S.B.R Govt. Women'S College, Berhampur: "Study On GST: The Way Forward"
S.B.R Govt. Women'S College, Berhampur: "Study On GST: The Way Forward"
PROJECT REPORT ON
BERHAMPUR
REGD NO:42054/2020
CERTIFICATE
This is certifying that MANISHA BEHERA, a student of B.COM FINAL YEAR
Berhampur
DECLARATION
I hereby declare that the Project Work with the title “ A STUDY ON GST: THE
WAY FORWARD” submitted by me under the guidance of Ms. LUNA RANI
SAHU for the partial fulfillment of the degree of B.com. Honours in Accountancy
under S.B.R. GOVT. WOMEN’S COLLEGE, BERHAMPUR is of my original
work and has not been submitted earlier to any other University/Institution for the
fulfillment of the requirement of any course of study.
I also declare that no chapter of this manuscript in whole or in part has been
incorporated in this report from any earlier work done by others or by me.
However, extracts of my literature which has been used for this report has been
duly acknowledged providing details of such literature in the references.
Berhampur
On the very outset of this report, I would like to extend my sincere & heartfelt
obligation towards all the personages who have helped me in this endeavour.
Without their active guidance, help, cooperation & encouragement, I would not
have made headway in the project. I am ineffably indebted to Ms. LUNA RANI
SAHU for conscientious guidance and encouragement to accomplish this
assignment. I am extremely thankful and pay my gratitude to my faculty Ms.
LUNA RANI SAHU for her valuable guidance and support on completion of this
project in its presently.
Thanking You
MANISHA BEHERA
CHAPTER TOPIC
1.2 Rationale
GST
1.5 Reserch
Methodology
international Scenario
of GST
Recommendations
Bibliography
1
Chapter (1):- INTRODUCTION
2
1(1) Background:-
The Goods and Services Tax (GST) is a comprehensive value added tax on Goods
& Services. It is a vast concept. GST will be help to enhancing & supporting the
economic growth of a country.
In India, the idea of adopting GST was first suggested by the “Atal Bihari
Vajpaye” Government in 2000. To the “Narendra Modi’s” Government in 2014,
India’s new Finance Minister Arun Jaitley was submit 122nd Constitution
Amendment Bill in the 16thLokSabha on 19th December 2014. The opposition
demanded that the bill be sent for discussion to the standing committee. Then
Government of India has appointed various committess, task force to give their
views to introduce a vibrant and modern Indirect Tax structure in India.
Finally in August 2016, The Constitution Amendment bill was passed in the parliament
& 18 states ratified The Constitution Amendment Bill & The President “Pranab
Mukherjee” gave his assent to it.
3
GST council has also recommended four – tier GST rate structure & thresholds.
GST council approved the Central Goods & Services Tax Bill 2017 (The CGST
Bill), The Integrated Goods & Services Tax Bill 2017 (The IGST Bill), The Union
Territory Goods & Services Tax Bill 2017 (The UTGST Bill), The Goods &
Services Tax (Compensation to the states) Bill 2017 The Compensation Bill, these
Bills were passed by the Loksabha on 29 march 2017. The Rajyasabha passed these
Bills on 6th April 2017.
The GST was implemented at midnight on 1st July 2017 by president of the India,
“Pranab Mukherjee”& the government of India. The Jammu & Kashmir state
legislature passed its GST act on 7 July 2017.
4
1(3) Review of Literature:-
GST was supposed to be introduced in Indiaway back in 2010. It has been getting
postponed due to various reasons major one being getting to a consensus between
the various states and the centre for compensation. The author in the paper has
discussed the existing laws in India for indirect taxes, the VAT laws in various
states with their advantages and disadvantages, the impact of the proposed GST, the
compliances under the proposed GST etc. The author has also used various
numerical examples to demonstrate how GST is cost effective.
Eva, (2008)
The author in his paper has examined the cost ofcomplying with the indirect tax
laws in the Slovak Republic by doing research of small, medium and large
businesses through a questionnaire and concludes that businesses especially the
small ones are not able to and do not make efforts to quantify the cost of
compliance which is quite high due to the complex laws.
