Sharath Bharath

A Study on GST and its Impact on Krishna Industries Pvt Ltd, Bangalore.
CHAPTER - 1
1.1 Introduction to Taxation
Tax is imposition of financial charge or other levy upon a taxpayer by a state or other
the functional equivalent of the state.
1. Taxation has four main purposes or effects: Revenue, Redistribution, Repricing

and Representation.
2. The main purpose is revenue: taxes raise funds to spend on roads, schools,
hospitals, and on other indirect government functions like market regulation or
legal systems. The second purpose is redistribution, which means transferring
wealth from the richer sections of society to poorer sections.
3. A third purpose of taxation is repricing of certain goods to increase or decrease

their consumption. Taxes are levied to discourage consumption of certain items
like say tobacco.
4. A fourth effect of taxation has been representation, where the citizens by paying
taxes demand accountability in return from the rulers or governments.
1.2 Importance of Taxation
The Taxation Structure of the country can play a very important role in the working of
our economy. Some time back the emphasis was on higher rates of Tax and more
incentives. But recently, the emphasis has shifted to decrease in rates of taxes and
withdrawal of incentives. While designing the Taxation structure it has to be seen that
it is in conformity with our economic and social objectives. It should not impair the
M Com., PG Department of Commerce, Shantidhama College, Bangalore Page -1

incentives to personal savings and investment flow and on the other hand it should not
result into decrease in revenue for the State.
1.3 History of Taxation in India
In India, the tradition of taxation has been in force from ancient times. It finds its
references in many ancient books like 'Manu Smriti' and 'Arthashastra'. There was
a perfect admixture of direct taxes with indirect taxes and they were varied in nature.
India's history of taxation suggests existence of a large and composite taxable
population. With the advent of the moguls in India the country witnessed a sea of
change in the taxation system of India. Although, they also practiced the same norm of
taxation but it was more homogeneous in structure and collection. The Islamic rulers
imposed jizya. It was later on abolished by Akbar. However, Aurangzeb, the last
prominent Mughal Emperor, levied jizya on his mostly Hindu subjects in 1679. Reasons
for this are cited to be financial stringency and personal inclination on the part of the
emperor, and a petition by the Ulema. His subjects were taxed in accordance with the
property they owned. Government servants were exempt, as were the blind, the
paralyzed, and the indigent. Its introduction encountered much opposition, which was,
however, abolished. Jizya is a per capita tax levied on a section of an Islamic state's
non-Muslim citizens, who meet certain criteria. From the point of view of the Muslim
rulers, jizya was a material proof of the non-Muslims' acceptance of subjection to the
state and its laws, "just as for the inhabitants it was a concrete continuation of the taxes
paid to earlier regimes." In return, non-Muslim citizens were permitted to practice their
faith, to enjoy a measure of communal autonomy, to be entitled to Muslim state's
protection from outside aggression, to be exempted from military service and the Zakat
as obligatory upon Muslim citizens. The period of British rule in India witnessed some
remarkable change in the whole taxation system of India. Although, it was highly in
favor of the British government and its exchequer but it incorporated modern and
scientific method of taxation tools and systems. In 1922, the country witnessed a
paradigm shift in the overall Indian taxation system. Setting up of administrative system
and taxation system was first done by the Britishers.

1.3.1Our Taxation structure provides for Two types of Taxes: -
Direct Taxes: -
A system of tax where the impact and incidence of tax fall on the same person is called
direct tax. For Examples Income Tax, Wealth tax, Property tax etc.
Indirect Taxes: -
A system of tax where the impact on one person and the incidence of tax fall on some
other person is called an indirect tax.
1. Service Tax
2. Value Added Tax
3. Custom duty & Octroi (On Goods)
4. Central sales tax
5. Excise Duty
6. Anti- Dumping Duty
Taxes in India are levied by the Central Government and the State Governments. Some
minor taxes are also levied by the local authorities such the Municipality or the Local
Council. The authority to levy a tax is derived from the Constitution of India which
allocates the power to levy various taxes between the Centre and the State. An important
restriction on this power is Article 265 of the Constitution which states that "No tax
shall be levied or collected except by the authority of law‖. Therefore, each tax levied
or collected has to be backed by an accompanying law, passed either by the Parliament

or the State Legislature. Article 246 of the Indian Constitution, distributes legislative
powers including taxation, between the Parliament and the State Legislature.
The important indirect taxes imposed in India are as under:
1.Customs Duty: Customs regulation in India is through the Customs act. The Customs
act came into existence in 1962 at a time when the Permit Raj" system existed in the
country. It came into existence to check illegal imports and exports of goods. All
imports into the country would be charged a duty, to give protection to the Indian
industries and to check the amount of imports with a view to secure the exchange rate
of the country. Customs duty on goods imported or exported from India are levied
according to the Tariff Act, 1975. To monitor imports and exports, the Central
government has the authority to inform the ports and airports for the unloading of the
imported goods and loading of the exported goods, the location for clearance of goods
imported or exported, the routes by which above goods may pass by land or inland
water into or out of Indian ports. Customs Duties include both import and export duties.
However, to boost competitiveness of exports, export duties form a nominal part of
revenue, while import duties constitute a major part.
According to the custom laws, the following are the various types of duties which
can be charged.
a. Basic Duty: All goods imported into India are chargeable to a rate of duty popularly
known as basic customs duty, which are indicated in the First Schedule of the
Customs Tariff Act, 1975 and are amended from time to time under Finance Acts.
The duty may be fixed on ad –valorem basis or specific rate basis. The duty may be
a %age of the value of the goods or at a specific rate. The Central Government has
the power to reduce or exempt any good from these duties.
Additional Duty (Countervailing Duty) (CVD): Equal to the, excise duty leviable
on like goods produced or manufactured in India. This is levied under Section 3 of

Customs Tariff Act, 1975. This is usually referred to as "countervailing

duty"(CVD). However, the correct description of this duty is Additional Duty of
Customs. In order to determine the applicable rate, it is essential to obtain the correct
classification of the goods under the Central Excise Tariff Act, 1986. The duties
under the Central Excise Tariff are on ad valorem basis. However, specific rates
have been prescribed for some items. If a like product is not manufactured or
produced in India, the excise duty that would be leviable on that product had it been
manufactured or produced in India is the duty payable. If the product is leviable at
different rates, the highest rate among those rates is the rate applicable. Such duty is
leviable on the value of goods plus basic custom duty payable. e.g. If the customs
value of goods is Rs. 5000 and rate of basic customs duty is 10% and excise duty on
similar goods produced in India is 20%, CVD will be Rs.1100/-. Importantly, the
value for the purpose of computing additional duties of Customs is the total of the
assessable value (generally the transaction value - roughly equal to the c.i.f. value)
and the basic customs duty. A manufacturer, importing goods to be used as inputs
for manufacture of other goods, would generally be eligible for obtaining credit
(called CENVAT credit) equal to the additional duty of customs paid on the
imported goods. This duty amount is eligible for credit under input duty Central
Excise Rules, 1944. This credit can be used for paying central excise duties on the
product manufactured.
Additional Duty to compensate duty on inputs used by Indian manufacturers: This

is levied under section 3(3) of the Customs Act.
b. Anti-dumping Duty: International sellers may at times export goods into India at
prices which would be less than the prices they would be charging in their domestic
market. The reason for this is to capture the Indian markets, which is against the
interest of the Indian industry. This is known as dumping and in order to avoid such
dumping, Central Government can impose, under section 9A of Customs Tariff Act,
anti-dumping duty up to margin of dumping on such articles, if the goods are being
sold at less than its normal value. Levy of such anti-dumping duty is permissible as

per WTO agreement. Anti-dumping action can be taken only when there is an Indian
industry producing 'like articles'. Countries which are signatories to the GATT or
countries with "Most Favored Nation Status" cannot be charged dumping duty.
c. Protective Duty: If the Tariff Commission set up by law recommends that in order
to protect the interests of Indian industry, the Central Government may levy
protective antidumping duties at the rate recommended on specified goods.
d. Duty on Bounty Fed Articles:In case a foreign country subsidises its exporters for
exporting goods to India, the Central Government may impose additional import
duty equal to the amount of such subsidy or bounty. If the amount of subsidy or
bounty cannot be clearly determined immediately, additional duty may be collected
on a provisional basis and after final determination; difference may be collected or
refunded, as the case may be.
e. Export Duty: Such duty is levied on export of goods. At present very few articles
such as skins and leather are subject to export duty. The main purpose of this duty is
to restrict exports of certain goods.
f. Cess on Export: Under sub-section (1) of section 3 of the Agricultural & Processed
Food Products Export Cess Act, 1985 (3 of 1986), 0.5% ad valorem as the rate of
duty of customs be levied and collected as cess on export of all scheduled products.
G. Cesses: Cesses are chargeable on some specified articles of exports like coffee,
coir, lac, mica, tobacco (unmanufactured), marine products cashew kernels, black
pepper, cardamom, iron ore, oil cakes and meals, animal feed and turmeric. These
cesses are collected as parts of Customs Duties and are then passed on to the agencies
in charge of the administration of the concerned commodities
h. National Calamity Contingent Duty: This duty was imposed under Section 134 of
the Finance Act, 2003 on imported petroleum crude oil. This tax was also leviable
on motor cars, imported multi-utility vehicles, two wheelers and mobile phones

i. Education Cess: Education Cess is leviable @ 2% on the aggregate of duties of

Customs (except safeguard duty under Section 8B and 8C, CVD under Section 9 and
anti-dumping duty under Section 9A of the Customs Tariff Act, 1985). Items
attracting Customs Duty at bound rates under international commitments are
exempted from this Cess
j. Secondary and Higher Education Cess: Leviable @1% on the aggregate of duties
of Customs.
k. Surcharge on Motor Spirit: Special Additional Duty of Customs (Surcharge) on

Motor Spirit is leviable by the Finance Act, 2002.
2. Central Excise Duty: The Central Government levies excise duty under the Central
Excise Act, 1944 and the Central Excise Tariff Act, 1985. Central excise duty is tax
which is charged on such excisable goods that are manufactured in India and are meant
for domestic consumption. The term "excisable goods" means the goods which are
specified in the First Schedule and the Second Schedule to the Central Excise Tariff
Act 1985. It is mandatory to pay Central Excise duty payable on the goods
manufactured, unless exempted e.g.: duty is not payable on the goods exported out of
India. Further various other exemptions are also notified by the Government from the
payment of duty by the manufacturers.
Various Central Excise duties are:
a. Basis Excise Duty: Excise Duty, imposed under section 3 of the Central Excises
and Salt Act of 1944 on all excisable goods other than salt produced or
manufactured in India, at the rates set forth in the schedule to the Central Excise
Tariff Act, 1985, falls under the category of Basic Excise Duty in India.
b. Special Excise Duty: According to Section 37 of the Finance Act, 1978, Special
Excise Duty is levied on all excisable goods that come under taxation, in line with
the Basic Excise Duty under the Central Excises and Salt Act of 1944. Therefore,

each year the Finance Act spells out that whether the Special Excise Duty shall or
shall not be charged, and eventually collected during the relevant financial year.
c. Additional Duty of Excise: Section 3 of the Additional Duties of Excise Act of

1957 permits the charge and collection of excise duty in respect of the goods as
listed in the Schedule of this Act.
d. Road Cess:
1. Additional Duty of Excise on Motor Spirit: This is leviable by the Finance Act
(No.2), 1998.
2. Additional Duty of Excise on High Speed Diesel Oil: This is leviable by the
Finance Act, 1999.
e. Surcharge:
1. Special Additional Duty of Excise on Motor Spirit: This is leviable by the Finance
Act, 2002.
2. Surcharge on Pan Masala and Tobacco Products: This Additional Duty of Excise
has been imposed on cigarettes, pan masala and certain specified tobacco products,
at specified rates in the Budget.
f. National Calamity Contingent Duty (NCCD): NCCD was levied on pan masala
and certain specified tobacco products vide the Finance Act, 2001. The Finance
Act, 2003 extended this levy to polyester filament yarn, motor car, two wheeler
and multi-utility vehicle and crude petroleum oil.
g. Education Cess: Education Cess is leviable @ 2% on the aggregate of duties of

Excise and Secondary and Higher Education Cess is leviable @ 1% on the
aggregate of duties of Excise.

h. Cess - A cess has been imposed on certain products.
Service Tax: The service providers in India except those in the state of Jammu and
Kashmir are required to pay a Service Tax under the provisions of the Finance Act of
1994. The provisions related to Service Tax came into effect on 1st July, 1994. Under
Section 67 of this Act, the Service Tax is levied on the gross or aggregate amount
charged by the service provider on the receiver. However, in terms of Rule 6 of Service
Tax Rules, 1994, the tax is permitted to be paid on the value received. The interesting
thing about Service Tax in India is that the Government depends heavily on the
voluntary compliance of the service providers for collecting Service Tax in India.
Sales Tax: Sales Tax in India is a form of tax that is imposed by the Government on
the sale or purchase of a particular commodity within the country. Sales Tax is imposed
under both, Central Government (Central Sales Tax) and State Government (Sales Tax)
Legislation. Generally, each State follows its own Sales Tax Act and levies tax at
various rates. Apart from sales tax, certain States also imposes additional charges like
works contracts tax, turnover tax and purchaser tax. Thus, Sales Tax Acts as a major
revenue-generator for the various State Governments. From 10th April, 2005, most of
the States in India have supplemented sales tax with a new Value Added Tax (VAT).
Securities Transaction Tax (STT): STT is a tax being levied on all transactions done
on the stock exchanges. STT is applicable on purchase or sale of equity shares,
derivatives, equity oriented funds and equity oriented Mutual Funds. Current STT on
purchase or sell of an equity share is 0.075%. A person becomes investor after payment
of STT at the time of selling securities (shares). Selling the shares after 12 months
comes under long term capital gains and one need not have to pay any tax on that gain.
In the case of selling the shares before 12 months, one has to pay short term capital
gains @10% flat on the gain. However, for a trader, all his gains will be treated as
trading (Business) and he has to pay tax as per tax sables. In this case the transaction
tax paid by him can be claimed back/adjusted in tax to be paid.

