A STUDY ON THE IMPACT OF GST ON DIFFERENT BUSINESS

SECTORS IN SAMBALPUR

SUBMITTED TO GANGADHAR MEHER UNIVERSITY

PAPER-DSE-IV
UG COMMERCE,SEM-VI
SUMBITTED BY
SURYAKANTA BARIK
ROLL NO-UBC21COM057

GUIDED BY
DR. SHYAMA CHARAN ACHARYA
PROFESSOR OF COMMERCE
SCHOOL OF COMMERCE
GANGADHAR MEHER
UNIVERSITY,AMRUTAVIHAR,SAMBALPUR 2024
 DECLARATION

I, SURYAKANTA BARIK, a student of B.com Semester-VI, school of commerce,

Gangadhar Meher University, Amruta Vihar, Do hereby declare that the project report entitled,
“A STUDY OF THE IMPACT OF GST ON DIFFERENT BUSINESS SECTOR IN
SAMBALPUR” submitted by me under the guidance of Shyama Charan Acharya, Professor,
School Of Commerce Gangadhar Meher University, Amruta Vihar, Sambalpur, Odisha For the
degree of bachelor of commerce is my original work and other’s ideas, contents and materials
used in the study have been duly cited and acknowledged. This project report has not been
published or submitted to any other university/ institution for award of any other degree. I have
taken of utmost care and diligence to make it error free and i will be extremely sorry if any
Erroneous information being found out in my work. I will be completely responsible of such
act. However, if any errors identified the same may kindly be intimated.

SIGNATURE OF SUPERVISOR SIGNATURE OF CANDIDATE

 CERTIFICATE

Dr. Shyama Charan Acharya

(Professor of Commerce)

School Of Commerce,
Gangadhar Meher University,
Amruta Vihar, Sambalpur,
Odisha-768004
 ACKNOWLOGEMENT

I express my deep sense of my gratitude to Dr. Shyama Charan Acharya

UG department of commerce Gangadhar Meher University for his constant
encouragement, inspiration, permission, valuable advice, consistent guidance and
enlightened direction in preparing the “A STUDY ON THE IMPACT OF GST
ON DIFFERENT BUSINESS SECTOR IN SAMBALPUR” I am highly thankful
to my esteemed faculty.

Lastly I would like to thanks my family and friends for their constant
and encouragement to complete my dissertation work.

