Goods and Services Tax

GOODS AND SERVICES TAX
Project By-
Garima Rao(2234)
• Introduction:
The word tax is obtained from Latin word “taxare” which means to estimate.
Goods and services tax(GST) is an indirect tax/consumption tax which is
imposed on production of goods and services in India. The Goods and
Services ACT was passed by the parliament on 29th march 2017 and the ACT
is implemented on 1st July 2017 and is regarded as a major taxation reform in
India since independence.
The GST Council governs the tax rate, rules and regulations. The GST
Council consists of finance of the central government and all the states.
GST is a comprehensive, multistage, destination-based tax.
Comprehensive- It is comprehensive because it includes almost all indirect
taxes except few state taxes.
Multistage- It is multistage because it is imposed at every stage of the
production process, but has to be refunded to all the parties in various
production stages except the final consumer.
Destination based- It is destination-based because it is collected from point
of consumption and not from point of origin that of previous taxes.
• Components of GST:
There are three components of GST.
1. CGST- CGST refers to the tax which is collected by the central
government at intra-state level i.e. transaction within the state.
2. SGST- SGST refers to the tax which is collected by the sate
government at intra-state level i.e. transaction within the state.
3. IGST- IGST refers to the tax which is collected by the state government
at inter-state level i.e. transaction with another state.
• Tax Laws Before GST:

In the earlier indirect tax system there were many indirect taxes imposed by
both state government and centre government. State government mainly
collected taxes in the form of Value Added Tax(VAT).
Central state tax(CST) was applicable in case of interstate sale of goods
which was taxed by the central government.
Other than this there were many indirect taxes which were levied by state and
central government like entertainment tax, octroi and local tax.
This led to a lot of overlapping of taxes imposed by both state and central
government.
For example, When goods were produced and sold, the Central government used
to charge excise duty. In addition to Excise Duty, State government also charged
VAT. This was known as cascading effect of taxes i.e. tax on tax.
List Of Indirect Taxes In The Pre-GST Regime:
1. Central excise duty
2. Duties of excise
3. Additional duties of excise
4. Additional duties of customs
5. Special additional duty of customs
6. Cess
7. State VAT
8. Central sales tax
9. Purchase tax
10. Luxury tax
11. Entertainment tax
12. Entry tax
13. Taxes on advertisements
14. Taxes on lotteries, betting and gambling
All the above taxes has been replaced by the CGST, SGST and IGST.
Petroleum products, alcoholic drinks are not taxed under GST but are taxed
separately by the individual state government under previous tax system.
• Economic Impact:
Indian economy is affected by GST in the following ways-
1. Simplification of tax structure:

Tax system of the country has been simplified. Tax calculation has become easier
at the multiple stages of supply chain, as GST is a single tax. Due to GST both
customers and producers are getting a clear of the amount of tax they are paying.
2. Fostering production:
Due to GST the burden to pay taxes has been reduced as a result the end
consumers pay lesser taxes. This reduced burden of taxes has resulted in the
enhanced production and growth of the retail and other industries.
3. SME support:
GST has introduced composition scheme for small and medium enterprises
which says that these enterprises can pay taxes according to their annual
turnover by registering under this scheme.
4. Enhanced pan India operations:

Taxation roadblocks can now be avoided by companies, such as toll
plazas and check posts. Earlier, these created problems, which resulted
in damaging unpreserved products while transporting them. These
overhead cost of storing and warehousing hampered their profit. These
problems have been reduced by single taxation system i.e. GST. Goods
can now be transported easily across India. Their Pan India operations
has been improved by this.
5. Increase In exports:
Custom duty on exporting goods has been reduced by GST. The
production cost in the local market has also decreased due to GST.
Rate of exports have been increased in the country due to all these
factors. When it comes to expanding businesses globally companies
have become more competitive.
GST introduction is of great help to state and central governments in
terms of merging taxes. The tax on tax that lead to the cascading effect
of taxes that prevailed pre-GST regime has been removed by GST.
Therefore, the tax burden has reduced for companies and customers.
Due to this the number of taxpayers have increased resulting in the
increase in tax revenues significantly. The overall taxation system is
now easy to administer. Moreover, small and medium sized enterprises
are able to enhance their businesses. It is expected that more Indian
organisations would be benefited by GST to establish themselves in the
international markets.
6. E-way Bills:
GST brought a centralised system of waybills by introducing E-Way Bills. This
system came into effect on 1st April 2018 for inter-sate movement of goods and
for intra-state movement of goods in a staggered manner on the next day.
Under the e-way bill system transporters, traders and manufacturers can
generate e-way bills for the goods transported from one place to another with
ease on a common portal.
• Conclusion:
One of the biggest taxation reform-GST binds the entire nation under a single
taxation rate system. GST ensures better compliance at each stage of supply
chain. Due to GST transparent and corruption free tax administration will be
there, which removed the problems which prevailed in the pre-GST regime.
Companies average tax burden will be reduced which in turn is expected to
reduce prices and lower prices mean more consumption, which there by leads
to more production and helping industrial growth. This will help create India
into a “Manufacturing Hub”. GST helps boost “Make In India”, “Digital India”,
“Start-Up” programmes. This will help Indian companies in competing with
foreign companies. Efficient formulation of GST will help both State and
Central government in gaining more resources and revenue. Therefore GST
has a positive impact on Indian sectors and industries.
• Bibliography:
https://en.wikipedia.org/wiki/Goods_and_Services_Tax_(India)
https://cleartax.in/s/gst-law-goods-and-services-tax
https://www.karvy.com/growth-hub/gst/impact-of-gst-on-indian-economy

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GOODS AND SERVICES TAX

• Tax Laws Before GST:

1. Simplification of tax structure:

4. Enhanced pan India operations:

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