(Submitted for the Degree of B.

Com Honours in Accounting & Finance /

Marketing/ .... Under the University of Calcutta)

AREA OF Topic of the Study.

“GOODS & SERVICE TAX (GST)”

Title of the Project

“THE STUDY OF GST STRUCTURE”

Submitted by

Name of the Candidate: MEHWISH FATEMA

C U Registration No: 011-1211-0309-21
C U Roll No: 211011-11-0017

Supervised by

Name of the Supervisor: PALLOVI MALAKAR

Name of the College: ACHARYA JAGADISH CHANDRA BOSE COLLAGE

Month & Year of Submission

May, 2024

Page | 1

HASAN AJC.pdf Page 1 of 32

 ACKNOWLEDGEMENT

“GST-The New Era of Taxation

System.”

PRINCIPAL DR.PURNA CHANDRA MAITY

HOD, SUPRATIM DEY

Supervisor, PALLOVI MALAKAR

Page | 2

HASAN AJC.pdf Page 2 of 32

 Supervisor's Certificate
This is to certify that Miss. MEHWISH FATEMA a student of B.COM Honours in Accounting
& Finance of ACHARYA JAGADISH CHANDRA BOSE COLLAGE under the University
of Calcutta has worked under my supervision and guidance for his Project Work and prepared a Project
Report with the title “GOODS AND SERVICE TAX (GST)”.
The project report, which he is submitting, is his genuine and original work to the best of my knowledge.

Signature:
Place: Name: PALLOVI MALAKAR
Designation: PROFESSOR
Date: Name of the College: ACHARYA JAGADISH CHANDRA
BOSE COLLAGE

Annexure- II

Student's Declaration

I hereby declare that the Project Work with the title “GOODS AND SERVICE TAX (GST)”.
Submitted by me for the partial fulfillment of the degree of B.COM Honours in Accounting &
Finance under the University of Calcutta is my original work and has not been submitted earlier
to any other University/Institution for the fulfilment of the requirement for any course of study.

I also declare that no chapter of this manuscript in whole or in part has been incorporated in
this report from any earlier work done by others or by me. However, extracts of any literature
which has been used for this report has been duly acknowledged providing details of such
literature in the references.
Signature:

Place: Name: MEHWISH FATEMA

Date:
Address: 57/B, TILJALA ROAD.

C U Registration No: 011-1211-0309-21

C U Roll No: 211011-21-0017

Page | 3

HASAN AJC.pdf Page 3 of 32

 TABLE OF CONTENT/INDEX
CHAPTERS TOPICS PAGE NO.

Acknowledgement 2

Supervisor’s Certificate 3

Student’s Declaration 3

Background

Justification of the study

Objectives of the Study

Research Methodology
CHAPTER -1
5-8
INTRODUCTION Limitations of the Study

Chapter Planning

Definition

Applicability And Mechanism of GST

Salient Features Of GST Of Model

GST-Overview,registration & Returns

CHAPTER-2 Opportunities
CONCEPTUAL 9-20
FRAMEWORK Benefits OF GST Implication

Present Taxes To Be Subsumed

Needs Of Goods And Services Tax [GST]

GST Analysis & Opinions

CHAPETR-3
PRESENTATION AND
Impacts Of GST On Automobiles Industry 21-31
DATA ANALYSIS

Global Experience Of GST Findings

Conclusion
CHAPTER-4
CONCLUSION AND 32
RECOMMENTATIONS Recommendation

CHAPTERS-5
Bibliography 33
BIBLIOGRAPHY

Page | 4

HASAN AJC.pdf Page 4 of 32

 INTRODUCTION

Introduction of the Value Added Tax (VAT) At the Central and the state level has been
considered to be a major step -an important step forward in the globe of indirect tax reforms in
India. If the VAT is a major improvement over the preexisting Central excise duty at the national
level and the sales tax system at the state level, then the goods and services tax(GST) will
indeed be an additional important perfection -the next logical step-towards a widespread
indirect tax reforms in the country. Initially, it was conceptualized that there would be a
national level goods and services tax, however, with the release of first discussion paper by the
Empowered Committee of the State Finance Ministers on 10.11.2009, it has been made clear
that there would be a "Dual GST" in India, taxation power-both by the center and the state to
levy the taxes on the Goods and Services. Almost 150 countries have introduced GST in some
from. While countries such as Singapore and New Zealand tax virtually everything at a single
rate, Indonesia has five positive rates, a zero rate and over 30 categories of exemptions. In
China, GST applies only to goods and the provision of repairs, replacement and processing
services. Under the GST scheme, no distinction is made between goods and services for levying
tax. In other words, goods and services attract the some rate of tax. GST is a multi-tier tax
where ultimate burden of tax fall on the consumer of goods/services. It is called as Value
Added
Tax because at every stage, tax is being paid on the Value addition. Under the GST scheme, a
person who was liable to pay tax on his output, whether the provision of service or sale of
goods, is entitled to get input tax credit (ITC) on the tax paid on its inputs.

