Industry Internship and Report on

“IMPACT OF GST ON AUTOMOBILE INDUSTRY IN INDIA”

BY

SHWETHA R

1NZ16MBA61

Submitted to

DEPARTMENT OF MANAGEMENT STUDIES

NEW HORIZON COLLEGE OF ENGINEERING,
OUTER RING ROAD, MARATHALLI,
BANGALORE

In partial fulfillment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Under the guidance of

INTERNAL GUIDE EXTERNAL GUIDE

NIVIYA FESTON V.RANGANATHA MURALI
SENIOR ASSISTANT PROFESSOR CHARTERED ACCOUNTANT

2016-18
 CERTIFICATE

This is to certify that Shwetha R bearing USN 1NZ16MBA61, is a bonafide student of

Master of Business Administration course of the Institute, Batch 2016-18,
autonomous program, affiliated to Visvesvaraya Technological University, Belgaum.
Internship report on “IMPACT OF GST ON AUTOMOBILE INDUSTRY IN
INDIA” is prepared by her under the guidance of Niviya Feston, in partial fulfillment
of requirements for the award of the degree of Master of Business Administration of
Visvesvaraya Technological University, Belgaum Karnataka.

Signature of Internal Guide Signature of HOD Signature of

Principal
 DECLARATION
I, Shwetha R, hereby declare that the Internship report entitled “IMPACT OF GST
ON AUTOMOBILE INDUSTRY IN INDIA” with reference to “V.R.MURALI AND
CO, Bangalore” prepared by me under the guidance of Niviya Feston, Senior
Assistant Professor of M.B.A Department, New Horizon College of Engineering and
external assistance by v.Ranganatha murali, Chartered accountant, V.R MURALI
AND CO.

I also declare that this Internship work is towards the partial fulfillment of the
university regulations for the award of the degree of Master of Business
Administration by Visvesvaraya Technological University, Belgaum.

I have undergone a summer project for a period of Twelve weeks. I further declare
that this project is based on the original study undertaken by me and has not been
submitted for the award of a degree/diploma from any other University / Institution.

Signature of Student
Place: Bangalore, Karnataka
Date
 ACKNOWLEDGEMENT

It is a genuine pleasure to express my deep sense of thanks and gratitude to the

Principal of New Horizon College of Engineering, Dr.Manjunatha for providing us
with a wonderful platform.
I owe a deep sense of gratitude to Dr.Sheelan Misra, Head of Department of
Management Studies for her support and encouragement.
I am extremely thankful to Prof. Niviya Feston, Internal guide who has guided and
corrected me in all the possible ways to get the best results. Her timely suggestions
and enthusiasm has helped me complete the project report.
I profusely thank Mr. V.RANGANATHA MURALI, who helped me explore the real
corporate world, without whom I would not have been able to complete the study.
It is my privilege to thank my family and friends who have constantly encouraged me
throughout my study period and for their co-operation.


Shwetha R
1NZ16MBA61
 CONTENTS

Executive Summary
Chapter 1. Theoretical Background of the Study 1-8
Chapter 2. Industry and Company Profile 9-17
Chapter 3. Methodology 18-19
Chapter 4. Data Analysis and interpretation 20-23
Chapter 5. Summary of Findings, Suggestion and Conclusion 24-28
Bibliography
Annexure

BIBLIOGRAPHY
BIBLOGRAPHY TITLE PUBLICATION YEAR OF
AUTHOR EDITION
NAME
TAXMANN’S Basics of GST Nitya Tax 2016
Associates

TAXMANN’S GST Ready V.S. Datey 2017

Reckoner

WEBSITES
www.accountingformanagement.com
www.investopedia.com
www.wikipedia.com
www.gst.gov.in
www.cbec.gov.in

EXECUTIVE SUMMARY
The internship report on implications of Goods and Service Tax (GST) on automobile
industry of India was assigned by Mr. Vikas Tuteja, the Branch Manager at HDFC Bank,
GK-1 Branch.
The objectives of the study was to find implications of Goods and Service Tax (GST) on
automobile industry of India, whether it will act as a boon or bane for industry. The other
sub-objectives are as follows:-
To study how Auto loans will get impacted after GST
implementation.
How GST will affect Indian Economy. Only secondary data was used to prepare this
report. This report is divided into few chapters such as introduction to banking sector,
overview of company profile (HDFC Bank), introduction to tax and elaboration of GST
insights, impact of GST on automobile sector and Indian economy. The last chapter is about
conclusion and recommendations which are drawn from analysis of whole study.

