INTRODUCTION

Taxation is a fiscal tool in the hands of the Government to raise revenue for the country and indirect
taxes like excise duty, customs duty, value added tax, service tax, proposed goods and service tax, etc. some
of the taxes which contribute majorly to raise this revenue. The proposed move to GST by the Indian
Government which would combine most of these indirect taxes and be introduced as one common tax on
both goods and services, is a step in this direction.

Introduction to GST

The introduction of goods and service tax on 1 July 2017 was a very significant step in the field of
indirect tax reform in India by amalgamating a large number of central and state tax into a single tax the aim
is to 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 should be in term of reduction of overall tax burden
an goods, introduction of GST will also make Indian product competitive in the domestic and international
market. Last but not the least this tax, because of its transparent and self policing character would be easier
to administer.

Goods and Service Tax or GST as it is known is all set to be a game changer for the Indian economy. The
Finance Minister in his budget speech of Budget 2015 has announced time and again that the tax will be
introduced on 1 April, 2016. VAT or Value Added Tax was first introduced in France somewhere in 1954.
The concept of VAT is applying a tax only on the value added by each person at each stage; by allowing the
person input credit of taxes paid up to his stage of procurement. Thus the tax is expected to reduce the
concept of 'tax on tax', increase the gross domestic product of the economy and reduce prices. Overall it is
known to be beneficial I to both the consumer, business and the Government. In India, there are different
indirect taxes applied on goods and services by central and state government. GST is intended to include all
these taxes into one tax with seamless ITC and charged on both goods and services.

Thus excise duty, special additional duty, service tax, VAT to name a few will get repealed and will
be added into GST. For this, GST will have 3 parts - CGST, SGST and IGST. The central taxes like excise
duty will be subsumed into CGST and state taxes like VAT into SGST. For the introduction of GST in the
above form, the Government needs to get the Constitution Amendment Bill passed so that the proposed
objective of subsuming all taxes and allowing states to tax subjects in Union list and vice versa is achieved.
Without these powers it is not legally possible to move towards GST. Thus going forward on all transactions
of both goods and services, only one tax will apply which is GST comprising of CGST and SGST. IGST
would be applied instead of SGST for interstate transactions. Input credit of all these taxes will be available
against all the respective outputs. For successful implementation of GST, it is necessary that the
Government
at both
central and state levels, agree to merge all their taxes into CGST/SGST. Further, the base for taxation for
both has to be the same. The exemptions, abatements etc. under GST need to be common for both
central and all states avoid litigation. Further to exemptions/exclusions should be minimum to avoid break of
credit chain.

It Provide for single point compliances, absence of multistate audits etc. for the assesses. Conceptually GST
is expected to have numerous benefits like reduction in compliances in the long run since multiple taxes will
be replaced with one tax. It is expected to bring down prices and hence the inflation since it will remove the
impact of tax on tax and enable seamless credit. It is expected to generate revenue for the country as the tax
base will increase as the GST rate will be somewhere around 18% with both goods and services covered. It
is also expected to make exports from India competitive and India a preferred destination for foreign
investment since GST.

Further double taxation issues like taxing intermediary services, interchange income, correspondent bank
charges etc. needs to be addressed so that India is globally competitive. Issues around compliances need to
be clarified since going forward there is an apprehension of multistate compliances and so on.

Thus the research paper starts with the existing issues faced by the industry under service tax laws and based
on the available information in the public domain and the issues faced captures the issues which need to be
addressed from a financial industry perspective for GST. Further the paper has Analysed data collected from
research articles and information for global practices for similar issues and data collected through interview
and questionnaire from people in the field. Based on this analysis, the paper goes on to suggest changes or
requirements that GST should address from a financial service industry perspective.
 Why is GST important?

It is important because it managed to bring India under one tax umbrella, which led to international
confidence in Indian goods and services. It also made business incredibly easy to do within the country, as
enterprises now had one common taxation scheme under which they could operate.

In this guide, we will discuss all the aspects of GST, including how you can register for it and how to
calculate it. Let’s get started!

Meaning of GST

GST stands for Goods and Services Tax which came into effect on 1st July 2017. This is indirect taxation,
which an end consumer usually pays.

GST replaced many other indirect taxes such as excise duty, VAT, service tax, entry tax and luxury tax.

In brief, this tax is levied on the supply of goods and services. It is calculated on the value added to any
goods. Goods and Services Tax in India is a comprehensive, destination-based and multi-stage tax added on
every value addition.

Let's take a complete look into what these various terms mean, thereby understanding what GST is all about .

Comprehensive - GST covers every aspect of sale and purchase. It replaced various other taxes. It is called
comprehensive because it encompasses every aspect of commercial life.

Destination-based - GST is levied in a state where the product is sold rather than the state where it was
manufactured. For example, if these goods were produced in West Bengal and sold in Andhra Pradesh, the
GST will be levied and collected in Andhra Pradesh.

Multi-stage - In the production of any goods or services, there are usually plenty of stages. These stages
include the procurement of raw materials, production or manufacture, warehousing, selling to wholesalers,
retailers and finally, the end consumers. At every stage, GST is levied. This makes it a multi-valued tax.

Value addition - Let's take an example of textile production. First, raw materials such as cotton or silk are
taken and made into cloth. This increases the value of the raw materials. Then the fabric is designed into
clothes which further enhances their value. After the dresses are made, they are branded and sold to retailers
who advertise and market them, thereby increasing their value. GST is levied on each of these stages where
value is added to the product.
 Types of GST in India

There is a four-fold break-up of goods and services tax in India. It oversees the levy of tax for central
government GST, GST for states, union territories, and the integrated goods and services tax. You can check
out the details of these below.

Central Goods and Services Tax (CGST) - The central government levies a CGST on goods and services
transactions. It is levied along with the State Goods and Services Tax and the Union Territory Goods and
Services Tax. These are shared between the state and centre. For example, if you are a Mumbai-based trader
selling to another Mumbai-based trader for an amount of Rs. 50,000 with a GST calculated at 18%, then 9%
will go to the state's coffers, and the other 9% will go to the central government's coffers.

State Goods and Services Tax (SGST) - SGST or State Goods and Services Tax is calculated for intrastate
goods and services transactions. The State Government keeps all of this tax that is levied. This tax replaces
the other previous taxes such as VAT, octroi, luxury, entertainment and purchase tax.

Integrated Goods and Services Tax (IGST) - Integrated Goods and Services Tax is the tax that is levied
on service transactions and inter-state goods. It applies to exports and imports too. Both the state and the
central take their respective shares of the tax. SGST part of the tax goes to that state where the goods or
services are consumed.