Eugen, (2011)
The authors have examined the various methods adopted by assesses to evade VAT
especially in intra country transactions in Romania. The authors have also
recommended the documentation and returns which could be relied upon by both
the authorities and the assesses to ensure that there is no tax evasion.
Mansor, (2013)
GST has always been considered as a tool in thehands of any Government to
increase revenue. The Malaysian Government introduced the said tax in Malaysia in
order to reduce its budget deficit. The authors in the paper have discussed the
readiness of the Malaysian economy in adopting the said newly introduced GST
along with the reactions of various sections of the society.
5
1(4) Objective of the GST:-
6
1(5) Research Methodology:-
JAPAN 4,872,137
CHINA 12,237,700
GERMANY 3,677,439
RUSSIA 1,530,751
FRANCE 2,582,501
7
The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a
comprehensive, multi-stage, destination-based tax that is levied on every value
addition. In simplewords, Goods and Service Tax (GST) is an indirect tax levied on
the supply of goods and services.
8
Types of GST:-
There are three kinds of taxes under the GST.
1. SGST:-
SGST means State Goods and Service Tax. It is covered under State Goods and
Service Tax Act 2016. A collection of SGST will be the revenue for State
Government. After the introduction of SGST all the state taxes like Value Added
Tax, Entertainment Tax, Luxury Tax, entry Tax etc. will be merged under SGST.
For example, if goods are sold or services are provided within the State then SGST
will be levied on such transaction.
9
2. CGST:-
CGST means Central Goods and Service Tax. CGST is a part of goods and service
tax. It is covered under Central Goods and Service Tax Act 2016. Taxes collected
under Central Goods and Service tax will be the revenue for central Government.
Present Central taxes like Central excise duty, Additional Excise duty, Special
Excise Duty, Central Sales Tax, Service Tax etc. will be subsumed under Central
Goods And Service Tax.
3. IGST:-
IGST means Integrated Goods and Service Tax. IGST falls under Integrated Goods
and Service Tax Act 2016. Revenue collected from IGST will be divided between
Central Government and State Government as per the rates specified by the
government. IGST will be charged on transfer of goods and services from one state
to another state. Import of Goods and Services will also be deemed to be covered
All the basic need requirement good are pleased in 0% category like food grains,
bread, salt, books etc. Goods like paneer packed food, tea coffee etc are placed
under 5% category. Mobiles, sweets, medicine are under 12%. All types of services
are under18% category. All other remaining luxury items are placed under the last
head of 28%.
10
List of rate changes at 31st GST Council Meeting:-
11
10 Cork roughly squared or 18% to 12%
debugged
11 Articles of Natural cork 18% to 12%
12 Movie Tickets < or = Rs 18% to 12%
100
13 Premium on Third party 18% to 12%
insurance on Vehicles
12
Composition scheme under GST:-
Any taxable person whose aggregate turnover in the preceding financial year is less
than Rs. 1.5 Crores and less than Rs. 75 lakhs for North Eastern States can opt for a
simplified composition scheme where tax will payable at a concessional rate on the
turnover in a state without the benefit of Input Tax credit.The floor rate of tax for
CGST and SGST shall not be less than 1%. A tax payer opting for composition levy
shall not collect any tax from his customers. Tax payers making inter-state supplies
or paying tax on reverse charge basis shall not be eligible for composition scheme.
Meaning of supply:-
The taxable event in GST is supply of goods or services orboth. Various taxable
events like manufacture, sale, renderingof service, purchase, entry into a territory of
state etc. havebeen done away with in favour of just one event i.e. supply.The
constitution defines “Goods and Services Tax” as any taxon supply of goods, or
services or both, except for taxes onthe supply of the alcoholic liquor for human
consumption.
The Central and State governments will have simultaneouspowers to levy the GST
on Intra-State supply. However, TheParliament alone shall have exclusive power to
make lawswith respect to levy of Goods and Services Tax on Inter-Statesupply.
