THE FRAMEWORK FOR GST IN INDIA:

BOON OR BANE?
INTRODUCTION

This assignment presents an overview of the framework for GST in India: Boon or Bane?
Here, I will be precisely discussing the various aspects and areas of this topic. GST is a
single, destination based indirect tax. It is levied on value added to goods as well as services
at each stage of the supply chain. The main objective behind levying such a tax is to
consolidate multiple indirect tax levies into a single tax. Thus, GST subsumes a host of taxes.
It overcomes limitations of the previous indirect tax structure. Furthermore, it brings
efficiency in the administration of tax. From the midnight of July 1, 2017 the multitudes of
indirect taxes were merged into one Goods and Service tax (GST). With the GST, India has
been unified into a one common market. Before GST, tax was separately implied on taxable
prices of goods and services. GST policy has abolished various taxes in India such as Central
Excise Duty, Sales Tax, Additional Custom Duty, Service Tax, VAT, Purchase Tax,
Advertisement Tax, etc. Tax Law in India is a comprehensive, multi-stage, destination-based
tax that is levied on every value addition. GST is a single domestic indirect tax law for the
entire country. Under the GST regime, the tax is levied at every point of sale. In the case of
intra-state sales, Central GST and State GST are charged. All the inter-state sales are
chargeable to the Integrated GST. There are approx. 140 countries where GST has already
been implemented. Some of the popular countries being Australia, Canada, Germany, Japan,
and Pakistan and to name a few. Implementation of GST impacts a nation both ways,
positively and negatively. Ignoring negative aspects, positive aspects can be taken into
consideration, in order to improve the economy of the country.

GST IN INDIA

India has observed historical financial restructuring earlier in the year 1991.The policy
changes in the year 1991 has given a tremendous shift to Indian economy in developing
direction. After 1991 and after independence, the next biggest Tax restructuring policy by
Indian Government is GST policy i.e. Goods and Services Tax Policy. The resolution for
GST policy having major effects on Indian economy got the acceptance by both the houses in
2014 through 122nd amendment. On 6th May, 2015, it was passed in Loksabha by majority

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voting but the Government has to wait to get it passed in Rajya Sabha. Finally on 3rd August,
2016, 20 States has accepted the GST resolution and Hon. President Pranav Mukharjee
signed it on 8th September, 2016. Government has declared the implementation of GST
policy from 1st April, 2017. GST is the only one indirect tax for the whole country. This tax
policy is definitely going to be helpful to smoothen the transactions between states and also
among other nations. This tax is applied on supply of Goods and Services. And GST is
applicable on value additions on further levels. This is going to avoid the Cascading Effect.
As before GST, tax was separately implied on taxable prices of goods and services. GST
policy has abolished various taxes in India such as Central Excise Duty, Sales Tax,
Additional Custom Duty, Service Tax, VAT, Purchase Tax, Advertisement Tax, etc.

101st CONSTITUTION (AMENDMENT) ACT 2016 1

The introduction of GST demanded an amendment in the Constitution of India to empower

the Centre and the States to levy and collect it. Thus, the Constitution (101st Amendment
Act) was passed. It is now known as the Goods and Services Tax Act, 2017.2

Article 246A 3was brought, which had an overriding effect on Article 2464. Article
246A gives power to the Centre and States to make laws concerning GST. However, the
Central government has an exclusive power to make laws on any inter-State supply of goods.

 GST shall be imposed on the supply of goods and services except for alcoholic liquor
for human consumption.
 GST shall be applied on the following goods from the date of the notification by the
government as per the recommendation of the GST council: 
1. Petroleum crude
2. High-speed diesel
3. Motor spirit(petrol)
4. Natural Gas
5. Aviation turbine fuel

1
https://cbic-gst.gov.in/constitution-amendment-act.html ( Last visited on 19th December 2021)
2
https://www.cbic.gov.in/resources/htdocs-cbec/gst/cgst-act.pdf ( Last visited on 19th December 2021)
3
https://www.constitutionofindia.net/constitution_of_india/relations_between_the_union_and_the_states/articles
/Article%20246A ( Last visited on 20th December 2021)
4
https://indianconstitution.guru/constitution-of-india/part-11/article-246/#:~:text=Article
%20246%20%E2%80%93%20Constitution%20Of%20India,the%20%E2%80%9CUnion%20List
%E2%80%9D). ( Last visited on 20th December 2021)

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COMPONENTS OF GST
There are three taxes applicable under this system: CGST, SGST & IGST.

