Goods and Services Tax (GST) in India: An Introductory Report

This report provides a comprehensive overview of the Goods and Services Tax (GST) in India. It begins with an introduction to GST as an indirect tax, outlining its implementation through the 101st amendment of the constitution and its categorization into five tax slabs (0%, 5%, 12%, 18%, 28%). The report details the features of GST, including the exemption of certain goods, the application of tax at the time of supply, and the availability of input tax credit. It explains the operational procedures of GST, such as business registration, tax invoice issuance, accounting practices, and return filing. The report also examines the tax calculation methods under both the earlier and current systems, including how to utilize input tax credit. Furthermore, it explores the business transformation and key impacts of GST, highlighting its advantages like removing the cascading effect, efficient logistics, and online return filing, as well as its disadvantages, such as increased costs and compliance burdens. The report concludes with a comparative analysis of GST implementation in various countries and emphasizes the positive impact of GST on the Indian economy.

Goods and Service Tax

Introduction
The goods and services tax is considered as an Indirect tax which
has removed many other existing Indirect Taxes such as VAT,
Central Excise Tax, Custom Duty, Service Tax and octroi.
This tax was published on 1st day of July 2017 via 101st
amendment of the constitution (Gupta, Sarita, Singh &
Kumawat, 2017).
Goods and services are divided into five major slabs under which
theses are to be taxed. These rates are categorised as 0%, 5%, 12%,
18%, 28%. The tax on alcoholic and petroleum products are
computed differently according to the rules of different states.
The rules of this tax are under the supervision of the GST council
which forms a body of ministers and relevant ministers of the states.

GST
Intra
State-
Supply
Central
GST
State
GST
Inter
State
Supply
Integrated
GST
Taxes under GST

Rate Structure
0%
Fruits, Vegetable,
Homespun cotton cloth,
Books, Newspapers.
5%
Apparel below 1000,
Packaged food items,
Footwear under 500
12%
Frozen Meats,
Cutlery, Sugar,
Biodiesel.
18%
Makeup,
Pastries,
Swimming,
Pools, Footwear
more than 500.
28%
Movie tickets,
Sunscreen, Ceramic
Tiles, Cars,
Motorcycles.

Features
GST is a tax which is levied on goods and services, yet there
are goods which are exempted which are cereals, vegetables,
fruits, beverages etc.
At the time of supply, GST is taxed.
Input tax credit is available for the tax which is paid on either
purchases or services falling under the category of the input.
It follows the unified tax regime.
GST applies when turnover exceeds Rs20 lakhs per year.
The GST has been proportionately shared by the central as
well as state government.

How GST Works?
Under the procedure of GST a particular threshold limit is set for the
businesses. If the limit is crossed the company shall from registers and
maintain records of input and output tax. A particular procedure is need to be
followed.
Registering your business
Tax invoice are issued on regular basis.
Proper accounting treatment shall be done for the purpose of GST.
Filing of returns half yearly.
A proper input tax credit method is followed.
Claiming of GST refunds
Paying GST on time (Mishra & Gupta, 2018).
Offences and grievances are to be handled.
Review and appeals are to be made.

Action Cost 10% Tax Total
Cost to
Manufacturer
1,200 120 1,320
Cost of label and
Repackaging @ 200
1,520 152 1,672
Advertising @ 400 2,072 207 2,279
Total 1,800 479 2,279
Tax calculations in earlier system:

Action Cost 10%
Tax
Actual
Liabili
ty
Total
Cost to Manufacturer 1,200 120 120 1,320
Cost of label and Repackaging @ 200 1,400 140 40 1540
Advertising @ 400 1,800 180 40 1,980
Total 1,800 200 2,000
Tax calculations in current system:

How to utilise Input Tax Credit
IGST PAYABLE
SGST PAYABLE
CGST PAYABLE
Input tax credit from central
state and integrated paid on
supply of inward nature.
Input credit from central and
state paid on supply of inward
nature.
Input credit from state and
integrated paid on supply of
inward nature.
• Total amount of tax
collected in India
including both direct
and the indirect is worth
Rs14.6 lakh crore.
• Around about 34% of
the total taxes form the
indirect taxes which
amounts to Rs2.8 lakh
crore (James &
Ecker, 2017).
• Rs2.1 lakh crore are
forming the club of the
service tax.
• After GST , the indirect
tax is expected to
increase.

Business Transformation and Key
Impacts
Opportunities are consolidated by the vendors and the suppliers.
Inter state procurement of raw materials have been proved to be very easy.
Distribution channels needs to be improved as they are not optimal with
the current scenario (Verity, & Nichols, 2014).
Removal of the excise duty resulted in revamping the cash flow structure.
Sourcing
Distribution
Cash Flow
Impact

Advantages
After implementation of GST following advantages have been recorded.
 GST helped in removing the cascading effect.
 There is a well defined composition scheme for small businesses.
 The public need to follow less compliance.
 There is a definite treatment determined for e commercial activities.
 The logistics became more efficient.
 The unorganized sector can be regulated through GST procedure.
 The threshold limit is set for each level.
 The returns are filed online which makes it easy for to collect and fill the
data (Mahto, Dubey, Gupta & Kumar, 2017).

Disadvantages
After analysing the benefits of the system, the system is also
prone to certain drawbacks which are discussed below.
 Costs have been increased gradually due to purchase of new
software.
 There is more compliance in terms of compulsion to pay GST.
 Operational costs have been increased (Thorat, 2017).
 Not everybody understand the online taxation procedure.
 GST was launched in the mid financial year which acted as a
cumbersome step.
 Small and Micro enterprises have to face a higher tax burden.

Conclusion
GST is already operational in countries like Australia, Canada,
Hong Kong, Malaysia, Singapore and New Zealand.
However, across any such systems applicable in developed
countries like USA, France, Germany, UK or Asian giants like
China, Japan etc. Perhaps they may be having some other system
with a different name. Implementation of GST was the strong
move which is accepted by the 159 countries. Though the
structure might not be a stable one yet the tax structure has been
improved. Henceforth time shall be given to see more of what
GST holds for the country.

References
 Gupta, S., Sarita, M. K., Singh, K., & Kumawat, H. (2017). Good and Service Tax: An
International Comparative Analysis. International journal of research in finance and
marketing (IJRFM), 7(5), 29-38.
 James, K., & Ecker, T. (2017). Relevance of the OECD International VAT/GST
guidelines for non-OECD countries. In Australian Tax Forum (Vol. 32, No. 2, p. 317).
Tax Institute.
 Mahto, K. N., Dubey, N. D., Gupta, S. K., & Kumar, A. (2017). GST in India:
Prospects and Challenges. International Journal of Current Trends in Science and
Technology, 7(10), 204-239.
 Mishra, A., & Gupta, A. (2018). Study Of GST In Indian Context. GST Simplified Tax
System: Challenges and Remedies, 1(1), 163-165.
 Thorat, Y. R. (2017). GST and Indian Economy. International Research Journal of
Multidisciplinary Studies, 3(7). 15-25.
 Verity, R., & Nichols, R. A. (2014). What is genetic differentiation, and how should we
measure it—GST, D, neither or both?. Molecular ecology, 23(17), 426-432.