The introduction of GST at the Central level will not only include comprehensively more
indirect Central taxes and integrate goods and service taxes for the Purpose of set-off
relief, but may also lead to revenue gain tor the center through widening of the dealer
base by capturing value addition in the distributive trade and increased compliance. In the
GST, both cascading effects of CENVAT and service tax are removed with set-off, and a
constant chain of set-off from the original producers point and Service provider's point up
to the retailer's level is established which reduces the burden of all cascading effects. This
is the real meaning of
Page | 6

HASAN AJC.pdf Page 5 of 32

 GST, and this is why GST is not simply VAT plus service tax but an improvement over the
previous system of VAT and disjointed service tax. Moreover, with the introduction of GST,
burden of central sales tax (CST) will also be removed. The GST at the state level is
therefore, justified for-
 Additional power of levy of taxation of services for the states
 System of comprehensive set-off relief

 To understand the meaning of Goods and Services Tax(GST)

 To obtain a true insight of GST
 To analyze the impact of GST over Gross Domestic Product (GDP) To
 make a comparative study of GST and other Taxes in India.

Before we proceed with the finer nuances of proposed Indian GST, let us first understand the
basic concept of GST. GST is a value added tax levied on manufacture, sale and consumption
of goods and services. GST offers comprehensive and continues chain of tax credits from the
producer's point/service provider's point up to the retailer's level/consumer's level thereby
texting only the Value Added at each stage of supply chain. The supplier at each stage is
permitted to avail credit of GST paid on the purchase of goods and/or Services and can set off
this credit against GST payable on the supply of goods and/or Services to be made by him.
Thus, only the final consumer bears the GST charged by last supplier in the supply chain, with
set-off benefits at all the previous stages. Since, only the Value Added at each stage is taxed
or
cascading of taxes under GST system. Further, GST does not differentiate between goods and
services and thus, the two are taxed at a single rate.

Our study has based on the basis of secondary data collected from various books, journals,
magazines, reports, newspapers, internet etc. We have also collected data from the source
of "Department of Revenue" and "Ministry of Finance". After analyzed with the help of
simple statistical tools. We have used lucid language to present the Data in a more
comprehensive manner. Finally some findings have been gathered to establish our
objectives.

Page | 7

HASAN AJC.pdf Page 6 of 32

 The study has some limitation on its scope and interpretation of the results. It covers only the
narrow concept of goods and service tax and not the whole, the present study has also the
following limitation:
 The first and most shortage of Time, in fact we have not sufficient time for in-depth analysis,
international comparison and other analysis of data. This has
indeed restricted our study to our mission.
 There are few common and unavoidable general problems in collecting
secondary data, which are required for our study.
 There was a problem of cost involved in earning out the project.

 INTRODUCTION
 CONCEPTURAL FRAMEWORK
 GLOBAL SCENARIO
 PRESENTATION OF DATA ANALYSIS
 CONCLUSION
 BIBLIOGRAPHY

Page | 8

HASAN AJC.pdf Page 7 of 32

 It has been long pending issue to streamline all the different types of indirect taxes and
implement a Single taxation" system. This system is called as goods and services tax (GST). The
main expectation from this system is to abolish all indirect taxes and only GST would be levied.
As the Name suggests, the GST will be levied both on Goods and Services.
GST is a tax that we need to pay on supply of Goods and Services. Any person, who is
providing or supplying goods and services, is liable to charge GST. GST is a consumption
based tax/levy. It is based on the "Destination Principal". GST was first introduced
during 2007-08 budget session. On 17th December 2014, the current union cabinet
ministry approved the proposal for introduction GST Constitutional Amendment bill. On
19th
December 2014, the bill was presented on GST in loksabha. The bill will be tabled and taken
up for discussion during the current budget session. The current central government is very
determining to implement GST Constitutional Amendment Bill.

Page | 9

HASAN AJC.pdf Page 8 of 32

 The GST is an indirect tax which means that the tax is passed on till the last stage where in it
is the Customer of the goods and services who bears the tax. This is the case even today for all
Indirect taxes but the difference under the GST is that with streamlining of the multiple taxes
the final cost to the customer will come out to be lower on the elimination of double charging
in the system.