Stamp duty: Stamp duty is a tax collected by the various State Governments and is
charged on various documents or instruments. It must be paid in full and on time failing
which it attracts penalty. A stamp duty paid instrument or document is considered a
proper legal instrument or document and can be admitted as evidence in courts.
The Central Excise Department spread over the entire country administers and
collects the central excise duty. The apex body that is responsible for the policy and
formulation of rules is the Central Board of Excise and Customs which functions under
the control of the Union Finance Ministry. The Central Excise officers are also
entrusted with the administration and collection of Service tax and the Customs duty.
Although far-reaching, these reforms have not completely eliminated the deficiencies
or inefficiencies in the Indian tax system. There are still a large number and variety of
indirect taxes, especially among those levied by the states. Examples are: sales tax on
crude petroleum and petroleum products, state excise on alcoholic liquor for human
consumption, entry tax, octroi, entertainment tax, taxes on lotteries and gambling,
luxury tax, electricity duty, taxes on the transportation of goods and passengers. In
addition, both the Centre and the states levy cesses and surcharges that are meant to
generate resources for a particular purpose. Most of these apply to a narrow tax base
and are therefore non-VAT type of taxes; input tax credit is not permitted. This
generates cascading and double taxation at many points in the value chain for the
production and distribution of goods and services. The upshot is that the tax system
creates distortions and anomalies for domestic manufacturing and trade. It has an
adverse implication for the export of goods and services in as much as it does not allow
full zero-rating of exports. Moreover, it is wasteful of administrative resources as a
separate administrative mechanism is required for the collection of many of these taxes.
Such an administrative structure has made it near impossible to optimize tax
compliance through the exchange of information about a taxpayer across tax
jurisdictions. For the taxpayer, the compliance cost is high as s/he has to deal with
multiple tax authorities.

The Goods and Services Tax (GST) will mark a very significant improvement over the
existing system, as it will integrate the tax base across the value chain of supply of both
goods and services in the economy. Not only will this enable the taxation of each stage
of the value chain at a uniform rate, it will also enable the seamless pass-through of
input tax credit so that the incidence is effectively borne at the stage of final
consumption of goods and services. It is well accepted that such a tax system minimizes
distortions in economic choice.
1.4 Introduction to Goods and Services tax
The introduction of Goods and Services Tax (GST) would be a very significant step in
the field of indirect tax reforms in India. By amalgamating a large number of Central
and State taxes into a single tax, it would mitigate cascading or double taxation in a
major way and pave the way for a common national market. From the consumer
point of view, the biggest advantage would be in terms of a reduction in the overall tax
burden on goods, which is currently estimated at 20%. Introduction of GST would also
make our products competitive in the domestic and international markets. Studies show
that this would instantly spur economic growth. Last but not the least, this tax, because
of its transparent character, would be easier to administer. GST is introduced in July
1st 2017 in India
The idea of moving towards the GST was first mooted by the then Union Finance
Minister Shri P. Chidambaram in his Budget for 2006-07. Initially, it was proposed
that GST would be introduced by 1st April, 2010. The Empowered Committee of State
Finance Ministers (EC) which had formulated the design of State VAT was requested
to come up with a roadmap and structure for the GST. Joint Working Groups of officials
having representation of the States as well as the Centre were set up to examine various
aspects of the GST and draw up reports specifically on exemptions and thresholds,
taxation of services and taxation of inter-State supplies. Based on discussions within
and between it and the Central Government, the EC released its First Discussion Paper
(FDP) on the GST in November, 2009. This spells out the features of the proposed GST

and has formed the basis for discussion between the Centre and the States so far. Salient
Features of GST
1.4.1. Meaning of GST
GST goods and services tax is a board based and a single comprehensive tax levied
on goods and services consumed in an economy. GST is levied at every stage of the
production-distribution chai with applicable set offs in respect of the tax remitted at
previous stages. it is basically a tax on final consumption and it is a destination based
tax
1.4.2. DEFINITION OF GST
Goods and services tax is a tax on goods and services with value addition at each stage
having comprehensive and continuous chain of set of benefits form the producers
service providers point up to the retailer’s level where only the final consumer should
bear the tax
1.4.3. Types of GST:
 The central goods and services (CGST}
 The states goods and services (SGST}
 The union territory goods and services (UTGST}
 The integrated goods and services (IGST}
1.4.4.GST slab rate: 5%,12%,18%,28%
1.4.5. Salient Features of GST

The salient features of GST are as under
(i) GST would be applicable on supply of goods or services as against the present
concept of tax on the manufacture or on sale of goods or on provision of services.
(ii) GST would be a destination-based tax as against the present concept of origin-
based tax.
(iii) It would be a dual GST with the Centre and the States simultaneously levying it
on a common base. The GST to be levied by the Centre would be called Central
GST (CGST) and that to be levied by the states would be called state GST
(SGST).
(iv) CGST and SGST would be levied at rates to be mutually agreed upon by the
Centre and the states.
(v) GST would replace the following taxes currently levied and collected by the
Centre:
a. Central Excise duty
b. Duties of Excise (Medicinal and Toilet Preparations)
c. Additional Duties of Excise (Goods of Special Importance)
d. Additional Duties of Excise (Textiles and Textile Products)
e. Additional Duties of Customs (commonly known as CVD)
f. Special Additional Duty of Customs (SAD)
g. Service Tax

h. Cesses and surcharges
(vi) State taxes that would be subsumed within the GST are:
a. State VAT
b. Central Sales Tax
c. Luxury Tax
d. Entry Tax (other than those in lieu of octroi)
e. Entertainment Tax (not levied by the local bodies)
f. Taxes on advertisements
g. Taxes on lotteries, betting and gambling
h State cesses and surcharges in so far as they relate to supply of goods or services
(vii) Credit of CGST paid on inputs may be used only for paying CGST on the input
and the credit of SGST paid on inputs may be used only for paying SGST. In
other words, the two streams of input tax credit cannot be mixed except in
specified circumstances of inter-State sales
(viii) GST would apply to all goods and services barring a few to be specified.
(ix) Tobacco and tobacco products would be subject to GST. In addition, the Centre
could continue to levy Central Excise duty and the States to levy sales tax / VAT.
(x) A common threshold exemption would apply to both CGST and SGST. Dealers
with a turnover below it would be exempt from tax. A compounding option (i.e.to
pay tax at a flat rate without credits) would be available to small dealers below

acertain threshold. The threshold exemption and compounding provision would be

optional.
(xi) The list of exempted goods and services would be kept to a minimum and it would
be harmonized for the Centre and the States as far as possible.
(xii) Exports would be zero-rated.
(xiii) An Integrated GST (IGST) would be levied on inter-State supply of goods or

services. This would be collected by the Centre so that the credit chain is not
disrupted. Accounts would be settled periodically between the Centre and the State
to ensure that the SGST used for payment of IGST is transferred to the destination
State where the goods or services are eventually consumed.
(xiv) Import of goods or services would be treated as inter-State supplies and therefore,
would be subject to IGST in addition to the applicable customs duties.
(xv) The laws, regulations and procedures for levy and collection of CGST and SGST
would be harmonized to the extent possible.
(xvi). Taxes on items containing alcohol and petroleum product are kept out of GST.
They will continue to be taxed as per existing practices
(xvii)PAN based identification number will be allowed to each taxpayer to have

integration of GST with Direct Tax.
(xviii)Import of goods or services would be treated as inter-State supplies and therefore,

would be subject to IGST in addition to the applicable customs duties.
(xix)The laws, regulations and procedures for levy and collection of CGST and SGST
would be harmonized to the extent possible.

(xx)Taxes on items containing alcohol and petroleum product are kept out of GST.
They will continue to be taxed as per existing practices.
(xxi)PAN based identification number will be allowed to each taxpayer to have

integration of GST with Direct Tax
1.4.6.GST and Centre-State Financial Relations
Currently, fiscal powers between the Centre and the States are clearly demarcated in
the Constitution with almost no overlap between the respective domains. The Centre
has the powers to levy tax on the manufacture of goods (except alcoholic liquor for
human consumption, opium, narcotics etc.) while the States have the powers to levy tax
on the sale of goods. In the case of inter-State sales, the Centre has the power to levy a
tax (the Central Sales Tax) but, the tax is collected and retained entirely by the States.
As for services, it is the Centre alone that is empowered to levy service tax. Since the
States are not empowered to levy any tax on the sale or purchase of goods in the course
of their importation into or exportation from India, the Centre levies and collects this
tax as additional duties of customs. This duty counterbalances excise duties, sales tax,
State VAT and other taxes levied on the like domestic product. Introduction of the GST
would require amendments in the Constitution so as to concurrently empower the
Centre and the States to levy and collect the GST. The assignment of concurrent
jurisdiction to the Centre and the States for the levy of GST would require a unique
institutional mechanism that would ensure that decisions about the structure, design and
operation of GST are taken jointly by the two. For it to be effective, such a mechanism
also needs to have Constitutional force.
 Constitution (One Hundred and Fifteenth) Amendment Bill, 2011
To address all these and other issues, the Constitution (115th Amendment) Bill was
introduced in the Lok Sabha on 22.03.2011. The Bill provides for a levy of GST on all
goods or services except for the specified goods. The tax shall be levied as Dual GST

separately by the Union and the States. The Parliament would have exclusive power to
levy GST on inter-State trade or commerce (including imports) in goods or services.
The Central Government will have the power to levy excise duty in addition to the GST
on tobacco and tobacco products. A GST Council would be constituted comprising the
Union Finance Minister, the Minister of State (Revenue) and the State Finance
Ministers to recommend on the GST rate, exemption and thresholds, taxes to be
subsumed and other features. This mechanism would ensure some degree of
harmonization on different aspects of GST between the Centre and the States as well
as among states The Constitution Amendment Bill needs to be passed by a two-third
majority in both Houses of Parliament and subsequent ratification by at least half of the
State Legislatures. The Bill was referred to the Parliamentary Standing Committee on
Finance for examination and its report has since been received. Certain official
amendments are under discussions in the light of latest developments in the matter and
the report of the Standing Committee. After passage of the Bill by both Houses of
Parliament, ratification by State legislatures and receipt of assent by the President, the
process of enactment would be complete.
Other legislative requirements:
Suitable legislation for the levy of GST (Central GST Bill and State GST Bills) drawing
powers from the Constitution can be introduced in Parliament or the State Legislatures
only after the enactment of the Constitution Amendment Bill. Unlike the Constitutional
Amendment, the GST Bills would need to be passed by a simple majority. Obviously,
the levy of the tax can commence only after the GST law has been enacted by the
respective legislatures. Also, unlike the State VAT, the date of commencement of this
levy would have to be synchronized across the Centre and the States. This is because
the IGST model cannot function unless the Centre and all the states participate
simultaneously.

 Developments on the GST
In 2013, four Committees have been constituted by the Empowered Committee of State
Finance Ministers (EC) to deal with the various aspects of work relating to the
introduction of GST. The Committees are:
(i) The Committee on the Problem of Dual Control, Threshold and Exemptions in
GST Regime;
(ii) The Committee on Revenue Neutral Rates for State GST & Central GST and Place
of Supply Rules (A Sub-Committee has been constituted to examines issues
relating to the Place of Supply Rules);
(iii) The Committee on IGST & GST on Imports (A Sub- Committee has been set up
to examine issues pertaining to IGST model);
(iv) The Committee to draft model GST Law (Three Sub-Committees have been
constituted to draft various aspects of the model law).
The first three Committees have submitted their interim reports and final reports are
awaited. CBEC officials, as members of these Committees / Sub-committees, are
playing a significant role in the work relating to design and contours of the proposed
GST regime. The meetings of the Empowered Committee are attended by the Nodal
Member of the CBEC and other officials. A GST Cell has been created within CBEC
which functions under the Joint Secretary TRU –II. Two Groups have been constituted
by CBEC to work on various aspects of the GST.
Role of CBEC
The CBEC is expected to play an important role in the drafting of GST law and
procedures, particularly the CGST and IGST law, which will be exclusive domain of
the Centre. This apart, the CBEC would need to prepare, in advance, for meeting the

implementation challenges, which are quite formidable. The number of taxpayers is

likely to go up significantly. The existing IT infrastructure of CBEC would need to be
suitably scaled up to handle such large volumes. Based on the legal provisions and
procedure for GST, the content of work-flow software such as ACES (Automated
Central Excise & Service Tax) would require review. They have already set in motion
the process of designing and implementing the GST Network (GSTN) through a special
purpose vehicle owned jointly by the Centre and the states and for the present, incubated
in, and later assisted by, a technology partner. The GSTN is being created under the
guidance of an Empowered Group chaired by Dr.Nandan Nilekani. Augmentation in
human resources would be necessary to handle such large number of taxpayers
scattered across the length and breadth of the country. The GST law is still evolving
and the dialogue continues between the Centre and the States on related issues. A
number of procedural, legal and administrative issues relating to GST are under active
discussions in various Committees/ Sub-committees constituted by the EC and in
various groups constituted by the CBEC.
Customs Duty:
• Reduction in duty on specified machinery for manufacture of leather and

leathergoods including footwear from 7.5% to 5%
• Reduction in duty on pre-forms precious and semi-precious stones from 10% to

2%
• Export duty on de-oiled rice bran oil cake withdrawn
• New duty imposed on export of unprocessed ilmenite @ 10%
• New duty imposed on export on ungraded ilmenite @ 5%
• Increase in duty on Set Top Boxes from 5% to 10%