 CGST: It is the tax collected by the Central Government on an intra-state sale (e.g., a
transaction happening within Maharashtra)
 SGST: It is the tax collected by the state government on an intra-state sale (e.g., a
transaction happening within Maharashtra)
 IGST: It is a tax collected by the Central Government for an inter-state sale (e.g.,
Maharashtra to Tamil Nadu)

FRAMEWORK OF GST

A. LEGISLATIVE FRAMEWORK

There is single legislation – CGST Act, 2017 – for levying CGST. Similarly, Union
Territories without State legislatures [Andaman and Nicobar Islands, Lakshadweep, Dadra
and Nagar Haveli, Daman and Diu and Chandigarh] will be governed by UTGST Act, 2017
for levying UTGST. States and Union territories with their own legislatures [Delhi and
Puducherry] have to enact their own GST legislation for levying SGST. Though there would
be multiple SGST legislations, the basic features of law, such as chargeability, definition of
taxable event and taxable person, classification and valuation of goods and services,
procedure for collection and levy of tax and the like would be uniform in all the SGST
legislations, as far as feasible. This would be necessary to preserve the essence of dual GST.

B. REGULATORY FRAMEWORK OF GST

A new set up by Government of India named as ‘GST Council’. GST Council constituted

w.e.f. 12.09.2016

The GST Council consists of

a) the Union Finance Minister (as Chairman),

b) the Union Minister of State in charge of Revenue or Finance, and
c) the Minister in charge of Finance or Taxation or any other Minister, nominated by
each state government.

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All decisions of the GST Council will be made by three fourth majority of the votes cast; the
centre shall have one-third of the votes cast, and the states together shall have two-third of the
votes cast.

 Threshold limit for exemption to be Rs. 20 lakh (Rs. 10 lakh for special category
States)
 Compounding threshold limit to be Rs. 50 lakh – not available to inter-State suppliers,
service providers (except restaurant service) & specified category of manufacturers
 Government may convert existing area based exemption schemes into reimbursement
based scheme

GST AS A BOON:

GST is undoubtedly one of the biggest tax reforms since India opened its gates to the world
economy in 1991. It aims to create a unified market throughout the nation by subsuming
multiple taxes and reducing tax compliance. Thus, there are a lot of advantages of GST as an
indirect tax. 

1. The main objective of GST is One India, One Tax and One Market.
2. With the help of IT infrastructure, it becomes easier for the tax payers to file IT
returns and payments with online system.
3. Elimination of cascading effect of taxes as a host of taxes get subsumed
Small traders or service providers exempt from paying tax as threshold for registration
increased to Rs 20 Lakhs
4. Small businesses to benefit from the composition scheme as it eases the compliance
burden for them
5. Reduced tax compliance as number of tax returns to be filed under GST has come
down
6. The final price of goods and services to come down as the benefit of the input tax
credit gets passed on to the final consumer
7. Registration and filing returns under GST made simple as everything is done online
8. Unorganized businesses would now be regulated as input tax credit can be availed
only when supplier accepts the amount.
9. It would help to achieve transparency in transactions and would help to control
malpractices.

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 10. GST has been abolishing the Cascading Effects.
11. GST policy would simplify the tax structure though not immediately but it will show
effect in upcoming years. It will take time to change the habitual tax structure policy
which was running in Indian Economy since last so many decades.
12. It has minimized the documentation and filling procedure for businessmen.
13. It has been reducing the problems in Import and Export Policies of India.
14. The last but not the least, it has abolish the faulty tax payers from the system.

