INTERNSHIP REPORT

“A STUDY ON MONTHLY GST COMPLIANCE AT GS TEAM & CO ”.

SUBMITTED IN PARALLEL TO THE REQUIREMENTS OF BACHELOR OF

COMMERCE DEGREE, BANGALORE UNIVERSITY.

BY

Manoj Gowda C
Reg No:- U03CK21C0018

Under the Guidance of

Dr. Murali Krishna
Assistant Professor

DAYANANDA SAGAR EVENING COLLEGE OF ARTS & COMMERCE

2021-24
 CERTIFICATE

TO WHOMSOEVER IT MAY CONCERN

This is to certify that Mr. Manoj Gowda C has completed Internship in our
organization from 11th January, 2024 to 20th February, 2024. During the time of his
tenure, he has learned Tally, GST monthly returns filing and we also found him
extremely resourceful in all the work that he is competent.

We found him to be a good team player besides being a hard worker. We wish him all
success for his future endeavors.

SL No RATING SCALE CRITERIA MARKS (10)

1 Responsibilities Handled 2
2 Regular to work 1.5
3 Attitude 1.5
4 Professional competence 2
5 Interpersonal skill/Willingness to learn 1.5
TOTAL 8.5

Yours truly,

GURURAO SARADESHPANDE SHUBHA GURURAO SARADESHPANDE

PARTNER PARTNER
 DAYANANDA SAGAR EVENING COLLEGE
OF ARTS AND COMMERCE
(Affiliated to Bangalore University)

LETTER OF GUIDE

Certified that the dissertation titled “A STUDY ON MONTHLY GST COMPLIANCE” at “GS
TEAM & CO” is based on an original project study conducted by Mr. Manoj Gowda C, under my
guidance. He has attended the required guidance sessions held. This project report has not formed a
basis for the award for degree of Bachelor of Commerce of Bangalore University.

Dr. Murali Krishna

Assistant Professor

Shavige Malleshwara Hills, Kumaraswamy Layout, Bangalore – 560111.

Phone: +91 8042161762 / 26661104 Fax: 26660789 Website:
www.dayanandasagar.edu.
 STUDENT DECLARATION

I, Manoj Gowda C, hereby declare that this report entitled “A STUDY ON MONTHLY GST
COMPLIANCE” and Accounts Execution at “GS TEAM & CO” study conducted by me
during the summer vacation from 11-01-2024 to 20-02-2024 under the supervision and guidance
of Dr., Faculty of Dayananda Sagar Evening College of Arts & Commerce.

Date:

Place: Bengaluru Signature

Reg. No:- U03CK21C0018

 ACKNOWLEGDEMENT

The achievement and final outcome of this report required a lot of guidance and
assistance from many people, and it's my pleasure to have received their guidance till
the completion of my report.

 To begin with I would like to express my gratitude to Mr. GURURAO

SARADESHPANDE, GS Team & Co for giving me an opportunity to
do internship in your institution.
 I would like to express my sincere gratitude to Dr. Narendra
Karigowda, Principal of Dayananda Sagar Evening College of Arts &
Commerce for providing the opportunity to undertake an internship,
benefitted me to gain knowledge and exposure to world of business.
 I would like to thank Dr. Murali Krishna, College Faculty for mentoring and
advising me during my internship period.
 I am also thankful to my parents and friends for their continuous support
and to all the individuals who directly or indirectly contributed towards
completion of this report.
 INDEX

Sl. No. Topic Pages No.

Executive Summary

1 Chapter-1 Introduction & Organizational Profile 8-11

2 Chapter-2 Design of the Study 44-45

3 Chapter-3 Discussion 46-73

4 Chapter-4 Learning Outcomes 74-77

5 Bibliography 61

Annexures

Letter of Application to the Employer for Internship

Letter of Acceptance by Employer

Log sheets
EXECUTIVE SUMMARY

This internship report provides an in-depth analysis and practical insights into two significant
areas: Microsoft Excel proficiency and Goods and Services Tax (GST) implementation. The
internship focused on leveraging Excel for financial analysis and reporting, particularly in the
context of GST compliance and management.

The report begins by outlining the importance of Excel in business operations, emphasizing its
role in data organization, analysis, and visualization. Practical applications of Excel tools such
as pivot tables, data validation, and macros are explored in detail, showcasing how these
functionalities streamline financial tasks.
Furthermore, the report delves into the realm of GST, a pivotal aspect of contemporary
business taxation. It discusses the fundamentals of GST, including registration, compliance,
and return filing processes. Specific attention is given to using Excel for GST-related
calculations, invoice tracking, and generating GST reports.

Throughout the internship, hands-on experiences were gained in real-world scenarios, applying
Excel techniques to manage GST data efficiently. Challenges encountered during this process
are addressed, alongside proposed solutions and recommendations for improvement.

In conclusion, this report highlights the symbiotic relationship between Excel proficiency and
GST compliance. The skills acquired during this internship are not only essential for effective
financial management but also vital for navigating the complexities of modern taxation
frameworks. The insights gained contribute to a deeper understanding of Excel's capabilities in
supporting businesses in their GST- related endeavors

SUMMARY OF GS TEAM & CO.

GS TEAM AND CO is a leading firm specializing in Goods and Services Tax (GST)
consulting and advisory services. With a strong commitment to delivering comprehensive
solutions, we assist businesses of all sizes in navigating the complexities of GST regulations
and compliance.

Our team comprises seasoned professionals with extensive expertise in tax law, accounting,
and regulatory frameworks. Leveraging their collective knowledge, we provide tailored
strategies to optimize GST management, mitigate risks, and maximize savings for our clients.

At GS TEAM AND CO, we understand the evolving landscape of GST legislation and stay
abreast of regulatory updates to ensure our clients remain compliant and competitive. Our
proactive approach enables businesses to streamline their GST processes, enhance operational
efficiency, and focus on their core objectives.
 INTRODUCTION

1.1 INTRODUCTION TO THE STUDY

Goods and Service Tax or GST as it is known is all set to be a game changer for the Indian
Economy Taxation system. GST evolved an all India One Nation One Tax regime. It has now
been more than a decade since the idea of national Goods and Services Tax (GST) was
mooted by Kelkar Task Force in 2004. The Task Force strongly recommended fully
integrated ‘GST’ on national basis.