Time of supply:-
Under GST, liability to remit GST to Government arises at the time of supply. Time
of supply is generally the earliest of one of the three events, namely receiving
payment, issuance of invoice or completion of supply.
Transaction value:-
Transaction Value” is the basis for Valuation for supply of goods and/or services
under the GST Regime. For the levy of tax i.e. GST first we have to determine the
13
transaction value. ‘Transaction Value’ is the price actually paid or payable for
supply of goods and/or services.
2. New dealers: Single application to be filed online for registration under GST.
3. The registration number will be PAN based and will serve the purpose for
Centre and State.
14
2(2) National & International scenario of GST:-
The National Scenario:-
At midnight of 30th June 2017, India became one of the 160 countries to launch
GST. The GST is a target based unified indirect tax and will remove all other
indirect taxes. It is collected and levied on the value added at each stage. GST will
be operated at both state (SGST- State collected GST) and central level (CGST-
Central collected GST). Besides, the center will also collect Integrated Goods and
Services Tax (IGST) in case of inter-state transactions. GST is a consumption-based
tax and is regressive. The ultimate burden of this tax is on the final consumer of
goods and services. So, whether your income is thousand, hundred or nothing you
have to pay this tax, as long as you buy some commodity. There is uniformity in the
tax between the rich and the poor. GST aims at unifying the country’s population
under a single tax regime expressing the principle of one nation, one tax, and one
market. GST will be collected under five tax braces of 0 percent, 5 percent, 12
percent, 18 percent and 28 percent. India is a developing country where 21.9 per
cent of the population still lives below the National Poverty Line (Basic Statistics
2017). United Nations Development Programme’s report shows that 55.3 percent of
India’s population is living under multidimensional poverty and Human
Development Index (HDI) for the country stands at 0.624 (0.454 only when
adjusted for inequality). HDI Report 2016 placed India at 131st rank in a list of 188
countries. World Bank’s report on world development indicators also placed India
at much lower levels than the global average (World Bank 2016). The public health
expenditure in India is only 1.40 percent of Gross Domestic Product (the year
2014).
In development scenario India is much behind than countries like Japan, United
Kingdom, France, United States, etc. but still having the highest GST in the world.
However, the developed countries have set much lower rates of GST than India and
are growing at faster rates, with almost nil amounts of poor people. Has the
15
government gone through above economic indicators before implementing GST?
Was it necessary for India to set the highest tax rates in the world? Someone
analyzed that countries where tax rates moved higher, GDP growth pushes up, after
following a temporary negative impact in initial years. The Reserve Bank of India
in its research report named ‘GST: A Game Changer’ also showed the good
performance of countries like New Zealand, Canada, Singapore, Malaysia after
implementation of GST. One thing that is missing is the background of a nation.
Every policy is based on the previous experience of the economy. India is a country
where more than 25 lakh people die of hunger every year (Hunger Facts 2017). A
large number of people are engaged in agricultural pursuits. They are earning less
and living hard and as a result, farmers are committing suicides. National
CrimeRecords Bureau of India reported 13,755 farmer suicides in 2012. How can the
government expect these people as the bearers of tax? Besides, the economy is
already facing disturbances due to demonetization. Imposing GST in such an
economy and at this time will simply increase the inequality between the rich and
the poor. International Monetary Fund (2001) on tax policy for developing countries
suggested that consumer taxes play a diminished role in these economies.
Therefore, the possibility that the government will impose high tax levels is
virtually excluded.
16
(1) United Kingdom(UK):-
Scope:
Standard Rate: 20 %
Payment: Usually quarterly returns. However, a small business can opt for annual
returns filing.
17
Export: Exports are ‘Zero’ rated.
Exempt Services:
(2) Canada:-
Name: Federal Goods and Service Tax & Harmonized Sales Tax
Date of introduction GST: 01.01.1991 & HST 01.04.1997
Scope: Taxable supplies of goods and services
Standard Rate: GST 5% and HST varies from 0% to 15%
18
services and intangible properties.
Exempt services:
Innovative concept: A group concern can supply to another group concern atzero-
rated.