SURYAKANTA BARIK
B.com UG-VI SEMESTER
UBC21COM-057
GANGADHAR MEHER UNIVERSITY
SAMBALPUR
 CONTENTS

CHAPTER 1: INTRODUCTION

1.1 INTODUCTION TO GST

1.2 SIGNIFICANCE/NEED OF GST
1.3 IMPACT OF GST ON DIFFERENT BUSINESS SECTOR
1.3.1 ON HOTEL BUSINESS
1.3.2
 INTRODUCTION
Goods and service tax (GST) was first devised by a German economist during the
18th century. He envisioned that sales tax on goods did not affect the cost of
manufacture or distribution as it is collected on the final price charged to the
consumer. Thus how many transactions the goods went through, the tax was always
be charged at a fixed percentage of the final price. France was the first country to
introduce this value-added tax system in the year 1954. With the replacement of state
sales taxes by value added tax (VAT) in 2005, India has witnessed many reforms in
indirect taxes over the past two decades. The Kelkar committee upon implementation
of the Fiscal Responsibility and Budget Management Act, 2003 had reported that
before GST although the Indian indirect taxation system was steadily progressing in
the way of VAT principles, but that indirect taxation system was suffering from many
problems. The tax base before GST implementation was spread between the centre
and the states. The Empowered Committee of State Finance Ministers in May 2007
constituted a Joint Working Group (JWG) in consultation with the central government
to recommend the model of GST. Later on, it sent a roadmap for GST in India along
with its recommendations in the form of a model to the central government. But due
to non-consensus between central and state governments in India, the proposal to
introduce this fiscal reform got so delayed. The introduction of GST in India on 1 July
2017, was a very significant step by the government in the field of indirect tax
reforms. The amalgamation of a large number of central and state taxes into a single
and uniform tax has helped in mitigating the cascading effect of taxes in a major way
and also paved the way for a common national market. GST is a comprehensive
value-added tax on supply of goods or services and is collected on value added at
every stage of sale and purchase in each supply chain. It is one indirect tax for the
whole nation, which is expected to make India one unified common market. It offers
continuous tax credits from the level of producer/service provider up to the level of
retailer and consumer, thereby taxing the value added at each level of the supply
chain. GST is levied on all transactions that happen in the entire manufacturing chain.
Before the implementation of GST, the centre would levy an excise duty on the
manufacture when a product was manufactured, and then the state used to levy VAT,
CST and other local taxes when the item was sold to the next stage in the value chain.
GST has subsumed all these indirect taxes. Under GST, at each stage, the supplier can
avail the credit of GST paid on the purchase of goods or services, and this credit can
be set off against the GST payable when the goods and services are supplied by him.
Thus, the final consumer bears the burden of the only that GST which is charged by
the last supplier in the supply chain. As the value added at each stage is taxed under
the GST regime, so there arises no situation of cascading of taxes. With the
implementation of GST in India, goods and services are taxed at a uniform scheme
using the following rates: 0%, 5%, 12%, 18%, and 28%. Special rates of 3% and
0.25% are also applicable on specific products like gold and rough precious and semi-
precious stones. Additionally, a cess is also levied on certain products like tobacco,
luxury cars, and carbonated drinks. Consumer goods and services under the GST
regime have been a matter of concern for the consumers. Although food products are
charged at 0%, but the tax burden on services has increased to 18% from 15%. The
biggest advantage of GST from the consumer’s point of view is regarding a reduction
in the overall burden of tax on goods. Introduction of GST in India is expected to
make Indian products more competitive in the domestic as well as international
market thus ensuring a positive impact on the economic growth. These economic
gains can only be achieved if the confidence amongst the people is enhanced and
important resources are made available to the entrepreneurs as per their needs (Dana,
2000). The manufacturing sector has always been a major economic driver for many
developing countries across the world. Even though India enjoys a favourable
geographic and demographic position, but it has not been successful in capitalising
this advantage. It is believed by the experts that there would be saving in taxes due to
fewer restrictions in taking setoff of taxes which is paid at various stages of
manufacture, thereby reducing the cost of goods/ services supplied. Before GST,
excise duty was charged on the event of manufacture of excisable goods and VAT on
the sale of goods. With the shift of taxable event from manufacture to supply of goods
under the GST regime, the valuation of goods has now been simplified. Under GST,
the actual value received in the form of consideration for the supply of goods is
charged to GST with some exceptions. The impact of GST on the wholesaler or
retailer has now been limited to the value addition. The tax paid at previous stages
(except CGST and SGST of other states) can be used to set off for payment of GST
on supplies. Therefore traders now have to buy/receive supplies with an invoice. This
is the biggest step by the government to prevent the practice of black money. India is
the world’s largest hub of sourcing for the information technology (IT) industry. This
industry currently employs about 10 million workforces which has led the economic
transformation of the country along with the altered perception of India throughout
the globe. India’s competitiveness in terms of cost of providing IT services is 3–4
times cheaper than the US. GST on IT sector attract 18% tax on software services
provided by software companies. The cost of such services has increased under the
GST regime. In the same way, the telecommunication services are chargeable at 18%
GST. The construction sector, including real estate, has had an effective tax outgo of
11% to 18% in the old taxation system. These rates varied by nature of the contract,
the applicability of service tax on the services availed and goods used in construction.
Under GST, the entire works contract is chargeable at 18% tax rate. However, in spite
of higher rate of GST, this sector can gain by availing the input tax credit as per the
GST rules. It has been estimated by the industry experts that this comprehensive tax
on goods and services will increase gross domestic product (GDP) growth by 0.9 to
1.7%. It is a rational tax system which would lead to lesser disruptions in the
economy and would also ensure more efficient distribution of resources within the
industry. To conclude the above, the implementation of GST will play a very
influential role in the growth of the nation.
 IMPACT OF GST ON DIFFERENT BUSINESS SECTOR IN
SAMBALPUR
1. MAA SARASWATI PUSTAK BHANDAR

Legal Name of Business

PRAVASINI MOHAPATRA
Trade Name
MAA SARASWATI PUSTAK BHANDAR
Effective Date of registration
03/08/2017
Constitution of Business
Proprietorship
GSTIN / UIN Status
Active
Taxpayer Type
Regular
Administrative Office

 (JURISDICTION - STATE)
 State - Odisha
 Range - Sambalpur
 Circle - Sambalpur - I Circle

Other Office

 (JURISDICTION - CENTER)
 Commissionerate - ROURKELA
 Division - SAMBALPUR DIVISION
 Range - SAMBALPUR-I RANGE

Principal Place of Business

PLOT NO 733/343, A-12, BUDHARAJA HIGH SCHOOL, BUDHARAJA, SAMBALPUR,
Sambalpur, Odisha, 768004
Whether Aadhaar Authenticated?
No
Whether e-KYC Verified?
No
Additional Trade Name
NONE