The Union Finance Minister Shri P. Chidambaram, while presenting the Central Budget
(2006-2007), announced for the first time a proposal to introduce a national level GST by
April 1, 2010. However, GST missed several deadlines and continued to be surrounded by
clouds of uncertainty. Since now, the former finance minister of India Arun Jaitley in his
budget speech of 2015 has announced time and again that the tax will be introduced on 1
April 2016. 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 Input Tax Credit 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. However, the Lok Sabha passed the Bill on 6th May
2015 and Rajya Sabha on 3rd August 2016. Subsequent to ratification of the Bill by more
than 50% of the States, Constitution (122nd Amendment) Bill, 2014 received the assent of
the President on 8thSeptember, 2016 and became Constitution (101st Amendment) Act,
2016, which paved the way for introduction of GST in India.
In the following year, on 27th March 2017, the Central GST legislations - Central Goods and
Services Tax Bill, 2017, Integrated Goods and Services Tax Bill, 2017, Union Territory
Goods and Services Tax Bill, 2017 and Goods and Services Tax (Compensation to States)
Bill, 2017 were introduced in Lok Sabha. Lok Sabha passed these bills on 29th March 2017
and with the receipt of the President’s assent on 12th April 2017, the Bills were enacted. The
enactment of the Central Acts is being followed by the enactment of the State GST laws by
various State Legislatures. Telangana, Rajasthan, Chhattisgarh, Punjab, Goa and Bihar are
among the first ones to pass their respective State GST laws.

Government is endeavouring to roll out GST by 1st July 2017, by achieving consensus on all
the issues relating thereto. It is geared to attain July 1st deadline for implementation of GST
across India. GST is a path breaking indirect tax reform which will create a common national
market by dismantling inter-State trade barriers. GST has subsumed multiple indirect taxes
like excise duty, service tax, VAT, CST, luxury tax, entertainment tax, entry tax, etc. For
successful implementation of GST, it is necessary that the Government at both centre 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 centre and all states to avoid litigation. Further exemptions/exclusions should be
minimum to avoid break of credit chain. The law needs to provide for single point
compliances, absence of multistate audits etc. for the assesse.

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 27% 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 is a globally accepted tax. France was the first country to
implement GST in the year 1954. Within 62 years of its advent, about 160 countries across
the world have adopted GST because this tax has the capacity to raise revenue in the most
transparent and neutral manner. Before the impending GST, addressing issues faced by the
financial service industry is important. The industry is currently facing issues inter alia on
determining nature of taxability of their incomes, input credit recovery, deciding the place of
provision of their service, issues like intermediary service income, interchange income,
correspondent bank charges income, format of the service tax returns, time limits for
compliances and revision of returns, and so on. Unless these issues are addressed the industry
would face major hurdles with GST. GST is a multistate tax with compliances expected in
different states. Thus, it is imperative to address the issue of “place of supply” with clarity
before 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. However, there is a huge hue and cry
against its implementation. It would be interesting to understand why this proposed GST
regime may hamper the growth and development of the country.

1.2 Background of Goods and Service Tax outside India

Goods and Service also known as the Value Added Tax (VAT) or Harmonized Sales Tax.
Following are some successfully implemented GST models in other counties:

France: -
• Rate of GST 19.6%
• France was the first country to introduce GST in 1954.

Worldwide, almost 150 countries have introduced GST in one or the other form since now.
Most of the countries have a unified GST system. Brazil and Canada follow a dual system
vis-à-vis India is going to introduce. In China, GST applies only to goods and the provision
of repairs, replacement and processing services.

Australia: -
Rate of GST 10%

GST is administered by the Tax office on behalf of the Australian Government, and is
appropriated to the states and territories.

Every company whose turnover exceeds $75,000 is liable for registration under GST and in
default 1/11th of the income and some amount is form of penalty.
There are provisions for credit back of GST, submission of returns according to limit decided,
Maintenance of records etc. There they have to keep records for 5 years.
Canada: -

GST is imposed at 5% in Part IX of the Excise Tax Act. GST is levied on goods and services
made in Canada except items that are either "exempt" or "zero-rated".

When, a supplier makes a zero-rated supply, he is eligible to recover any GST paid on
purchases but the supplier who makes supply of Exempt goods he is not eligible take input
tax credit on purchases for the purpose of making the exempt goods and services.

New Zealand: -

Rate of GST 12.5%.

Exceptions are rent collected on residential rental properties, donations and financial services.
1.3 Background of Goods and Service Tax in India

The Kelkar Task Force on implementation of FRBM23 Act, 2003 had pointed out that
although the indirect tax policy in India has been steadily progressive in the direction of VAT
Principle since 1986, the existing system of taxation of goods and services still suffers from
many Problems. The tax base is fragmented between Centre and States. Keeping significance
of GST in view, an announcement was made by then our Ex – Finance Minister Mr. P.
Chidambaram in his four budget speeches24.

• Budget Speech 2004-05

• Budget Speech 2005-06
• Budget Speech of 2006-07
• Similar speech given in the Budget of 2007-08
 Need for GST

Deficiencies in the existing Value-Added Taxation

❖ In the present regime, a manufacturer of excisable goods charges excise duty and value
added tax (VAT) on intra-State sale of goods. However, the VAT dealer on his subsequent
intra-State sale of goods charges VAT (as per prevalent VAT rate as applicable in the
respective state) on value comprising of (basic value + excise duty charged by manufacturer
+ profit by dealer).

❖ Further, in respect of tax on services, service tax is payable on taxable services provided.
W.e.f. 1 July 2012, service tax is levied on all ‘services’ other than the Negative list of
services as provided under Section 66D of the Finance Act, 1994 or else otherwise exempted
vide the Mega Exemption Notification No. 25/2012-ST dated 20 June 2012 (“the Mega
Exemption Notification”).

❖ Presently, from 1 June 2016, service tax is levied @ 15% [Service tax @ 14%, Swachh
Bharat Cess (SBC) @ 0.5% (w.e.f. November 15, 2015) and Krishi Kalyan Cess (KKC) @
0.5% (w.e.f. June 1, 2016)] on specified services provided by service providers in India.