• Increase in duty on raw silk from 5% to 15%
• Duties on Steam Coal and Bituminous Coal equalized. Custom duty @ 2% and
CVD @ 2 % levied on both kinds coal
• Increase in duty on imported luxury motor vehicles from 75 % to 100 %
• Increase in duty on imported motorcycles with engine capacity of 800cc or more

from 60% to 75%
• Increase in duty on imported yachts and similar vessels from 10% to 25% Duty
free gold limit increased to Rs. 50,000 in case of male passenger and Rs.1, 00,000
in case of a female passenger subject to conditions.
Excise duty
• Relief for readymade garment industry. In case of cotton there will Zero % excise
duty at fiber stage. In case of spun yarn made of man-made fiber, duty of 12 % at
the fiber stage.
• Handmade carpets and textile floor coverings of coir and jute totally exempted
from excise duty
• Ships and vessels exempted from excise duty. No CVD on imported ships and
vessels.
• Increase in specific excise duty on cigarettes, cigars, cheroots and cigarillos by

18%
• Excise duty on non-taxi SUVs hiked to 30% from 27%
• Excise duty on SUVs increased from 27% to 30%

• Excise duty on marble increased from Rs. 30 per square meter to Rs. 60 per square
meter
• New duty imposed @ 4 % on silver manufactured from smelting zinc or lead
• Increase in duty from 1 % to 6 % on mobile phones priced at more than Rs. 2000
MRP based assessment in respect of branded medicaments of Ayurveda, Unani,
Siddha, Homeopathy and bio-chemic systems of medicine to reduce valuation
disputes. There will be an abatement of 35%
Service Tax
• Maintain stability in tax regime.
• Vocational courses offered by institutes affiliated to the State Council of

Vocational Training and testing activities in relation to agricultural produce
included in the negative list for service tax
• Exemption of Service Tax on copyright on cinematography limited to films

exhibited in cinema halls.
• Service Tax to be levied on all air conditioned restaurant
• For homes and flats with carpet area of 2,000 sq .ft. or more or value of RS. 1 crore
or more which are high-end constructions, where the component of services is
greater, rate of abatement reduced from 75% to 70%
• A onetime scheme called ‗Voluntary Compliance Encouragement Scheme has

been proposed to motivate the registered assesses under service tax to file returns
and pay tax dues since 1St October 2007 to avoid interest, penalty and other
consequences

Good and Services Tax
• A sum of Rs. 9,000 crore towards the first installment of the balance of CST
compensation has been provided in the budget.
• Work on draft GST Constitutional amendment bill and GST law expected to be
taken forward.
Procedure changes:
• Online Excise and Service Tax registrations in 2 days
• Digital invoices to be accepted
• A provision for issuing digitally signed invoices is being added along with the
option of maintaining of records in electronic form and their authentication by
means of digital signatures.
Cen vat Credit
• Rule 4(7) is being amended to allow Cen vat Credit of Service Tax paid under
partial reverse charge by the service receiver without linking it to the payment to
the service provider.
• The period for availing Cen vat Credit has been being extended from six months
from the date of invoice to one year from the date of invoice
The common hurdles for the implementation of Goods and Services Tax includes
state‘s inadequate ground level preparations of information technology system and
administrative infrastructure, adverse effect on the revenue due to uniform tax rate
which will be lower than the existing rate, political hurdles(NDA V/S UPA),
amendment of each state‘s legislature with regard to taxation laws, need for service

provider and6.5million dealers in myriad intricate transactions to check over the system
of Goods and Services Tax Network (disagreement among the IT companies). These
hindrances and criticisms facing the Centre could not allow it to implement Goods and
Services Tax on the above proposed dates.
From this it is clear that no doubt Goods and Services Tax is going to benefit all the
stakeholders in the economy but at the same time it is proven to be a challenging task
before the government because of many hurdles in its way. It is also proved that the
prices and tax burden is going to be reduced under Goods and Services Tax while
increasing the revenue of government. This caused to take up the study on Goods and
Services Tax to show how it would be effective over present indirect tax system and to
offer findings and suggestions to support the effective implementation of Goods and
Services
TO KNOW THE REASONS FOR THE INTRODUCTION OF GST
 The Kelkar task force on implementation of the FRBM act 2003 had pointed out
that although the indirect tax policy in India has been steadily progressing in the
direction of VAT principle since 1986, the existing system of taxation of goods
and services still suffers from many problems and had suggested a comprehensive
goods and services tax based on VAT principle introduction of GST to replace the
existing multiple tax structures of Centre and state taxes is not only desirable but
imperative in the emerging economic environment. A proposal to introduce a
national level GST was first mooted in the budget speech for the financial year
2006-07 the origin of GST can be traced to VAT or harmonized sales tax which
was first devised by a German economist during 18th century. GST is necessary:
 To plug the loopholes in the present system, that allows for multiplicity of taxes
being collected through an inefficient and non-transparent mechanism. This will
enable the government to stop pilferage and rationalize the overall taxation regime.
 To avoid under-taxation or non-taxation or over-taxation in many areas.

 To meet the needs of emerging economic environment where services are used
or consumed in production and distribution of goods and vice versa. Separate
taxation of goods and services often requires splitting of transactions value into
value of goods and services for taxation, which leads to greater complexities,
administration and compliances costs.
 To have a nation-wide simple and transparent system of taxation that enables

the Indian industry to compete not only internationally but also in the domestic
market. This enables to avoid duty-free or lower duty imports in India.
 To give full credit for input taxes collected and thereby to enable spatially
dispersed purchases/procurement for the producers.
 To remove economic distortions caused by present complex tax structure and to

develop a common national market.
 To replace existing taxes like Excise, State Sales Tax/VAT, Central Sales Tax,
Entry Tax and all other cascading type Central/State levies on goods and services.
 To reduce overall tax burden by removing many distortionary features of present

sales tax system.
 To make a chain that is difficult to break and to widen the base of tax collections.
Economic philosophy says that taxes should be collected from the public without
causing hardship, just as a honeybee collects honey without disturbing the flowers.
Only honest tax payers are paying regular taxes whereas the offenders are still walk
escort free in the present tax system. So GST seems to be necessary in this
perspective.
 ARTHASHASTRA, says that public prosperity, rewards for good conduct, capture
of tax evasion, prevention of mismanagement by officials, abundance of greenery,
prosperity of commerce, prevention of disaster, reduction in unnecessary

expenditure and optimum collection of taxes lead to prosperity of the country.

Keeping these objectives in mind the introduction of GST is imperative.
 To meet the needs of changing society, reform in the system and amendment in
the law is necessary.
 To open up India for globalization by making the tax structure easier and simple
to understand.to allow inter-state transactions economically VAT able.
1. To allow input tax credit on all inputs including capital goods, services etc. across
the board.
2. To minimize the multiplicity of tax laws.
3. To have simple tax structure in order to increase the compliance level
4. To reduce the administration cost and compliance cost of the tax system.
5. To make tax structure simple that allows easy administration.
6. To make the tax evasion difficult by widening tax base.
7. To include simpler provisions for registration, filing of returns, assessment

procedures, maintaining of books of accounts, closing of business for small tax
payers. So that ‗File, smile and go‘ comes into reality.
8. To abolish competition, cold tax war among various states.
9. To avoid confusion, mistrust, complex, high transaction cost which is present in

the existing system.
10. To minimize interpretation of overlap between intangible goods and services.

To have common exemption list and common threshold limits between Centre and
states.
 TO KNOW HOW TAXES ARE COMPUTED UNDER PRESENT

INDIRECT SYSTEM AND IMPACT GOODS & SERVICES TAX SYSTEM
 TO KNOW HOW PRICES GET SAFFECTED IN THE SUPPLY CHAIN
 TO KNOW THE EFFECTIVENESS OF GST OVER THE PRESENTTAX

SYSTEM
GST may be defined as a tax on goods and services which is leviable at each point of
sale or provision of service in which at the time of sale of goods or providing the
services the seller or service provider may claim the input credit of tax which he has
paid while purchasing the goods or procuring the service directly or indirectly sold to
end-users. In this way the total tax levied at each stage in the economic chain of supply
is a constant fraction of the value added by a business to its products and most of the
cost of collecting the tax is borne by business rather than by the state.
While purchasing the raw materials for the product, the manufacturers pay tax on the
procurement. Further he pays sales tax when a wholesaler purchases the product from
the manufacturer. When the retailer purchases the product from the wholesaler, the
wholesaler again charges tax. This layering of sales tax will significantly increase the
final sales price as each party in the supply chain increases the price of the product to
recover the tax they paid. This increases the cascading effect. Unless there is an efficient
system of tax credit, this effect seems to increase the price of the product. Thus Goods
and Services Tax helps to remove that issue, which is shown in the following
illustration.
The below showed illustration reveals the computation of taxes and how prices of
products/goods (for the study PVC is taken as product) gets affected in the supply chain.
It is with reference to the PVC which is manufactured by Krishana industries pvt ltd.

1.4.7 ARCHITECTURE OF GST
After the proposal of GST the empowered committee of state finance ministers started
working with the central government to prepare a road map for the introduction of GST
empowered committee has also set up a joint working group to work on the GST model.
They also called upon the committee of taxes to comment on the working of the GST.
The EC also decided to constitute a working group which again acceded to form 3 sub
working groups to work on
(a) The commodities and services that should be kept in the exempted list
(b) The rules and principles of taxing the transactions of services including the
transactions in inter-state services and
(c) Finalization of model suggested for inter-state transaction movement of goods

including stock transfers in consultation with the SBI and some other nationalized
banks.
The senior representatives of Government of India have also been associated with these
groups. The proposed architecture of GST has been brought up by all these authorities
in consultation of each among them.
Subsuming of existing taxes:
The sub summation results in free flow of tax credit in intra and inter-state levels so
that unrelated taxes, levies and fees are not be subsumed under GST.
Certain items out of GST net:
i. Purchase tax: some of the food grains producing states and certain the states
felt that they are getting substantial revenue from purchase tax and therefore it
should not be subsumed under GST while majority of the states were of the view

that no such exemptions should be given. Therefore, it is in the hands of Centre

to compensate those states if it wants purchase tax to be subsumed.
ii. Tax on items containing alcohol:
Alcoholic beverages would be kept out of the purview of GST. Sales tax/VAT
can be continued to be levied on alcoholic beverages as per the existing practice.
iii. Tax on tobacco products:
Tobacco products would be subjected to GST with input tax credit. Centre may
be allowed to levy excise duty on tobacco products over and above GST without
input tax credit.
iv. Tax on petroleum products
Basket of petroleum products (crude motor spirit and HSD would be kept
outside GST as is the prevailing practice in India. Sales tax could continue to be
levied by the states on these products with prevailing floor rate. Similarly,
Centre could also continue its levies.
Entry taxes levied by municipalities or panchayats, entertainment and luxury taxes

levied by local bodies
Basic customs duty and safeguard duties on imports of goods into India
Electricity taxes/duties stamp duties on immovable properties, property tax,
road tax, royalty for minerals
Taxation of services:
Both the Centre and the states will have the concurrent power to levy tax on all services.
Under the new framework of GST service tax may see 2 rates that is one CGST and

another SGST. It may be imposed on all services barring having a small negative list
exempting few services like public education, poor health and exports. Inter-state
services will be under the centre‘s purview and intra state services will be under states
purview. It is expected that the state GST would only include services that are
essentially of local nature (intra-state services). It has also been proposed that service
tax rate under CGST and SGST is likely to be uniform. Though state service tax
proposed to be levied on new local services would add to the cost a redeeming feature
is that input tax credit would be eligible on the state service tax and a host of other
levies like entry tax, electricity tax and luxury tax etc. that would be integrated under
SGST. Of course, the service will qualify as an eligible input service for claiming
cenvat credit. Under the new system inter-state services may be charged and collected
by Centre. If the service transaction is between two states, the SGST collected by the
Centre will be transferred to the consuming state based on principle of destination based
taxation. This is well known principle accepted globally where the assesse can claim
input tax credit if the service is used as an input into its business.
Zero rating of exports:
Exports would be zero rated. Similar benefits may be given to Special Economic Zones
(SEZs) only with reference to processing zones of SEZs and not to the sales from an
SEZ to Domestic Tariff Area (DTA).
GST on imports:
The GST will be levied on imports with necessary constitutional amendments. Both
CGST and SGST will be levied on import if goods and services into the country. The
incidence of tax will follow the destination principle and the tax revenue in case of
SGST will accrue to the state where the imported goods and services are consumed.
Full and complete set-off will be available on the GST paid on import of goods and
services.

Special Industrial Area Scheme: It is clarified that exemptions, remissions etc. would
continue up to legitimate expiry time both for the Centre and the states. Any new
exemptions, remission etc. or continuation of earlier exemption, remission etc. would
be converted into cash refund schemes after the collection of GST.
Central Sales Tax (CST) to be phased out: It is a precondition for the implementation
of GST which carries in it many distortions. It is for this reason that the CST rate has
been decreased to lower rate than before.
GST on inter-states transactions: Inter-state GST (IGST) which is new and

innovative concept will be imposed on interstate transactions and will be entirely
collected by the central government. According to integrated GST model, Centre would
levy IGST which would be CGST+SGST on all inter-state transaction of taxable goods
and services with appropriate provision for consignment or stock transfer of goods and
services. The inter-state seller will pay IGST on value addition after adjusting available
credit of IGST, CGST and SGST on his purchases. The exporting state will transfer to
the Centre the credit off GST used in the payment off GST. The importing dealer will
claim credit of IGST while discharging his output tax liability in his own state. The
Centre will transfer to the importing state the credit of IGST used in payment of SGST.
The relevant information will also be submitted to the central agency which will act as
a clearing house mechanism, verify the claims through e-returns to be filed by selling
and purchasing dealers and inform the respective governments to transfer the funds.
IGST will be charged in invoice only if the selling dealer is registered under IGST.
Similarly, credit of IGST can be taken only if the purchasing dealer is registered under
IGST.IGST is expected to reduce the number of claims made, besides reducing the
corruption and harassment. It will also reduce the litigation issues on taxing cross
border services.