GST SUPPLY CHAIN EXAMPLE (ASSUMING GST RATE @ 8%)

SUPPLY OF GOODS GST FLOW INPUT SALE GST
COST PRICE COLLECTED
(EX-GST) (EX-GST)
A weaver sells a fabric to a tailor The weaver pays GST 0 Rs 100 Rs 8
for Rs 108 per metre of Rs 8
The tailor sells a readymade The tailor pays GST Rs 100 Rs250 Rs 12
completed shirt to a retailer forof Rs 12 ( After input
Rs 270 tax claim. Weaver
claims tax credit for
Rs 8)
The retailer sells the readymade The retailer pays Rs 250 Rs 500 Rs 20
shirt in his showroom for Rs 540 GST of Rs 20
(After input tax
claim. Tailor claims
tax credit for Rs 12)
You purchase the shirt for Rs No Tax credit claim. NA NA Total : Rs 40
540 You pay entire GST
Rs 40 @8%

The current tax structure does not allow a business person to take tax credits. There is a lot of
chances that double taxation takes place at every step of supply chain. This may set to change
with the implementation of GST. Indian Government is opting for Dual system GST. This
system will have two components which will be known as
 Central Goods and Service Tax (CGST)
 State Goods and Service Tax (SGST)

The current taxes like Excise duties, service tax, custom duty etc will be merged under CGST.
The taxes like sales tax, entertainment tax, VAT and other state taxes will be included in SGST.

Page | 10

HASAN AJC.pdf Page 9 of 32

 2.3 SALIENT FEATURES OF THE GST MODEL
Salient features of the proposed model are as:
 The GST shall have two components: one levied by the center (referred to as central GST) and
the other levied by the states (referred to as state GST), Rate for central GST and the state GST
would be approved appropriately, reflecting revenue considerations and acceptability.
 The Central GST and the state GST would be applicable to all transactions of goods
and services made for a consideration except the exempted goods and services.
 The Central GST and state GST are to be paid to the accounts of the Central and the
states individually.
 Since the Central GST and the state GST are to be treated individually, taxes paid
against the Central GST shall be allowed to be taken as input tax credit (ITC) for the
Central GST and could be utilized only against the payment of central GST.
 Cross utilization of ITC between the Central GST and the state GST would not be
permitted except in the case of inter-state supply of goods and services.
 Ideally, the problem related to credit accumulation on account of refund of GST should
be avoided by both the Central and the states except in the cases such as exports,
purchase of capital goods, input tax at higher rate than output tax etc.

 INTRA STATE SUPPLY: CGST & SGST

 INTERSTATE: IGST = CGST+ SGST
 IMPORT FROM OUTSIDE INDIA: CUSTOM DUTY (CVD-SAD) & IGST

 GST is principally consumption/destination based tax

 Tax will be payable in the state in which goods and services are consumed.
 No declaration
 No check posts
 SGST will be kept same in all states. However, a price band may be given to states for SGST rates.
 CGST & IGST rates will be same all over India.
 IGST may be sum total of SGST & CGST i.e. IGST-SGST+CGST

Page | 11

HASAN AJC.pdf Page 10 of 32

  GST will be on basis of value Added Tax (VAT) concept VAT to
 avoid cascading effect of taxes
 ITC (set off) of CGST for CGST and IGST but not for SGST ITC
 (set off) of SGST and IGSST but not for CGST
 ITC (set off) of IGST, CGST and SGST in that order
 Credit on basis of Return like 26AS

SCHEDULE 1: LIST OE GOODS AT NIL RATE- Meat of bovine animals fresh or chilled
Natural Honey, Live sheep, Goats poultry etc.
SCHEDULE 2: LIST OE GOODS ATO259% RATES- Diamonds, precious metals,
Semi precious stones etc.
SCHEDULE 3: LIST OF GOODS AT 3% RATES-Silver, Gold, Platinum, Beans,
Coin, Imitation jewellery etc.
SCHEDULE 4: LIST OE GOODS AT 5% RATE- Vanilla, oats Soya beans, Olive
oil, Cane sugar, Cocoa beans, Pizza bread etc.
SCHEDULE 5: LIST OF GOODS AT 129% RATE- Beverages, contacting milk,
live horses, stream Cheese, Granite Blocks. Stream, Feeding bottles etc.
SCHEDULE 6: LIST OF G00DS AT 189% RATE- Kajal pencil sticks, hair oil,
toothpaste, Gum, Tall oil. Activated carbon, photographic plates & films etc.
SCHEDULE 7: LIST OE GOODS AT 280% RATE- Molasses, Chewing gum,
cocoa butter, pan masala etc.

 Taxable event is supply of goods and services being payable by the supplier at
the time of supply on a forward charge basis.

 In certain notified matters, liability of GST will be on recipient of goods and

services under a reverse charge mechanism.
 There is TDS & TCS mechanism under specified circumstances.