The main findings of the study are as follows: Automobile industry is looking forward to
introduction of GST. However, there are quite a few concerns in GST model, which need to
be addressed. Restrictions and conditions on eligibility to tax credits on assets used for
business is also a major area of concern, and the credit mechanism should be more liberal.
Overall, GST will be boon for automobile industry.
THEORETICAL BACKGROUND OF THE STUDY
INDUSTRY PROFILE AND COMPANY PROFILE
METHODOLOGY
DATA ANALYSIS AND INTERPRETATION
FINDINGS, SUGGESTIONS AND CONCLUSION
LEARNING EXPERIENCE
 CHAPTER 1

THEORETICAL BACKGROUND OF THE STUDY

INTRODUCTION:

The Goods and Service Tax is a single rate tax levied on the manufacture, sale and
consumption of goods as well as services at a national level. In this system the GST is
implemented only on the value added at every stage of production. This will ensure there is
no cascading effect of taxes (tax on tax paid) on inputs that are used in manufacturing goods.
With the GST in place, the prices of goods are expected to fall, and in the long term we can
expect the dealers to pass on these benefits to the end consumer as well. The Automobile
industry has seen significant disputes under central excise valuation like, sale below the cost
for market penetration, inclusion of State Industrial Promotion subsidies retained by the
manufacture, deductibility of past sale discounts from value under excise, valuation of demo
cars treatment of PDI charges and other dealer reimbursement advertisement charges
recovered from dealers etc., and sales though marketing companies and mutuality of interest.
The model GST law continues with the concept of transaction value which is a welcome
measure, however the powers for rejection of the transaction value are very wide, and could
lead to significant valuation disputes.
The GST is working towards a more viable approach when it comes to tax, which is
applicable in the manufacturing process. The tax under the new regime which the
manufacturer has already levied in the manufacturing process in deducted when the final
product created by the manufacturer is produced in the market. Hence, the tax on products in
overall reduced as the tax otherwise charges on the final product does not include the pre
charged one. The same process is followed on the level of the wholesaler who sets off the tax
when he purchases the good from the manufacturer and releases them in the market. The
product passes from the wholesaler to the retailer the retailer after adding value to the product
again sets off the tax when releasing the goods finally in the market.

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In this chain of passing the goods from one to another, the tax sets off at every level,
releasing a bit of pressure on all the people on the respective stages. Hence, when the final
product is released the overall value of the good when taxed has a marginal variation in favor
of the consumer as to re-existing rate of taxes. The double tax burden is being eliminated
from this region as taxes that may have been charged and again charged on the tax that was
already paid has been done away with the section, though has variations as per type of
vehicle depending on the size and emissions by the same. Moreover the overall compliance
burden is expected to decrease and bring lots more efficiency in operations of the indirect tax
prospective the whole country will be treated as one market and will add to operational
efficiencies.

MEANING OF GST: GST is an Indirect Tax which has replaced many Indirect Taxes in
India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017.
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 simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of
goods and services. This law has replaced many indirect tax laws that previously existed in
India.

GST is one indirect tax for the entire country.

GST needs

GST will break the complex structure of separate central and state tax that often overlap with
each other to create a uniform tax system that will apply across the country. Taxes are
implemented more effectively, as a network of indirect taxes such as excise duty, service tax,
central sales tax, VAT and patent will be replaced by a single tax. The state will still have a
tax case as the number of taxes is reduced to three with Central GST, State GST and
Integrated GST for interstate governments.

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 SALIENT FEATURES OF GST
1. GST would be a comprehensive indirect taxon manufacture, sale and consumption of goods
and services throughout India, to replace taxes levied by the central and state Governments.
2. This method allows GST-registered businesses to claim tax credit to the value of GST they
paid on purchase of goods or services as part of their normal commercial activity.
3. Taxable goods and services are not distinguished from one another and are taxed at a single
rate in a supply chain till the goods or services reach the consumer.
4. Administrative responsibility would generally rest with a single authority to levy tax on
goods and services.
5. Exports would be considered as zero-rated supply and imports would be levied the same
taxes as domestic goods and services adhering to the destination principle in addition to the
Customs duty which will not be subsumed in the GST.
6. Amalgamating several Central and State taxes into a single tax would mitigate cascading or
double taxation, facilitating a common national market.
7. The simplicity of the tax would lead to easier administration and enforcement.
8. From the consumer point of view, the biggest advantage would be:
- reduction in the overall tax burden on goods, which is currently estimated at 25%-30%
- free movement of goods from one state to another without stopping at state borders
for hours for payment of state tax or entry tax.
- reduction in paperwork to a large extend.
HSN code in GST
HSN (Harmonized System of Nomenclature) is an 8-digit code for identifying the applicable
rate of GST on different products as per CGST rules. If a company has turnover up to ₹1.5
Crore in the preceding financial year then they need not mention the HSN code while
supplying goods on invoices. If a company has turnover more than ₹1.5 Crore but up to ₹5
Cr then they need to mention the 2 digit HSN code while supplying goods on invoices. If
turnover crosses ₹5 Cr then they shall mention the 4 digit HSN code on invoices.

Components of GST:
 CGST: Collected by the Central Government on an intra-state sale.
 SGST: Collected by the State Government on an intra-state sale.
 IGST: Collected by the Central Government for inter-state sale.

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 In most cases, the tax structure under the new regime will be as follows:

Transaction New Old Regime

Regime

Sale within the CGST + VAT + Central Revenue will be shared equally between the Centre and
State SGST Excise/Service tax the State

Sale to another IGST Central Sales Tax + There will only be one type of tax (central) in case of
State Excise/Service Tax inter-state sales. The Center will then share the IGST
revenue based on the destination of goods.