Advantages of IGST model:
Uninterrupted input tax credit chain on inter-state transactions
No up-front payment of tax or substantial blockage of funds for the inter-state
seller or buyer.
No refund claim in exporting state, as input tax credit is used up while paying the
tax.
Self- monitoring model.
Level of computerization is limited to inter-state dealers and central and state

governments should be able to computerize their processes expeditiously.
As all inter-state dealers will be e-registered and correspondence with them will be
by e-mail, the compliance level will improve substantially.
Model is likely to take ‗Business to Business as well as ‗Business to

Consumer‘ transactions into account.
Composite contract under GST: Single composite contracts for various works, jobs,
services etc. as in case of engineering projects, construction contracts, EPC projects,
installation and erection, software and information technology may be desired to treat
as services. It also helps to simplify the convoluted tax treatment for such contracts.
This would help in simple and reasonable valuation by keeping out such contracts from
different classification or valuation if treated as goods. With different threshold limits
and GST rates both at central and state level, it will be very difficult to tax and pay tax
on such composite contracts

Dual GST model for India: Dual GST model has been proposed for India which is
having federal system in order to have an overall harmonious of rates, to uphold the
powers of central and state governments in tax matters and to seek all stakeholders
‘acceptability in the implementation.
Features of the proposed model are as follows:
 GST shall have two components; one levied by the Centre called CGST and other
levied by the states called SGST. It would be implemented through multiple statutes
(one for CGST and SGST statute for every state). However chargeability definition
of taxable event and taxable person, measure of levy including valuation of
provisions etc. would be uniform across these statutes.
 It does not apply to goods which are outside the purview of GST and the
transactions which are below the prescribed threshold limits.
 Account-heads for all services and goods would have indication whether it relates
to CGST or SGST with identification of the state to whom the tax is to be credited.
 Tax paid against CGST shall be allowed to be taken as input tax credit for the central
GST and could be utilized only against the payment of CGST. The same principle
will be applicable for the SGST. The tax payer or exporter would have to maintain
separate details in the books of accounts for utilization and refund of credit.
 Cross utilization of ITC between CGST and SGST would not be allowed except in
the case of inter-state supply of goods and services under the IGST model.
 Centre and states would have concurrent jurisdiction for the entire value chain and
for all tax payers on the basis of thresholds for goods and services prescribed for the
states and the Centre.

 Threshold limit: a uniform state GST threshold across states is desirable and
therefore, it is considered that a threshold of gross annual turnover of Rs.10 lakhs
for both goods and services for all the states and union territories may be adopted
with adequate compensation for the states, particularly the states in north-eastern
region and special category states, where lower threshold had prevailed in the VAT
regime. Keeping in view the interest of small traders and small scale industries and
to avoid dual control, the states also considered that the threshold for central GST
for goods may be kept at .1.5 crores and the threshold for CGST for services may
also be appropriately high.
 The states are also of the view that composition/compounding scheme of cutoff for
the purpose GST should have an upper ceiling on gross annual turnover which is
expected at Rs.50 lakh of gross annual turnover across the states. The scheme would
also allow option for GST registration for dealers with turnover below the
compounding cut-off.
 Easy single e-return for both the CGST and SGST in the common format to the
respective authority with the copy to the other authority would be ensured.
 Each tax payer would be allotted a PAN-linked tax payer identification number with
a total of 13-15 digits which will be of 10 digits alphanumeric PAN along with the
2 digits of state code and 1-2 check numbers for disallowing fake numbers. This
would bring the GST PAN-linked system in line with the prevailing PAN-based
system for income tax facilitating data exchange and tax payer compliance.
 Keeping in mind the need of tax payer‘s convenience, functions such as assessment,
enforcement, scrutiny and audit would be undertaken by the authority which is
collecting the tax, with information sharing between the Centre and the states.

GST invoice
An invoice is also required by the tax authorities to audit the collection of GST.It
is an essential part of procedure for imposing and enforcing the GST.
Taxable supplier has to provide GST invoice while supplying taxable supplies to
taxable buyer.
Invoice should be standardized across all states so as to contain minimum of

information about the supply being invoiced.
Periodicity of GST payment:
Since the amount of collected by a dealer is related to his turnover the dealer is likely
to accumulate a huge VAT liability within a very short period. Hence the collection
mechanism under should imperatively provide for a periodical flow of revenue to the
exchequer (ultimately to the respective governments) in order to minimize the risk of
payment default by dealers, in particular fly-by-night operators and the risk of revenue
loss. Therefore, GST period should be a calendar month.
Taxable person:
 It will cover all types of person carrying on business activities that is manufacture,
job worker, trader, importer, exporter all types of service providers etc.
 If a company is having four branches in four different states, all the four branches will
be considered as taxable person under each jurisdiction of state governments.
 All the dealers are business entities will have to pay both the types of taxes on all the
transactions.

CHAPTER - 2
2.1. Meaning of Literature Review
Review of literature is vital since it helps researcher to find out the previous research
carried out by the researchers in the related fields. A critical analysis of the research
studies carried out till now helps the researcher to identify the research gaps
GST was first introduced by France in 1954 and now it is followed by 140 countries.
Most of the countries followed unified GST while some countries like Brazil, Canada
follow a dual GST system where tax imposed by central and state both. In India also
dual system of GST is proposed including CGST and SGST.
Govinda Rao (2009) “Goods and Service Tax – Some progress towards clarity” the
author in his article express his views on the first empowered committee report of state
finance ministers of Goods and Service tax to be implemented in India. He also explains
salient features, shortcomings of the proposed GST. He suggests that the proposed GST
model should overcome the shortcomings of VAT system. He also throws light on the
challenges faced in the implementation of GST in India.
Ehtisham Ahmed and Satya Poddar (2009) studied “Goods and Service Tax Reforms
and Intergovernmental Consideration in India” and found that GST introduction will
provide simple and transparent tax system with increase in output and productivity of
economy in India. But the benefits of GST are critically dependent on rational design
of GST.
Ehtisham Ahmed and Satya Poddar (2009)studied , “ Goods and service tax reforms
and intergovernmental consideration in India ” and found that GST introduction will
provide implies and transparent tax system with increase in output and productivity of

economy in India. But the benefits of GST are critically dependent on rational design
of GST.
(Saira et al, 2010), Based on the history of the implementation by the other countries
around the world, most of the countries received a positive impact in terms of their
revenue, despite the success of GST implementation the Malaysian citizens still feel
uncertain with the GST, (Saira et al, 2010). The findings from the study showed that
the majority of Malaysians not convinced with the GST system,
Dr. R. Vasanthagopal (2011), Conducted a study on,“GST in India: A big leap in the
Indirect Taxation System” and concluded that switching to seamless GST from current
complicated indirect tax system in India will be positive step in becoming Indian
economy. Success of GST will lead to its acceptance by more than 130 countries in
world and a new preferred form of Indirect Tax System in Asia also.
According to Torgler (2011) tax morale is important to taxpayer awareness. On the

other hand, research by Tekeli (2011) using multiple regression analysis show that tax
morale has insignificant relationship on tax awareness. A Tekeli (2011) conclusion is
supported study by regarding cause and consequences of tax morale.
Research by Mustapha and Palil (2011), stated that the influence of compliance
behavior towards individuals’ awareness has been proven in various researches. From
the findings of Razak and Adafula (2013); Santi (2012) they found that taxpayers’
awareness is significantly associated with tax compliance and this is also supported by
study Jatmiko (2006).
Dr. R. Vasanthagopal (2011) studied “GST in India: A Big Leap in the Indirect
Taxation System” and concluded that switching to seamless GST from current
complicated indirect tax system in India will be a positive step in booming Indian
economy. Success of GST will lead to its acceptance by more than 130 countries in
world and a new preferred form of indirect tax system in Asia also.

Dr. R. Vasanthagopal, (2011)“GST in India: A Big Leap in the Indirect Taxation

System”, found that the positive impacts are dependent on a neutral and rational design
of the GST. Balancing the conflicting interests of various stakeholders, complete
political commitment for a fundamental tax reform with a constitutional amendment,
the method of valuation for levying the tax is to be required.
Jana V. M., Sarma& V Bhaskar (2012) “A Road Map for implementation of Goods
and Service Tax”, from the study it is found that the steps to be undertaken to implement
the comprehensive tax system i.e., GST. The authors have thrown light on the
constitutional amendment required for the implementation of GST in India.
BeriYogita (2012) “Problems and Prospects of Goods and Services Tax (GST) in
India” in this article the author say that India has witnessed with number of tax reforms
since Independence. The implementation of GST will become major indirect reform in
India though is subsumes many existing indirect taxes like central excise duty, customs
duty, service tax, additional duties etc. by implementation of GST there will be levy of
central taxes both on goods and services which integrates and widen the tax base.
Jana V. M.Sarma& V. Bhaskar (2012) studied “The Road Map for implementation
of Goods and Service Tax”. He found that the steps to be undertaken to implement the
comprehensive tax system i.e., GST. The authors have thrown light on the
constitutional amendment required for the implementation of GST in India.
Syed Mohd Ali Taqvi (2013) studied the challenges and opportunities of Goods and
Service Tax in India. He explained that GST is only indirect tax that directly affects all
sectors and sections of our country. It is aiming at creating a single,
unified market that will benefit both corporates and economy. He also explained the
proposed GST model will be implemented parallel by the central and state governments
as Central GST and State GST respectively.

Syed Mohd Ali Taqvi (2017) “Challenges and Opportunities of Goods and Service
Tax in India” the researcher explains the GST is only indirect tax that directly affect all
sectors and sections of our country. It is aiming at creating a single, unified market that
will benefit both corporates and economy. He also explains the proposed GST model
will be implemented parallel by the central and state governments as Central GST and
State GST respectively.
Pall et al. (2018), study by using multiple regression analysis, the researchers found
out that there are significant relationship between awareness and tax knowledge. When
individuals have knowledge related to the tax systems, people will be more willing to
respect the tax systems and improved individuals’ awareness. Further, Jatmiko (2006)
also conclude that awareness can be developed from the knowledge and the
understanding. Palil et al. (2018) and Jatmiko conclusions is also supported study by
Tayib (1998) identified that individuals’ awareness towards the tax system can increase
when the individualshave knowledge about the tax. This makes tax knowledge and tax
awareness has significant relationship and when the individuals or the taxpayers have
knowledge about it and it will make it easier for them to study and follow the tax rules.
Djawadi and Fahr (2018), This study is pointed out that knowledge about tax is
important to increase the thrust of authorities and citizens.
The researcher used structure equation modelling to examine the relationships between
tax awareness and tax knowledge and researcher found that tax knowledge has positive
relationship with tax awareness. Hence, taxpayers will be more aware about tax system
when they have knowledge and understanding towards the tax system.
Agogo Mawuli (2018) studied “Goods and Service Tax-An Appraisal” and found that
GST is not good for low-income countries and does not provide broad based growth to
poor countries. If still these countries want to implement GST then the rate of GST
should be less than 10% for growth.

Jaiprakash (2018) in his research study mentioned that the GST at the Central and the
State level are expected to give more relief to industry, trade, agriculture and consumers
through a more comprehensive and wider coverage of input tax set-off and service tax
setoff, subsuming of several taxes in the GST and phasing out of CST. Responses of
industry and also of trade have been indeed encouraging. Thus GST offers us the best
option to broaden our tax base and we should not miss this opportunity to introduce it
when the circumstances are quite favorable and economy is enjoying steady growth
with only mild inflation.
Nitin Kumar (2014) studied “Goods and Service Tax- A Way Forward” and concluded
that implementation of GST in India help in removing economic distortion by current
indirect tax system and expected to encourage unbiased tax structure which is
indifferent to geographical locations.
NishithaGuptha (2019) in her study stated that implementation of GST in the Indian
framework will lead to commercial benefits which were untouched by the VAT system
and would essentially lead to economic development. Hence GST may usher in the
possibility of a collective gain for industry, trade, agriculture and common consumers
as well as for the Central Government and the State Government.
Saravanan Venkadasalam (2019) analyzed the post effect of the goods and service
tax (GST) on the national growth on ASEAN States using Least Squares
Dummy Variable Model (LSDVM) in his research paper. He stated that seven of the
ten ASEAN nations are already implementing the GST. He also suggested that the
household final consumption expenditure and general government consumption
expenditure are positively significantly related to the gross domestic product as required
and support the economic theories. But the effect of the post GST differs in countries.
Philippines and Thailand show significant negative relationship with their nation’s
development. Meanwhile, Singapore shows a significant positive relationship.

GirishGarg, (2019) - “Basic Concepts and Features of Good and Service Tax in India”,
it is found that GST is the most logical steps towards the comprehensive indirect tax
reform in our country since independence. GST will create a single, integrated Indian
market to make the economy stronger. Under GST, the taxation burden will be divided
equitably between manufacturing and services, through a lower tax rate by increasing
the tax base and minimizing exemptions. Through this it is likely to improve tax
collections and Boost India’s economic development by breaking tax barriers between
States and integrating India through a uniform tax rate.
SupriyaKamna&RichaVerma (2019) Goods and Service Tax - Panacea for Indirect

Tax System in India” it is found that the GST is India’s most ambitious indirect tax
reform plan, which aims at removing the cascading effect of tax. The movement of GST
was declared in 2008 and supposed to be in force by 2010. Due to various reasons it
could not be in force. GST has been implemented in more than 150 countries which
will leads to economic growth of the country.
Pinki, SupriyaKamma and Richa Verma (July 2019) studied, “ Goods and Service
Tax “ Panacea for indirect tax system in india “ and concluded that the new NDA
government in india is positive towards implimentation of GST and it is beneficial for
central government , state government and as well as for consumers in long run if its
implimentation is backed by strong it infrastructure.
Agogo Mawuli (May 2019)studied,“Goods and Service Tax an Appraisal “and found
that GST is not good that low income countries and does not provide broad based
growth to poor countries. If still countries want to implement GST then the rate of GST
should be less than 10 % for growth.
Boonyarat et al. (2019), the researcher used Structure Equation Modelling (SEM) to
examine the relationships between tax awareness and tax knowledge and the researcher
found out that tax knowledge has positive relationship with tax awareness. Hence,
taxpayers will be more aware about tax system when they have knowledge and
understanding towards the tax system.