❖ The existing indirect tax framework in India suffer from various shortcomings. Under the
existing indirect tax structure, the various indirect taxes being levied are not necessarily
mutually exclusive.

❖ To illustrate, when the goods are manufactured and sold both central excise duty
(CENVAT) and State-Level VAT are levied. Though CENVAT and State-Level VAT are
essentially value added taxes, set off of one against the credit of another is not possible as
CENVAT is a central levy and State-Level VAT is a State levy. Moreover, CENVAT is
applicable only at manufacturing level and not at distribution levels. The existing sales tax
regime in India is a combination of origin based (Central Sales Tax) and destination based
multipoint system of taxation (State-Level VAT). Service tax is also a value added tax and
credit across the service tax and the central excise duty is integrated at the central level.
2. OBJECTIVE OF STUDY

The study has following objectives:

1) To recognize the concept of GST

2) To study the features of GST
3) To evaluate the advantages and challenges of GST
4) To study its effect on consumer’s .

GST is a tax on goods and services with value addition at each stage having comprehensive
and continuous chain of set of benefits from the producer’s / service provider’s point up to
the retailer’s level where only the final consumer should bear the tax.
The main objective of the project is to understand about need, requirements, purpose, benefits
and backlogs of the GST also how GST would effect the consumer’s .

The country will benefit immensely in three ways from the GST:

First: - The GST will greatly boost the GDP. Lesser taxes leads, to lower prices of goods and
services. Lower prices lead, to increased purchasing power of the consumers. Increased
purchasing power leads to more demand of the goods and services. More demands lead to
more production. More production leads to Higher GDP. Hence, GST will boost the GDP.

Second: - The GST will facilitate ‘Make in India’ by converting the geographical landscape
of the country into a single market. Despite being one country, India is a union of 30 or more
markets. Too many taxes in the current system like the Central Sales Tax (CST) on inter-state
sales of goods; numerous intra-state taxes; and the extensive nature of countervailing duty
exemptions, favour imports over domestic production. GST would get rid of the CST and
subsume most of the other taxes. And since, it will also be applicable on imports, the major
tax factor working against ‘making in India’ will disappear, greatly boosting the production
and in turn exports. This will ultimately help bridge the current account deficit.

Third: - The GST would improve tax governance in two ways. One, like the value added tax
(VAT), it is a self-collecting and self-enforcing tax. What it essentially means is that the
companies buying supplies from outside parties will insist on tax payment on goods supplied
as without this they can’t get setoffs on their own final product sales. Two, due to the dual
monitoring structure of the GST – one by the states and another by the Centre – it is difficult
to evade tax. Even if one set of tax authorities overlooks or fails to detect evasion, there is the
possibility that the other overseeing authority may not. To reap these benefits, it is important
that the GST is well-designed and the revenue-neutral rate is such that protects revenue,
simplifies administration, encourages compliance, avoids adding to inflationary pressures,
and keeps India in the range of countries with reasonable levels of indirect taxes.

Some other elementary benefits of GST model in INDIA

1. Uniform GST Registration: - The model legislation for the introduction of goods
and services tax (GST) will have a provision for registration of individuals and
companies which pay the tax. The registration will be done through a uniform PAN-
linked business identification number. The Department of Revenue in the Ministry of
Finance had recently sent a proposal to state governments for making the 10-digit
permanent account number (PAN) the starting point for registering GST payees.

2. Input Credit in GST: - Input Credit Mechanism is available to you when you are
covered under the GST Act. Which means if you are a manufacturer, supplier, agent,
ecommerce operator, aggregator or any of the persons mentioned here, registered
under GST, you are eligible to claim INPUT CREDIT for tax paid by you on your
purchases

3. Growth of Revenue in States and Union: - 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 taxation. This will lead to higher amount of revenue to both the states
and the union. Reduces transaction costs and unnecessary wastages: - If government
works in an efficient mode, it may be also possible that a single registration and a
single compliance will suffice for both SGST and CGST provided government
 produces effective IT infrastructure and integration of states level with the union.

4. Reduces average tax burdens: - Under GST mechanism, the cost of tax that
consumers have to bear will be certain and it is expected that GST would reduce the
average tax burdens on the consumers.

5. Reduces the corruption: - It is one of the major problems that India is overwhelmed
with. We cannot expect anything substantial unless there exists a political will to root
it out. This will be a step towards corruption free Indian Revenue Services. Present
CST will be removed and need not to be paid. At present, there is no input tax credit
available for CST. There are many indirect taxes in state and central level currently,
which will be included by GST. i.e. you need to pay a single GST instead of all of
them. Uniformity of tax rates across the states Ensure better compliance due to
aggregate tax rate reduces. By reducing the tax burden, the competitiveness of Indian
products in international market is expected to increase and there by development of
the nation. Prices of goods are expected to reduce in the long run as the benefits of
less tax burden would be passed on to the consumer.

Simplification of Various Terms of GST

Intra-State Movement: - An intra-State supply if the goods remain within the same State. A
supply of Services shall be - (a) An inter-State supply if the service provider and the service
recipient are located in different States. (b) An intra-State supply if the service provider and
the service recipient are located in the same State.

Inter- State Movement: - An inter-State supply if the supply involves the movement of
goods from one State to another
Explanation: Where the movement of goods commences and terminates in the same State it
shall not be deemed to be a movement of goods from one State to another by reason merely
of the fact that in the course of such movement the goods pass through the territory of any
other State.

CGST: - CGST means Central Goods and Service Tax. CGST is a part of goods and service
tax. It is covered under Central Goods and Service Tax Act 2016. Taxes collected under
Central Goods and Service tax will be the revenue for central Government. Present Central
taxes like Central excise duty, Additional Excise duty, Special Excise Duty, Central Sales
Tax, Service Tax etc. will be subsumed under Central Goods and Service Tax.

SGST: - SGST means State Goods and Service Tax. It is covered under State Goods and
service Tax Act 2016. A collection of SGST will be the revenue for State Government. The
introduction of SGST all the state taxes like Value Added Tax, Entertainment Tax, Luxury
Tax, Entry Tax etc. will be merged under SGST. For example, if goods are sold or services
are provided within the State then SGST will be levied on such transaction.

