of goods and services lies with both central and state government. A law imposed by central government on GST will not invalidate or nullify by state GST law
Pan card based identification number would be allotted to the taxpayer to facilitate tax payment and return and decrease in “Black “transactions
Reduces difficulties and enhance more number of economic transactions.
GST classify 17 indirect taxes namely – VAT, Excise, Customs duty, Octroi, Luxury Tax, Entertainment Tax etc., which ultimately helped in removing the cascading effect of taxes.GST is also termed as One Nation One Tax, which removed the obstacle of inter-state transactions having a uniform tax structure across nation.
GST is applied at the final point of consumption and not at every step (like the manufacturing and retail outlets) this will help in eliminating misrepresentations and serve in the development of the common national market.
Components of GST
There are 3 taxes under this system: CGST, SGST & IGST.
CGST is a taxCollected by the Central Government on an intra-state movement of goods and services and will governed by CGST Input Tax Credit on it is given partly to the Centre and partly to the States as it will be utilized against the payment of both CGST and IGS
SGST is a tax Collected by the State Government on an intra-state supply of goods and services and will governed by the SGST. Any tax liability obtained under SGST can be set off against SGST or IGST
IGST: Collected by the Central Government for inter-state sale (Maharashtra to Tamil Nadu) IGST will be applicable on any supply of goods and/or services in both cases of import into India and export from India.
Significance of GST
GST is transparent tax & also reduce no of indirect taxes, with GST implemented a business premises can show the tax applied in the sales invoice.
GST will not be a cost to registered retailers therefore three will be no hidden taxes & the cost to registered retailers therefore there will be no hidden taxes & the cost of doing business will be lower.
Benefit people spruces will come down which in turn will help companies as consumption will increase.
There is no doubt the product & distribution of goods services are increasingly used or consumed & vice versa separate taxes for goods services.
It would make possible the taxation burden to be split equal ably b/w manufacturing & service.
GST will be levied only at the final destination of consumption based on VAT this will help in removing economic destination & bring about development of a common national market.
It will also help to build a transparent & corruption free tax administration.
The presently a tax is levied on when a finished product moves out from a factory which is paid by the manufacturer.
Positive impact of GST in India
Boost to make in India initiative GST will give a major boost to the make in India initiative of the government of India by making goods and services produced in India competitive in national as well as international market.
Companies which are under unorganized sectors will come under tax bracket. This will increase the revenue of the govt.
Reduction in inflation : The Government is expected is collect more revenue with the introduction of GST and this way lead to reduce fiscal deficit .
Easy for E Business: In the previous tax structure there were no specific provision for such e – commerce sector business but in the GST specific provision have been given for this sector and are applicable throughout India, so there will be no difficulty regarding interstate movement of goods and services.
Uplift of GDP – The GST would have a positive impact on GDP of the country and the GDP of the country will increase by 0.80%. This is definitly a great help to acheive the targets set by Modi Government.
On salaried employees, self-employed professionals
GST is mainly for businesses and hence won’t directly influence the salaried class and self-employed professionals such as doctors, lawyers etc. However, it will influence their expenses due to the alteration in rates of goods and services they avail. Other than that, they will continue to pay their income tax like before. The medical sector has been exempted from GST.
Disadvantages of the GST
Increased costs due to software purchase. …
Being GST-compliant. …
GST will mean an increase in operational costs. …
GST came into effect in the middle of the financial year. …
GST is an online taxation system. …
SMEs will have a higher tax burden.
Real Estate could have a negative impact, some economist predict that it will add up to 8% to the cost of new homes and reduce demand closely by 12%
There might be disturbance amongst dealers who have been avoiding certain taxes, by only paying VAT, who will now be forced to pay GST.
GSTcompliance return filing and payments all have to be done online. Many small business are not technically adequate and do not have the resources for fully computerized. Business in small cities across India faces a huge technology problem in the day ahead.
Some of the items have been left in GST structure which has made the people more disappointed. Petroleum products on which very high rate of VAT and other taxes are being charged not included in GST act.
GST which includes CGST, SGST, and IGST is nothing but just a new name of the existing tax systems. Kind of old wine in a new bottle.
Impact on Discounts – GST has also had an impact on discount and reward programs as well. The product is being taxed at the rates pre-discount whereas the products were earlier taxed at post discount prices. Most of the companies have also postponed reward programs on because of complexities of GST
Mid-Year introduced – Government has chosen a mid-year launch for GST and this will lead to problems in taxation and reporting during the end of the financial year.
Luxury things to get costly: Drinking tea/coffee at branded cafes, staying in hotels with charge above 7500rs, electronic devices like TV, washing machine, motor bikes with engine capacity more than 350cc, Movie tickets above 100. etc. will be costlier with GST bill.