NishithaGuptha (2019) in her study stated that implementation of GST in the Indian
framework will lead to commercial benefits which were untouched by the VAT system
and would essentially lead to economic development.
Jai Parkash (2019) in his research study mentioned that the GST at the Central and the
State level are expected to give more relief to industry, trade, agriculture and consumers
through a more comprehensive and wider coverage of input tax set-off and service tax
set off, subsuming of several taxes in the GST and phasing out of CST.
Venkadasalam (2019), has analyzed the post effect of the goods and service tax (GST)
on the national growth on ASEAN States using Least Squares Dummy Variable Model
(LSDVM) in his research paper. He stated that seven of the ten ASEAN nations are
already implementing the GST. He also suggested that the household final consumption
expenditure and general government consumption expenditure are positively
significantly related to the gross domestic product as required and support the economic
theories. But the effect of the post GST differs in countries.
International Journal of Scientist research and management (2019), Girish Gargh

Assistant Professor from PGDAV College University of Delhi has published paper
titled Basic Concepts and Features of good and service tax in India. In this paper he has
given the outline of GST and what does this tax system wants to achieve with threats
and challenges opportunities that the free market economy can bring.
Shefali Dani (2019) has suggested that GST administration is an irresolute endeavor to
legitimize backhanded expense structure. Roughly more than 150 nations have
executed GST idea. The legislature of India must examination the GST administration
set up by different nations and furthermore their aftermaths previously actualizing GST.
IT is the need of hour that, the legislature must make an endeavor to protect the huge
poor populace of India, against the expansion because of execution of GST. GST will
disentangle its current roundabout duty framework and should expel wasteful aspects
made by the current heterogeneous expense framework, just if there is a reasonable

agreement over issues of edge constrain, income rate, and incorporation of oil based
commodities, power, alcohol and land.
Srinivas K. R (2019) in his article “Issues and Challenges of GST in India” mentioned
that central and state governments are empowered to levy respective taxes as per the
Indian constitution which is likely to change the complete scenario of present indirect
taxation system. GST will be a compressive indirect tax structure on manufacture, sales
and consumption of goods and services throughout India, to replace the various indirect
taxes levied by the both the governments.
Mohammad Ali Roshidi (2020), conduct a study on “Awareness and perception of tax
payers towards Goods and Service Tax implementation. The study attempts to find out
what level of awareness and perception to GST taxpayers in Malaysia. This study only
consists of 256 civil service servants of the secondary school teachers in the
KaulaKangsar, Perak. Data collected using questionnaire. The result shows that
moderate and majority of respondents give a high negative perception to the GST. The
eventually causes the majority of respondents did not accept implementation of GST in
Malaysia.
International Journal of innovative studies in sociology and humanities (2020) , A

study on impact of GST after implementation Milan-deep Kour and his co-authors
Assistant Professor from Eternal University Himachal Pradesh talks about the impact
of GST and implementation of it, its benefit and challenges. He also emphasizes that
GST is going to change things in current situation.
Ahamd et al. (2020), found that the level of awareness of the GST is still not reached
a satisfactory level. This is because the study involved only general questions that
should be known by the respondents as end users. This cause the respondents gave high
negative perception of the impact of implementation of GST. The respondents received
less information and promotion of the authorities. Most of the respondents were unclear
whether the goods and services are not subject to GST. Furthermore, due to the lack of
information on GST, the respondents had a high negative perception. Therefore, the

government must convince that GST will not have a lasting impact on the public as
particularly convincing end users that no increase in prices of goods and services
Poonam (2020) in her study cleared that in the system of indirect taxation GST plays
a very important role. The cascading and double taxation effects can be reduced by
combing central and state taxes. Consumer’s tax burden will
approximately reduce to 25% to 30% when GST is introduced and then after Indian
manufactured products would become more and more inexpensive in the domesticand
international markets. This type of taxation system would directly encourage economic
growth. GST with its transparent features will prove easier to administer.
With the above reviews we can assume that GST is a tax reform which will change the
scenario of the country as a support for this review study.
Times of India (26 July, 2020), page no 1&17 it is stated that Sweet makers are
confused with fixing the tax for their products as the ingredients used in the sweets are
taxed separately as raw material and as finished goods the products its taxing is different
ex. Plain burfi is 5% taxed but chocolate burfi is fixed with 28%. Plain burfi mixed with
other dry fruits is of 12%. This taxing system makes the Sweet makers to get confused
on how much GST to be fixed for which product.
Times of India dated (27 July, 2020) , stated that the GST implication across different
places for the same product has wider differences which the consumers are unaware,
resulting them in surprise. Ex A Rasamalai sold in counter at a shop is taxed with 5%
but if it is served in the hotel it is taxed with 18% this has resulted in difference of
consumers shopping to purchase the similar products
Shakwipee (2020), A study conduct on the inquring the level of awareness towards
GST among the small business owners in Rajasthan State, found that the main areas to
be focused include training errors and computer software availability.

Vineet Chauhan (2020), Conduct a study on “Measuring Awareness about

implementation of GST.” A study survey of small business unit of Rajasthan State in
India. The study seeks to evaluate the awareness of the business owners about GST
difficulties they face to encase of the current awareness about it. 148 small
business owners were analyses in order to identify the awareness about GST
fromRajasthan state and the kind and extent of relief provided and the implementation
of the provision under GST Law
Bar hate (2021), found that people have no doubt whatsoever regarding the proposed
benefits of GST irrespective of their business type, legal status of business for the
reason being they feel irritated by the present system which appears to be cumbersome.
Most respondents believe that GST will bring monetary gains to their business and do
not anticipate any significant boost in tax compliance costs. Interestingly, respondents
expect the spending on tax compliance to go down after GST is implemented. The lack
of information coupled with the apathy towards reforms may paralyze the speedy
implementation of this system especially in small towns where still not a single
orientation programs have been planned and executed till date by competent authorities.
Poonam (2021), The biggest problems in Indian tax system like Cascading effect & tax
evasion, distortion can be minimized by implementing GST. After amalgamation of
local state and central taxes competitiveness of industry, exporter and company will
increase. The extra revenue which can be generated from broaden tax base structure
can be utilized for the growth of nation.
CONCLUSION
GST will swift government focus on depending direct tax (income) to indirect tax.
Definitely due to small income in tax collection base, GST will be a strong boost to
government revenues. Hopefully with these amount of revenue challenges that the
government face in term of deficit budget and debt can be clear by 2022.

As it is a consumption tax, it appears that Malaysian GST will also act as an effective
dragnet for tax evaders and illegal immigrants who pay no income tax.
The payment made to BRIM recipient will offset most of the GST’s impact on the poor.
GST will give some impact on consumer expenditure due to rise in goods and services
price, however with increase of revenue government spending aspect to be more and
firm will continue to invest as export goods will exempted from tax. GDP will increase
when government spending and investment increase. Hopefully the implementation of
GST can provide good platform for the country to become develop country with high
income.

CHAPTER -3
3.1 Meaning of Research Design
Meaning of Research
Research is a logical and systematic search for new and useful information on a
particular topic. Research methodology is a systematic way to solve a problem. It is a
science of studying how research is to be carried out. Essentially, the procedures by
which researchers go about their work of describing, explaining and predicting
phenomenon are called research methodology.
Meaning of Design
The term 'Design' means "drawing an outline" or planning or arranging details. It is a

process of making decisions before the situation arises in which the decision has to be
carried out. Research Design' is planning a strategy of conducting research. Research
Design is, thus, a detailed plan of how the goals of research will be achieved.
3.2 Statement of the Problem:-
One of the biggest taxation reforms in India- Goods and Services Tax- is all set to
integrate state economies and boost overall growth. Experts says that it is likely to
improve tax collections, transparent and corruption- free tax administration to boost
India‘s economic development by breaking tax barriers between states and integrating
India through a uniform tax rate(at national level). It is estimated that India will gain
$15 billion a year by implementing Goods and Services Tax as it would promote
exports, raise employment and boost growth. In Goods and Services Tax system both
central and state taxes will be collected at the point of sale.

Both components (central Goods and Services Tax and state Goods and Services Tax)
will be charged on manufacturing cost. This will benefit individuals as prices are likely
to come down. Lower prices will lead to more consumption thereby helping companies.
France was the first country to introduce Goods and Services Tax in 1954. Almost 140
countries have implemented Goods and Services Tax. Most countries have a unified
Goods and Services Tax system. Brazil and Canada follow a dual system.
India is planning to implement dual Goods and Services Tax where tax is levied by both
the union and the state governments. But there are many issues raised in the
implementation of Goods and Services Tax.
3.3 Objectives of the study:
 To study the reasons for the introduction of Goods and Services Tax.
 To study how taxes are calculated under present indirect tax and proposed Goods
and Services Tax.
 To study how prices of the products gets affected in the supply chain.
 To study the effectiveness of Goods and Services Tax over present indirect tax
system
 To study how Goods and Service Tax will have impact on the government revenue.
3.4 Scope of the Study :-
 This study covers how proposed indirect tax system affects the prices of product
at each supply chain (producers, wholesalers, retailers and consumers), whether
probable system yields revenue to the government by boosting the industry
production and sales, problems in the implementation and suggestions to prove
it as an effective system. The study also analyses and interprets the present

indirect tax structure with reference to excise duty and value added tax and
probable tax structure under Goods and Services Tax. It interprets how proposed
tax system proves to be effective over the present indirect tax system.
3.5 Methodology of the study:-
Sources of Data: This study is predominantly exploratory/analytical in nature. Since

the Goods and Services Tax has not yet been implemented in India, this study (proposed
impact of GST) is based on the secondary data that are readily available. It is as well as
based on the descriptive study whereas the opinion of the professionals to the proposed
implementation of GST has been collected for analysis.Quantitative figures have also
been used to prove it as quantitative study
Type of Data:-
Data refers to information or facts which can be numerical figures, non-numerical

information, descriptive facts, qualitative and quantitative information. Data can be
broadly classified as
a) Primary data- is known as the data collected for the first time through field survey
which reveals the cross section picture of anything studied. The primary sources are
questionnaire or schedule, interview and observation
b) Secondary data- it refers to the information or facts already collected with the
objective of understanding the past status of any variable or the data collected and
reported by some source is accessed and used for the objective of a study. The sources
usually includes books, published documents, periodicals or journals research thesis
and dissertations, encyclopedia, directories or year books, newspapers, internet etc .The
data for the study includes both primary and secondary data. the primary data for this
study has been collected through questionnaire, observation and personal oral

unstructured interview with the professionals Somadas, Balasubramaniya and

Guruprasad.
The questionnaire consists of multiple choice questions and closed ended questions. It
has been distributed to employed and practicing. Structured Observational study has
helped to concentrate on the part of learning the computation of taxes from Chartered
Accountants. Secondary data for the study has been collected through various published
and unpublished sources like books, research journals, economic and political weekly
journals, business newspapers (like times of India, economic times) and internet by
accessing various related websites of Central Board of Excise and Custom, Ministry of
Finance Government of India, Commercial Tax Department of Karnataka State
Government, Reserve Bank of India, KPMG Co-operative companies etc.
3.6 Limitations of the study:-
 Results may vary when the sample size is increased.
Results are based on the accuracy of information provided by the respondents.
 Lack of accurate primary data and more dependency on the secondary data.
 Inaccuracy of the information collected due to lack of awareness of the proposed

system among most of the people.
Since Goods and Services Tax has not yet implemented in India figures shown
under the proposed system study is hypothetical and not accurate.
 This study does not concentrate much on the service perspective of Goods and
Services Tax.