Union Territory Goods and Services Tax (UTGST) - Union Territory Goods and Services Tax is the same
as State Goods and Services Tax except that it is levied in the Union Territories of the country rather than
the states. So expect to pay this tax in Pondicherry, Daman and Diu, etc.

Transaction New Regime Old Regime Revenue

Sale within the CGST+SGST VAT + Central Revenue will be shared

state Excise /Service equally between the Central
tax and the State.

Sales to IGST Central Sales There will only be one type

another State Tax of tax (central) in case of
+ intra- state sales. The Central
Excise/Tax will then share the IGST
revenue based on the
destination of goods.
 GST COUNCIL

As per Article 279A (1) of the amended Constitution, the GST Council has to be constituted by the President
within 60 days of the commencement of Article 279A. The notification for bringing into force Article 279A
with effect from 12th September, 2016 was issued on 10th September, 2016.

As per Article 279A of the amended Constitution, the GST Council which will be a joint forum of the Centre
and the States, shall consist of the following members: -

a) Union Finance Minister – Chairperson

b) The Union Minister of State, in-charge of Revenue of finance – Member

c) The Minister In-charge of finance or taxation or any other Minister nominated by each State
Government – Members

As per Article 279A (4), the Council will make recommendations to the Union and the States on important
issues related to GST, like the goods and services that may be subjected or exempted from GST, model GST
Laws, principles that govern Place of Supply, threshold limits, GST rates including the floor rates with
bands, special rates for raising additional resources during natural calamities/disasters, special provisions for
certain States, etc.

The Union Cabinet under the Chairmanship of Prime Minister Shri Narendra Modi approved setting up of
GST Council on 12th September, 2016 and also setting up its Secretariat as per the following details:

(a) Creation of the GST Council as per Article 279A of the amended Constitution

(b)Creation of the GST Council Secretariat, with its office at New Delhi;

(c) Appointment of the Secretary (Revenue) as the Ex-officio Secretary to the GST Council;

(d) Inclusion of the Chairperson, Central Board of Excise and Customs (CBEC), as a permanent invitee
(non- voting) to all proceedings of the GST Council;

(e) Create one post of Additional Secretary to the GST Council in the GST Council Secretariat (at the
level of Additional Secretary to the Government of India), and four posts of Commissioner in the GST
Council Secretariat (at the level of Joint Secretary to the Government of India). The Cabinet also decided to
provide for adequate funds for meeting the recurring and non-recurring expenses of the GST Council
Secretariat, the entire cost for which shall be borne by the Central Government. The GST Council Secretariat
shall be manned by officers taken on deputation from both the Central and State Governments.

□ GST Council Meetings

GST Council has met fifteen times since its constitution and some important decisions taken in the GST
Council meeting are:-
 ● Rules for conduct of business in GST

Council; Timetable for implementation of GST;

● The threshold limit for exemption from levy of GST would be Rs. 20 lakhs for the States except for
the Special Category States, as enumerated in Article 279A of the Constitution, for which it will be
Rs 10 Lakhs);
● The threshold for availing the Composition scheme would be Rs. 50 lakhs. Service providers and
some others would be kept out of the Composition Scheme;
● To compensate States for 5 years for loss of revenue due to implementation of GST, the base year
for the revenue of the State would be 2015-16 and a fixed growth rate of 14% will be applied to it;
● Approval of the Draft GST Rules on registration, payment, return, refund and invoice, valuation,
input tax credit, composition and transitional provisions.
● All entities exempted from payment of indirect tax under any existing tax incentive scheme would
pay tax in the GST regime and the decision to continue with any incentive scheme shall be with the
concerned State or Central government. In case, the State or Central Government decides to continue
with any existing exemption/incentive scheme; it will be administered by way of a reimbursement
mechanism.
● Adoption of four slabs tax rate structure of 5%, 12%, 18% and 28%. In addition, there would be a
category of exempt goods and further a cess would be levied on certain goods such as luxury cars,
aerated drinks, pan masala and tobacco products, over and above the rate of 28% for payment of
compensation to the states.
● GST rates on 1211 items were approved at the 14th GST Council meeting held at Srinagar on 18th
and 19th of May 2017.
● At the 15th GST Council meeting held at New Delhi on 3rd June 2017, tax rates on the remaining
goods were approved.
● 22 states, and 2 Union Territories with Legislatures (Delhi and Puducherry) have already passed their
respective State GST Bill in their State Assemblies.
● Issue of cross empowerment and administrative division of taxpayers between the States and Centre
has been resolved.

● The Central Goods and Services Tax bill, Integrated Goods and Services Tax bill, Union Territories
(without legislature) Goods and Services Tax bill and Goods and Services Tax (Compensation to
States) bill have been passed by the Lok Sabha on 29.03.2017 and by the Rajya Sabha on
06.04.2017.
 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 sale of goods. In case of inter-states sales, the Centre has the powers
to levy a tax (the Central Sales Tax) but, the tax is collected and retained entirely by the originating
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
exportations from India, the Centre levies and collects this tax in addition to the Basic Customs Duty.
This additional duty of customs (commonly known as CVD and SAD) counterbalance excise duty, sales
tax, State VAT and other taxes levied on the like domestic product. Introduction of GST required
amendments in the Constitution so as to empower the Centre and the States concurrently to levy and
collect GST.

The assignment of concurrent jurisdiction to the Centre and the States for the levy of GST required a
unique institutional mechanism that would ensure that decisions about the structure, design and operation
of GST are taken jointly by the two. To address all these and other issues, the Constitution (122nd
Amendment) Bill was introduced in the 16th Lok Sabha on 19.12.2014. The Bill provides for a levy of
GST on supply of all goods or services except alcohol for human consumption. The tax shall be levied as
Dual GST separately, but concurrently the Union (CGST) and the States (SGST). The Parliament would
have exclusive power to levy GST (IGST) on inter-state trade or commerce (including imports) in goods
and services. The Central Government will have the power to levy excise duty in addition to GST, on
tobacco and tobacco products.

The constitution Amendment Bill was passed by the Lok Sabha in May, 2015. The Bill with certain
amendments was finally passed in the Rajya Sabha and thereafter by the Lok Sabha in August, 2016.
Further, the Bill has been ratified by the required number of States and has since received the assent of
the President on 8th September,2016 and has been enacted as the 101st Constitution Amendment Act,
2016. The GST Council has also been notified w.e.f. 12th September,2016. GST Council is being assisted
by a Secretariat.