IGST: - IGST means Integrated Goods and Service Tax. IGST falls under Integrated Goods
and Service Tax Act 2016. Revenue collected from IGST will be divided between Central
Government and State Government as per the rates specified by the government. IGST will
be charged on transfer of goods and services from one state to another state. Import of Goods
and Services will also be deemed to be covered under Inter-state transactions so IGST will be
levied on such transactions. For example, if Goods or services are transferred from Rajasthan
to Maharashtra then the transaction will attract IGST.

UTGST: - The full form of UTGST is Union Territory Goods and Service Tax. UTGST is a
part of Goods and Service Tax in India. GST under supply of goods and services takes place
in Union Territories like Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar
Haveli, Daman and Diu, Delhi (National Capital Territory of Delhi), Lakshadweep,
Puducherry etc. is accounted under UTGST. A separate Act is being implemented for Union
Territory states to impose and administer GST in India in the name of UTGST Act. Under
UTGST Act, the details of GST rates payable against the movement of goods and services in
Union territories are explained. The UTGST bill is presented in respective states government
to implement as UTGST Act.
The above information is about the meaning of UTGST under GST in India, the mechanism
of UTGST under GST system in India and union territory states falls under UTGST.

3. SCOPE OF THE GST

The scope of the study limits up to the study of GST under Indirect Tax System. GST shall
cover all goods and services, except alcoholic liquor for human consumption, for the levy of
goods and services tax. In case of petroleum and petroleum products, it has been provided
that these goods shall not be subject to the levy of Goods and Services Tax till a date notified
on the recommendation of the Goods and Services Tax Council.

All goods and services are covered under GST Regime except Alcoholic liquor for Human
Consumption, Tobacco Products subject to levy of GST and Centre may also levy excise duty
GST Council yet to decide the incidence and levy of GST on following; a) Crude Petroleum

b) High Speed Diesel (HSD)

c)Motor Spirit (Petrol)
d)Natural Gas
e) Aviation Turbine Fuel

Also how Implementation of GST would impact the consumer’s . With the Indirect Tax like
GST consumer’s would be more aware of the percentage of tax charged on the goods they
consume than earlier imposition of taxes which wouldn’t be noticed by them .

4. LITERATURE REVIEW

Consistent with the federal structure of the country, the GST will have two components: one
levied by the Centre (hereinafter referred to as Central GST), and the other levied by the
States (hereinafter referred to as State GST). This dual GST model would be implemented
through multiple statutes (one for CGST and SGST statute for every State). However, the
basic features of law such as chargeability, definition of taxable event and taxable person,
measure of levy including valuation provisions, basis of classification etc. would be uniform
across these statutes as far as practicable. GST is also referred as value added tax (VAT). It is
a tax government collected at the final purchase consumption. However, according to Hooper
and Smith (1997), GST is actually collected at various stages of the production process.
Accordingly, there is output tax, a GST tax charges by the suppliers on taxable goods and
services and input tax, a tax incurred by businesses on goods and services purchases. It is
noted that GST is not a cost to the sellers and would not appear in financial statements as
expenditure. Recently, the government initiative to introduce Goods and Services Tax (GST)
has been a growing topic of interest in Malaysia. Despite the increasing popularity and
success of GST implementation around the world (Hooper & Smith, 1997), Malaysian
citizens are not entirely convinced with this new tax scheme. There are debates mainly
centred on the advantages and disadvantages derived from the new tax initiative. As per as
India is concerned AgogoMawuli (May 2014) studied, “Goods and Service Tax an
Appraisal” and found that GST is not good for low-income countries and does not provide
broad based growth to poor countries. If still these countries want to implement GST then the
rate of GST should be less than 10% for growth. Dr. R. Vasanth Gopal (2011) studied, “GST
in India: A Big Leap in the Indirect Taxation System” and concluded that switching to
seamless GST from current complicated indirect tax system in India will be a positive step in
booming Indian economy. Success of GST will lead to its acceptance by more than 130
countries in world and a new preferred form of indirect tax system in Asia also. Ehtisham
Ahmed and Satya Poddar (2009) studied, “Goods and Service Tax Reforms and
Intergovernmental Consideration in India” and found that GST introduction will provide
simple and transparent tax system with increase in output and productivity of economy in
India. But the benefits of GST are critically dependent on rational design of GST.

5.RESEARCH METHODOLOGY

It is based on secondary data of articles and newspapers . Considering the objectives of study
descriptive type research design is adopted to have more accuracy and rigorous analysis of
research study. The accessible secondary data is intensively used for research study.
DATA COLLECTION

Dual GST Model introduced in India

❖ India has adopted a dual GST which will be imposed concurrently by the Centre and
States, i.e. Centre and States will simultaneously tax goods and services. Centre will have the
power to tax intra-State sales & States will be empowered to tax services. GST will extend to
whole of India except the State of Jammu and Kashmir.

❖ GST is a destination based tax applicable on all transactions involving supply of goods and
services for a consideration subject to exceptions thereof. GST in India will comprise of
Central Goods and Service Tax (CGST) - levied and collected by Central Government, State
Goods and Service Tax (SGST) - levied and No CENVAT after manufacturing stage Non-
inclusion of several local levies in State VAT such as luxury tax, entertainment tax, etc.
Nonintegration of VAT & service tax Cascading of taxes on account of (i) levy of Non-VAT
able CST and (ii) inclusion of CENVAT in the value for imposing VAT Double taxation of a
transaction as both goods and services collected by State Governments/Union Territories with
State Legislatures and Union Territory Goods and Service Tax (UTGST) - levied and
collected by Union Territories without State Legislatures, on intra-State supplies of taxable
goods and/or services. Inter-State supplies of taxable goods and/or services will be subject to
Integrated Goods and Service Tax (IGST). IGST will approximately be a sum total of CGST
and SGST/UTGST and will be levied by Centre on all inter-State supplies.