(3) Australia:-
Standard Rate: 10 %
Reduced Rate: 0 %
Payment: Depending on the turnover, the tax needs to be deposited either monthly,
quarterly or annually. The due date for payment Tax needs to be deposited on 21st
day following the end of the month/quarter/year.
Exempt Services:
1. Government supplies such as water services, drainage services etc.
2. Health, education, religious supplies Financial Services and residential renting
3. Vegetable, fruit, meat
Standard Rate: 15 %
20
Threshold exemption limit: NZ$ 60,000
The due date for returns and payment: On the 28th day following the end of the
month or bi-month or six-month. However, a different date for the certain periods.
Exempt services:
1. Real estate
2. Financial services
3. Residential rental
21
Innovative concept: The headline price in advertisement and stores must be always
GST inclusive except when supplies are to wholesale clients.
(5) Singapore:-
Standard Rate: 7 %
Returns: Usually quarterly returns. However, a business can opt for monthly
returns.
The due date for returns and payment: Last day of the month following the end
of the month or quarter.
22
Exempt services: Real estate, Financial services, Residential rental
23
Chapter (3):- Analysis, Finding & Recommendation
GST- The Goods and Services Tax- is the mother of all tax reforms in India. It is
crucial for all businesses to understand the implications of GST on their brands.
Since GST is a new law and crucial processes like return filing and invoicing have
been changed, it is even more important that business owners and tax professionals
understand the nuances of these new laws so that they can be GST-compliant.
Every registered person is required to compute his tax liability on a monthly basis
by setting off the Input Tax Credit(ITC) against the Outward Tax Liability. If there
is any balance tax liability the same is required to be paid to the government.
24
Amount of tax payable A
Interest, late fee B
Amount of tax payable along with interest on account of C
mismatch of credit based on provisions of Section 29 or
Section 29A or section 43C
Any other amount payable by the taxpayer or directed by D
the board on account of any proceeding’s carried out
Tax Deduction at source E
Tax Collection at source F
Tax payable under reverse charge G
Amount payable by the department against any interest, H
refund, penalty, late fee or any other amount determined
under the proceedings under this Act
Balance in Electronics Tax Liability Ledger =A+B+C+D-E-F-
G-H
An Electronic Cash Ledger will also be maintained on the GST portal. It will
display the total amount deposited by the tax payer towards discharge of his tax
liability or interest or late fee or penalty any other amounts. Also, it is now
mandatory for businesses making payment for more than Rs 10,000 to do it
electronically.
25
ITC allowed on input held in stock and the semi-finished or finished goods
would be credited to electronic credit ledger if the taxpayer applies for
registration within 30 days of becoming liable to pay tax.
ITC available on the input held in stock and semi-finished or finished goods
by a taxpayer in the composition scheme converting to a normal taxpayer
shall be transferred to electronic credit ledger.
ITC available due to the taxes paid under the reverse charge mechanism shall
also be transferred to the electronic credit ledger.
ITC available on goods/services used for the business and other purposes
shall only be allowed to the extent applicable for business purposes.
All the payments under GST have to be made by either using the input tax credit
available in the electronic credit ledger or through the electronic cash ledger.
26
Utilizing ITC for the fulfillment of Tax liability:
IGST: After the IGST input tax credit is used for payment of IGST then the
remaining ITC can be used to pay tax liability under CGST and SGST.
CGST: The CGST input tax credit cannot be used to pay the SGST liability but can
be used to pay the liability under CGST. Further, the balance of CGST credit
available can be used to pay the IGST liability.
SGST: The SGST input tax credit cannot be used to pay the CGST liability but can
be used to pay the liability under SGST. Further, the balance of SGST credit
available can be used to pay the IGST liability.
Benefits of GST:-
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.
27
Removal of cascading effect of taxes i.e. removes tax on tax.