The Goods and Service Tax Council (hereinafter referred to as, “GSTC”) comprises of 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 matters. One-half of the total number of
members of GSTC form quorum in meetings of GSTC. Decision in GSTC are taken by a majority of not
less than
 three-fourth of weighted votes cast. Centre has one-third weightage of the total votes cast and all the states
taken together have two-third of weightage of the total votes cast.

All decisions taken by the GST Council has been arrived at through consensus. The option of exercising a
vote has not been resorted to till date.

To ensure smooth roll-out of the GST, various Committees and Sectoral groups has been
formed comprising of members from both Centre and States.

Salient features of GST

The salient features of GST are as under:

(i) GST is applicable on ‘supply’ of goods or services as against the present concept on the manufacture
of goods or on sale of goods or on provision of services.

(ii) GST is based on the principle of destination-based consumption taxation as against the present
principle of origin-based taxation.

(iii) It is a dual GST with the Centre and the States simultaneously levying tax on a common base. 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) An Integrated GST (IGST) would be levied an inter-state supply (including stock transfers) of goods
or services. This shall be levied and collected by the Government of India and such tax shall be apportioned
between the Union and the States in the manner as may be provided by Parliament by Law on the
recommendation of the GST Council.

(v) Import of goods or services would be treated as inter-state supplies and would be subject to IGST in
addition to the applicable customs duties.

(vi) CGST, SGST & IGST would be levied at rates to be mutually agreed upon by the Centre and the
States. The rates would be notified on the recommendation of the GST Council. In a recent meeting, the
GST Council has decided that GST would be levied at four rates viz. 5%, 12%, 16% and 28%. The schedule
or list of items

that would fall under each of these slabs has been worked out. In addition to these rates, a cess would be
imposed on “demerit” goods to raise resources for providing compensation to States as States may lose
revenue owing to the implementation of GST.
(vii) 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 surcharge in so far as they relate to supply of goods and services.

(viii) State taxes that would be subsumed within the GST are:

a) State VAT b) Central Sates Tax c) Purchase Tax d) Luxury Tax e) Entry Tax (All forms) f) Entertainment
Tax and Amusement Tax (except those levied by the local bodies) g) Taxes on advertisements h) Taxes on
lotteries, betting and gambling i) State cesses and surcharges in so far as they relate to supply of goods and
services.

(ix) GST would apply on all goods and services except Alcohol for human consumption.

(x) GST on five specified petroleum products (Crude, Petrol, Diesel, ATF & Natural Gas) would by
applicable from a date to be recommended by the GSTC.

(xi) Tobacco and tobacco products would be subject to GST. In addition, the Centre would have the
power to levy Central Excise duty on these products.

(xii) A common threshold exemption would apply to both CGST and SGST. Tax payers with an annual
turnover not exceeding Rs.20lakh (Rs.10 Lakh for special category States) would be exempt from GST. For
small taxpayers with an aggregate turnover in a financial year up to 50 lakhs, a composition scheme is
available. Under the scheme a taxpayer shall pay tax as a percentage of his turnover in a State during the
year without benefit of Input Tax Credit. This scheme will be optional.

(xiii) 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 well as across States as far as possible.

(xiv) Exports would be zero-rated supplies. Thus, goods or services that are exported would not suffer
input taxes or taxes on finished products.

(xv) Credit of CGST paid on inputs may be used only for paying CGST on the output and the credit of
SGST paid on inputs may be used only for paying SGST. Input Tax Credit (ITC) of CGST cannot be used
for payment of SGST and vice versa. In other words, the two streams of Input Tax Credit (ITC) cannot be
cross-utilised, except in specified circumstances of inter-state supplies for payment of IGST. The credit
would be permitted to be utilised in the following manner:
a) ITC of CGST allowed for payment of CGST & IGST in that order; b) ITC of SGST allowed for payment
of SGST & IGST in that order; c) ITC of IGST allowed for payment of IGST, CGST & SGST in that order.

(xvi) Accounts would be settled periodically between the Centre and the States to ensure that the credit of
SGST used for payment of IGST is transferred by the Exporting State to the Centre. Similarly, IGST used
for payment of SGST would be transferred by the Centre to the Importing State. Further, the SGST portion
of IGST collected on B2C supplies would also be transferred by the Centre to the destination State. The
transfer of funds would be carried out on the basis of information contained in the returns filed by the
taxpayers.

(xvii) The laws, regulations and procedures for levy and collection of CGST and SGST would be
harmonized to the extent possible.

The whole GST system will be backed by a robust IT system. In this regard, Goods and Services Tax
Network (GSTN) has been set up by the Government. It will provide front end services and will also
develop back end IT modules for States who opted for the same.

India of Background Indirect Taxes in India

Broadly there are two types of taxes - 'Direct taxes and indirect taxes'. Direct taxes are called as such
because they are a tax on income earned by an individual/entity and are directly paid by the individual/entity
earning the income to the government. Thus the entity or individual earning income pays tax on its taxable
income determined as per the provisions of law to the Government. The slab rates of the income tax are
progressive i.e. they increase with the increase in income. Hence direct taxes are considered as progressive
since they rise with a rise in income and are directly proportional to the income. However, in the case of
indirect taxes, these are imbedded in the costs of goods and services (like excise, customs duty, service tax
etc.) and are collected by the seller/provider of such goods/services from the final consumer of the
goods/services and paid to the government. Thus though the tax is borne by the consumer, it is paid to the
government by the seller of goods or provider of services. Hence the tax is an indirect tax borne by one and
paid by another. Further these taxes being included in the cost of the product, are paid by all irrespective of
the income level. Hence indirect taxes are considered as regressive in nature. Excise duty, customs duty,
Central Sales Tax, Value Added Tax, Luxury Tax, Entertainment tax, Service Tax etc. are the various types
of indirect taxes.

Historically in India, indirect taxes were applicable only on goods and there were various indirect
taxes operating in India. The main ones were Customs duty on imports, excise duty on manufacture and
Sales Tax on sale of goods which later became Value Added Tax or VAT. Thus goods which were tangible
in nature were covered under the indirect tax net. Further, there was no concept of availability of input tax
credit or ITC set off against the output tax liability other than under excise i.e. in the form of Cen vat
credit
on manufacture of goods. Thus the cost of goods sold was higher due to tax being charged on tax. Further for
interstate
movement of goods, Central Sales Tax or CST is charged. CST is payable to the state where the transaction
originates. It is paid by the buyer of the goods in the destination state. This is contrary to the model of IGST
proposed in the coming GST where the IGST is payable to the destination state and not the origination state.