❖ There is single legislation – CGST Act, 2017 - for levying CGST. Similarly, Union
Territories without State legislatures [Andaman and Nicobar Islands, Lakshadweep, Dadra
and Nagar Haveli, Daman and Diu and Chandigarh] will be governed by UTGST Act, 2017
for levying UTGST. States and Union territories with their own legislatures [Delhi and
Puducherry] have to enact their own GST legislation for levying SGST. Though there would
be multiple SGST legislations, the basic features of law, such as chargeability, definition of
taxable event and taxable person, classification and valuation of goods and services,
procedure for collection and levy of tax and the like would be uniform in all the SGST
legislations, as far as feasible. This would be necessary to preserve the essence of dual GST.
❖ In GST regime, tax (i.e. CGST and SGST/UTGST for intra-State supplies and IGST for
inter-State supplies) shall be paid by every taxable person and in this regard provisions have
been prescribed in the law. However, for providing relief to small businesses, a simpler
method of paying taxes and accounting thereof is also prescribed, known as Composition
Scheme. Along with providing relief to small-scale business, the law also contains provisions
for granting exemption from payment of tax on specified goods and/or services.

❖ Input Tax Credit (ITC) of CGST and SGST/UTGST will be available throughout the
supply chain, but cross utilization of credit of CGST and SGST/UTGST will not be possible,
i.e. CGST credit cannot be utilized for payment of SGST/UTGST and SGST/UTGST credit
cannot be utilized for payment of CGST. However, cross utilization will be allowed between
CGST/SGST/UTGST and IGST, i.e. credit of IGST can be utilized for the payment of
CGST/SGST/UTGST and vice versa.

❖ Since GST is a destination based consumption tax, revenue of SGST will ordinarily accrue
to the consuming States. The inter-State supplier in the exporting State will be allowed to set
off the available credit of IGST, CGST and SGST/UTGST (in that order) against the IGST
payable on inter-State supply made by him. The buyer in the importing State will be allowed
to avail the credit of IGST paid on inter-State purchase made by him. Thus, unlike the
existing scenario where the credit chain breaks in case of inter-State sales on account of non-
VAT able CST, under GST regime there is a seamless credit flow in case of inter-State
supplies too. The revenue of inter-State sale will not accrue to the exporting State and the
exporting State will be required to transfer to the Centre the credit of SGST/UTGST used in
payment of IGST. The Centre will transfer to the importing State the credit of IGST used in
payment of SGST/UTGST. Thus, the inter- State trade of goods and services (IGST) would
need a robust settlement mechanism amongst the States and the Centre. A Central Agency is
needed which can act as a clearing house and verify the claims and inform the respective
Governments to transfer the funds. This is possible only with the help of a strong IT
Infrastructure.

❖ Resultantly, Goods and Services Network (GSTN) - a Special Purpose Vehicle – has been
set to provide a shared IT infrastructure and services to Central and State Governments,
taxpayers and other stakeholders for implementation of GST.
GST PORTAL
The government’s portalfor GST compliance is finally live and open for business
registrations. The GST portal is hosted at https://www.gst.gov.in/ and so far, only
registrations are enabled on it. Existing taxpayers or new businesses can apply to register and
submit the required documents. All the existing registered taxpayers will be granted
provisional registration initially and would be required to submit additional documents within
6 months.

GSTIN
For any dealer registered under state VAT law, a unique TIN number is issued by the
respective state tax authorities. Similarly, a service provider is assigned a service tax
registration number by the Central Board of Excise and Custom (CBEC). Going forward, in
the new GST regime, all these taxpayers will get consolidated into one single platform for
compliance and administration purposes and will be assigned registration under a single
authority. The government has set up GSTN–a special purpose vehicle to provide the IT
infrastructure necessary to support GST digitally. It is expected that 8 million taxpayers will
be migrated from various platforms into GST. All of these businesses will be assigned a
unique Goods and Services Tax Identification Number (GSTIN). But most are yet not aware
of the new registration process and the identification number.

Proposed GST Identification Number (GSTIN)

A complete break-up of the proposed GST Identification Number. Each taxpayer will be
allotted a state-wise PAN-based 15-digit Goods and Services Taxpayer Identification Number
(GSTIN).
▪ The first two digits of this number will represent the state code as per Indian Census 2011 ▪
The next ten digits will be the PAN number of the taxpayer ▪ The thirteenth digit will be
assigned based on the number of registration within a state ▪ The fourteenth digit will be Z by
default ▪ The last digit will be for check code
A format of proposed GSTIN has been shown in the image below.
GST Registration
Every business carrying out a taxable supply of goods or services under GST regime and
whose turnover exceeds the threshold limit of Rs. 20 lakh/ 10 Lakh as applicable will be
required to register as a normal taxable person. This process is of registration is referred as
GST registration.

Importance of GST Registration

GST registration is critical because it will enable you to avail various benefits that are
available under the GST regime. One such benefit is to avail seamless input tax credit.
Multiple taxes are being clubbed under GST and thus the cascading of taxes that is prevailing
currently will no longer be the case. Also, timely registration will help you avoid any kind of
interface with tax authorities.

Casual Registration
A person who occasionally supplies goods and/or services in a territory where GST is
applicable but he does not have a fixed place of business. Such a person will be treated as a
casual taxable person as per GST.
Example: A person who has a place of business in Bangalore supplies taxable consulting
services in Pune where he has no place of business would be treated as a casual taxable
person in Pune.

Composition Dealer
This is an option available to small businesses and taxpayers having a turnover less than Rs.
75 lakhs. They can opt for Composition scheme where they will tax at a nominal rate of 1%
or 2.50% (for manufacturers) CGST and SGST each (rates will be notified later). They will
be required to maintain much less detailed records and file only 1 quarterly return instead of
three monthly returns. However, they cannot issue taxable invoices, i.e., collect tax from
customers, but are required to pay the tax out of their own pocket. They cannot also claim
any input tax credit. Composition levy is available to only small businesses. It is not available
to interstate sellers, e-commerce traders, and operators.

Applicability GST
will apply when turnover of the business exceeds Rs 20 lakhs (Limit is Rs 10 lakhs for the
North-Eastern States). [Earlier the limit was Rs 10lakhs and Rs 5lakhs for NE states.]