Number
1. REG-01 Registration Application u/s 19(1) GST Act, 20
2. REG-02 Acknowledgement
3. REG-03 Information regarding Registration / Amendments / Cancellation
Notice
28
4. REG-04 Filing application for clarification Registration / Amendment /
Cancellation / Revocation of Cancellation
5. REG-05 Order application for rejection for Registration / Amendment /
Cancellation / Revocation of Cancellation
6. REG-06 Issued registration certificate u/s 19(8A) of the GST Act, 20
7. REG-07 Application for Registration as TDS or TCS u/s 19(1) of the GST
Act, 20
8. REG-08 Order of Cancellation of Application for Registration as TDS /TCS
u/s 21 of the GST Act
9. REG-09 Non-Resident Taxable Person Application for Registration
10. REG-10 Person supplying online information and database access or
retrieval services from a place outside India to a person in India,
other than a registered person Application for registration
11. REG-11 Amendment in Particulars subsequent to Registration Application
12. REG-12 Temporary Registration/ Suo Moto Registration Order of Grant
13. REG-13 Grant of Unique Identity Number (UIN) to UN Bodies/ Embassies
/others Application/Form
14. REG-14 Application for Cancellation of Registration under GST 20
15. REG-15 Amendment Order
16. REG-16 Cancellation of Registration Application
17. REG-17 Cancellation of Registration Show Cause Notice
18. REG-18 Show Cause Notice issued for Cancellation Reply
19. REG-19 Cancellation of Registration Order
20. REG-20 Dropping the proceedings for cancellation of registration Order
21. REG-21 Revocation of Cancellation of Registration Application
22. REG-22 Order for revocation of cancellation of registration
29
23. REG-23 Show Cause Notice for rejection of an application for revocation of
cancellation of registration
24. REG-24 Reply to the notice for rejection of an application for revocation of
cancellation of registration
25. REG-25 Provisional Registration Certificate
26. REG-26 Existing Taxpayer Application Enrolment
27. REG-27 Provisional registration Show Cause Notice cancellation
28. REG-28 Provisional registration Order Cancellation
30
migrate on the elected day)
ITC Forms
32
Form GST PMT- Electronic Credit Ledger
02
Form GST PMT- Order for re-credit of the amount to cash or credit ledger
03 on
rejection of refund claim
Form GST PMT- Application for intimation of discrepancy in Electronic
04 Credit Ledger/Cash Ledger/Liability Register
Form GST PMT- Electronic Cash Ledger
05
Form GST PMT- Challan For Deposit of Goods and Services Tax
06
Form GST PMT- Application for intimating discrepancy in making
07 payment
5 GSTR-5 20th from end of the month or within 7 days after the last day of
validity of registration whichever is earlier
6 GSTR-6 13th of Next Month
0813 dried
5%
17. 6501 Textile caps 18% 12%
18. 6912 Idols made of 28% Nil
clay
19. 44,68,83 Idols of 28% 12%
wood, stone
[including
20. 7102 Rough 3% 0.25%
industrial
diamonds
including
Recommendation of GST:-
The major recommendations are as detailed below:
1. Upper limit of turnover for opting for composition scheme to be raised
from Rs. 1 crore to Rs. 1.5 crore. Present limit of turnover can now be
raised on the recommendations of the Council.
2. 2. Composition dealers to be allowed to supply services (other than
restaurant services), for upto a value not exceeding 10% of turnover in the
preceding financial year, or Rs. 5 lakhs, whichever is higher.
9.Scope of input tax credit is being widened, and it would now be made
available in respect of the following:
10. In case the recipient fails to pay the due amount to the supplier within
180 days from the date of issue of invoice, the input tax credit availed by the
recipient will be reversed, but liability to pay interest is being done away with.
12. Amount of pre-deposit payable for filing of appeal before the Appellate
Authority and the Appellate Tribunal to be capped at Rs. 25 Crores and Rs. 50
Crores, respectively.
15. Place of supply in case of job work of any treatment or process done on
goods temporarily imported into India and then exported without putting them
to any other use in India, to be outside India.
16. Recovery can be made from distinct persons, even if present in different
State/Union territories.
WEBSITES:-
http://www.gst.gov.in
http://www.taxmann.com
http://www.icai.org