Page | 12

HASAN AJC.pdf Page 11 of 32

  Supply includes all forms of Goods and Services-
 Such as sales, transfer, barter, license, exchange, rental, lease or disposal made or agreed
to be made for a consideration by a person in the course of furtherance of business.
 Importation of Service where the same is not for a consideration and whether or not it is in
the course of furtherance of business.
 Schedule-I to schedule-IV describes what would be supply or supply of goods/Service or
would not be supply.
 Sale of under construction properties, temporary transfer of intellectual property right,
intangible property, works contracts, transfer of right to use any goods and development,
up graduation, customization of software would be supply of Service.
 Transactions between principal and agents are deemed to be suppliers.
 Supply of goods to job Worker would not be covered.
ELECTRONIC ERA TO COMMERCE:
 E-REGISTRATION
 E-PAYMMENT
 E-RETURN
WHO CAN OPT FOR COMPOSITION SCHEME:
A taxpayer whose turnover is below Rs. 1.5Crore can opt for composition scheme. In case of
North Eastern states and Himachal Pradesh, the limit is now Rs 75 1akh.
Turnover of all businesses registered with the same PAN should be taken into consideration to
calculate turnover.

 No input tax credit can be claimed by a dealer opting for composition scheme.
 The taxpayer cannot make any inter-state supply of goods.
 The dealer cannot supply GST exempted goods.
 Taxpayer has to pay tax at normal rates for transportations under reverse charge system.
 If a taxable person has different segments of businesses (Such as textile, electronic,
accessories, groceries etc.) under the same PAN, they must register all such businesses
under the scheme collectively or opt out of the scheme

Page | 13

HASAN AJC.pdf Page 12 of 32

  The taxpayer has to mention the words "Composition Taxable Person" on every notice or
signboard displayed prominently at their place of business.
 The taxpayer has to mention the words "composition taxable person" on every bill of supply
issued by him.
 Those supplying goods can provide services of up to Rs. 5 lakh

To opt for composition scheme a taxpayer has to file GST CMP-02 with the government. This
can be done online by logging into the GST portal.
This intimation should be given at the beginning of every financial year by a dealer wanting to
opt for composition scheme.

Following chart explains the rate of tax on turnover applicable for composition dealers:

A dealer is required to file a quarterly return GSTR-4 by 18th of the month after the end of the
quarter. Also, an annual return GSTR-9A has to be filled by 31st December of next financial
year.
Also, note that a dealer registered under composition scheme is not required to maintain
detailed records.

The following are the advantages of registering under composition scheme:

 Lesser compliance (returns, maintaining books of record, issuance of invoices)
 Limited tax liability High liquidity as taxes are at a lower rate.

Page | 14

HASAN AJC.pdf Page 13 of 32

 Let us now see the disadvantages of registering under GST Composition scheme:
 A limited territory of business. The dealer is barred from carrying out inter-state
transactions.
 No input tax credit available to composition dealers.
 The taxpayer will not be eligible to supply exempt goods or goods through an
ecommerce portal.

Advantages of registration:-
 Plays very important role in any tax statute.
 Determines jurisdiction of a particular authority.
 Unique identification.
 Link transactions.
 Proper accounting of input taxes paid.
 GST collection.
 Legally recognized as supplier of goods and services.
 Pass on the credit of taxes paid on the goods or Services supplied to purchase or
recipients.
 Without GST registration, a legal person can neither collect GST nor claim any input
tax credit of GST paid by him.
 Service compliances: Tax-Returns-Assessment or any communication.

 Taxpayers with an aggregate turnover of Rs. 20 lakhs would be exempted from tax.
For, North Indian states and Sikkim, the exemption would be Rs. 10 lakhs.
 Aggregate turnover shall include the aggregate value of all taxable and non-taxable/
non GST supplies, exempt/ nil-rated supplies and exports of goods and/ or Services
and
exclude taxes under GST.

This will be the major contribution of GST for the business and Commerce. At present, there
are different state level indirect tax levies that are compulsory one after another on the supply
chain till the time of its utilization.

Page | 15

HASAN AJC.pdf Page 14 of 32

 It is expected that the introduction of GST will increase the tax base but lowers down the tax
rates and also removes the multiple point. This will lead to higher amount of revenue to both
the states and the union.

If government works in an efficient mode, it may be also possible that a single registration and
single compliance will sufficient for both SGST and CGST provided government produces
effective IT infrastructure and integration of such infrastructure of states level with the union.

One of the great advantages that a taxpayer can expect from GST is elimination of multiplicity
of Taxation. The reduction in the number of Taxation applicable in a chain of transaction will
help to clean up the current mess that is brought by existing indirect tax laws. ONE-POINT
SINGLE TAX:
Another feature that GST must hold is it should be "one-point single Taxation". This also gives
a lot of comforts and confidence to business community that they would focus on business
rather than worrying about taxation that may crop at later stage.

 The tax structure will be made lean and simple.