Migration to GST
All existing Central Excise and Service Tax assessees and VAT dealers will be migrated to
GST. To migrate to GST, assessees would be provided a Provisional ID and Password by
CBEC/State Commercial Tax Departments.

Provisional IDs would be issued to only those assessees who have a valid PAN associated
with their registration. An assessee may not be provided a Provisional ID in the following
cases:
1. The PAN associated with the registration is not valid
2. The PAN is registered with a State Tax authority and Provisional ID has
been supplied by the said State Tax authority.
3. There are multiple CE/ST registrations on the same PAN in a State. In
this case, only 1 Provisional ID would be issued for the 1st registration
in the alphabetical order provided any of the above 2 conditions are not met.
The assessees need to use this Provisional ID and Password to login to the GST Common
Portal https://www.gst.gov.in where they would be required to fill and submit the Form 20
along with necessary supporting documents.

Penalties for Not Registering Under GST

An offender not paying tax or making short payments has to pay a penalty of 10% of the tax
amount due subject to a minimum of Rs. 10,000. The penalty will be high at 100% of the tax
amount when the offender has evaded i.e., where there is a deliberate fraud. However, for
other genuine errors, the penalty is 10% of the tax due.
Multiple Registrations Under GST

i. A person with multiple business verticals in a state may obtain a separate

registration for each business vertical.

ii. PAN is mandatory to apply for GST registration (except for a non-resident

person who can get GST registration on the basis of other documents).

iii. A registration which has been rejected under CGST Act/SGST Act shall also

stand rejected for the purpose of SGST/CGST act.

GST RATES COMPARISION EARLIER TAX SYSTEM V/S NEW

TAXATION

GST council has made the much-awaited announcements around tax rates on various
categories of goods on day one of a two-day meeting of the said council at Srinagar. There
has been a hype around these rates for a while and now these rates are finally in the public
domain.
As soon as the GST rates were announced a huge wave of curiosity hit across industry and
trade bodies. Everyone is evaluating their position as a result of this change. So, in this
article, we bring you our analysis of these GST rates.
We know that the GST slabs are pegged at 5%, 12%, 18% & 28%. According to the GST
council, the tax structure for common-use goods are as under:
 Services

Name of ITEM GST Rate (%) Earlier Rate (%)

Telecom 18 15

Works contracts 12 15

Non-AC/alcohol-serving restaurants 12 13-14

AC, alcohol-serving restaurants 18 22

Five-star restaurants 28 18

Name of ITEM GST Rate (%) Earlier Rate (%)

Leather bags 28 6

Cell phones 18 6

Yachts 28 18.5

Air conditioners 28 26

Refrigerators 28 26

Storage water heaters 28 26

Dish washing machines 28 26

Printer, photocopier, fax machines 28 26

Wristwatches 28 26

Furniture 28 26
 Video game consoles 28 26

Exercise equipment 28 26

Sports goods 12 18.5

Bicycles 12 18.5

Spectacle lens 12 18.5

Whey proteins & fitness supplements 18 26

Hats and other headgears 18 26

Steel utensils 5 18.5

Lifestyle and Home

Consumer Goods

Name of ITEM GST Rate (%) Earlier Rate (%)

Aluminium Foil 28 18.5
Agarbatti 12 0
Preserved Vegetables 18 0
Butter, ghee, cheese 12 6
Dry fruits 12 6
Jams, jellies 18 12
Frozen meal 12 6
Branded paneer 5 0
Branded cereals 5 0
Cocoa butter, oils chocolates 28 26
Instant, aroma coffee 28 26
Coffee concentrates, custard powder 28 26
Protein concentrates, sugar syrups 28 26
Razors 28 26
Dental floss 28 26
Toothpaste 28 26
Deodorants 28 26
Aftershave 28 26
Shaving cream 28 26
Cereals 0 0
Puffed, rice, papad, bread Exempt 0
Aquatic/poultry/cattle feed Exempt 0
Salt Exempt 0
Soyabean, groundnut, sunflower, seeds 5 6
Infant use preparations 18 19.5
Pasta, corn flakes, and cakes 18 19.5
Coffee, tea 5 6
Frozen vegetables 5 6
Condensed milk 18 18.5
Toilet paper 18 18.5
Hot water bottles 18 18.5
Petroleum jelly, paraffin wax 18 20
Pencil sharpeners, knives 12 18.5
Meats & fish preparations 12 18.5
Sweetmeats 5 12
Bakery mixes, dough’s, pizza bread 5 12
Vegetable fats & oils 5 12
Tea concentrates, sauces, soups 5 12
Ice cream, instant food mixes, sherbet 18 26
Refined sugar 18 26
Soap 18 26
Dentrifices – toothpaste 18 26
Hair oil 18 26
Handmade safety matches 5 18.5
Broomsticks 5 18
Candles 12 26
Tooth powder 12 26
Led lights 12 26
Milk beverages 12 26
Ready to eat Namkeen/bhujiya 12 26
Beet sugar, cane sugar 5 26

Other’s

Name of ITEM GST Rate (%) Earlier Rate (%)

Tyres 28 18.5
Steam 12 0
Children’s drawing books 12 0
Plastic products 28 18.5
Artists’, students’ or signboard colours 28 18.5
Solar water heater 5 0
Renewable energy devices 5 0
Pianos 28 26
Artificial Flowers 28 26
Bangles (Non-Precious Metals EXEMPT 0
Fountain pen ink, ball pen ink 12 12
Printed books 0 0
Calendars 12 12
Animal or human blood vaccines 5 6
Power driven water pumps 12 12.5
Padlocks, locks 18 18.5
Helmets 18 18.5
Plastic Products 28 18.5
Fertilizers 12 18.5
Tractors 12 18.5
Sewing/knitting needles 12 18.5
Agricultural implements 0 12.5
Firewood 0 12.5
Geometry boxes 5 18.5

GST calculation

Model of GST with example:

The GST shall have two components: one levied by the Centre (referred to as
Central GST or CGST), and the other levied by the States (referred to as State
GST or SGST). Rates for Central GST and State GST would be approved
appropriately, reflecting revenue considerations and acceptability.

The CGST and the SGST would be applicable to all transactions of goods and
services made for a consideration except the exempted goods and services.