3.7 Stastical Tools
Following MS Office tools are being availed while preparing the project:
• MS Excel: Pictorial & graphical representation of data
• MS Word: Preparation of project & other reports
3.8 Methods for Presentation of Data
• Traditional method of data representation i.e. Pie chart, Bar chart etc.
• Average of responses – No. of Responses/Total Responses * 50
Sample size:
The sample size shorted out from the population (universe set) is 100 nos. to draw the
conclusion of the study.
Sampling Technique: The Project will be non-probability sampling. Research Type:

The project will be exploratory research type.
3.9 Analysis Of Data
DATA COLLECTION SOURCES
Primary Data: Primary data is basically the live data which I collected on field while
doing cold calls with the customers and I show them list of question for which I had
required their responses.

source: Main source for the primary data for the project was questionnaires which I got
filled by the customers or sometimes filled myself on the basis of discussion with the
customers.
Secondary Data:
Secondary data for the base of the project I collected from intranet and from internet,
magazines, newspapers etc.
3.10 Sampling Technique
Sampling techniques can be broadly classified in to two types:
1.Probability Sampling.
2 Non Probability Sampling.
Tools for analysis
1) Bar chart (Bar charts will be used for comparing two or more values that will be
taken over time or on different conditions, usually on small data set.
2) Pie-chart (Circular chart divided in to sectors, illustrating relative magnitudes or

frequencies)
Tools and Techniques
As no study could be successfully completed without proper tools and techniques, same
with my project. For the better presentation and right explanation, I used tools of

statistics and computer very frequently. And I am very thankful to all those tools for
helping me a lot. Basic tools which I used for project from statistics are-
- Bar Charts
- Pie charts
- Tables
Bar charts and pie charts are really useful tools for every research to show the result in
a well clear, ease and simple way. Because I used bar charts and pie charts in project
for showing data in a systematic way, so it need not necessary for any observer to read
all the theoretical detail, simple on seeing the charts anybody could know that what is
being said.
Technological Tools Ms- Excel
Ms-Access Ms-Word
Above application software of Microsoft helped me a lot in making project more

interactive and productive.
3.11 Chapter scheme :-
1. Introduction: this chapter covers the introduction to tax, importance of taxation,

history of taxation in India, indirect taxation in India, reforms in indirect tax system: a
way towards Goods and Services Tax. introduction to Goods and Services Tax. The
structure
2. Review of Literature: Meaning of Research Design, lists of review of literature

3. Research Design: This chapter covers statement of the problem, methodology of the
study, hypothesis, objectives of the study, scope and limitations of the study,
operational definitions of terms and chapter scheme. this chapter covers previous
studies on taxation and its reforms, indirect tax system and Goods and services Tax and
ultimately the research gaps
4. Company Profile: This chapter includes establishment of the firm, mission

statement, quality statement, Objectives of the company, environment healthy and
safety policy, social responsibilities, SWOT Analysis,
5. Data analysis and interpretation: This chapter covers the reasons for the
introduction of new tax regime, analysis of difference between present indirect tax
system and proposed indirect tax system, effectiveness of Goods and Services Tax,
revenue to the government and problems in the implementation of Goods and Services
Tax in India.
6 Summary of findings, suggestions and conclusions: This chapter covers findings

made after the analysis and interpretation of primary data, suggestions given for the
effective implementation of Goods and Services Tax based on the findings and finally
the conclusions.
Annexure: It includes questionnaire, GST bill etc.
Bibliography: consists of references and websites

CHAPTER -4
PROFILE
NAME OF THE FIRM KRISHANA INDUSTRIES PVTLTD
Project Krishna Shelton, Flat 103,

Kattigenahalli, A Block, Baglur Cross,
ADDRESS OF HEAD OFFICE
Yelahanka Hoble Bangalore Bangalore
KA 560063
DIRECTORS Ravi Sunilkumar, Ravi Anil kumar
YEAR OF ESTABLISMENT 25/04/2007
PRODUCT PVC Raw Materials
FIRM REGISTRATION
42601
NUMBER
CIN U45201KA2007PTC042601
4.1 Introduction

Krishna Industries Private Limited is a Private incorporated on 25 April 2007. It is

classified as Non-govt company and is registered at Registrar of Companies, Bangalore.
Its authorized share capital is Rs. 20,000,000 and its paid up capital is Rs. 20,000,000.
It is involved production of PVC doors.
Krishna Industries Private Limited's Annual General Meeting (AGM) was last held on
30 September 2015 and as per records from Ministry of Corporate Affairs (MCA), its
balance sheet was last filed on 31 March 2015.
Directors of Krishna Industries Private Limited are Ravi Sunilkumar and Ravi
Anilkumar.
Krishna Industries Private Limited's Corporate Identification Number is (CIN)
U45201KA2007PTC042601 and its registration number is 42601.Its Email address is
compmca123@gmail.com and its registered address is Project Krishna Shelton, Flat
103, Kattigenahalli, A Block, Baglur Cross, Yelahanka Hoble Bangalore Bangalore KA
560063 IN , - , .
Current status of Krishna Industries Private Limited is - Active.
4.2 Vision and Mission Statement
Vision Statement:
● To achieve consistent quality, on time delivery at the right price we are committed to
updated to our systems, working culture and technology time to time.
● To become a leading manufacture and exporter of stamped components and sub-

assemblies.
● To adopt latest technology for manufacturing.
● To provide a clean working environment and culture in the organization.
● To provide accident free workplace with world class safety norms.

● Providing transparent business norms to the customers as well as within our

organization
Mission Statement
To provide world-class service to dealers in a professional and cost effective manner.
Quality Statement
We are committed to achieve total customer satisfaction by providing consistent quality

products at right time through continuous improvement and combined efforts of
workforce at all levels.
4.3 Objectives of The Company:
● To work towards improving our skills and technology.
● To adopting the latest technology to enhance customer’s satisfaction.
● To protect the environment and to prevent pollution.
● To provide a safe and healthy workplace for the employees.
● To achieve rapid economic development.
● To control prices of essential goods.

4.4 Environmental Healthy And Safety Policies:
● We will provide a safe and healthy workplace, and adopt processes and technology
that will protect the environment, prevent pollution, and conserve energy and natural
resources.
● We will comply with all applicable EHS standards, legal and other requirements that
we subscribe to.
● We will proactively seek education as appropriate at each level pf our organization,

so as to bring awareness and respect for environmental health and safety issues.
● We will receive performance regularly to achieve continual improvement.
4.5 Social Responsibilities:
● Establish strategic business partnership.
● Take anti-corruption steps.
● Promote human rights.
● Create awareness and responsible managements towards environment.
4.5 Products Types
1. plain door
2. picture door
3. digital door

4. joint panel
4.6 SWOT Analysis
STRENGTH:
● High barriers to entry: Barriers to entry are the obstacles or hindrance that make it
difficult for new competitive levels without attracting new entrants to enter the industry.
● Very high gross margin: the higher the gross margin, the more capital a company
retains on each dollar of sales, which it can then use to pay other costs or satisfy debt
obligations.
● Ability sell product line: a product line is a group of related products all marketed
under a single brand name that is sold by the same company.
● Highly visible websites: websites visibility is the process of getting your website
found on the internet when your prospects are searching for your related products and
services.
WEAKNESS:
● Competitors can offer similar quickly: monopolistic competition characterizes an

industry in which many firms offer products or services that are similar, but not perfect
substitutes.
● Limited start-up cost: start-up costs paid or incurred in connection with investigating
the creation or acquisition of an active trade or business or creating a active trade or
business.
● High transportation cost: transport cost is usually higher because the secondary
location is farther from the customer.

● Limited flexibility: product flexibility is the ability of the manufacturing system to

cope with the growing product variety to ensure better system performance.
OPPORTUNITIES:
● Ability to develop additional stores: innovative ideas lead to increased sales,

engagement and so much more.
● Acquisition of additional funds of capital: acquisition financing is the capital that is

obtained for the purpose of buying another business.
● Affiliate relation with the related vendors: affiliate is used primarily to describe a
business relationship between wherein one company owns less than a majority stake in
the other company’s stock
THREATS:
● Changes in regulation: trade regulation the federal minimum wages, and the
requirements for permits or license have effect on business
● Products are already sold by major competitors: learn how to identify your
competitors and research what they do and act on the product and services that is being
developed.
● Insurance cost are continuously increasing: if the company credit scores go down due
to increased debt, decreased income, missed or late payments, too many credit enquiries
so the insurance company may choose to increase cost.
● Increase in price inputs can cause upward pricing: a rise in the prices of the inputs
that is independent of output in this industry will cause the supply curve to shift upward
cost will increase.

CHAPTER -5
Table 5.1
TABLE SHOWING THE DIFFERENCE BETWEEN PRESENT TAX AND

PROPOSED GST OF PRODUCER (KRISHANA INDUSTRIES P VT LTD)
PVC FROM PRODUCER TO WHOLESALER ( IN LAKHS)
Cost of production 300.00 300.00
Producer's margin of profit 90.00 90.00
Producer's basic price 390.00 390.00
Central Excise Duty@ 12% 46.90 NILL
Value Added Tax @14.5% 56.55 NILL
Central GST @ NILL 46.90

12%(expected rate)
State GST @ 12% (expected NILL 46.90

rate)
TOTAL PRICE OF PVC 493.45 483.80

Graph 5.1
CHART SHOWING THE PRICE OF PVC UNDER PRESENT TAX

AND GST OF PRODUCER
PRICE OF P V C
1
52% 48%
2
INTERPRETATION:
From the above table it is clear that GST will remove cascading effects of tax. Present
VAT is calculated on the price that includes Excise Duty which in turn leads to tax on
tax. But, under GST, it is only on basic price of the producer. Under present VAT tax
liability is 103.45 lakhs, but under GST it is only 93.8 lakhs resulting in reduced tax
burden of 9.65 lakhs. Further the price of steel also decreased from 493.5 lakhs to 483.8.
GST is a broad based and a single comprehensive tax i.e, tax on only value of the
product and service. Besides it reduces cost for manufacturer by providing credit of
input tax against the output tax and thereby reduces the tax for him. Thus he can operate
on large scale of production by purchasing raw materials spatially across the world to
obtain cost advantage.

Table 5.2
TABLE SHOWING THE DIFFERENCE BETWEEN PRESENT TAX AND

PROPOSED GST OF WHOLESALER
PVC FROM WHOLESALER TO RETAILER ( IN CRORE)
PARTICULARS UNDER PRESENT UNDER PROPOSED

TAXES (RS) GST(RS)
Cost of steel to the wholesaler 350.00 265.00
Profit margin @ 10% 35.00 26.50
TOTAL 385.00 291.5
Value Added Tax @ 14.5% 55.82 NILL
Central GST @ 12% (expected NILL 34.98

rate)

rate)
Total price to the Retailer 440.82 361.46

Graph 5.2
CHART SHOWING THE PRICE OF STEEL UNDER PRESENT TAX AND

PROPOSED GST OF WHOLESALER
PRICE OF P V C
2 52%
1 48%
46% 47% 48% 49% 50% 51% 52% 53%
Series1
INTERPRETATION:
1. From the above table, it is clear that PVC from wholesaler to retailer is priced at
440.82 lakhs under present system. But, under GST it is reduced to 361.46 lakhs
Even though the input tax credits exists under both the system, the greater
advantage lies in the GST as it provides two separate streams for claiming tax credit
that is the wholesaler while paying tax to the government or while charging tax to the
retailer he deducts that amount which is equivalent to the tax that he has already paid
(CGST of 34.9 lakhs and SGST of 39.6 lakhs ) previously for purchasing the product
from the manufacturer. It can also be observed that even the wholesaler‘s profit margin
remains same in both the method the GST reduces the selling price of the product(steel)
by removing cascading effect.

Table 5.3
SHOWING THE DIFFERENCE BETWEEN PRESENT VALUE ADDED TAX

AND PROPOSED GOODS & SERVICE TAX OF RETAILER
PVCFROM RETAILER TO FINAL CONSUMER ( IN LAKHS)
PARTICULARS UNDERPRESENT UNDER

TAXES PROPOSED
GST(RS)
(RS)
Cost of steel to the retailer 385.00 291.50
Profit margin @ 20% 77.00 58.30
TOTAL 462.00 349.80
Value Added Tax @ 14.5% 66.99 NILL
Central GST @ 12% (expected NILL 41.97

rate)

rate)
Total price to the final consumer 528.99 433.74
Tax component in price to final 144.99 142.24

consumer
Final price excluding Taxes 384.00 291.50

Graph 5.3
CHART SHOWING THE PRICE OF STEEL UNDER PRESENT TAX AND

GST OF RETAILER
Price of PVC
1200
1000
800
600
400
200
0
INTERPRETATION:
From the above analysis, it can be proved that the cost of PVC is more for retailer under
present system i.e.385lakhs whereas under GST it is expected at 291.50lakhs.Even
though the profit margin of retailer remains 20% under both the system the price of
steel to final consumer gets reduced from 528.99lakhs (under VAT) to 433.74 lakhs
(under GST). It can also be observed that the tax component in the total price amounts
to 142.22 lakhs under GST when compared to the higher amount of 144.99 lakhs under
present tax system. Ultimately, the price excluding tax has been reduced by 92.5 lakhs
due to wide tax base, tax credit benefits and zero cascading effects of taxes on prices
under proposed GST.
Final consumer and trader will benefit from GST, low tax burden to the consumer
ultimately leading to low selling price and low cost of product to the trader to boost
trade.

Since there is a direct relationship between prices and demand the reduced price is
expected to increase the consumption rate which in turn will increase the standard of
living of people in the country.
ANALYSIS OF PRIMARY DATA (Questionnaire)
Table 5.4
TABLE SHOWING THE AGE OF RESPONDENTS
Total Number of
Age Percentage
Respondents
Below 20 years 00 00.00
20-30 years 20 44.4
30-40 years 11 24.44
40-50 years 06 13.33
50-60 years 08 17.79
TOTAL 45 100.00
Source: Primary Data

Graph 5.4
GRAPHS SHOWING THE AGE OF RESPONDENTS
Interpretation:
The above table and figures clearly indicates that 44.44% of respondents belongs to the
age group of 20-30, 24.44% i.e., 11 out of 45 total respondents belongs to the age group
of 30-40, 6 respondents that is 13.33% of respondents falls under the age category of
4050 and 8 out 45 respondents are of the age group of 50 and above. Thus the majority
of respondents out of total45 respondents belong to the age group of 20-30 and the
second majority belongs to the age group of 30-40 while there no-one for the age group
of below 20 years.

Table 5.5
TABLE SHOWING THE MONTHLY INCOME OF THE RESPONDENTS
MONTHLY INCOME
Monthly income Number of respondents Percentage
Below Rs.15,000 09 19.9
15,000-25,000 04 8.88
25,000-40,000 02 4.44
40,000-50,000 09 19.99
50,000 and above 21 46.7
TOTAL 45 100.00
Source ;primary data

Graph 5.5
GRAPHS SHOWING THE INCOME OF RESPONDENTS
Interpretation:
The above table and graph reveals the number of respondents based on their monthly
income. Among total 45 respondents, 21 (46.66%) of them have the income of
Rs.50000 and above per month. 9 of them have the income of Rs.40000-50000, other
9 of them earn the income below Rs. 15000 per month, 4 of the total respondents
haveRs.1500025000 income while 2 respondents earn the income between Rs.25000-
40000.