GST AS A BANE:
Every coin has two sides. It is not easy to face the change in tax structure policy due to
habitual practice of old tax policies running in the country since last so many decades. While
facing the GST policy, following are the disadvantages-

1. Compliance under GST is very high as there are three tax returns to be filed every
month
2. Challenging for smaller businesses to adapt to the online system under GST
3. GST does not adhere to ‘One Nation One Tax’ paradigm. Currently, there are 31
legislations governing and regulating GST law
4. Instead of single or dual rate GST system, there are 7 standard tax rates as well as
multiple rates of CESS
5. Hurried implementation of GST which has lead to confusion among professionals and
businesses
6. Increased cost for businesses as they either have to update current software or invest
in new one
7. GST policy is Customer Centralized Policy. So the States having their share in tax
income through old tax structure may face a risk of losing their share of income at a
sudden. For ex. Maharashtra being the largest productive state, it has to leave its right
on 14000 crores of tax income. But for this aspect, GST board has already included
the rule of paying compensation to the states for their lost income through taxes.
8. All Petro Chemical products are excluded from the GST policy. Petro Chemical
products are the products having major share for the common peoples’ utilization.
Even Agricultural market Committees’ Market Tax has also been excluded from GST.
For ex. A State like Punjab has got relieved from their half share of income to be

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 covered under GST policy.
9. Last but not the least; the State Government is going to lose the independence in tax
policies and income share from that. Up till now Sales Tax Inspectors has the right to
sort out the tax related disputes but from this change in policy, they will lose this
right. All the GST matters will be under the jurisdiction of the GST Board which will
be time consuming process.

CONCLUSION

It can be concluded that The Goods and Services Tax has been the most fiercely debated
topics in recent times. The GST is worldwide accepted system. GST is framed in India to
remove the cascading effects of tax and increase the tax base. In my view, GST is not only a
combination of VAT and other indirect taxes but also a step taken to eradicate the problems
and to plug out the loopholes in the present indirect tax system. It has been four years since
the introduction of Goods and Services Tax (GST), India’s biggest tax reform, on 1 July
2017. It has been a roller coaster ride for the government, industries, and consumers due to
the amount of changes and reforms introduced in the past three years. These changes were
primarily focused on rationalising rates, simplifying procedures, and curbing tax evasion.
Stabilising one of the world’s biggest online tax systems, GSTN, was also a key focus area
for the government. As the coin has two sides, same way it has two sides and the
implementation of GST impacts our nation in both ways, positively and negatively. If we
ignore the negative aspects and consider the positive effect, then it is a way to get benefited in
various fields as mentioned above. GST is having a few problems, but with time, we will be
able to see the bigger picture and it will surely result in an economic integration in near
future. It has several advantages and disadvantages that influence both consumers and sellers.
GST policy bas brought a though change in the Indian economy and the common citizen will
need more time to adjust. But as the main objective of GST is One India, One Tax and One
Market, it is going to show the positive results in future.

References:

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 1. Shaik S., Sameera S.A, Firoz Sk.C., Does Goods and Services Tax (GST) Leads to
Indian Economic Development?, IOSR Journal of Business and Management, Vol.
17, Issue 12 , P. 01-05. (2015),
2. Sehrawat Monika , Dhanda Upasana, GST IN INDIAA KEY TAX REFORM,
International journal of research Vol.3, Issue 12, December, P. 133-141. (2015),
3. Girish Garg, Basic concepts and features of Goods and Services tax in India,
International Journal of scientific research and management (IJSRM),Vol. 2, Issue 2
P. 542-549. (2014),
4. Vasanthagopal. R, GST in India, A Big Leap in the Indirect Taxation System,
International Journal of Trade, Economics and Finance, Vol. 2, No. 2, P.144-146. .
( 2011)
Web references:

1. http://www.gstindia.com/about/
2. http://www.ey.com/in/en/services/ey-goods-and-services-tax-gst
3. http://swarajyamag.com/economy/so-what-is-gst-and-what-are-its-benefits
4. http://www.livemint.com/r/LiveMint/Period1/oldpdf/741e329f-def4-4ce9-a8c3-
236721417717.pdf
5. https://www.quora.com/Whats-the-importance-of-GST-bill-in-India
6. http://indianexpress.com/article/explained/gst-most-important-tax-reform-since-1947/
7. https://www.quora.com/Is-there-any-loophole-in-GST-goods-and-service-tax

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