 The entire Indian market will be a unified market which may translate into lower business
costs. It can facilitate seamless movement of goods across states and reduce the
transaction
 costs of business.
It is good for export oriented business. Because it is not applied for goods/Services which

 are exported out of India.

In the long run, the lower tax burden could translate into lower prices on goods and
consumer's.

The suppliers, manufacturers, wholesalers and retailers are able to recover GST incurred
on input costs as tax credits. This reduces the cost of doing business, thus enabling fairer
prices for consumer's.

Page | 16

HASAN AJC.pdf Page 15 of 32

  Every person who is registered under the pre-GST law (i.e Excise, VAT, Service tax etc.)
Needs to register under GST
 When a business which is registered has been transferred to someone, the transferee shall
take registration with effect from the date of transfer.
 Anyone who drives inter-state supply of goods**
 Casual taxable person
 Non-resident taxable person.
 Agents of a supplier.
 Those paying tax under the reverse charge mechanism.
 Input Service distributor.
 E-commerce operator or aggregator.
 Person supplying online information and database access or retrieval Services from a place
outside India to a person in India, other than a registered Taxable Person.

PAN is mandatory to apply for GST registration (except in case of non-resident).

The document/ details required to register for GST are:

Business can register for GST and obtain GSTIN free of cost.

However, GST registration is a tedious 11 step process which involves submission ofmany
Business details and scanned documents.
You can opt for clear tax goods and services tax (GST) Registration Services where a GST
expert will assist you end to end with GST registration.

Page | 17

HASAN AJC.pdf Page 16 of 32

 All business that successfully register under GST are assigned unique Goods and Services
Tax Identification Number also known as GSTIN.

There shall be separate invoice for taxable supplies called as tax invoice. For non-taxable goods
a bell shall be issued.

When invoice raise within time- Earliest of invoice raising

or recipient of payment.
Otherwise- Earliest of completion of service, receipt of payment or accounting in books.

2. Continuous supply of Services- when due date is ascertainable from contract,

the due
date else each time payment is received/ invoice issued, in case payment is linked to
completion of event.
3. Reverse Charges: Earliest of date of receipt of goods/Services, payment,
invoice,

Accounting in books.

PLACE OE SUPPLY:
FOR GOODS: Place where the goods are delivered except in case of Goods not involve
movement, assembled/ installed at site- location of goods.

Page | 18

HASAN AJC.pdf Page 17 of 32

 In case of a registered person- location of such registered person.
In case of a unregistered recipient- address the recipient and if it is not available, the location
of the supplier of Services.

Tax payable as per return shall be paid on or before the last date for filling the return, i.e. on or
before 20th of the next month in case of monthly return.

Payment of challah can be through internet banking through authorized banks or credit/ debit
card or over the counter payment (OTC) through authorized banks or payment through NEFT/
RTGS from any bank.
Payment by book adjustments would not be allowed.

Page | 19

HASAN AJC.pdf Page 18 of 32

 RETURN DUE DATE PERSONS REQUIRED TO FILE

GSTR-1 10TH Of Every Month All Registered Persons

TH
GSTR-2 15 Of Every Month All Registered Persons

GSTR-3 20TH Of Every Month All Registered Persons

18TH Of April, July, October and Persons Registered Under

GSTR-4
January Composition Scheme
20TH Of Every Month and Within 7 Non-Resident Taxable person
GSTR-5
Days After Expiry Of Registration
13TH Of Every Month
GSTR-6 Input service Distributors

Authorities Deducting Tax At

GSTR-7 10TH Of Every Month
Source
GSTR-8 10TH Of Every Month E-Commerce operators

GSTR-9 31st December of Next Financial year

Registered persons

GSTR-10 Within 3 Months Of Cancellation Of

Registered Person With Surrendered
GST Registration
Of Cancelled GST Registration

Every registered person shall be required to keep and maintain records of production, inward
and outward supplies, stock, input tax credit availed, tax payable and paid at least for 60
months.
AUDIT:
 Audit of all returns compulsorily.
 Around 70% state- 30% central.

 Refund may arise on account of

 Excess payment of tax due to mistake or inadvertence.
 Export of goods/Services.
 Finalization of provisional assessment.
 Refund of pre-deposit for filling appeal.
 Payment of duty/tax during investigation but no/ less liability arises at the time of
finalization of investigation/adjudication.

Page | 20

HASAN AJC.pdf Page 19 of 32

 CHAPTER-3
PRASENTATION AND DATA ANALYSIS

GST proposes to subsume the following indirect taxes currently levied by the central
government (CG) and the state government (SG).
 All goods and services are covered under GST except alcoholic liquor for human
consumption. Excise duty would be levied by the SGs on production and VAT WOuld
be levied by the SGs on sale of liquor for human consumption.