Nature Of Core Business Activity

Trader - Retailer

Nature of Business Activities

 1. Retail Business

Dealing In Goods and Services

GOODS SERVICES
HSN DESCRIPTION HSN DESCRIPTION
4901 PRINTED BOOKS,
BROCHURES,
LEAFLETS AND
SIMILAR PRINTED
MATTER,
WHETHER OR NOT
IN SINGLE SHEETS
4280 REGISTERS,
ACCOUNT BOOKS,
NOTE BOOKS,
ORDER BOOKS,
RECEIPT BOOKS,
LETTER PADS,
MEMORANDUM
PADS, DIARIES
AND SIMILAR
ARTICLES, EXCISE
BOOKS,
BLOTTING-PADS,
BINDERS
(LOOSELEAF OR
OTHER),
FOLDERS, FILE
COVERS,
MANIFOLD
BUSINESS FORMS,
INTERLEAVED
CARBON SETS
AND OTHER
ARTICLES OF
STATIONERY, OF
PAPER OR
PAPERBOARD;
ALBUMS FOR
SAMPLES OR FOR
COLLECTIONS
AND BOOK
COVERS, OF
PAPER OR
PAPERBOARD
 9608 BALL POINT PENS;
FELT TIPPED AND
OTHER
POROUSTIPPED
PENS AND
MARKERS;
FOUNTAIN PENS;
STYLOGRAPH
PENS AND OTHER
PENS;
DUPLICATING
STYLOS;
PROPELLING OR
SLIDING PENCILS;
PEN HOLDERS,
PENCIL HOLDERS
AND SIMILAR
HOLDERS; PARTS
(INCLUDING CAPS
AND CLIPS) OF
THE FOREGOING
ARTICLES, OTHER
THAN THOSE OF
HEADING 9609

GST RATE FOR STATIONERY PRODUCT

GST on stationery items was revised at the 47th GST Council meeting. These include items
such as pencil sharpeners, paper knives, and printing, writing, or drawing ink, whose GST
rates were hiked to 18% from 12% to correct the inverted tax structure. There were some
exemptions granted as well to apply from 18th July 2022. Pencil sharperners underwent rate
cut at the 49th GST Council meeting too. Below, we elaborate on the current structure of
GST on stationery items.

GST RATE ON STATIONERY ITEMS AND HSN CODES

The applicability of GST on stationery in India differs across stationery items. Moreover, the

47th GST Council raises the GST rates on some stationery items, such as pencil sharpeners,

paper knives, knives with cutting blades, printing, writing, or drawing ink, paper for aseptic

packing, and drawing and marking out instruments, from 12% to 18%. Whereas, the pencil

sharpeners saw a rate cut later on at the 49th GST Council meeting held on 18th
February 2023 from 18% to 12%, restoring the original rate.
While most stationery items, including pens and paper, fall under chapter 96 of the HSN

code, some exceptions exist. Slates, slate pencils, and chalk sticks are exempt from GST.

Below, we tabulate the applicable rates of GST on stationery items listed under chapter

96 after the changes made by the 47th GST Council meeting went into effect, along with

their HSN codes.

Product GST Rate HSN Code

Slate pencils and chalk 9609

NIL
sticks

Slates 9610 00 00
NIL

Slate pencils and chalk 9609

NIL
sticks

Postage or revenue 5% 9704

stamps, first-day
covers, stamp-
postmarks, postal
stationery (stamped
paper), whether or not
used, other than those
under heading 4907

Pencils (including 12% 9608, 9609

propelling or sliding
pencils), drawing
charcoals, crayons,
pastels, and tailor’s
chalk

Brushes, prepared 18% 9603 [Except 9603 10

knots and tufts for 00]
brush making, paint
pads, and rollers
(excluding brushes,
which are made by
tying together of twigs
or vegetable materials,
irrespective of whether
or not they have
handles)

Ballpoint pens, felt- 18% 9608

tipped, and other
porous-tipped pens,
fountain pens,
stylograph pens,
markers, and other
pens, pens, pencils
and other similar
holders, duplicating
stylos, parts like caps
and clips of the
preceding articles,
excluding those under
heading 9609

Boards, with writing or 9610 00 00

18%
drawing surface,
framed or otherwise

Typewriter/similar 18% 9612

ribbons, utilised for
giving impressions,
irrespective of whether
on spools or in
cartridges and ink-
pads, with or without a
box, inked or
otherwise.