GST Tax Laws before

In the earlier indirect tax regime, there were many indirect taxes levied by both the state and the centre.
States mainly collected taxes in the form of Value Added Tax (VAT). Every state had a different set of rules
and regulations.

Inter-state sale of goods was taxed by the centre. CST (Central State Tax) was applicable in case of inter-
state sale of goods. The indirect taxes such as the entertainment tax, octroi and local tax were levied together
by state and centre. These led to a lot of overlapping of taxes levied by both the state and the centre.

For example, when goods were manufactured and sold, excise duty was charged by the centre. Over and
above the excise duty, VAT was also charged by the state. It led to a tax on tax effect, also known as the
cascading effect of taxes.

The following is the list of indirect taxes in the pre-GST regime:

Central Excise Duty

Duties of Excise Additional

Duties of Excise

Additional Duties of Customs

Special Additional Duty of Customs

Cess

State VAT Central

Sales Tax

Purchase Tax

Luxury Tax

Entertainment Tax

Entry Tax

Taxes on advertisements

Taxes on lotteries, betting, and gambling

CGST, SGST, and IGST have replaced all the above taxes.

However, certain taxes such as the GST levied for the inter-state purchase at a concessional rate of 2% by the
issue and utilisation of ‘Form C’ is still prevalent.

It applies to certain non-GST goods such as:

Petroleum crude;

High-speed
diesel

Motor spirit (commonly known as petrol);

Natural gas;

Aviation turbine fuel; and

Alcoholic liquor for human consumption.

It applies to the following transactions only:

Resale

Use in manufacturing or processing

Use in certain sectors such as the telecommunication network, mining, the generation or distribution of
electricity or any other power sector
 The Journey of GST in India

2000: In India, the idea of adopting GST was first suggested by the Atal Bihari Vajpayee Government in
2000. The state finance ministers formed an Empowered Committee (EC) to create a structure for GST,
based on their experience in designing State VAT. Representatives from the Centre and states were
requested to examine various aspects of the GST proposal and create reports on the thresholds, exemptions,
taxation of inter-state supplies, and taxation of services. The committee was headed by Asim Dasgupta, the
finance minister of West Bengal. Dasgupta chaired the committee till 2011.

2004: A task force that was headed by Vijay L. Kelkar the advisor to the finance ministry, indicated that the
existing tax structure had many issues that would be mitigated by the GST system.

February 2005: The finance minister, P. Chidambaram, said that the medium-to-long term goal of the
government was to implement a uniform GST structure across the country, covering the whole production-
distribution chain. This was discussed in the budget session for the financial year 2005-06.

February 2006: The finance minister set 1 April 2010 as the GST introduction date.

November 2006: Parthasarthy Shome, the advisor to P. Chidambaram, mentioned that states will have to
prepare and make reforms for the upcoming GST regime.

February 2007: The 1 April 2010 deadline for GST implementation was retained in the union budget for
2007-08.

February 2008: At the union budget session for 2008-09, the finance minister confirmed that considerable
progress was being made in the preparation of the roadmap for GST. The targeted timeline for the
implementation was confirmed to be 1 April 2010.

July 2009: Pranab Mukherjee, the new finance minister of India, announced the basic skeleton of the GST
system. The 1 April 2010 deadline was being followed then as well.

November 2009: The EC that was headed by Asim Dasgupta put forth the First Discussion Paper (FDP),
describing the proposed GST regime. The paper was expected to start a debate that would generate further
inputs from stakeholders.

February 2010: The government introduced the mission-mode project that laid the foundation for GST.
This project, with a budgetary outlay of Rs1,133 crore, computerised commercial taxes in states. Following
this, the implementation of GST was pushed by one year.
March 2011: The government led by the Congress party puts forth the Constitution (115th Amendment) Bill
for the introduction of GST. Following protest by the opposition party, the Bill was sent to a standing
committee for a detailed examination.

June 2012: The standing committee starts discussion on the Bill. Opposition parties raise concerns over the
279B clause that offers additional powers to the Centre over the GST dispute authority.

November 2012: P. Chidambaram and the finance ministers of states hold meetings and set the deadline for
resolution of issues as 31 December 2012.

February 2013: The finance minister, during the budget session, announces that the government will provide
Rs.9,000 crore as compensation to states. He also appeals to the state finance ministers to work in
association with the government for the implementation of the indirect tax reform.

August 2013: The report created by the standing committee is submitted to the parliament. The panel
approves the regulation with few amendments to the provisions for the tax structure and the mechanism of
resolution.

October 2013: The state of Gujarat opposes the Bill, as it would have to bear a loss of Rs.14,000 crore per
annum, owing to the destination-based taxation rule.

May 2014: The Constitution Amendment Bill lapses. This is the same year that Narendra Modi was voted
into power at the Centre.

December 2014: India's new finance minister, Arun Jaitley, submits the Constitution (122nd Amendment)
Bill, 2014 in the parliament. The opposition demanded that the Bill be sent for discussion to the standing
committee.

February 2015: Jaitley, in his budget speech, indicated that the government is looking to implement the
GST system by 1 April 2016.

May 2015: The Lok Sabha passes the Constitution Amendment Bill. Jaitley also announced that petroleum
would be kept out of the ambit of GST for the time being.

August 2015: The Bill is not passed in the Rajya Sabha. Jaitley mentions that the disruption had no specific
cause.

March 2016: Jaitley says that he is in agreement with the Congress's demand for the GST rate not to be set
above 18%. But he is not inclined to fix the rate at 18%. In the future if the Government, in an unforeseen
emergency, is required to raise the tax rate, it would have to take the permission of the parliament. So, a
fixed rate of tax is ruled out.

June 2016: The Ministry of Finance releases the draft model law on GST to the public, expecting
suggestions and views.
August 2016: The Congress-led opposition finally agrees to the Government's proposal on the four broad
amendments to the Bill. The Bill was passed in the Rajya Sabha.

September 2016: The Honourable President of India gives his consent for the Constitution Amendment Bill
to become an Act.

2017: Four Bills related to GST become Act, following approval in the parliament and the President's assent:

Central GST Bill

Integrated GST Bill

Union Territory GST Bill

GST (Compensation to States) Bill

The GST Council also finalised on the GST rates and GST rules. The Government declares that the GST
Bill will be applicable from 1 July 2017, following a short delay that is attributed to legal issues.

Objectives Of GST

To achieve the ideology of ‘One Nation, One Tax’

GST has replaced multiple indirect taxes, which were existing under the previous tax regime. The advantage
of having one single tax means every state follows the same rate for a particular product or service. Tax
administration is easier with the Central Government deciding the rates and policies. Common laws can be
introduced, such as e-way bills for goods transport and e-invoicing for transaction reporting. Tax compliance
is also better as taxpayers are not bogged down with multiple return forms and deadlines. Overall, it’s a
unified system of indirect tax compliance.