Advantages of GST:

1. GST eliminates the cascading effect of tax:

2. Higher threshold for registration
3. Composition scheme for small businesses
4. Simple and easy online procedure
5. The number of compliances is lesser
6. Defined treatment for E-commerce operators

Disadvantages of GST

1. Increased costs due to software purchase

2. Being GST-compliant
3. GST will mean an increase in operational costs
4. GST came into effect in the middle of the financial year
5. GST is an online taxation system
6. SMEs will have a higher tax burden

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FACTS:

Facts -
France, first country to introduce single GST(VAT) in 1954.
Brazil, Canada has dual GST.
160 countries have implemented GST/VAT in some form or other.
India will follow Canadian model of GST.

GST has 4 tax slabs :-

5% slab
12% slab
18% slab
28% slab
Challenges
1. Valuation Disputes - The Automobile business has seen critical question under focal
extract valuation like: deal underneath the cost for showcase entrance, consideration of State
Industrial Promotion Subsidies held by the producer, deductibility of post-deal rebates from
an incentive under extract, valuation of demo autos, treatment of PDI charges and other
merchant repayments, commercial charges recuperated from merchants and so on., and deals
through advertising organizations and commonality of intrigue. The Model GST law
proceeds with the idea of 'exchange esteem' which is an appreciated measure however the
forces for dismissal of the exchange esteem are wide, and could prompt noteworthy valuation
debate. At present, merchant motivating force plans are not subject to VAT, but rather there
are issues on materialness of administration charge on merchants, contingent upon the terms
of each plan. Presently, merchant motivating force plans are not subject to VAT, but rather
there are issues on pertinence of administration assess on merchants, contingent upon the
terms of each plan.

2. Employment work - The activity work process is the spine for vehicle industry operations.
The Model GST law treats 'work' as an administration and looks to keep up existing extract
systems for the activity work exchanges, i.e. non-taxability of employment work exchange
and giving credits to the vital to provisions to work laborer, 180 days condition for bringing
back products after occupation work, and so forth. In any case, some greater clearness is
required in the calculated structure for work else will represent a test.

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3. Credits on seller tooling - It is a typical practice in the car business for merchants to create
apparatuses/molds for fabricate of parts of autos. Normally, the responsibility for apparatuses
is exchanged to the OEMs, and the cost is likewise recouped from OEMs. Be that as it may,
the devices are physically situated in the merchant's processing plant for produce of parts.
Under the Model GST law; the meaning of 'capital products' spreads just that merchandise
which is utilized at the place of business of supply of products. Thus, only goods which are
used in the place of business of OEM seem to be eligible for GST credit in the OEM's hands.
This definition would pose a challenge to the OEMs in availing credits relating to tools
located in the premises, on which cost is recovered by the vendors. This could possibly result
in increase in the cost of tooling and the cost for manufacture.

4. Time of supply for payment - Currently, under the excise law, duty is paid at the time of
removal of the vehicles manufactured. VAT is paid at the time of sale of vehicles. The Model
GST law specifies that the time of supply of goods shall be at the earliest of: Date of removal
of goods, Date of which goods are made available to recipient, Date of invoice, Date of
receipt of payment with respect to the supply, Date of receipt of goods as shown in the books
of accounts by recipient. Under the existing law, receipt of advance towards supply of goods
is not a taxable event, both under Central Excise and VAT law.

AUTOMOTIVE INDUSTRY is a wide range of companies and organizations involved in

the design, development, manufacturing, marketing, and selling of motor vehicles, some of
them are called automakers. It is one of the world's most important economic
sectors by revenue. The automotive industry does not include industries dedicated to the
maintenance of automobiles following delivery to the end-user, such as automobile repair
shops and motor fuel filling stations.
The term automotive was created from Greek autos (self), and Latin motivus (of motion) to
represent any form of self-powered vehicle. This term was proposed by Elmer Sperry.

HISTORY:-

The automotive industry began in the 1890s with hundreds of manufacturers that pioneered
the horseless carriage. For many decades, the United States led the world in total automobile
production. In 1929, before the Great Depression, the world had 32,028,500 automobiles in
use, and the U.S. automobile industry produced over 90% of them. At that time the U.S. had
6|Page
one car per 4.87 persons. After World War II, the U.S. produced about 75 percent of world's
auto production. In 1980, the U.S. was overtaken by Japan and became world's leader again
in 1994. In 2006, Japan narrowly passed the U.S. in production and held this rank until 2009,
when China took the top spot with 13.8 million units. With 19.3 million units manufactured
in 2012, China almost doubled the U.S. production, with 10.3 million units, while Japan was
in third place with 9.9 million units.[4] From 1970 (140 models) over 1998 (260 models) to
2012 (684 models), the number of automobile models in the U.S. has grown exponentially.