Cross utilization of ITC both in case of Inputs and capital goods between the
CGST and the SGST would not be permitted except in the case of inter-State
supply of goods and services (i.e. IGST).

The Centre and the States would have concurrent jurisdiction for the entire
value chain and for all taxpayers on the basis of thresholds for goods and
services prescribed for the States and the Centre.
 THE FOLLOWING COMPARISION SHOW THE BENEFIT OF GST: -

Comparison between Multiple Indirect tax laws and proposed one law

Particulars Without GST With GST

(Rs.) (Rs.)

Manufacture to Wholesaler

Cost of Production 5,000.00 5,000.00

Add: Profit Margin 2,000.00 2,000.00

Manufacturer Price 7,000.00 7,000.00

Add: Excise Duty @ 12% 840 –

Total Value(a) 7,840.00 7,000.00

Add: VAT @ 12.5% 980 –

Add: CGST @ 12% – 840

Add: SGST @ 12% – 840

Invoice Value 8,820.00 8,680.00

Wholesaler to Retailer

COG to Wholesaler(a) 7,840.00 7,000.00

Add: Profit Margin@10% 784 700

Total Value(b) 8,624.00 7,700.00

Add: VAT @ 12.5% 1,078.00 –

Add: CGST @ 12% – 924

Add: SGST @ 12% – 924

Invoice Value 9,702.00 9,548.00

Retailer to Consumer:
COG to Retailer (b) 8,624.00 7,700.00

Add: Profit Margin 862.4 770

Total Value(c) 9,486.40 8,470.00

Add: VAT @ 12.5% 1,185.80 –

Add: CGST @ 12% – 1,016.40

Add: SGST @ 12% – 1,016.40

Total Price to the Final consumer 10,672.20 10,502.80

Cost saving to consumer – 169.4

% Cost Saving – 1.59

Notes: - Input tax credit available to wholesaler is Rs.980 and Rs. 1,680 in case of without
GST and with GST respectively.

Likewise Input tax credit available to Retailer is Rs. 1,078 and Rs. 1,848 in case of without
GST and with GST respectively.
In case, VAT rate is also considered to be 12%, the saving to consumer would be 1.15%.

GST benefits to common man

The basis of Goods and Services Tax is the seamless flow of Input Tax Credit (ITC) along
the entire value addition chain. At every step of the manufacturing process, businesses will
have the option to claim the tax already paid in the previous transaction. Understanding this
process is crucial for businesses. A detailed explanation here.
To understand this, let us first understand what is Input Tax Credit. It is the credit an
individual receives for the tax paid on the inputs used in manufacturing the product. So, if
there is a 10% tax that the individual must submit to the government, he can subtract the
amount he has paid in taxes at the time of purchase and submit the balance amount to the
government.

Understand this with a hypothetical numerical example :-

Say a shirt manufacturer pays Rs. 100 to buy raw materials. If the rate of taxes is set at 10%,
and there is no profit or loss involved, then he has to pay Rs. 10 as tax. So, the final cost of
the shirt now becomes Rs (100+10=) 110.

At the next stage, the wholesaler buys the shirt from the manufacturer at Rs. 110, and adds
labels to it. When he is adding labels, he is adding value. Therefore, his cost increases by say
Rs. 40. On top of this, he has to pay a 10% tax, and the final cost therefore becomes Rs.
(110+40=) 150 + 10% tax = Rs. 165. Now, the retailer pays Rs. 165 to buy the shirt from the
wholesaler because the tax liability had passed on to him. He has to package the shirt, and
when he does that, he is adding value again. This time, let’s say his value add is Rs. 30. Now
when he sells the shirt, he adds this value (plus the VAT he has to pay the government) to the
final cost. So, the cost of the shirt becomes Rs. 214.5 Let us see a breakup for this: Cost = Rs.
165 + Value add = Rs. 30 + 10% tax = Rs. 195 + Rs. 19.5 = Rs. 214.5
So, the customer pays Rs. 214.5 for a shirt the cost price of which was basically only Rs. 170
(Rs 110 + Rs. 40 + Rs. 30). Along the way the tax liability was passed on at every stage of
transaction and the final liability comes to rest with the customer. This is called the
Cascading Effect of Taxes where a tax is paid on tax and the value of the item keeps
increasing every time this happens

Action Cost 10% Tax Total

Buys Raw Material @ 100 100 10 110

Manufactures @ 40 150 15 165

Adds value @ 30 195 19.5 214.5

Total 170 44.5 214.5

In the case of Goods and Services Tax, there is a way to claim credit for tax paid in acquiring
input. What happens in this case is, the individual who has paid a tax already can claim credit
for this tax when he submits his taxes.

In our example, when the wholesaler buys from the manufacturer, he pays a 10% tax on his
cost price because the liability has been passed on to him. Then he adds value of Rs. 40 on
his cost price of Rs. 100 and this brings up his cost to Rs. 140. Now he has to pay 10% of this
price to the government as tax. But he has already paid one tax to the manufacturer. So, this
time what he does is, instead of paying Rs (10% of 140=) 14 to the government as tax, he
subtracts the amount he has paid already. So, he deducts the Rs. 10 he paid on his purchase
from his new liability of Rs. 14, and pays only Rs. 4 to the government. So, the Rs. 10
becomes his input credit.

When he pays Rs. 4 to the government, he can pass on its liability to the retailer. So, the
retailer pays Rs. (140+14=) 154 to him to buy the shirt. At the next stage, the retailer adds
value of Rs. 30 to his cost price and has to pay a 10% tax on it to the government. When he
adds value, his price becomes Rs. 170. Now, if he had to pay 10% tax on it, he would pass on
the liability to the customer. But he already has input credit because he has paid Rs.14 to the
wholesaler as the latter’s tax. So, now he reduces Rs. 14 from his tax liability of Rs. (10% of
170=) 17 and has to pay only Rs. 3 to the government. And therefore, he can now sell the
shirt for Rs. (140+30+17) 187 to the customer.