To subsume a majority of the indirect taxes in India

India had several erstwhile indirect taxes such as service tax, Value Added Tax (VAT), Central Excise, etc.,
which used to be levied at multiple supply chain stages. Some taxes were governed by the states and some
by the Centre. There was no unified and centralised tax on both goods and services. Hence, GST was
introduced. Under GST, all the major indirect taxes were subsumed into one. It has greatly reduced the
compliance burden on taxpayers and eased tax administration for the government.

To eliminate the cascading effect of taxes

One of the primary objectives of GST was to remove the cascading effect of taxes. Previously, due to
different indirect tax laws, taxpayers could not set off the tax credits of one tax against the other. For
example, the excise duties paid during manufacture could not be set off against the VAT payable during the
sale. This led to a cascading effect of taxes. Under GST, the tax levy is only on the net value added at
each
stage of the
supply chain. This has helped eliminate the cascading effect of taxes and contributed to the seamless flow of
input tax credits across both goods and services.

To curb tax evasion

GST laws in India are far more stringent compared to any of the erstwhile indirect tax laws. Under GST,
taxpayers can claim an input tax credit only on invoices uploaded by their respective suppliers. This way, the
chances of claiming input tax credits on fake invoices are minimal. The introduction of e-invoicing has
further reinforced this objective. Also, due to GST being a nationwide tax and having a centralised
surveillance system, the clampdown on defaulters is quicker and far more efficient. Hence, GST has curbed
tax evasion and minimised tax fraud from taking place to a large extent.

To increase the taxpayer base

GST has helped in widening the tax base in India. Previously, each of the tax laws had a different threshold
limit for registration based on turnover. As GST is a consolidated tax levied on both goods and services
both, it has increased tax-registered businesses. Besides, the stricter laws surrounding input tax credits have
helped bring certain unorganised sectors under the tax net. For example, the construction industry in India.

Online procedures for ease of doing business

Previously, taxpayers faced a lot of hardships dealing with different tax authorities under each tax law.
Besides, while return filing was online, most of the assessment and refund procedures took place offline.
Now, GST procedures are carried out almost entirely online. Everything is done with a click of a button,
from registration to return filing to refunds to e-way bill generation. It has contributed to the overall ease of
doing business in India and simplified taxpayer compliance to a massive extent. The government also plans
to introduce a centralised portal soon for all indirect tax compliance such as e-invoicing, e-way bills and
GST return filing.

An improved logistics and distribution system

A single indirect tax system reduces the need for multiple documentation for the supply of goods. GST
minimises transportation cycle times, improves supply chain and turnaround time, and leads to warehouse
consolidation, among other benefits. With the e-way bill system under GST, the removal of interstate
checkpoints is most beneficial to the sector in improving transit and destination efficiency. Ultimately, it
helps in cutting down the high logistics and warehousing costs.

To promote competitive pricing and increase consumption

Introducing GST has also led to an increase in consumption and indirect tax revenues. Due to the cascading
effect of taxes under the previous regime, the prices of goods in India were higher than in global markets.
Even between states, the lower VAT rates in certain states led to an imbalance of purchases in these states.
Having uniform GST rates have contributed to overall competitive pricing across India and on the global
front.
This has hence increased consumption and led to higher revenues, which has been another important
objective achieved.

Registration under GST

Registration of an assessee or a ‘taxable person’ is the starting point in any tax law. It is the most
fundamental requirement of identification of the business for tax purposes and monitoring compliance
requirements.

CGST Act provides for registration of every supplier effecting the taxable supplies. Every supplier having
aggregate turnover exceeding ₹ 20 lakh in the financial year is required to be registered. This threshold limit
of ₹ 20 lakh is reduced to ₹ 10 lakh in cases of supplies effected in the States of Himachal Pradesh,
Uttarakhand, Manipur, Arunachal Pradesh, Assam, Jammu & Kashmir, Meghalaya, Mizoram, Nagaland,
Sikkim, and Tripura. For calculating the threshold limit, supply of goods by a registered Job-worker after
completing job-work, shall be treated as the supply of goods by the "principal" and shall not be included in
the aggregate turnover of the registered job-worker.

Registration, under GST, is a State-wise requirement which means a person making supplies in every State
is required to be separately registered in that State once the threshold limit is crossed taking to account
supplies from all States. Such a person making taxable supplies from different places in the State will be
required to
take one registration in the State, except in case of business verticals in which case multiple registrations are
permitted within a State. If a taxpayer supplies from different places in the State, he has to opt for one place
as “principal place of business” and mention all other places in the State as “additional place of business” at
the time of obtaining registration. The application for registration will have to be made within 30 days from
the date the liability of registration arises.

A business vertical means a distinguishable component of an enterprise that is engaged in the supply of
individual goods or services or a group of related goods or services which is subject to risks and returns that
are different from those of the other business verticals and for this purpose the following factors shall be
considered:

● The nature of the goods or services;

● The nature of the production processes;
● The type or class of customers for the goods or services;
● The methods used for distribution of goods or supply of services; and
● The nature of regulatory environment (wherever applicable), including banking, insurance, or
public utilities.

All the existing taxpayers (under Excise, VAT or Service Tax) are not eligible for threshold limit
exemptions. They have to compulsorily migrate and obtain provisional registration from GSTN before the
appointed day, irrespective of the fact that their turnover is less than threshold limit specified in the GST
Law. However, such taxpayers can opt out from the provisional registration if their supplies are not covered
under GST or they are within the threshold limit.
Aggregate turnover is defined to mean the aggregate value of all taxable supplies, exempt supplies, export of
goods or services or both and inter-State supplies made by the person having same Permanent Account
Number to be computed on the all India basis. However, Central Tax (CGST), State Tax (SGST), Union
Territory Tax (UTGST), Integrated Tax (IGST) and Cess are not to be included in such supplies. Further,
value of inward supplies on which tax is payable on reverse charge basis is also to be excluded. A Special
Economic Zone unit or developer shall make a separate application for registration as a business vertical
distinct from its other units located outside the Special Economic Zone.

A casual taxable person or a non-resident taxable person shall have to apply for the registration at least 5
days prior to the commencement of business. A casual taxable person is one who occasionally undertakes
transaction involving supply of goods for services or both in the course or furtherance of business in a State
or Union Territory where he does not have fixed place of business. A non-resident taxable person is one who
occasionally undertakes transaction involving supply of goods for services or both in the course or
furtherance of business but not having fixed place of business or residence in India.