ECONOMY:-
Around the world, there were about 806 million cars and light trucks on the road in 2007,
consuming over 980 billion litres (980,000,000 m3) of gasoline and diesel fuel yearly. The
automobile is a primary mode of transportation for many developed economies. The Detroit
branch of Boston Consulting Group predicts that, by 2014, one-third of world demand will be
in the four BRIC markets (Brazil, Russia, India and China). Meanwhile, in the developed
countries, the automotive industry has slowed down.[8] It is also expected that this trend will
continue, especially as the younger generations of people (in highly urbanized countries) no
longer want to own a car anymore, and prefer other modes of transport. Other potentially
powerful automotive markets are Iran and Indonesia. Emerging auto markets already buy
more cars than established markets. According to a J.D. Power study, emerging markets
accounted for 51 percent of the global light-vehicle sales in 2010. The study, performed in
2010 expected this trend to accelerate. However, more recent reports (2012) confirmed the
opposite; namely that the automotive industry was slowing down even in BRIC
countries.[8] In the United States, vehicle sales peaked in 2000, at 17.8 million units.

7|Page
World Motor vehicle Production:-

Year Production Change

1997 54,434,000
1998 52,987,000 -2.7%
1999 56,258,892 6.2%
2000 58,374,162 3.8%
2001 56,304,925 -3.5%
2002 58,994,318 4.8%
2003 60,663,225 2.8%
2004 64,496,220 6.3%
2005 66,482,439 3.1%
2006 69,222,975 4.1%
2007 73,266,061 5.8%
2008 70,520,493 -3.7%
2009 61,791,868 -12.4%
2010 77,857,705 26.0%
2011 79,989,155 3.1%
2012 84,141,209 5.3%
2013 87,300,115 3.7%
2014 89,747,430 2.6%
2015 90,086,346 0.4%
2016 94,976,569 4.5%

8|Page
 CHAPTER 2

COMPANY PROFILE

2.1 INTRODUCTION:
Automobile sector in India is growing fast and the growth pattern seems to have a clear
correlation with the reforms related policies those influenced both domestic demand pattern
as well as trade. India is global major in the two wheeler industry producing motor cycles,
scooters and mopeds principally of engine capacities below 200cc. The two wheeler industry
in India has grown at a compounded annual growth rate of more than 15% during the last five
years and Indian two wheelers comply with some of the most stringent emission and fuel
efficiency standards maintained worldwide. In India two wheelers is the second largest
producer in the world and the world‘s number one producer is located in India. India is the
largest tractor manufacturer, the fifth largest commercial vehicle manufacturer and the
thirteenth largest producer of passenger cars in the world.
The Auto industry currently employs more than 30 million people both directly and
indirectly. The auto industry is a key employment generator in the OEM factory that
manufacturers the vehicles, in the inbound auto component and logistics industry that makes
and delivers components & systems and the out bound logistics and dealer network that sells,
maintains and distributes the cars. Every vehicle produced, generates secondary and tertiary
employment. The industry generates employment of 13 persons for each truck, 6 persons for
each car and four persons for each three wheeler and one person for two wheelers. It is
important to appreciate the sector‟s multiplier effect on economic activity. If the industry
produces as per its potential, it could generate employment of over 35 million people by
2020.

2.2 AUTOMOTIVE INDUSTRY is a wide range of companies and organizations involved

in the design, development, manufacturing, marketing, and selling of motor vehicles, some of
them are called automakers. It is one of the world's most important economic
sectors by revenue. The automotive industry does not include industries dedicated to the
maintenance of automobiles following delivery to the end-user, such as automobile repair
shops and motor fuel filling stations.
The term automotive was created from Greek autos (self), and Latin motivus (of motion) to
represent any form of self-powered vehicle. This term was proposed by Elmer Sperry.

9|Page
2.3 HISTORY:-

The automotive industry began in the 1890s with hundreds of manufacturers that pioneered
the horseless carriage. For many decades, the United States led the world in total automobile
production. In 1929, before the Great Depression, the world had 32,028,500 automobiles in
use, and the U.S. automobile industry produced over 90% of them. At that time the U.S. had
one car per 4.87 persons. After World War II, the U.S. produced about 75 percent of world's
auto production. In 1980, the U.S. was overtaken by Japan and became world's leader again
in 1994. In 2006, Japan narrowly passed the U.S. in production and held this rank until 2009,
when China took the top spot with 13.8 million units. With 19.3 million units manufactured
in 2012, China almost doubled the U.S. production, with 10.3 million units, while Japan was
in third place with 9.9 million units.[4] From 1970 (140 models) over 1998 (260 models) to
2012 (684 models), the number of automobile models in the U.S. has grown exponentially.

2.4 ECONOMY:-
Around the world, there were about 806 million cars and light trucks on the road in 2007,
consuming over 980 billion litres (980,000,000 m3) of gasoline and diesel fuel yearly. The
automobile is a primary mode of transportation for many developed economies. The Detroit
branch of Boston Consulting Group predicts that, by 2014, one-third of world demand will be
in the four BRIC markets (Brazil, Russia, India and China). Meanwhile, in the developed
countries, the automotive industry has slowed down.[8] It is also expected that this trend will
continue, especially as the younger generations of people (in highly urbanized countries) no
longer want to own a car anymore, and prefer other modes of transport. Other potentially
powerful automotive markets are Iran and Indonesia. Emerging auto markets already buy
more cars than established markets. According to a J.D. Power study, emerging markets
accounted for 51 percent of the global light-vehicle sales in 2010. The study, performed in
2010 expected this trend to accelerate. However, more recent reports (2012) confirmed the
opposite; namely that the automotive industry was slowing down even in BRIC
countries.[8] In the United States, vehicle sales peaked in 2000, at 17.8 million units.

