ABSTRACT

Good and services tax can be considered as biggest tax reform in country which is based on
notion of one nation one market one tax. The constitution (one hundred and twenty-second
amendment bill 2014 bill was introduced by finance minister Arun Jailtely on 19 December
2014 and bill was passed by house on 6 th may 2014 and this bill came into force on 1 st July
2017 which is applicable to whole India which replaced earlier multiple cascading tax by
various state and centre .GST is comprehensive tax system which will include all indirect tax
levied by central and state into one regime. This paper will make an attempt to know about
the implication of GST on Indian economy and hike in the revenue of government.

KEY WORDS: GST, ECONOMY. GOVERMENT REVENUE, TAX PAYER, INDIRECT

TAX

RESEACH QUESTION:

 Whether implementation of GST gives rise to Indian economy?

 Impact of GST on various industries.

OBJECTIVE

 To study the effect of GST on Indian economy

 To study effect of GST on various industry
 Challenges faced by various industry after implementation of this new tax
regime

RESEACH AND METHDOLOGY

The research paper is an attempt of exploratory research, based on the secondary data
sourced from journals, Internet, articles, previous research paper. Looking into
requirements of the objectives of the study the research design employed for the
study is of descriptive type. Keeping in view of the set objectives, this research
design was adopted to have greater accuracy and in depth analysis of the research
study. Available secondary data was extensively used for the study.
INTRODUCTION

GST is known as good and service tax. in India the idea of GST was first contemplated in
2004 by kelkar committee. the kelkar committee was convinced that a dual system will able
to tax almost all goods and services and as result of that there will be more tax collection in
the country and India will have greater market, but it was not implemented because of
political problem. Finally GST the biggest tax reform in country was introduced on 1st July
2017 embodied upon the notion of one nation one tax. the new tax system that is GST has
removed all interstate tax barrier with respect to trade. the major source of revenue for any
nation is tax so far as for economic development of nation, so it is better to have that tax
system which does not have any cascading effect and by implementing GSt the government
had make an initiative towards improving economy and remove all the barrier in trade respect
of tax. Almost 160 nation has implemented GST and India is one of them, firstly GST was
first introduced in France GST has pushed economy one more step closer towards a common
market. Doing business now has become easier

CORE CONCEPT OF GST

Earlier Indian industries are not ready to contend in the worldwide market in view of the
different limitation of Indirect taxes for example, complicated and comprehensive tax
structure, lack of transparency and more legal conflict due to different interpretations.GST is
one indirect tax for the entire country, which has make India a bound together normal market.
GST is one tax that is levied on supply of goods and services, which will be shared among
the Central Government and the State Governments according to the GST Council.

GST STRUCTURE

Definition of Goods and Service Tax: New Article 366(12A) of the Indian Constitution
defines Goods and Services Tax (GST) as any tax on supply of goods or services or both
except taxes on the supply of the alcoholic liquor for human consumption.
APPLICABLITY OF GST

GST is applicable on the supply of goods and services.

GST is not levied (initially) on:

 Petroleum crude
 High speed diesel
 Motor spirit(petrol)
 Natural gas
 Aviation Turbine fuel

Alcoholic liquor for human consumption is exempted from GST.

Tobacco and tobacco products will be subjected to GST. The centre may apply excise duty on
tobacco.

TYPES OF GST

There are four type of GST in India

1. CGST
2. SGST
3. IGST
4. UTGST

CGST

CGST can be define as central goods and service tax that is levied by central government on
any transaction of supply of goods and services take place within a state.

CSGST can charge along with either SGST OR UTGST

for an example ramesh sales a product to rahul in same state. he has to pay two taxes one is
CGST and another one will be SGST

SGST
SGST can be defining as state goods and service tax. SGST IS one of the two tax levied by
state government and central government on every interstate transaction.

UTGST

Union territory goods and service tax ,it is levied on any of transaction of supply has been
taken place within any of the union territory of country

IGST

Integrated goods and service tax is applicable on all interstate transaction of goods and
services. it is collected by Central government and further it will be further will be divided
with respective state.