 5 petroleum products namely, petroleum crude, natural gas, motor spirit (petrol), high
speed diesel and aviation turbine fuel would be brought under GST from the date to be
notified on recommendation of GST council. These 5 petroleum products continue in the
union list of articles 246 of the constitution of India for excise duty & state list for VAT.
Other petroleum products like LPG, Naphtha, kerosene, fuel oil etc. Would be
covered under GST.
Page | 21

HASAN AJC.pdf Page 20 of 32

  Tobacco products are covered under GST and the CG is empowered to levy Excise duty
on the same over and above GST.

India has a 3-tier federal structure, compromising the union Government, the state government
and the urban / rural local bodies. The power to levy taxes and duties is distributed among the 3
tires of overnments, in accordance with the provisions of the India Constitution. Principal
indirect taxes levied India are listed.

TAX
TAX TAX LAW TAXABLE EVENT COLLECTION
AUTHORITY
Custom Duty Customs
AcT1962 Import/Export Central Govt.
Central Central Excise
Excise Duty Act 1944 Manufacture/Production Central Govt.
Central Sales Central Sales
Tax Tax Act 1956 Inter State Sale State Govt.
Service Tax Finance Act
Taxable Service 1994 Central Govt.
VAT Sales Within The
Sales VAT Act state State Govt.

GST has brought in “ine nation one tax” system, but its effect on various industries is slightly
different. The first level of differentiation will come in depending on whether the industries
deals with manufacturing, distributing and ratailing or is providing a service.

Page | 22

HASAN AJC.pdf Page 21 of 32

 GST ia a boost competitiveness and performance in india’s manufacturing sector declining
export and high infrastructure spending are just some of the concerns of the sector. Multiple
indirect taxes had also increase the administrative cost for manufactures and distributors
and with GST in place, the compliance burden has eased and this sector will grow more
strongly. But due to GST business which was not under the tax bracket previously will now
have to register. This will lead to lesser tax evasion.

As of March 2014, there was 12,76,861 service tax assesses in the country out of which only
the top 50 paid more than 50% of the tax collected nationwide. Most of the tax burden is
borne by domains such as it services, the insurance industry, business support services,
banking and financial services, etc. This pan-India business already worked in unified market,
and when she compliance burden becoming lesser. But they will have to separately register
every place of business in each state.

E-COMMERCE: The E-Commerce sector in India has been growing by leaps and
bounds. In many ways, GST will help the E-Commerce sectors continued growth, but
the long-term effects will be particularly interesting because the GST law specifically
proposes a tax collection at source (TCS) mechanism, which E-Commerce companies
are not to happy with. The current rate of TCS is at 1%.
TELECOMMUNICATION: In the telecom sector, prices will come down after
GST. Manufacturers will save on cost through efficient management of inventory and by consolidating
their warehouses. Handset manufacturers will find it easier to sell their equipmen as GST has negated
the need to set up state-specific entities, and transfer
stocks. This will also save on logistics costs.
TEXTILE: The Indian textile industry provides employment to a large number of
skilled and unskilled workers in the country. It contributes about 10% of the total annual
export, and this value is likely to increase under GST. GST WoUld affect the cotton
value chain of the textile industry which is chosen by most small medium enterprises
as it previously attracted zero central excise duty (under optional route).

Page | 23

HASAN AJC.pdf Page 22 of 32

 FMCG: The FMCG sector is experiencing significant savings in logistics and
distribution costs as the GST has eliminated the need for multiple sales depots.
AUTOMOBILES: The automobile industry in India is a vast business producing a
large number of cars annually, filled mostly by the huge population of the country.
Under the previous tax system, there were several taxes applicable. on this sector like
exercise, VAT, sales tax, road tax, motor vehicle tax, registration duty which will be
subsumed by GST.

The Indian auto industry is one of the largest in the world. The industry accounts for 7.1% of
the largest in the world. The industry accounts for 7.1% of the country's gross domestic
product (GDP). Almost 13% of the revenue from Central excise is from this sector and claims a
size 4.3% of total exports from India. Despite its contribution to the economy and growth
potential, this sector has been combating the hardship of high tax rates for substantially a long
period of time now with central excise duty ranging between 12.5% to 30% coupled with
introduction of multiple cases ant revenues whims and fancies, most recent being
infrastructure chess. Thus, introduction of GST shall be a breather for this sector wherein
taxes on vehicle are largely expected to be @ 18% in GST regime except for luxury cars where
the rate may go up to 28% plus cases. However, even this rate of taxation will be beneficial of
this industry. The article

focuses on the supply chain part of this industry that is the “automobile dealers”. Therefore,
this article examines the intricacies of GST on automobile dealers.