10 | P a g e
2.5 World Motor vehicle Production:-

Year Production Change

1997 54,434,000
1998 52,987,000 -2.7%
1999 56,258,892 6.2%
2000 58,374,162 3.8%
2001 56,304,925 -3.5%
2002 58,994,318 4.8%
2003 60,663,225 2.8%
2004 64,496,220 6.3%
2005 66,482,439 3.1%
2006 69,222,975 4.1%
2007 73,266,061 5.8%
2008 70,520,493 -3.7%
2009 61,791,868 -12.4%
2010 77,857,705 26.0%
2011 79,989,155 3.1%
2012 84,141,209 5.3%
2013 87,300,115 3.7%
2014 89,747,430 2.6%
2015 90,086,346 0.4%
2016 94,976,569 4.5%

2.6 MARUTHI:
Maruti Suzuki India Limited is a subsidiary of Suzuki Motor Corporation, Japan & India‟s
leading passenger car manufacturer, accounting for nearly 45 percent of the total industry
sales. Maruti Suzuki offers 16 brands with near about 150 variants. Maruti offers various
brands which include Maruti 800, Alto 800, Alto K10, Estilo, Wagon-R, Omni, Eeco, A-Star,
Ritz, Gypsy, Swift, Swift Dzire, SX4, Ertiga, Kizashi and Grand Vitara. The company is
engaged in the business of Purchase, Manufacturing, and Sales of vehicles & spare parts.
Maruti Suzuki is also engaged in other activities like Pre owned car sales, Car financing &
Fleet management.

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Maruti Suzuki got various awards and accolades in its profile. It has ranked no.1 in JD Power
Asia Pacific Customer Satisfaction Index (CSI) survey 2009 for ten times in a row. Maruti
Suzuki got CNBC TV18 award 2011 for manufacturer of the year.

Maruti Suzuki is the only Indian company who has crossed the 10 million sales mark since its
inception. The company has two manufacturing facilities in Manesar and Gurgaon, Haryani,
India. The Gurgaon manufacturing plant has a manufacturing capacity of nine lakh units
annually.

According to Mr.R.C.Bhargava-Chairman, Maruti Suzuki India Limited, Maruti Suzuki India

Limited finalized Rs.1700 crore investment for doubling the diesel engine capacity at
Gurgaon Manufacturing Facility to 6,00,000 units by 2014. The Gurgaon plant also having K
Series engine plant. Since inception of this plant, till date over 10 lakh K Series engine have
been rolled out. Maruti Suzuki‟s Manesar manufacturing facilities have two fully integrated
plants having capacity of 5.5 lakh units annually.

Maruti Suzuki is also ahead in Social activities. As a responsible corporate citizen Maruti
Suzuki introduced world class driving training facilities to India by launching Institute of
Driving & Traffic Research. These include a specially formulated multilingual theory
curriculum, scientifically laid-out driving tracks and advanced driving simulators that
replicate Indian driving conditions.

In 2008, Maruti Suzuki introduced National Road Safety Mission. Under this initiatives, the
company took a commitment of training over 5,00,000 people in safe driving practice in a
span of three years. Also with an objective to improve road safety and inculcate safe and
systematic driving habits among people, Maruti Suzuki has opened Maruti Driving Training
School (MDS). These driving schools are equipped with Practical Training and Attitude
Training.

2.6.1 COMPANY MISSION , VISION AND SWOT ANALYSIS.

1)Company‘s Portfolio:

Maruti Udyog Limited (MUL),INDIA‘s finest and Asia‘s largest automobile industry was
established in 1981 by an act of parliament.MUL, the first automobile company in the world
to be honored with an ISO 9000:2000 certificate, is a subsidiary of Suzuki Motor Corp (holds

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a 54% equity stake). The Government of India remains a significant equity stakeholder
(10%).With its early mover advantage in Indian market; Maruti retains a dominant Market
share despite increasing competition.

2) Business Portfolio:
The Group's principal activity is to manufacture, purchase and sale of Motor Vehicles and
Spare parts. The other activities of the Group comprises of facilitation of Pre-Owned Car
Sales, Fleet Management and Car Financing. The Group also provides services like framing
of customized car policies, economical leasing of cars, maintenance management, registration
and insurance management, emergency assistance and accident management. The product
range includes ten basic models with more than 50 variants. The Group has operations in over
100 cities with more than 150 outlets and also exports cars to other countries.

Vision:
Visions of any company are those values on which company works. As the MUL is started by
Governmental initiatives it tends to be more consumer oriented and hence cost effective, but
on the other hand Suzuki‘s participation ensures not only need of the profit, but of the need of
maximum profit. The only way for this Nora‘s dilemma of selecting principals for company‘s
working vision ,was to maximize profit and reducing cost by maximizing output and sales
Hence MUL declared its Vision as-
―The Leader in the Indian Automobile Industry, Creating Customer Delight1 and
Shareholder's Wealth2; eventually become a pride of India‖
Customer Delight1 is making sure that performance, after sales service and customer support
are best and beyond expectation. Shareholder‘s wealth2 is the prime concern for running
business smoothly.MUL knows this and understands ―customer is king‖, he can change the
fortune of any company, hence goes company‘s brand line: COUNT ON US.