Table 5.6
TABLE SHOWING THE PROFESSION OF RESPONDENTS
PROFESSION Total number of respondents Percentage
Chartered Accountant 11 24.44
Practicing Chartered
34 75.56
Accountant
Total 45 100.00
Sorce :primary data

Graph 5.6
GRAPHS SHOWING THE PROFESSION OF RESPONDENTS
Interpretation:
From the above table, it is clear that 34 respondents that is 75.55% of the total 45
respondents are Practicing Chartered Accountants while 11 of the respondents are
employed as Chartered Accountants

Table 5.7
TABLE SHOWING THE EXPERIENCE AND AGE OF RESPONDENTS
AGE EXPERIENCE TOTAL
Below 3 3-6 6-9 9-12 12

year year year year
Above
30-40 00 00 08 03 00 11
40-50 01 00 01 01 03 06
50 above 00 00 00 00 08 08
Total 12 05 13 04 11 45
Percentages 26.67 11.11 28.89 8.89 24.44 100

Graphs 5.7
GRAPHS SHOWING THE EXPERIENCE AND AGE OF THE RESPONDENT
Interpretation
The above cross-table reveals that 28.88% of the 45 respondents have the experience
below 6-9 years who among them 8 belongs to the age group of 30-40, 12 respondents
have the experience below 3 years of which 11 of them falls under the age group of
2030, and 11 respondents have the experience of above 12 years and 8 of them are aged
above50. 5 and 4 of the respondents bears the experience of 3-6 years and 9-
12 years‘experience in CA field respectively.

Table 5.8
TABLE SHOWING THE KIND OF CLIENTS THE RESPONDENTS DEAL
Kinds of clients Number of respondents Percentage
Minimum maximum Percentage
Individuals 35 45 77.7
Small dealers 32 45 71.11
Moderate dealers 27 45 59.9
Large scale dealer 20 45 44.44
Raw material 23 45 51.11

supplier
Source:primary data

Graph 5.8
GRAPH SHOWING THE KIND OF CLIENTS THE RESPONDENTS DEALS

WITH KIND OF DEALERS OF RESPONDENTS
kind of dealers of respondents
Raw material supplier
Large scale dealer
Moderate dealers
Small dealers
Individuals
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Analysis and Interpretation:
Fromtheabovetableitisclearthat77.7% respondents deals with individuals,71.11%have

small dealers as their clients,59.9%or27respondentsdealswithmoderatedealers,51.11%
of the respondents deals with manufacturing agencies and 20 out of 45 respondents
have large scale dealers as their clients

Table 5.9
TABLE SHOWING THE FREQUENCY OF NEED FOR GST
Needs of GST Number of Respondents Percentage
YES 45 100
NEUTRAL 00 0
NO 00 0
TOTAL 45 100

Graph 5.9
GRAPH SHOWING THE FREQUENCY AND PERCENTAGE OF

RESPONDENT’S NEED FOR GST
The above table reveals the opinion of respondents towards the need for Goods and
Services Tax. It is to be observed that 100% of the respondents feel that there is a need
for reform through Goods and Service Tax in the indirect tax regime.

Table 5.10
TABLE SHOWING THE RANKING OF FACTORS THAT NECESSITATES GST
FACTORS Number of Respondents Total
Rank Rank Rank Rank Rank Rank

1 2 3 4 5 6
Lower tax rates and 5 3 4 9 11 13 45

lower exemptions
Lower administration 5 3 11 12 6 8 45
cost for the
government
Avoids multiple tax 17 6 11 4 2 5 45

structure
Anti-tax evasion 5 13 4 9 12 2 45
system
Avoids cascading 8 15 7 5 5 5 45
effects and reduces
tax burden
Widens the tax base 5 5 8 6 9 12 45

provides input tax
credit and ensures
destination based
taxation
Total 45 45 45 45 45 45 45

Graph 5.10
GRAPH SHOWING THE RANKS OF FACTORS THAT NECESSITATES

GOODS AND SERVICES TAX
The above table reveals the ranking of factors that necessitates Goods and Service Tax.
It is clear that 17 of the respondents have ranked GST avoids multiple tax structure as
1, avoiding tax cascading and reducing tax burden have been ranked as 2 by 15
respondents, 12 respondents have marked lower administration cost for the government
as rank 4, 12 of the respondents have preferred anti-tax evasion system in the 5th
placeand lower rates and lower exemptions have been preferred in rank 6th place by
13respondents.8 of the respondents feels that widening tax base, providing input tax
credit and ensuring destination based taxation as 3rdimportant factor while 12
respondents feels this as 6th important factor since input tax credit system still exists in
the present system too.

Table 5.11
TABLE SHOWING THE FREQUENCY OF GST’S IMPACT ON THE

PRICES OF MANUFACTUR NON-AGRICULTURAL PRODUCTS OF
CONSUMERS
Impact on prices Number of Respondents Percentage
YES 34 75.56
NEUTRAL 10 22.22
NO 00 2.22
TOTAL 45 100
Source: Primary data

Graph 5.11
GRAPH SHOWING THE IMPACT OF GST ON PRICES
The above drafted table provides opinion of the 45 respondents towards whether the
GST will have impact on the prices of manufactured non-agricultural products that
flows to the final consumers in the supply chain. It is clear that majority of respondents
i.e., 34 respondents feels that GST will have impact on the prices, while 10 respondents
are neutral regarding the impact on prices and only 1 respondent have the opinion that
GST will have no impact on prices.

Table 5.12
TABLE SHOWING THE FREQUENCY OFWAY OF PRICES

GETTINGAFFECTED THROUGH GST
Number of
Ways Percentage
Respondents
Decrease in price by avoiding tax

cascading effect on prices benefitting all 6 13.63
the dealers in the supply chain
Decrease in price through reduced cost of

3 6.82
production benefitting the manufacturers
6.82
Decrease in prices through lower tax
3
rates

cascading effect on prices benefitting all
the dealers in the supply chain and 19 43.19
through reduced cost of production
benefitting the manufacturers

cascading effect on prices benefitting all
13 29.54
the dealers in the supply chain and
through lower tax rates
TOTAL 44 100

Graph 5.12
CHART SHOWING THE WAYS THAT THE PRICES GETTING AFFECTED

THROUGH GST
Out of the 34 respondents who have opinion that prices will be affected due to GST and
those 10 who are neutral regarding impact on prices, 19 respondents which comes to
about 43.18% feels that the prices gets reduced due to no cascading effect and through
less cost of production that can again be due to availing input tax credit, 13 of them
feels that along with the less cost of production, no cascading effect, lower tax rates
that has been proposed under GST will also be the contributing factor for less prices

Table 5.13
TABLE SHOWING THE FREQUENCY OF INCREASE IN PRODUCTION

AND SALES OF COMPANIES DUE TO GST
Increase in production and sales Number of respondents Percentage
Yes 39 86.67
No 06 13.33
Total 45 100

Graph 5.13
GRAPH SHOWING THE FREQUENCY OF RESPONDENTS STATING

INCREASE IN PRODUCTION AND SALES DUE TO GST
The above table clearly indicates that 86.66%of respondents are favorable towards GST
that it helps the companies to boost their production and sales while only the 6
respondents feels that production and sales will not be increased due to GST.

Table 5.14
TABLE SHOWING THE FREQUENCY OF RESPONCENTS VIEWING

MEANS OF INCREASE IN PRODUCTION AND SALES DUE TO GST
Means of increase Number of Percentage

respondents
By creating demand for their products 8 20.51

through reduced price
By taking advantage of reduced cost of 10 25.65

production and large economies of scale
By availing input tax credit 2 5.12
By creating demand for their products 11 28.21

through reduced price and by availing
input tax credit
By reduced cost of production, large 8 20.51

economies of scale and availing input tax
credit
TOTAL 39 100

Graph 5.14
CHART SHOWING THE FREQUENCY OF RESPONDENTS VIEWING THE

WAYS OF INCREASE IN PRODUCTION AND SALES
Among 39 who felt that GST will help in boosting production and sales, 11 of them
views that it is due to the reason that increased demand for less priced products and
input tax credit that contributes to no cascading which in turn again leads to less prices
of products, while 10 of the respondents gives the reason of reduced cost of production
and large scale production that the manufacturers avails because of input tax credit
benefits and spatial procuring capacity available to them under GST

Table 5.15
TABLE SHOWING THE FREQUENCY OF EFFECTIVENESS OF GST

OVER THE PRESENT INDIRECT TAX SYSTEM
EFFECTIVENESS OF GST Number of respondents Percentage
Yes 37 82.22
Neutral 6 13.33
No 2 4.45
Total 45 100
Source:Primary data

Graph 5.15
GRAPH SHOWING THE NUMBER OF RESPONDENTS STATING

THE EFFECTIVENESS OF GST
The above figure shows that 37 out of 45 respondents feels that GST will be effective
over the present tax system, while 2 are in the view of ineffectiveness of GST and 6 of
the respondents are in the middle of parameter of effectiveness and ineffectiveness of
Goods and Service Tax.

Table 5.16
TABLE SHOWING THE FREQUENCY OF FACTORS THAT ARE

RESPONSIBLE FOR EFFECTIVENESS OF GST
FACTORS OF EFFECTIVENESS Number of Percentage

respondents
Reduced prices and tax burden by eliminating tax 4 9.30

on tax
9 20.93
Widening the tax base and ensuring uniform tax

rates, policies
Nations growth by increasing employment 3 6.98

opportunities and exports

on tax, Widening the tax base and ensuring
uniform tax rates, policies

on tax, Widening the tax base, ensuring uniform
tax rates, policies Nations growth by increasing
employment opportunities
and exports
Total 43 100

Graph 5.16
CHART SHOWING THE MEANS OF EFFECTIVENESS OF GOODS

AND SERVICE TAX
Among the 37 respondents who feels that GST will be effective and 6 respondents who
remains neutral about effectiveness, 17 of them provides their opinion that GST will be
effective due to its benefits of reduced prices, less tax burden, no cascading, widening
tax base, uniform tax rates, policies and its contribution to nations growth by increasing
employment opportunities, purchasing power, standard of living of people and exports

Table 5.17
TABLE SHOWING THE FREQUENCY OF FACTOR FOR

INEFFECTIVENESS OF GST
FACTORS Number of respondents Percentage
Revenue loss to the government 0 0

in initial years
Loss of fiscal autonomy and 0 0

power of state governments
Difficulty in bringing consensus 1 12.5

and drafting the model
Requirement of existing 0 0
constitutional amendment
All the above 7 87.5
TOTAL 8 100

Graph 5.17
GRAPH SHOWING THE FACTORS RESPONSIBLE FOR

INEFFECTIVENESS OF GST
Interpretation:
Out of the 6 respondents who were neutral about effectiveness of GST and 2 of the
respondents who felt that GST will not be effective over present tax system 7 or 87.5%
of the respondents views the reason for ineffectiveness of GST as revenue loss to
the government in initial years, loss of autonomy and power of states, difficulty in
bringing consensus and drafting the model of GST and the GST‘s requirements of
constitutional amendment. Only 1 respondent feels difficulty in bringing consensus and
drafting the model is the most important factor for the ineffectiveness of GST.

Table 5.18 TABLE SHOWING THE REDUCTION IN GOVERNMENT

REVENUE ASWELL AS NO IMPACT ON REVENUE DUE TO GST
PARTICULARS STRONGLY AGREE NEUTRAL STRONGLY DIS Total

AGREE DISAGRE AGREE
Adverse F 12 22 7 0 4 45
effect on state
government’s % 27 49 15 0 9 100
revenue in
the short run
It reduces F 3 12 11 3 16 45
both the
central and
% 7 27 24 7 36 100
the state
government’s
revenue in
the long run
No effect on F 4 11 13 2 15 45
revenue
instead % 9 25 29 4 33 100
remains as
before

Graph 5.18
CHART SHOWING THE NEGATIVE IMPACT OF GST ON

GOVERNMENT’S REVENUE
The above table says that 22 out of 45 respondents have agreed to the statement that
GST adversely affects the state government’s revenue in the transitional periods due to
lower tax rates and phasing out of Central Sales Tax, 12 of them strongly agreed while
7 of them are neutral, 4 of them have disagreed and none of them have strongly agreed
because of the assurance of the Centre to compensate states From the above table, it is
proved that 16 of the respondents have disagreed to the point that GST reduces
government’s revenue in the long run due to lower tax rates while 12 of them agreed

for this point. For the statement GST will not affect government ‘s revenue in any way
but remains same 15 respondents have disagreed that means majority of them feels that
GST will have impact on government s revenue once it is implemented.

CHAPTER- 6
6.1 FINDINGS:
The following are the findings drawn by the study of proposed GST:
1. The study presents that Proposed GST reduces the product price to the extent of
4% from producer to seller.
2. It is clear that selling price of goods from wholesaler to retailer will reduce to the
extent of 5.1% after the implementation of GST in spite of same profit margin.
3. Analysis tells that the proposed GST will reduce the selling price of the product to
final consumers to the extent of 6%. Thus, GST provides efficient system of input
tax credit throughout the supply chain and is exclusive of cascading effects in all
stages .It is observed that the tax component in the price will also reduce to the
extent of 11.75%.
4. The observation reveals that the inter-dependency of the producer, whole seller
and retailer will bring transparency in tax liability
5. The study exhibits that the excise revenue of central government has increased
from 139% to 169% in 2012-2013, service tax has increased to 226% in 2012-2013
from 166.90% in 2011-2012, Value Added Tax and Central Sales Tax collection
of the state government has increased to 216.04% and 99.3% in 2013-2014.
6. It is clear from the study that even though GST affects the revenue due to low tax
rates, in the long run it is expected to increase the government revenue due to
increased compliance and enhanced exports.