Services tax (ST) on services both as provider and also as receiver under reverse/joint charge.
Value added tax (VAT)/ central sales tax (CST) / on sale of vehicles/spares/Accessories.

Page | 24

HASAN AJC.pdf Page 23 of 32

 Currently, automobile dealers are not able to avail CENVAT Credit on the following indirect
taxes paid by them.
 CST paid on purchase of vehicle, Spares, consumables and accessories.
 Excise duty paid on purchase of vehicle, spares, consumable and accessories.
 NCCD, auto season infrastructures is paid on purchase of vehicle.
 CVD pet on any imported spares, accessories and consumable. SBC paid on input
services
 Reversal of proportionate CENVAT Credit of service tax due to trading activity

showroom rent, advertisement expenses etc.

In GST regime, all the above duties / taxes will get subsumed; therefore, dealers should be able
to avail the input tax credit of all its procurement of goods and services.

Since, all of the above taxes get subsumed in the GST; therefore the procurement cost to that
extent will come down as explained below:
 Since, IGST and cusses shall be fully available as credit in the GST regime, therefore they will
not form part of purchase cost and can be set off from output GST payable on
sale of the vehicle.
 Procurements are assumed to be in the course of inter-state. GST rates have been assumed
to be at such levels based on the various news reports and the reports issued
by various committees formed by the Ministry of Finance.

Page | 25

HASAN AJC.pdf Page 24 of 32

 As noted above, reduction in procurement Cost is substantial as cascading of taxes was just
adding to the cost in this sector.

Since, the procurement cost reduces in GST and if the benefit of the same is fully passed on to
the customer, then is leads to reduction in sale price of the vehicle as tabulated below:

Assuming that the sale prices at 5% mark up above the purchase price. It is seen from the
above calculation that overall reduction in the purchase cost of the per vehicle ranges from 16
% to 34% and if full benefit of such reduced prices is passed on to the end consumers then the
sale prices of vehicles can come down in the GST regime which will boost this sectors growth
and must have largely positive impact due to invasion of GST.

Following aspects will impact the working capital of the automobile dealers in the GST regime:

Transfer of vehicle / spares to other premises will be liable for GST if the transfer is in the
course of inter-state trade. Further, if there is separate dealership of a dealer and separate
GST registration number is obtained for each such dealership, then transfer of any goods or
services between such dealerships will also be liable for GST. This shall be block the
working capital

Page | 26

HASAN AJC.pdf Page 25 of 32

 as the taxes needs to be paid from own fund and collection of taxes will be at a later date only
when such / services evenly sold.

These coupons will be issued at the time of sale of the vehicle. As per the time of supply rule,
GST on such coupons needs to be paid immediately on the date of issue of such vouchers. As
per the policy of some manufacturers, the amounts in respect of such coupons will be
redeemed to the dealers only once the customer brings the vehicle for repair to the workshop.
Therefore, dealer should have to pay tax on such coupons immediately on its issue, but they
said taxes can be collected from the customers only when the vehicle comes for the repair
leading to unnecessary blocking of fund in taxes.
VEHICLE B00KING ADVANCE: It is quite common in this sector that the vehicles
will be booked in advance on payment of certain amount as token. Currently, VAT is not being
paid on such advances as the same is payable at the time of sale of vehicle. However, this
luxury of holding advances without payment of taxes is clipped in the GST regime and taxes
need to be paid on receipt of the booking advances also. Therefore, dealers either have to pay
taxes on the advances out of its pocket or collect Axis text even on the token advances.

Currently, it is very difficult for dealers to pay service tax on accrual basis on the following
incomes and thereby as a system of practice many dealers are paying service tax on receipt
basis.

As details of the commission will be provided by bankers/insurers at a later date with constant
changes involved. Therefore, generally dealers pay service tax on such receives only upon
receipt of commission.

Various commissions, incentives, reimbursements, warranty receipts etc. Are received from
manufacturer. Dealer does not pay taxes on this incomes on accrual basis as the same may
or may not get approved by the manufacturer at a later date. Therefore, currently Service tax
is paid on receipt basis only when the amount is credited by the manufacturer and is
reflected in the manufacturer's statement.
However, the luxury of paying taxes on receipt basis will not be accepted in the GST regime as
everything will be system driven. Therefore, dealers will have to either get it system
connected with the bankers and manufacturers immediately to ensure smooth transition into

Page | 27

HASAN AJC.pdf Page 26 of 32

 the GST regime or else it would have to take the brunt of taxes on its own due to fault of its
vendor.

Currently this sector is facing on the following areas

VALUATION IN SERVICING OF VEHICLE: Complexity in bifurcation of the material and labor
component is the servicing of vehicle has led to multiple disputes as both the Service tax and
sales tax authorities demanded taxes on a higher component.