Mission:
Mission is the statement of an organization‘s purpose, what it want to accomplish in the
larger environment and its goals which are specific, realistic and motivating. Missions are
described over visions and visions demand certain objectives. The main objectives/Missions
of MUL are:
-Modernization of the Indian Automobile Industry.
-Developing cars faster and selling them for less.

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-Production of fuel-efficient vehicles to conserve scarce resources.
- Production of large number of motor vehicles which was necessary for economic growth.
- Market Penetration, Market Development Similarly Product Development and
Diversification.
-Partner relationship management, Value chain, Value delivery network .

SWOT ANALYSIS: Consists of analysis of internal environment (Strength and weakness)

and external environments

STERNGHTHS:Contemporary technology. Japanese Management practices (that had

captured Japan over USA to the status of
top Auto manufacturing country in the world)Early mover advantages. Recruitment is done in
very tedious mann-
-er ensuring talent and best professionals, Working culture, after sale services , distribution,
diversification, R&D

WEAKNESS: Still depends upon SUZUKI COPORATION, Japan For tech. support, 10%
components are manufactured outside India. Though MUL has launched luxury cars as well
it‘s still considered as poor man‘s brand. Diversification is not supported with all India
presence of Manufacturing Units. Bureaucracy, Technological disadvantages, Decades of
isolation, inertia and subservience to the whims of government bureaucrats have made MUL
unaccustomed to international standards or keen competition.

OPPURTUNITY: first company to roll out suitably designed cars before 2008 as per Govt.‘s
Proposal of new ethanol (renewable) mixed fuel. Other companies lacks economy of scale, so
market is still open. Importing new technology is controlled by Govt. so there is plenty of
untapped market and with increase in Income scale, Demand is rising

THREAT: Numbers of new Technology driven players and manufactures are in market.
Govt .reducing support and cutting down the Gas supply quota.(TOI, New Delhi,11th
june,07).

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2.7 HONDA:
The Honda Foundation was established in December 1977 by donations from the founder of
Honda Motor Company, Soichiro Honda, and his younger brother, Benjiro. The Foundation
was established as a result of the first DISCOVERIES International Symposium that had
been held the previous year.
DISCOVERIES is the acronym for "Definition and Identification Studies on Conveyance of
Values, Effects and Risks Inherent in Environment Synthesis." At this first symposium issues
on how to harmonize human activities with the earth's environment were actively discussed
from the perspective of a broad range of different fields. The response to this approach was
huge with mounting requests to continue and expand these discussions. The Foundation was
thus established in 1977 to address these issues.

Since then the DISCOVERIES series of international symposia covering a broad range of
topics have been held 11 times in various world-renowned cities. In 2000 the international
symposium discussed the topic of what form regional cooperation in East Asia should take,
and since then there have been all types of seminars and symposia held every year on a
variety of timely topics, all of which have been highly regarded.
In 1980 the Foundation established an international award, the Honda Prize, to recognize
individuals or groups for distinguished contributions in the field of ecotechnology. Since
then, the Foundation has continued activities to honor scientists who have contributed new
value to the world.
In 2006 the scholarship program Honda Young Engineer and Scientist's Award (Y-E-S
Award) was established to foster the next generation of leaders in the field of science and
technology. In order to attract more talented people in this field the Foundation plans to
broaden its scope in the future, especially for students in Asia.

In this manner, the Foundation has broadened its activities in keeping with the times up
through the present. The basis for that has been the fervent wish of our founder, Soichiro
Honda that "Science and technology must serve to ensure peoples' happiness." This is our
mission at the Honda Foundation.
2.7.1 CORPORATE PROFILE AND DIVISIONS

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Honda is headquartered in Minato, Tokyo, Japan. Their shares trade on the Tokyo Stock
Exchange and the New York Stock Exchange, as well as exchanges in Osaka, Nagoya,
Sapporo, Kyoto, Fukuoka, London, Paris and Switzerland.

Honda's Net Sales and Other Operating Revenue by Geographical Regions in 2007[24]

Geographic Region Total revenue (in millions of ¥)

Japan 1,681,190

North America 5,980,876

Europe 1,236,757

Asia 1,283,154

Others 905,163

2.7.2 COMPANY VISION AND MISSION:

VISION:
We are the leading and most innovative Honda organization that provides best value
solutions to our customers and partners.

MISSION:
We commit to nurture customer Confidence by offering Convenient and efficient
automotive services delivered by highly Competent and Value-driven associates.
In pursuit of our goal, we continue to deliver significant business results to our stakeholders.

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VALUES:
1. Customer focus
2. Integrity
3. Excellence
4. Innovation
5. Commitment
6. Teamwork

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 CHAPTER 3
METHODOLOGY
3.1 OBJECTIVE OF THE STUDY:

The Objective of the study is to find implications of Goods and Service Tax (GST) on
automobile industry of India, whether it will act as a boon or bane for industry.
The other sub-objectives are as follows:-

Sub-Objectives :-
To study how Auto loans will get impacted after GST implementation.
How GST will affect Indian Economy.