7. The study clearly exhibits that there is 100% need for reform through Goods &
Services Tax.
8. The analysis shows that avoiding multiple tax structure and avoiding cascading
effects that leads to less tax burden is the two important factors that necessitates
GST.
9. Majority of the respondents feels that GST will reduce the prices of products due
to no cascading effect and less cost of production that the producers avails due to
effective input tax credit and spatial purchasing power capacity.
10. The analysis clearly exhibits that 86.66% of respondents supports GST as it
helps to increase the production and sales of companies.
11. Majority of respondents has given the reason of increase in demand for less priced
products contribute to high production and sales of companies.
12. The study reveals that, majority of respondents views GST as an effective system
over the present indirect tax system due to its accrued benefits of
• Reduction in price
• less tax burden
• No cascading effect
• Widening tax base
• Uniform tax rates and policies
• Nations growth through increasing employment and exports

13. The analysis exhibits that the reasons for the implementation of GST are valid and
effective as it is proposed to overcome the difficulties of present tax system.
Further, as a result of decrease in the total cost of production and tax rates trader
reduces the price of the product which in turn decreases the inflation of economy.
14. From the study it is found that GST can also contribute to country ‘s overall
economic and fiscal health by removing distortions.
15. In spite of all the benefits it also confronts both the central and state government
with various challenges like revenue loss, high compensation to states, no
consensus on the common model of GST system etc.
6.2 SUGGESTIONS
The following suggestions have been given based on the findings drawn from the study:
1. It is highly essential to address the concern of the state government‘s fear of

losing tax revenue. The indirect tax revenue has been increasing over the time,
so the government should see to it that it maintains the same even after the
implementation of GST.
2. It is important to take into account all stakeholders ‘interest in order to arrive at

consensus.
3. Fiscal autonomy and consolidation of the government must be taken care of.
4. Dual GST model must be structured or tailored in such a way so as to achieve the
very much purpose of the proposed GST.
5. Information technology in fracture swiftly has to be implemented in the entire

nation because this is one of the hurdles to implement GST.

6. Since the two previously proposed dates for the implementation couldn’t be met,
next proposed date that is 1st April 2016 should prove the reality of the GST by
overcoming the various issues.
7. Government has to train and educate about the benefits of GST for all
the stakeholders.
8. Administrative structure has to be reshuffled for the implementation of GST.
9. Central government should discuss the changes suggested by state

government‘s framework of GST with industry.
10. During transition, government needs to publicize the benefit of credit mechanism
under GST.
11. Central government has to sanction entire amount of .840 crores. This will help to
reduce the concern of the State Government revenue loss it had been hoping for a
bigger some to cope with the financial crises caused by COVD-19.
12. The GST will enhance the growth of the industry; it leads to more investment,
good economic condition and better job opportunity.
13. The central government has to implement the GST with transparent and complete
chain of set-offs which will result in widening of tax base and better compliance.
14. The new tax code must be given to the various Chambers of Commerce,
Professional bodies, various bars, Non-government organizations and public,
various State Governments for its critical analysis before getting it vet through
parliament.
15. Electronically equipped tax administration, design bureaucrats must be looked

into.

16. The law/act must be framed in such a way that it is equitable/neutral. It should
motivate businessmen by economic considerations and not by tax consideration.
17. Cost of compliance and administration must be minimum.
18. It must ensure simplicity with regard to tax liability, how to deposit tax and how
to file the tax returns.
19. It must call for self-compliance, trust and confidence self-enforcing.
20. It should be designed to allow flexibility in future.
21. Uniform machinery must be set up to deal with conflicts.
22. It would provide auto check on tax evasion to prove itself as an anti-tax evasion
system.
23. Historical realities must be looked into before conforming on the model.
24. GST reform can make India to be a global trend setter example. Thus all that it
needs is co-operation from all stakeholders which is possible when they think
beyond vested interest.
6.3 CONCLUSION
Taxes are the life blood of any government but it cannot be over emphasized that the
blood is taken from the arteries of the tax payer and, therefore the transfusion
has to be accomplished in accordance with the principle of justice and fair play. Every
government has a right to levy tax but no government has a right in a process of

extracting tax, to cause misery and harassment to the tax payers and the gnawing feeling
that he is made victim of palpable injustice‖-N.A. Palkhiwala.
The Empowered Committee describes the GST as a further significant improvement-

the next logical step towards a comprehensive indirect tax reforms in the country
Indeed, it has the potential to be the single most important initiative in the fiscal history
of India. It can pave the way for modernization of tax administration- makes it simpler
and more transparent and significant enhancement in voluntary compliance. For
example, when the GST was introduced in New Zealand in 1987, it yielded
revenues that were 45% higher than anticipated, in large part due to improved
compliance. It‘s more neutral and efficient structure could yield significant dividends
to the economy in increased output and productivity.
From the project work it is concluded that the GST will benefit economy, industry and
consumers. Problems faced by government to implement GST have to be resolved
because both manufacturing and service industries are eagerly waiting for GST. Since
GST removes cascading effect in all the stage and provides efficient input tax credit
mechanism, GST is the proper answer to loopholes in the present system. The GST
enhances the growth of business; it will increase the tax revenue to the government
even though it initially reduces tax revenue. Thus, the ultimate effect of GST will be on
the Nation‘s growth.
WEBSITES:

www.prsindia.org
www.GSTINDIA.com
www.academia.edu/Goods and service tax its impact
www.moneycontrol.com
www.cbec.gov.in
www.ctax.kar.nic.com
www.finmin.nic.in
BOOKS REFERRED:
“Understanding of Goods and Services Tax made simple” by Arun kumar
Gupta, FCA Vinrander Chauhan FCA, assisted by Sucheta Bansal.
Goods and services tax fifth sem text book by B G Bhasakar and Manjunath N

ANNEXURES:
*Required
Name* ____________ Designation* ____________
Age*
a) Below 20
b) 20-30
c) 30-40
d) 40-50
e) 50 and above
Monthly income*
a) Below 15000
b) 15000 – 25000
c) 25000 – 40000
d) 40000 – 50000
e) 50000 and above

Profession*
a) A charactered Accountant
b) practicing Chartered Accountant
C) Experience in CA field
1) below 3 years
2) 3 - 6 years
3) 6 – 9 years
4) 9 -12 years
5) 12 and above
Kind of dealers you deal with
a) individuals
b) Small dealers
c) Moderate dealers
d) Large scale dealer
e) raw material supplier
1. Do you think there is a need for the reform in the present indirect tax system
through the introduction of proposed comprehensive goods and service tax?

a) yes
b) no
2. If Yes, Rank the following factor that necessitates the implementation of proposed
Goods and Services tax according to your preferences:
a) Lower tax rates and lower exemptions
b) Lower administration cost the government
c) Avoids multiple tax structure
d) Anti-tax evasion system
e) Avoids cascading effects and reduces tax burden
f) Widens the tax base, provides input tax credit and ensures destination based taxation
3. Wills Goods and Service tax system have impact on the prices of manufactured
non- agricultural products of consumers?
a) Yes
b) Neutral
c) No
4. If Yes/Neutral, In what way do you think that the price gets affected?
a) Decrease in price by avoiding tax cascading effect on prices benefitting all the
dealers in the supply chain

b) Decrease in price through reduced cost of production benefitting the manufacturers

at the same time
c) Decrease in prices through lower tax rates
d) a and b
e) a, b and c
5. Do you think goods and service tax helps the companies to boost their production
and sales?
a) Yes b) No
6. If Yes , then how do you think production and sales will be boosted?
a) By creating demand for their products through reduced price
b) By taking advantage of reduced cost of production and large economies of scale
c) By availing input tax credit
d) a and c
e) b and c
7. Do you think Goods and Service Tax will be more effective over the present
indirect tax system ?
a) Yes
b) Neutral

c) No
8. If Yes, in what way do you think goods and service tax will be more effective?
a) Reduced prices and tax burden by eliminating tax on tax
b) widening the tax base and ensuring uniform tax rates, policies
c) Nations growth by increasing employment opportunities and exports
d) a and b
e) a,b and c
9. If no, How do you think Goods And service Tax will not be effective?
a) Revenue loss to the government in initial years
b) Loss of fiscal autonomy and power of state governments
c) Difficulty in bringing consensus and drafting the model
d) Requirements of existing constitutional amendment
e) All the above

10. Specify your opinion on the following statement:
STATEMENTS Strongly Agree Neutral Strongly Disagree

agree disagree
State government’s
revenue will be
adversely affected in the

short run due to GST
To avail the advantages of

reduced price and input tax
credit GST compels every
dealer to generate invoice
and to pay taxes regularly
that contributes to
government revenue
GST eliminates tax

evasion by makinz
supply chain strong and

difficult to break which in
turn contributes to
government revenue
In the long run it increases

both the central

and state governments

revenue through increased
tax compliance
GST reduces prices

thereby increases
Demand and consumption

which leads to more tax
payments
It reduces both the

central and the state
governments revenue in
thelongrun through lower
tax rate
Itwill not affect revenue

in any way
instead remains as before

PG Department of Commerce
SHANTIDHAMA COLLEGE
Sunkadakatte, Bangalore
PROJECT REVIEW REPORT
Name of the Project Guide: Project Title:
Dr.Manujla.V A Study on GST and its Impact on

Krishna Industries Pvt Ltd.
MCOM, MBA, MPhil, PhD
Assistant Professor
Name of the Student: Project Starting Date:

Sharath.K.B 04-07-2022
Student Reg no: Project completion Date:
201YCOM034 30-09-2022
Chapters Date Progress of the Comments Signature of the Student

Report by the and Guide
Project
Guide
Chapter 1 04-07-2022 Introduction Student Guide
Chapter 2 18-07-2022 Review of

Literature
Chapter 3 01-08-2022 Research

Design
Chapter 4 08-08-2022 Company

Profile
Chapter 5 02-09-2022 Data Analysis

and
Interpretation
Chapter 6 11-09-2022 Findings,

Suggestions,
Conclusion
Blue Print of 15-09-2022 Overall Project

the Report Review

Final Report 30-09-2022 Submitted

Sharath Bharath

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A Study on GST and its Impact on Krishna Industries Pvt Ltd, Bangalore.

1.1 Introduction to Taxation

1. Taxation has four main purposes or effects: Revenue, Redistribution, Repricing

3. A third purpose of taxation is repricing of certain goods to increase or decrease

1.2 Importance of Taxation

M Com., PG Department of Commerce, Shantidhama College, Bangalore Page -1

1.3 History of Taxation in India

M Com., PG Department of Commerce, Shantidhama College, Bangalore Page -2

1.3.1Our Taxation structure provides for Two types of Taxes: -

2. Value Added Tax

3. Custom duty & Octroi (On Goods)

4. Central sales tax

6. Anti- Dumping Duty

M Com., PG Department of Commerce, Shantidhama College, Bangalore Page -3

The important indirect taxes imposed in India are as under:

M Com., PG Department of Commerce, Shantidhama College, Bangalore Page -4

Customs Tariff Act, 1975. This is usually referred to as "countervailing

Additional Duty to compensate duty on inputs used by Indian manufacturers: This

M Com., PG Department of Commerce, Shantidhama College, Bangalore Page -5

M Com., PG Department of Commerce, Shantidhama College, Bangalore Page -6

i. Education Cess: Education Cess is leviable @ 2% on the aggregate of duties of

k. Surcharge on Motor Spirit: Special Additional Duty of Customs (Surcharge) on

Various Central Excise duties are:

M Com., PG Department of Commerce, Shantidhama College, Bangalore Page -7

c. Additional Duty of Excise: Section 3 of the Additional Duties of Excise Act of

g. Education Cess: Education Cess is leviable @ 2% on the aggregate of duties of

M Com., PG Department of Commerce, Shantidhama College, Bangalore Page -8

h. Cess - A cess has been imposed on certain products.

M Com., PG Department of Commerce, Shantidhama College, Bangalore Page -9

M Com., PG Department of Commerce, Shantidhama College, Bangalore Page -10

1.4 Introduction to Goods and Services tax

M Com., PG Department of Commerce, Shantidhama College, Bangalore Page -11

1.4.1. Meaning of GST

1.4.2. DEFINITION OF GST

1.4.3. Types of GST:

 The central goods and services (CGST}

 The states goods and services (SGST}

 The union territory goods and services (UTGST}

 The integrated goods and services (IGST}

1.4.4.GST slab rate: 5%,12%,18%,28%

1.4.5. Salient Features of GST

M Com., PG Department of Commerce, Shantidhama College, Bangalore Page -12

The salient features of GST are as under

a. Central Excise duty

b. Duties of Excise (Medicinal and Toilet Preparations)

c. Additional Duties of Excise (Goods of Special Importance)

d. Additional Duties of Excise (Textiles and Textile Products)

e. Additional Duties of Customs (commonly known as CVD)

f. Special Additional Duty of Customs (SAD)

M Com., PG Department of Commerce, Shantidhama College, Bangalore Page -13

h. Cesses and surcharges

b. Central Sales Tax

d. Entry Tax (other than those in lieu of octroi)

e. Entertainment Tax (not levied by the local bodies)

g. Taxes on lotteries, betting and gambling

M Com., PG Department of Commerce, Shantidhama College, Bangalore Page -14

acertain threshold. The threshold exemption and compounding provision would be

(xii) Exports would be zero-rated.

(xiii) An Integrated GST (IGST) would be levied on inter-State supply of goods or

(xvii)PAN based identification number will be allowed to each taxpayer to have

(xviii)Import of goods or services would be treated as inter-State supplies and therefore,

M Com., PG Department of Commerce, Shantidhama College, Bangalore Page -15