Who can collect GST

Any person who is authorised to collect tax under GST act can collect tax

Who must be registered under GST

IT is compulsory for every person who is having an aggregate turnover of rs 20 lakh or more
( rs 10 lakh for hill state) has registered themselves under GST

Person or entities that are exempted from GST

 charitable trust
 those whose total turnover is less than limit
 person supplying goods and services that are subjected to levy GST under reverse
 charge like lawyer
 few goods and services are also exempted under this like educational services

Benefit of implementation of GST

For business and industry

 Easy compliance: A powerful and complete IT system had been established in India
of the GST .because of this, all taxpayer services such as enrolments, returns,
instalments, and so on is easily accessible to the taxpayer on online, which has make
compliance simple and transparent. In starting there was some problem in filling of
return but as time goes on everything get good.
  Uniformity of Tax rates and structures: GST has given guaranteed assurance that
indirect taxes structure is common all across the country. uniformity of tax structure
has given chance to do business at the place of their own choice because rate of taxes
are same across all the country.
 Removal of cascading: An arrangement of consistent tax credits all through the value
chain, and crosswise over limits of States, has removed the cascading taxes and also it
has minimal reduces hidden coat of doing business
 Gain to manufactures and exporters: the subsuming of major central and state taxes in
GST has reduces the cost of locally manufactured goods and services and this has
increases competitiveness of Indian goods and services in International market and
has given to Indian export.

For central and state governments

 Simple and easy to administer: earlier there was numerous number of taxes charged at
centre and state level after implementation of GST These taxes are categorized under
4 part only, so it is now became simple to monitor indirect taxes.
 High revenue efficiency: high revenue efficiency . GST is systematic tax system to
collect indirect tax and because of GST government is expending low in collecting of
tax revenue.

For the purchaser

 Single and straightforward tax proportionate to the estimation of value of good and
services: due to multiple taxes imposed by centre and state, with incomplete or no
input tax credits available at progressive stages of value addition, the cost of goods
and services are laden with many indirect taxes which are hidden, but after
implementation of GST from manufacturer to the consumer there is only one tax, so
final consumer has clear picture of how much he has paid tax.
 Relief in overall tax burden: because of efficiency in system consumer has to pay
overall low tax

GST IMPLICATION IMPACT ON ECONOMY

GST is considered as one of the greatest assessment changes in India established on the idea
of "One Country One Market, One Tax”. The minute that the Indian government was
hanging tight for 10 years has at last arrived on 1st July 2107. The single biggest indirect tax
system has kicked into, destroying all trade barriers all across the country. The GST roll out,
with a solitary stroke, has changed over India into a brought together market of 1.3 billion
citizens. In a general sense, the $2.4-trillion economy is endeavouring to change itself by
getting rid of the interior tax barrier and subsuming centre, state and local taxes into a
brought together GST. The roll out has re-established the expectation of India's financial
change program recapturing energy and extending the economy. On the other hand, there are
fears of disturbance, installed in what's apparent as a surged progress which may not help the
interests of the nation. The thought behind actualizing GST the nation over in 29 states and 7
Union Territories (now its change to 28 states and 9 union territories) is that it would offer a
success win circumstance for everybody. Manufacturers and traders would profit by less
charge filings, straightforward principles, and simple accounting; consumer would save
money on goods and services, and the government will create more revenue and that revenue
can be utilized by government on various welfare programs for its citizen as income holes
would be stopped. But the ground all varies because of various unexpected circumstances.

SHORT TERM IMPACT

From the view of consumer, implication of GST is not good as there are paying more tax for
the most of the goods and services they usually consumes. the majority of the goods the
consumer consumes is slightly higher rate of tax. further some the cost attached to GST
implication has burden many of the small scale manufacturers and trade as result there was
many protest against the implication of GST all over the country.