3.2 LIMITATIONS:
Limitations Concerns over GST are as follows –
Lack of clarity on subsuming of cess
The automotive industry has witnessed several cesses, including automobile cess, NCCD,
tractor cess and infrastructure cess. In the discussions on GST, the Government has indicated
its intention to subsume all central and State cesses into GST. However, on a reading of the
Model GST law and the constitutional amendment bill, it is not clear as to whether the cesses
levied under different legislations (for specified purposes) will be subsumed into GST or
would continue under the GST scenario.
Impact on Registration, Return and Accounting
Registration: Dealers need to obtain separate registration for each state even if it pertains to
the same dealership and covered under the same PAN. But dealer can opt for multiple
registrations within the state for various cars.

Returns: Compliance burden will be very high in the GST System as one has to file 37
Returns in one financial year for each registration apart from ISD returns. In case taxes are
not paid by the vendors or if the returns are not filed by the vendors, then the credit of such
taxes is
denied to the customers. Therefore, timely payment of taxes, filing of returns needs to be
ensured in the GST.
Accounting: Communication, flow of documents from all branches to H.O. should be before
10th of the subsequent month. Therefore, accounting department needs to be faster.

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 Valuation Disputes
The Automobile industry has seen significant disputes under central excise valuation like:
sale below the cost for market penetration, inclusion of State Industrial Promotion Subsidies
retained by the manufacturer, deductibility of post-sale discounts from value under excise,
valuation of demo cars, advertisement charges recovered from dealers etc., and sales through
marketing companies and mutuality of interest. The Model GST law continues with the
concept of 'transaction value' which is a welcome measure however the powers for rejection
of the transaction value are very wide, and could lead to significant valuation disputes.

Transfer of Right to use of Car with accessories, handling charges

Dealers charge various ancillary services such as insurance, extended warranty, accessories,
logistics and handling, registration etc in addition to amount for sale of vehicle. It important
whether the entire transaction shall be classified as separate supplies or as a ‗composite
supply‘ or as a ‗mixed supply‘ (new concept), which will create litigation at large.

Post Supply Discounts

Generally, dealers receive various discounts from its manufacturers based on targets, vehicles
lifted, Special Customers [like CA, Doctor], Year- End Discounts etc. It is to note that post
supply discounts will not be allowed as deduction from the value if the same is not linked to
any
invoice in the GST.

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 CHAPTER 4
ANALYSIS AND INTERPRETATION
4.1 IMPACT OF GST ON AUTOMOBILE SECTOR:

Taxes at time of buying car –

TAX TYPE PERCENRAGES COLLECTORS
Excise duty 12%, 24%, 27% (Depending on the size of cars)

Central Government Infrastructure Cess 1% to

4% Central

VAT 12.5% to 14.5% State Road tax 3% to 24% State Entry tax 4% State
Government Government Government

VAT 12.5% to 14.5% State Road tax 3% to 24% State Entry tax 4% State
Government Government Government

VAT 12.5% to 14.5% State Road tax 3% to 24% State Entry tax 4% State
Government Government Government

current taxes. Since around

17 taxes will get subsumed in the GST.

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S.NO SEGMENT EXCIS VA OTHE TOTAL PROPOSED IMPACTED
E T RS TAXES GST SLAB CARS
1 Small Hatches, 13% 14% 3.2% 29.7% 28% Alto,
Sedan and Wagon R,
SUVs Swift, Elite
with length <4m i20, I10,
Zest,
Xcent,
Amaze,etc

2 Mid Size 24% 14% 2.1% 40.1% 28%+35 City, Ciaz,

Length >4m but
cess Vento ,etc
engine capacity
less than 1500cc
3 Big 27% 14% 2.1% 43.1% 28%+15% Cruze,
Cars/Luxury Elantra,
cess
cars Altis
Length >4m
and
engine capacity
more than
1500cc
4 SUVs/MUVs 30% 14% 2.1% 46.1% 28%+15% Scorpio,
Length >4m, Safari,
cess
engine Creta,
capacity>1500c Innova
c

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4.2 HOW CAR WILL COST PRE AND POST GST IN MARUTHI AND HONDA

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4.3 EFFECT OF GST ON INDIAN ECONOMY :
Some effects of GST on the Indian Economy are discussed as follows :

Increased FDI - The flow of Foreign Direct Investments may increase once GST is
implemented as the present complicated/ multiple tax laws are one of the reasons foreign
Companies are wary of coming to India in addition to widespread corruption.

Growth in overall revenues - It is estimated that India could get revenue of $15 billion
per annum by implementing the Goods and Services Tax as it would promote exports, raise
employment and boost growth. Over a period, the dilution of the principles may
see that only part of this is accruing.

Simplified tax laws - This reduces litigation and waste of time of the judiciary. Present
law appears to be much worse and an amalgam of the bad parts of VAT/ ST.

Increase in exports and employment - GST could also result in increased employment,
promotion of exports and consequently a significant boost to overall economic growth and
factors of production -land labour and capital. Experts are also making positive speculations
regarding GST.