Weather it is liable for VAT or Service tax has led to demand of taxes from both authorities
and thereby disputes.

Disputes were noted on Applicability of Service tax on various charges that are merely collected
pure agent such as temporary permanent Registrations etc.

It has been a matter of disputes at a various judicial forum as to whether the incentives
received by the automobile dealers from the manufacturer whether amounts to any "Service" to
be liable for Service tax. Such disputes would end in the GST regime as the tax base for both
CGST and SGST shall be same.

To transfer the existing credits in the GST regime, condition has been kept that such credit
must have been admissible in the GST regime Therefore, the dealers should be able to
transfer the following credits to the GST regime.

The same must be properly reflected in the last Service tax returns and documentation must be
in place to establish the same. Further. Service tax credit pertaining to cars, spares in stock can
also be availed.

Since, currently dealers are not availing the credit of excise duty & CVD. Therefore, they need to
ascertain the value of stock as on the appointed day and based on the availability of the invoice,
and credit can be availed. Further, even if proper excise invoice is not available with the dealers
still a percentage as prescribed can be taken as credit to transit its excise credit in the GST
regime.

Page | 28

HASAN AJC.pdf Page 27 of 32

 Similarly, if a dealer is not availing the credit of VAT/SAD Current due to restriction in the
state VAT law, then credit can be availed based on the ascertainment of stock as on
appointed day. However, if the credit of VAT is being currently availed then the same needs
to be properly reflected in the last VAT return to transfer such credits to the GST regime.

The same can't be availed subject to possession of appropriate documents for the same in
states where such set off is permissible.

Credit of some can be availed subject to possession of appropriate documents for the same in
states where such set-off is permissible.

Since a dealer will be able to take the credit of goods lying in stock, the tax cost would be
decrease. This additional benefits accruing to a dealer is expected to be passed on to the
end consumer by way of reduction in prices etc. A separate authority will be formed in the
GST regime to monitor the non-compliance of the anti-profiteering matters which could
have an adverse impact on the entire industry especially when the pricing is predefined by
the manufacturer. Therefore, it is imperative for the dealer to establish passing of the GST
benefits to its consumers. In this times of falling prices this may not be

Page | 29

HASAN AJC.pdf Page 28 of 32

 3.5 GLOBAL EXPERIENCE OF GST:

 GST is a window into business- indirect tax function more integrated into broader
 business focus (DATA).
 Comment by ATO office - "Sunshine is a great disinfectant".
 Integrity of business system (|BS) - the ATO risk and data integrity focus.
 Multiplier effect of incorrect transaction can lead to significant revenue risk.
Business going through change our especially at risk (staff changes, organizational
restructures etc.)
 New accounting software or significant upgrades- a risk and a window of opportunity.
 Regional/ Global GST/ VAT reporting requirements.
 Self-Assurance more is coming / light touch /3-year moratoriums-big ATO focus.

Page | 30

HASAN AJC.pdf Page 29 of 32

 CONCLUSION & RECOMMENDATIONS

While successfully completing this project, I have identified that GST drives for boosting up
economic growth of any country. GST is the most logical steps towards the comprehensive
indirect tax reform in our country since independence. GST is lovable on all supply of goods
and provision of services as well combination thereof. All sectors of economic whether the
industry, business including Govt.
Departments and service sector shall have to bear impact of GST. All six sense of
economy viz., Big, medium, small scale units, intermediaries, importers, exporters,
traders, professionals and consumers shall be directly affected by GST. One of the biggest
taxation reforms in India - Goods and Service Tax (GST) is all set to integrate state
economies and boost overall growth. GST bill create a single. Unified Indian market to
make the economy stronger. Experts say that GST 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. 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.

Besides various recommendations has come to my mind while doing this project.
 The proactive initiative if implemented properly, government can expect refund of
rupees thousand core.
 GST will simplify our indirect tax structure.
 Government should create more items under zero rated supplies rather than exempt rate
supplies.
 In order to settle the issue, the Govt. Need to play their role by put more efforts in
educating the public about tax.

Page | 31

HASAN AJC.pdf Page 30 of 32

 BIBLIOGRAPHY

This project has been done with the help of different books, magazines, journals and website
My supervisor has also suggested some suggestions. I visited many sites and followed many
journals like:-

 www.caclubindia.com
 www.moneycontrol.com
 www.ey.com
 www.hindustantimes.com
 www.wikipedia.org
 www.finmin.nic.in
 www.economictimes.indiatimes.com
 The Economic Times (News Paper)
 Student's journals of Institute of Chartered Accountants of India
 Monthly journals of Institute of Chartered Accountants of India
 All about GST- A Complete Guide to Model GST Law.

Page | 32

HASAN AJC.pdf Page 31 of 32

 Page | 33

HASAN AJC.pdf Page 32 of 32