CANCELLATION OF REGISTRATION

A registration granted can be cancelled by the proper officer either on his own or on application of the
registered person when —
 ● The business is discontinued, transferred fully for any reason including death of
proprietor, amalgamation with other legal entity, demerged or otherwise disposed of, or
● There is any change in the constitution of the business, or

The taxable person is no longer liable to be registered.

Registration may be cancelled retrospectively if the proper officer so deems fit in any of the following
situations after giving the person an opportunity of being heard:

Registered person has contravened such provisions of the Act or Rules;

Person paying tax under Composition Scheme has not furnished returns for 3 consecutive tax periods;

Any taxable person has not furnished returns for a continuous period of 6 months;

Person who has taken voluntary registration has not commenced business within 6 months from the date of
registration;

Registration has been obtained by means of fraud, wilful misstatement or suppression of facts.

As such, cancellation of registration shall not affect the liability of the taxable person to pay tax and other
dues under the Act for any period prior to the date of cancellation whether or not such tax and other dues are
determined before or after the date of cancellation.

Where the registration is cancelled, the registered taxable person shall pay an amount equivalent to the credit
of input tax in respect of inputs held in stock and inputs contained in semi- finished or finished goods held in
stock on the day immediately preceding the date of such cancellation or the output tax payable on such
goods, whichever is higher. The payment can be made by way of debit in the electronic credit or electronic
cash ledger.

In case of capital goods, the taxable person shall pay an amount equal to the input tax credit taken on the
said capital goods reduced by the percentage points (to be prescribed) or the tax on the transaction value of
such capital goods whichever is higher.

REVOCATION OF CANCELLATION OF REGISTRATION

Any registered taxable person, whose registration is cancelled, may apply to proper officer for revocation
of cancellation of the registration within thirty days from the date of service of the cancellation order.

The proper officer shall not reject the application for revocation of cancellation of registration without giving
a show cause notice and without giving the person a reasonable opportunity of being heard.
 Input Tax credit(ITC)

● What is input credit?

Taxpayers who are covered in GST Act. can avail input credit. Input tax refers to the mechanism whereby
you can get tax deductions that you have paid on the inputs at the time when you are paying the tax on the
output. Input tax credit or ITC enables businesses to reduce the tax liability as it makes a sale by claiming
the credit depending on how much GST was paid on the business’s purchases.

For example, let us say you manufacture a product and the tax payable on output is Rs. 1500 while the tax
paid on input is Rs. 1000. The input credit is Rs. 1000 and so you are only required to deposit Rs. 500 in
taxes. This is because the final product is Rs. 1500 while your purchases are Rs. 1000

❖ What is ITC eligibility?

As per the SGST and CGST Act, a taxable person who is registered as per the GST Act and is paying the tax
due is eligible to claim ITC. There are certain conditions in place for him. He must have a tax invoice or
debit note that has been issued by the supplier. He should have paid input tax or tax in cash as defined in
section 41 of the GST Act. It is mandatory that he receives either both goods or services or one of them.
Another condition is that he should have filed for returns as per section 39 of the GST Act.

❖ How to claim input credit under GST?

You must be eligible for input credit tax before you can claim it. It is important to note that you can avail the
input credit only if the supplier has deposited the tax which has been collected from you during the
transaction that took place between you two. That is, the verification process of the input credit is mandatory
before you can claim ITC. Also, the suppliers have to be GST compliant in order for you to claim input
credit.

You can claim a refund when the tax on the sale is lesser than the tax on the purchase. In such cases, there is
often unclaimed input credit. In this case, you have an additional option of carrying it forward. You can
claim the input tax credit on capital goods. However, you cannot claim input credit on all purchases. For
example, input tax cannot be availed when you buy goods and services for your personal use. You cannot
claim input credit if the purchase invoice is older than one year in most cases.
 What are the New Compliances Under GST?

Apart from online filing of the GST returns, the GST regime has introduced several new systems along with
it.

E-Way Bills

An e-Way bill is an electronic document required for the movement of goods worth more than Rs. 50,000
(or an equivalent amount) from one place to another within India. It was introduced under the Goods and
Services Tax (GST) regime to simplify the movement of goods and curb tax evasion.

The e-Way bill contains details such as the consignor and consignee's name and address, the goods'
description and value, the vehicle number in which the goods are being transported, and the GSTIN (Goods
and Services Tax Identification Number) of the parties involved in the transaction.

The e-Way bill needs to be generated by the registered supplier or transporter of the goods before the
movement of the goods begins. It can be generated online through the e-Way bill portal or via SMS, mobile
app, and other modes.

The e-Way bill is valid for a specific period, depending on the distance that the goods need to travel. If the
goods do not reach their destination within the specified time, a new e-Way bill needs to be generated.
Failure to generate an e-Way bill or incorrect details in the e-Way bill can result in penalties and fines.

E-invoicing

E-invoicing is the process of electronically generating invoices and sharing them with the relevant parties. It
involves the creation, validation, and exchange of invoices in a structured digital format, which enables
seamless integration with the supplier's and the buyer's business systems.

In India, e-invoicing has been made mandatory for businesses with an annual turnover of Rs. 50 crore or
more from 1st October 2020. The objective of e-invoicing is to bring greater transparency and efficiency to
the invoicing process and to curb tax evasion. E-invoicing is integrated with the Goods and Services Tax
Network (GSTN), and the invoices generated through this process are automatically updated in the GST
returns.

Under the e-invoicing system, businesses need to generate invoices on their own ERP (Enterprise Resource
Planning) system or through an e-invoicing software provider (IRP) that is authorized by the government.
The e-invoice contains a unique Invoice Reference Number (IRN), which is generated by the GSTN, and a
QR code that contains the details of the invoice.
E-invoicing has several benefits, such as reducing errors and delays in the invoicing process, improving
compliance, and reducing the time and cost involved in the generation and processing of invoices.
 What is a compensation scheme in GST?

The Composition Scheme in GST (Goods and Services Tax) is a simplified tax payment scheme designed
for small taxpayers. Under this scheme, eligible taxpayers can pay a fixed percentage of their turnover as tax
instead of the regular GST rate, and they have to comply with fewer compliance requirements.

Here are some key features of the Composition Scheme in GST:

Eligibility: Taxpayers with an annual turnover of up to Rs. 1.5 crore can opt for the Composition Scheme.

Tax rate: Taxpayers under the Composition Scheme are required to pay a fixed percentage of their turnover
as tax. The tax rate varies depending on the type of business, and it ranges from 0.5% to 6%.