So, in long run GST will act as a boon for the society and we can take example from
CANADA.

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 CHAPTER 5
FINDINGS AND SUGGESTIONS
The GST or the Goods and Services Tax bill was the biggest talk of this year‘s budget. Some
say that it could upset the balance of the economy, some are saying it is flawed in its current
state whereas others are saying that if it isn‘t passed it could lead to crisis in the Indian
economy.

Now manufacturers like Maruti-Suzuki and Hyundai are all in favour of the GST in its
current format as it gives small car manufacturers massive tax reductions.

For the carmakers, the GST is undoubtedly a good news but till it gets implemented, they run
the risk of losing sales as people may hold on to their car purchase till July, 2017. With the
festive season around the corner, the gravity of this trend only seems to compound further but
in the long-run the GST is set to benefit each one of us, beyond theautomotive industry and
more. In the end though, the customer wins and remains the king. Now let's hope the GST
implementation doesn't hit a roadblock.

GST was implemented from July 1, 2017. The day marked changes in most tax structures and
would help India unite under a single framework.

ONE COUNTRY
ONE TAX

GST will result in –

GST will lead to merger of firms
Reduction in number of taxes.
Decrease in effective tax rate of goods over a period.
Increase in transparency and tax collection.
Uniformity in tax rates across India.

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 It will result in lower prices and consecutively, boost demand for automobiles. The on-road
prices of vehicles could go down by 4% to 8%.
The automotive sector will be one of the most positively impacted sectors.
Other than the center imposed taxes, the other major chunk of taxation comes from state
imposed Value added tax (VAT) that ranges between 12-14.5 per cent across states. Add the
various cess in the country and even for a small car, a customer pays upwards of 30 per cent
on tax and cess alone.
Proper GST administration and dispute resolution (more importantly on inter-state
transactions) is very critical.
Companies need to upgrade their enterprise resource planning (ERP) — a category of
business-management software — so as to accommodate the complexities of calculating
GST. ERP helps companies manage and monitor everything in the organisation, including
supply chain, finance
and even human resource functions. SAP and Oracle are the big players in the Indian ERP
space.

Many companies will have to move from their current system, where every transaction is
recorded separately, to an upgraded system where there is a correlation between every entry,
according to industry executives.
GST rollout is one of the biggest tax reforms for India. Timely GST preparedness is a key to
smooth transition for industry, and we have a huge and experienced talent pool that is fully
geared for this.

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 CONCLUSION
India has many taxes in place like excise, sales tax, service tax, entertainment tax, VAT etc.
These taxes are divided at Central as well as state level. These bundle amount of taxes are
difficult to manage and sometimes causes inconvenience to businesses and customers. GST
aims to solve it with single indirect taxation system.
GST has been the buzzword in the country for the last few days and finally the bill has
passed, leading to the realization of ―One country, one tax‖, at least on papers for now. Goods
and Services Tax Network (GSTN) is a nonprofit organization formed to create a platform for
all the concerned parties i.e.
stakeholders, government, taxpayers to collaborate on a single portal. The portal will be
accessible to the central government which will track down every transaction on its end while
the taxpayers will be having a vast service to return file their taxes and maintain the details.
The IT
network will be developed by private firms which are being in tie up with the central
government and will be having stakes accordingly.
While overall the industry is looking forward to the introduction of GST, more will be clear
only when the actual tax rate under the new Bill has been decided. The exclusion of petrol
and diesel from the GST umbrella may be another concern as otherwise prices would have
come down.
However, as states have correctly pointed out, petroleum related products (and alcohol) as the
biggest source of revenue for state governments, maybe this is for the better.

Nevertheless, automobile industry is looking forward to introduction of GST. However, there

are quite a few concerns in the draft Model GST

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law, including some of the key aspects highlighted above, which need to be addressed.
Restrictions and conditions on eligibility to tax credits on assets used for business is also a
major area of concern, and the credit mechanism should be more liberal.
Proper GST administration and dispute resolution (more importantly on inter-state
transactions) is very critical apart from the competitive GST rate.
So, GST will act as boon for automobile industry.

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 REFERENCES
https://gst.caknowledge.in/impact-gst-automobile-sector/
http://www.ey.com/in/en/newsroom/news-releases/ey-gstimpact- on-the-auto-industry
https://www.legalraasta.com/gst/impact-of-gst-on-automobilesector/
http://auto.economictimes.indiatimes.com/news/policy/benefitschallenges- for-auto
sector-in-gst-bill/53541153
http://www.abplive.in/auto/gst-bill-how-it-affects-the-autosector- 391864
http://www.caclubindia.com/articles/impact-of-gst-onautomobile- dealers-industry-
28910.asp
http://www.gstinindia.in/GST-on-Automobiles-sector.aspx
https://www.linkedin.com/pulse/impact-challanges-gstautomobile- industry-india-
manish-goyal
http://www.usstaad.com/Blog/news-reviews/impact-gst-carprices/
http://economictimes.indiatimes.com/articleshow/53678594.cms
?utm_source=contentofinterest&utm_medium=text&utm_campa
ign=cppst

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