Monopods, tripods, 18% 9620 00 00

bipods, and similar
articles
 Date, numbering, or 18% 9611
sealing stamps, and
the like (including
printing or embossing
label devices),
designed for operating
in hand, hand-
operated composing
sticks, and hand
printing sets which
hold such composing
sticks

2. OM SAINATH MEDICAL STORE

Legal Name of Business

KAMALESH KUMARI PARIDA
Trade Name
OM SAINATH MEDICAL STORE
Effective Date of registration
01/07/2017
Constitution of Business
Proprietorship
GSTIN / UIN Status
Active
Taxpayer Type
Regular
Administrative Office

 (JURISDICTION - STATE)
 State - Odisha
 Range - Sambalpur
 Circle - Sambalpur - I Circle
Other Office

 (JURISDICTION - CENTER)
 Commissionerate - ROURKELA
 Division - SAMBALPUR DIVISION
 Range - SAMBALPUR-I RANGE

Principal Place of Business

AINTHAPALI, ADARSH MARG, AINTHAPALI, BUDHARAJA, BUDHARAJA, Sambalpur,
Odisha, 768004
Whether Aadhaar Authenticated?
No
Whether e-KYC Verified?
No
Additional Trade Name
NONE

Nature Of Core Business Activity

NA
Nature of Business Activities

 1. Retail Business
 2. Office / Sale Office

Dealing In Goods and Services

Goods Services
Goods Description Description
HSN

30061010 PHARMACEUTICAL
GOODS SPECIFIED IN
NOTE 4 TO THIS
CHAPTER STERILE
SURGICAL CATGUT,
SIMILAR STERILE
SUTURE MATERIALS
(INCLUDING STERILE
ABSORBABALE
SURGICAL OR DENTAL
YARNS)AND STERILE
TISSUE ADHESIVES FOR
SURGICAL WOUND
CLOSURE; STERILE
LAMINARIA AND
STERILE LAMINARIA
TENTS; STERILE
98041000 LAMINARIA AND
STERILE LAMINARIA
TENTS; STERILE
ABSORBABLE SURGICAL
OR DENTAL
HAEMOSTATICS;STERILE
SURGICAL OR DENTAL
ADHESION BARRIERS,
WHETHER OR NOT
ABSORBABLE:STERILE
SURGICAL CATGUT,
SIMILAR STERILE
SUTURE MATERIALS
(INCLUDING STERILE
ABSORBABALE
SURGICAL OR DENTAL
YARNS)AND STERILE
TISSUE ADHESIVES FOR
SURGICAL WOUND
CLOSURE

GST Rate on Medicines and Other Pharmaceuticals

The GST levy on pharmaceutical products can range between different tax rates, i.e. Nil, 5%,
12% and 18%. The lowest rate typically applies to life-saving drugs and vaccines, whereas
the 18% rate applies to products such as nicotine gum.

NIL GST Rate on Medicines and Medical Goods

 Human blood and its components by products used in medicine

 All kinds of contraceptives

 Sanitary napkins or tampons

5% GST Rate on Medicines and Medical Goods

The following are some of the medical products on which 5% GST is levied.
This list is not exhaustive.

 Animal or human blood vaccines

 Insulin

 Oral rehydration salts

 Diagnostic kits for detection of all types of hepatitis

 Desferrioxamine injection or deferiprone

 Cyclosporin

 Medicaments used in biochemic systems and not bearing a brand name

 Drugs or medicines including their salts and esters and diagnostic test kits, specified in

List 1 of the central excise notification 12/2012 such as Dopamine, Penicillamine,

Influenza Vaccine, Protamine, BCG vaccine, amongst 200+ other specified drugs

 Formulations manufactured from bulk drugs specified in List 2 of the central excise

notification 12/2012 such as Streptomycin, Pyrazinamide, Hydrocortisone, Quinine,

amongst 20+ other specified drugs

 Artificial kidneys

 Disposable sterilized dialyzer or micro barrier of artificial kidney

 Artificial limbs

 Orthopaedic appliances that include crutches, surgical belts and trusses; splints and

other fracture appliances; artificial parts of the body

 Parts of wheelchairs, tricycles, braillers, crutches, walking frames, etc.

 Assistive devices, rehabilitation aids and other goods for disabled, specified in List

3 of the central excise notification 12/2012 such as braille writers and braille writing

instruments, canes, electronic aids like the sonic guides, braille paper, artificial

electronic ears (cochlear implants), amongst 20+ other specified goods

 Coronary stents/stent systems for use with cardiac catheters

 Ostomy Appliances

 Milk food for babies

 COVID-19 diagnostic test kits

12% GST Rate on Medicines and Medical Goods

The following are some of the medical products on which 12% GST is levied. This list is not

exhaustive.