LONG TERM IMPACT

longer-term benefits of GST is not just limited to impact on economy but also it mean to have
lower tax rates with minimum tax slabs. till now 160 country is following the system of one
tax regime and the implication of it help to change country economic condition, the object of
having GST as Tax system is to make necessary commodities cheaper by implementing lower
tax and high tax rates on luxurious commodities. As India is developing country and to be
developed country it require that tax system which is clear and having no tax barrier so that
government can have more revenue.
The Impact of GST on macroeconomics indicators is likely to be very positive and one of the
examples of it is that in recession time of our country there is low inflation it is because there
is no cascading effect on tax. As a result of GST export of country as also show significant
improvement and foreign investment in country is also increase by july 2017 this is all
because of positive impact of GST on macroeconomics

SECTOR WISE IMPACT

AGRICULTURE

The agricultural sector is the sector in which 55% of population is engaged in but it covers
only 16% of India GDP, this is major drawback but the foreseeable future outcomes from
agriculture sector as been seen positive.

The execution of GST has boosted the agricultural market because of single rate tax system
that has make the movement of agricultural commodities hassle free as the product is easily
able to reach places vi a trucks in better way earlier there was many tax barrier, various
permissions licences was required in interstate transaction, this often has created hindrance in
trading of products across the country. The step of government to implement GST is one step
forward to liberalized the market of agriculture product.\

E- Commerce

GST is the one of biggest tax reform in Indian history. The aim of bill was to simply the
Indian tax structure. All the major and minor industry will fall under the regime of GST.
Finance report said that there are more than 1 crore GST registration is obtained till now. the
well developed e-commerce sector falls under this regime of GST.

The business has influenced the part of customer outreach, more than ever. The e- commerce
industry enables entrepreneurs to make a worldwide group of spectators and a universal
brand. India e-commerce industry is evaluated to have crossed rupees 211,005 crores a year
ago and expected to create $100 billion online retail income by 2020. GST goes about as a
critical lift to online business income. Government has allowed Foreign Direct Investments
under the eWay Bill model to advance internet business commercial centre in India.

Impact on real estate

The real estate sector is one the most important sector in the terms economy development as
it generates large number of employment in India. It is difficult to assessed overall impact of
GST on real estate business because it largely depends on the tax rates. However as per the
report sector has shown substantial benefits after the implementation of GST.

Impact on textile Industry

The Indian textile industry provides employment to most of the skilled and unskilled workers.
GST contributes overall 10% of total export and after GST it has also shown positive impact
and it will increase more. GST has influence the cotton worth chain of the material business
including all pieces of clothing for people like shirts, pants, , array, shoes and any all the
more apparel materials which is picked by most little medium endeavours as it as of now
there is no tax barrier (excise duty).

The tax rate under textile Industry is higher as compare to older tax system. Despite of higher
tax rate as whole textile industry is benefited because of these reason.

 break in input credit chain

Earlier significant portion of textile industry in India was operating under unorganized
sector because of these there is gap in flow of input tax credit. After gst input tax credit was
not allowed to taxpayer who works under unorganized sector. GSt has make smoother system
of Input tax credit, which has make positive balance towards organised sector.

 reduction in manufacturing goods

There is slight reduction in tax rate of various manufacturing goods which helps to reduce the
cost of manufacturing goods.

 input tax credit allowed on capital goods

Earlier there was no input tax credit allowed on capital good but after implementation of GST
input tax credit was allowed on capital goods
Impact on automobile industry

in India automobile industry has vast business as it is producing large amount of cars and
bikes. Earlier there were several taxes applicable to this industry like excise, road tax, sales
tax, VAT, motor vehicle tax. Implementation of GST has reduces the cost of manufacturing of
cars and bikes due to the subsuming of various taxes which was levied before. earlier tax was
charged on basis of origin of state basis but after implementation of gst tax are charged on
consumption state which has boost the automobile industry and future outcome of this
industry is also positive because there is slightly chances that government will reduce tax rate
on cars and bikes

COMPARISION of tax rate

Segment Total CGST SGST TOTAL Difference

(excise ,Nccd+auto
cess, VAT ,Motor
vehicle tax

Small Cars <1200cc 28%(approx) 9% 9% 18% 10%

Mid-SizeCars from 39% 9% 9% 18% 21%

1200cc to 1500cc

Luxury Cars>1500cc 42% 14% 14% 28% 14%

SUV’s >1500cc, 45% 14% 14% 28% 17%

>170mm ground
clearance