Input tax credit (ITC): Taxpayers under the Composition Scheme are not eligible to claim Input Tax
Credit (ITC) on their purchases.

Invoicing: Taxpayers under the Composition Scheme are not required to issue a tax invoice for every sale.
They can issue a bill of supply instead.

Compliance: Taxpayers under the Composition Scheme have to file quarterly returns instead of monthly
returns. They also have to file an annual return.

Validity: Taxpayers can opt for the Composition Scheme at the beginning of every financial year. Once they
opt for the scheme, they have to continue with it for the entire year.

Compensation scheme for retailers

The composition scheme for retailers is a tax payment mechanism introduced by the government to simplify
the tax payment process for small and medium-sized businesses. Under this scheme, eligible retailers can
pay a fixed percentage of their turnover as tax instead of paying the regular GST (Goods and Services Tax)
rate.

Here are some key features of the composition scheme for retailers:

Eligibility: Retailers with an annual turnover of up to Rs. 1.5 crore can opt for the composition scheme.

Tax rate: Retailers under the composition scheme are required to pay a fixed percentage of their turnover
as tax. The tax rate varies depending on the type of business, and it ranges from 0.5% to 6%.
Input tax credit: Retailers under the composition scheme are not eligible to claim input tax credit (ITC).
Invoicing: Retailers under the composition scheme are not required to issue a tax invoice for every sale. They
can issue a bill of supply instead.

Compliance: Retailers under the composition scheme have to file quarterly returns instead of monthly
returns.

Validity: Retailers can opt for the composition scheme at the beginning of every financial year. Once they
opt for the scheme, they have to continue with it for the entire year.

Benefits of GST In India

The implementation of GST (Goods and Services Tax) in India has brought about several benefits for
businesses and the economy as a whole. Here are some of the benefits of GST in India:

Simplified tax structure: GST has replaced a complex web of indirect taxes, such as excise duty, service
tax, and VAT, with a single tax. This has simplified the tax structure and reduced the compliance burden for
businesses.

Improved competitiveness: The implementation of GST has created a level playing field for businesses by
eliminating the cascading effect of taxes. This has made Indian goods and services more competitive in the
global market.

Increased tax revenue: GST has widened the tax base and increased tax revenue for the government. This
has enabled the government to invest in social welfare schemes and infrastructure development.

Easier compliance: GST has introduced a uniform tax return filing system across the country, making
compliance easier for businesses. This has reduced the administrative burden and compliance costs for
businesses.

Technology-driven tax system: GST is a technology-driven tax system, with the entire process of tax
payment, return filing, and refunds being done online. This has reduced the scope for corruption and
improved transparency in the tax system.

Boost to the economy: GST has had a positive impact on the economy, with businesses reporting increased
efficiency, reduction in logistics costs, and faster movement of goods across state borders. This has boosted
economic growth and created job opportunities.

Removal of Cascading Effect: GST allows for the set-off of taxes paid on purchases against taxes on sales,
reducing the cascading effect of taxes and lowering the overall tax burden.
Uniform Tax Rates: GST ensures that tax rates are uniform across the country, reducing tax differentials
between states and promoting inter-state trade.

Transparency and Accountability: The implementation of GST promotes transparency and accountability
in the tax system, reducing corruption and improving governance.

Ease of Doing Business: The implementation of GST has simplified the process of starting and running a
business in India, making it easier to do business in the country.

Consumer Benefits: GST reduces the overall tax burden on consumers, resulting in lower prices for goods
and services.

Impact of GST on Retail sector

Impact of GST on retail sector is going to be positive as it will take down total indirect taxes, increase
supply chain efficiently and facilitate unified input tax credit. After implementation of GST, state boundaries
will be applicable form taxation and documentation point of view. Waning state boundaries will
decrease the complexity for retailers and increase the circulation reach as well as efficiency.

The goods and services tax (GST) is one of the main tax reorganization that the country is about to witness.
Currently, goods are accountable to various taxes/duties such as countervailing duty (CVD), basic customs
duty (BCD), central excise duty on manufacture, special additional duty (SAD) on import, value-added tax
on intra-state sale, central sales tax on inter-state sale, entry tax on entry of goods into local area, etc. and
services are accountable to service tax. All of the above taxes and duties except BCD would be subsumed
under GST.

Good and Services Tax(GST) is a comprehensive tax lived on manufacture, sale and consumption of goods
and services at national level. Good and Services Tax (GST) is set to roll out in India with effect from April
1st, 2017. Indian retail industry is one of the fastest growing industry in the world.

GST will benefits 3 sectors the mostly: Retail and consumer companies, FMCG(Fast-moving consumer
goods (FMCG) or consumer packaged goods (CPG)) and logistics business. In the retail sector, its
implementation will mean a seamless integration of goods and services transaction across the states. It will
gives benefit the value chain of different stages.

GST would have significant impact on the way businesses operate and one of the sector which would be
significantly impacted by GST is the retail sector.

ERP implementation is driven by unique business goals and accent user training, education and involvement.
While system implementation, S3Infotech team experts will provides you help in well organizing and
planning, providing regular training, prototype functional and design areas of your business implementation
process changes and complete timely conversions and working closely with your key people, while
achieving the desired results.

The implementation of GST (Goods and Services Tax) has had a significant impact on retailers in

India. Here are some of the impacts of GST on retailers:

Increased compliance requirements: GST has increased the compliance requirements for retailers. They
are required to register for GST, maintain detailed records of all transactions, and file regular returns. This
has increased the administrative burden for retailers, particularly for small businesses.

Change in tax rates: Under the GST regime, tax rates for various products and services have changed, with
some items becoming more expensive and others becoming cheaper. Retailers need to ensure that they
charge the correct tax rate for each product they sell.

Input tax credit (ITC): GST allows retailers to claim input tax credit on all goods and services used in the
course of their business. This means that they can reduce their tax liability by claiming credit for the taxes
paid on inputs. However, retailers need to maintain proper documentation to claim ITC.

Improved logistics: GST has simplified the movement of goods across state borders, reducing the time and
cost of transportation. This has improved logistics for retailers, enabling them to reach new markets and
expand their businesses.

Increased competition: GST has created a level playing field for businesses by eliminating the cascading
effect of taxes. This has made Indian goods and services more competitive in the global market. Retailers
need to adapt to this increased competition and improve their efficiency to remain competitive.
Increased use of technology: GST is a technology-driven tax system, with the entire process of tax
payment, return filing, and refunds being done online. This has led to an increased use of technology among
retailers, with many of them adopting new software and systems to manage their tax compliance.