 Animal blood for therapeutic, prophylactic or diagnostic uses

 Antisera and other blood fractions and modified immunological products

 Toxins, cultures of microorganisms (excluding yeasts) and similar products

 Medicaments comprising two or more constituents which have been mixed together for

therapeutic or prophylactic uses (excluding goods under headings 30.02, 30.05 and

30.06), not in measured doses or forms or packings for retail sale. This includes

ayurvedic, homoeopathic, unani, siddha, or biochemic systems medicaments.

 Medicaments (excluding goods under headings 30.02, 30.05 and 30.06) comprising

mixed or unmixed products for therapeutic or prophylactic uses, in measured doses or

forms or packings for retail sale. This includes ayurvedic, homoeopathic, unani, siddha,
or biochemic systems medicaments.
 Wadding, bandages, gauze, and similar articles, impregnated or coated with

pharmaceutical substances, for retail sale for surgical, medical, dental or veterinary

purposes.

 Pharmaceutical goods specified in Note 4 such as sterile surgical catgut, sterile tissue

adhesives for surgical wound closure, sterile laminaria and sterile laminaria tents, etc.

 Tooth powder

 Feeding bottles and nipples of feeding bottles

 Surgical rubber gloves or medical examination rubber gloves

 Instruments and appliances used in surgical, medical, dental or veterinary sciences.

This includes scintigraphic apparatus and other electro-medical apparatus and sight-

testing instruments.

 Mechano-therapy appliances; psychological aptitude-testing apparatus; massage

apparatus; ozone therapy, oxygen therapy, artificial respiration or other therapeutic

respiration apparatus, and aerosol therapy apparatus.

 Breathing appliances and gas masks, excluding protective masks having neither

replaceable filters nor mechanical parts.

 Photographic film and plates for x-rays for medical use

 X-ray machines, and other similar apparatus used for surgical, medical, dental or

veterinary uses.

 Other drugs and medicines intended for personal use

 Enzymes and prepared enzymes

 Contact lenses; spectacle lenses and corrective spectacles

 Glands and other organs used for organo-therapeutic use, and extracts of glands or
other organs or of their secretions for the same purpose
 Diabetic foods

 Blood glucose monitoring system (glucometer) and test strips

 Medical grade oxygen, medical grade hydrogen peroxide, etc.

18% GST Rate on Medicines and Medical Goods

The following are some of the medical products on which 18% GST is levied. This list is not

exhaustive.

 Products for oral or transdermal application or application otherwise containing

nicotine and intended to assist tobacco use cessation

 Hygienic or pharmaceutical articles such as teats, hot water bottles, Ice bags, etc.

 Preparations for oral or dental hygiene and dental floss, sold in individual retail

packages

 Surgical, medical, dental or veterinary furniture such as operating tables, hospital beds,

examination tables, etc., with mechanical fittings; dentists' chairs; barbers' chairs, etc.

 Razors and razor blades

 Organic surface-active products and preparations for washing the skin, whether or not

containing soap

 Infrared thermometers, pyrometers, barometers, psychrometers and hygrometers.

Impact of GST on medicines

Medicines fall under Chapter 30 and are liable for excise duty at 6% on 65% of MRP when

supplied by a pharmaceutical company. Some medicines were exempt from excise duty.

Certain area-based excise duty exemptions were also available. The inputs required for

manufacturing attracted 12.5% excise duty. Due to this inverted duty structure, there was an

accumulation of CENVAT credit. Additionally, VAT at 4% was charged on the sale of

medicines by producers and pharmacies.

The table below illustrates the change in the price of medicines pre and post GST:

Particulars Pre-GST (Rs) Post GST (Rs)

Cost of manufacturing of 100 100
one pack of XYZ tablets (A)
3.9 —

Excise duty at 6% on 65%

of MRP (B)

[((A)*65%)/106]*6%

VAT at 4% (On A+B) 4.16

GST at 12% —

5/12

Final sale price 108.06 105/112

The average price of medicine remains almost the same in comparing scenarios before GST
and upon implementing GST.
Some of the other impacts on the price of medicines post implementation of GST are:

Reduction in the overall cost of technology – Under the previous regime, the healthcare

sector’s machinery was very costly. Also, the duty charged on the same was not allowed as a

tax credit. However, under GST, the IGST component will be allowed as a tax credit.

Improvisation of operational efficiency – Previously, the pharmaceutical industry attracted

eight different types of taxes. But, GST has merged all these taxes into one, thereby removing

the cascading impact of many taxes. GST will also rationalise the supply chain, thereby
improving operational efficiency.