The implementation of the Goods and Services Tax (GST) in India has brought several benefits

for retailers. Here are some of the key benefits:

Simpler Taxation System: GST has simplified the taxation system for retailers by replacing multiple
indirect taxes with a single, unified tax. This has reduced the complexity of compliance and made it easier
for retailers to understand their tax obligations.

Reduction in Tax Burden: GST has eliminated the cascading effect of taxes, which means that taxes are
only levied on the value added at each stage of production and distribution. This has reduced the tax burden
on retailers and made their products more affordable.

Input Tax Credit: Retailers can claim input tax credit on the GST paid on their purchases. This reduces the
overall cost of goods sold and increases profitability for retailers.

Increased Compliance: GST has increased compliance among retailers by making it mandatory to file
regular returns and maintain proper records. This has helped to bring more retailers into the formal economy
and reduce tax evasion.

Easier Inter-State Trade: GST has created a uniform tax structure across all states, making it easier for
retailers to trade across state borders. This has increased efficiency and reduced transaction costs for
retailers.

Reduction in Logistics Costs: GST has reduced logistics costs for retailers by eliminating the need for
multiple state-level permits and reducing transit times. This has helped to improve supply chain efficiency
and reduce costs for retailers.

Level Playing Field: GST has created a level playing field for retailers by eliminating the differential tax
treatment of goods and services. This has helped to create a more competitive business environment and
reduce distortions in the market.

Increased Digitalization: GST has encouraged the digitalization of retail transactions by making it
mandatory to issue electronic invoices and maintain digital records. This has helped to increase transparency
and reduce the use of cash in retail transactions.

Greater Input in Policy Making: GST has created a platform for retailers to provide feedback and
suggestions on policy matters related to taxation. This has helped to ensure that the views of retailers are
taken into account in the decision-making process.
Improved Customer Experience: GST has helped to improve the overall customer experience by reducing
the tax burden on retailers and making goods more affordable. This has helped to boost consumer demand
and increase sales for retailers.

The Goods and Services Tax (GST) has several advantages for retailers' businesses

Simplification of taxation: GST has simplified the tax structure by replacing multiple taxes such as VAT,
service tax, excise duty, and others with a single tax. This has made it easier for retailers to comply with the
tax laws and reduce the burden of multiple tax filings.

Input Tax Credit (ITC): Under GST, retailers can claim input tax credit for the tax paid on goods and
services used for business purposes. This means that retailers can reduce the tax liability by claiming credit
for the tax paid on inputs, such as raw materials, packaging, rent, and other services.

Reduced tax evasion: GST has introduced a robust IT infrastructure that tracks the entire supply chain and
transactions, making it difficult to evade taxes. This has created a level playing field for all retailers,
reducing the competitive advantage of those who previously evaded taxes.

Increased competitiveness: With the removal of cascading taxes and reduction in tax rates, retailers can
now offer products and services at a lower cost, making them more competitive in the market.

Streamlined supply chain: GST has streamlined the supply chain by removing the need for multiple check-
posts and state-level taxes, resulting in faster and more efficient movement of goods across the country. This
has reduced the transportation costs and time for retailers.

Increased Transparency: GST is a transparent tax system that allows retailers to track their input tax credit
and tax liability in real-time, enabling better financial planning and decision making.

Better Credit Access: GST compliance improves the creditworthiness of retailers, making it easier for them
to access credit from banks and other financial institutions.

The Goods and Services Tax (GST) has several Disadvantages for retailers' businesses

Increased Compliance Costs: GST compliance requires retailers to maintain detailed records of
transactions, file regular returns, and undertake regular audits. This adds to their compliance costs and
administrative burden.

Cash Flow Issues: The GST requires retailers to pay tax on their sales even before they have received
payment from customers. This can create cash flow issues for small retailers, especially during the initial
phase of GST implementation.
Increased Competition: GST eliminates the cascading effect of taxes by allowing retailers to claim input
tax credits on their purchases. This reduces the overall tax burden, which can increase competition in the
market, making it difficult for smaller retailers to survive.

IT System Upgrades: GST requires retailers to upgrade their IT systems to comply with the new tax
regime, which can be costly, especially for small and medium-sized businesses.

Increase in Prices: The GST replaces many existing taxes and duties, including excise duty and value-
added tax (VAT), which can lead to an increase in prices for consumers. This can negatively impact
retailers' sales and revenue.

Overall, the GST can create a challenging environment for retailers, particularly small businesses, who may
struggle to cope with the increased compliance costs and cash flow issues. However, it is also worth noting
that the GST has several advantages, such as simplifying the tax system and reducing tax evasion, which can
benefit retailers in the long run.

Key features of GST (Goods and Services Tax) on retailers:

Registration: Retailers with an annual turnover of more than Rs. 20 lakhs (Rs. 10 lakhs for northeastern
states) are required to register for GST. They can register under the composition scheme, which is available
for small retailers with an annual turnover of up to Rs. 1.5 crore.

Input Tax Credit (ITC): Retailers can claim input tax credit on the GST paid on their purchases of goods
and services used for business purposes, which can be used to offset their output tax liability.

GST Invoice: Retailers are required to issue a GST invoice for all their sales, which includes details such as
the GSTIN (Goods and Services Tax Identification Number) of the retailer and the buyer, the value of goods
and services, and the GST charged.

GST Returns: Retailers are required to file regular GST returns, which includes details such as sales,
purchases, input tax credit claimed, and output tax liability.

Composition Scheme: The composition scheme is available for small retailers with an annual turnover of
up to Rs. 1.5 crore. Retailers under the composition scheme are required to pay a lower GST rate and file
quarterly returns.

Reverse Charge Mechanism (RCM): Under RCM, the liability to pay GST on certain supplies is shifted
from the supplier to the recipient. Retailers are required to pay GST under RCM for purchases from
unregistered dealers and certain other supplies.
Place of Supply: GST is levied based on the place of supply of goods and services.
Retailers must determine the place of supply based on the nature of the transaction and
the location of the supplier and the recipient.

E-commerce: E-commerce operators are required to collect and remit GST on behalf of
their sellers. Retailers selling goods through e-commerce platforms must ensure that their
GSTIN is updated on the platform.

GST Council: The GST Council is a constitutional body that decides the GST rates,
exemptions, and other policy matters related to GST. Retailers must keep themselves
updated with the decisions of the GST Council.

GST Audit: Retailers with an annual turnover of more than Rs. 2 crores are required to
undergo a GST audit by a chartered accountant or a cost accountant. The audit is
conducted to verify the accuracy of the GST returns filed by the retailer.