Action Cost 10% Tax Actual Liability Total

Buys Raw Material @ 100 100 10 10 110

Manufactures @ 40 140 14 4 154

Adds value @ 30 170 17 3 187

Total 170 17 187

In the end, every time an individual was able to claim input tax credit, the sale price for him
reduced and the cost price for the person buying his product reduced because of a lower tax
liability. The final value of the shirt also therefore reduced from Rs. 214.5 to Rs. 187, thus
reducing the tax burden on the final customer.
So essentially, Goods & Services Tax is going to have a two-pronged benefit. One, it will
reduce the cascading effect of taxes, and second, by allowing input tax credit, it will reduce
the burden of taxes and, hopefully, price
 Impact of GST

OVERALL GST IMPACT: -

 Change in law and procedure: Since it is a major indirect tax reform in India, there
would be new legislations and procedures. The entire indirect tax code would be a
new one.

 Change in tax-rates: The standard rate of 12.5 % for central excise, Service tax, along
with residuary rate of VAT at 12.5-14.5% brings the overall rate to 25%-30%. But,
post GST, the general rate will be 18%; a net gain of almost 7%-12%. Most of the
dealers and consumers would experience the change in tax rates, either significantly
or marginally. When the tax rates are increased for some products it could lead to tax
evasion as well.

 GST based on HSN: The central excise tariff based classification would no longer be
applicable. It would reduce the interpretational issues in respect of class of
commodities.

 Availment of tax credit: GST would facilitate near seamless credit across the entire
supply chain and across all States under a common tax base. At present no cross
credits are available across central excise/service tax to local VAT/sales tax. Under
the GST law, the input tax credit (ITC) (set off) would be given for Central GST
against CGST and the States would give input tax credit (ITC) SGST to SGST.
Crossutilization of credit between Central GST and State GST would not be allowed.

 Credit availment based on vendor’s invoices: The credit of excise duty paid is
available based on the excise invoice raised by manufacturer or service provider. The
credit is available under the Service Tax law when the invoice amount is paid within 3
 months of the invoice date. In respect of joint charge and reverse charge, based on
receipt of payment on the basis of payment challans of the assessee. Under State VAT
law, credit is allowable on the basis of tax invoice. Under GST the credits could be
availed based on the invoices of vendors under CGST and SGST. But the onus may
shift onto the assessee to ensure that theamount of the CGST/SGST has been
deposited in the respective Government treasury by the vendor. This provision has
been added to bring in tax discipline but smaller businesses may find transaction cost
increasing due to this.

 Avoidance of Double Taxation: Presently, several transactions suffer VAT as well as

Service Tax such as works contract or licensing of software. This could be resolved
under the GST regime by redefining what is goods and service.

 Changes in the Accounting Software: Dealers and service providers need to

modify/replace the accounting and taxation software. Initially there could be
investment costs, costs of training in GST of people at each level starting from
junior/mid to higher level managerial staff, management group/stakeholders

 Training: Comprehensive training would be required to the staff members of the

business community, both at senior level and also at junior level across the purchase,
sales and finance functions. VAT + CE/ ST officers would also need to understand the
law well.

 Competent Professionals: There are specialized consultants for Excise Duty, Service
Tax and VAT. With the GST, only a single consultant maybe required who can
handle all GST matters. Compliance for the SME may necessitate competent tax
preparers

 Amending existing contracts: Assessees have to incorporate an extra clause in the

existing contracts to collect CGST and SGST as applicable.
 IMPACTS ON INDIA: -

Goods and Services Tax (GST) is expected to provide the much-needed stimulant for
economic growth in India by transforming the existing basis of indirect taxation towards free
flow of goods and services within the economy and also eliminating the cascading effect of
tax on tax. In view of the important role that India is expected to play in the world economy
in the years to come, the expectation of GST being introduced is high not only within the
country, but also in neighbouring countries and in developed economies of the world.

Some of the imp impacts are: -

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

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

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

4. Simplified tax laws: This reduces litigation and waste of time of the judiciary and the
assessee due to frivolous proceedings at various levels of adjudication and appellate
authorities. Present law appears to be much worse and an amalgam of the bad parts of
VAT/ ST/ CE.

5. Increase in exports and employment: GST could also result in increased

employment, promotion of exports and consequently a significant boost to overall
economic growth and factors of production -land labour and capital.
 IMPACTS ON INDIAN ECONOMY: -

• Reduce tax burden on producers and foster growth through more production. This double
taxation prevents manufacturers from producing to their optimum capacity and retards
growth. GST would take care of this problem by providing tax credit to the manufacturer.

• Various tax barriers such as check posts and toll plazas lead to a lot of wastage for
perishable items being transported, a loss that translated into major costs through higher need
of buffer stocks and warehousing costs as well. A single taxation system could eliminate this
roadblock for them.

• Also, there will be more transparency in the system as the customers would know exactly
how much taxes they are being charged and on what base.

• GST would add to government revenues by widening the tax base.

• GST provides credits for the taxes paid by producers earlier in the goods/services chain.
This would encourage these producers to buy raw material from different registered dealers
and would bring in more and more vendors and suppliers under the purview of taxation.

• The proposed GST regime, which will subsume most central and state-level taxes, is
expected to have a single unified list of concessions/exemptions as against the current
mammoth exemptions and concessions available across goods and services

The introduction of Goods and Services Tax would be a very noteworthy step in the field of
indirect tax reforms in India. By amalgamating a large number of Central and State taxes into
a single tax, it would alleviate cascading or double taxation in a major way and pave the way
for a common national market. From the consumer point of view, the biggest advantage
would be in terms of reduction in the overall tax burden on goods and services. Introduction
of GST would also make Indian products competitive in the domestic and international
markets. Last but not the least, this tax, because of its transparent character, would be easier
to administer. However, once implemented, the system holds great promise in terms of
sustaining growth for the Indian economy.

Negative list under GST

Schedule III: -Activities or transactions which shall be treated neither as a supply of goods
nor a supply of services .

Services by an employee to the employer in the course of or in relation to his employment.

Services by any Court or Tribunal established under any law for the time being in force.

Functions performed by the MPs, MLAs, Members of municipality and Member of other
local authorities
Duties performed by any person who holds any constitutional post.

Duties performed by any person as a Chairperson or a Member or a Director in a body

established by the Central Government or a State Government or local authority and who is
not deemed as an employee before the commencement of this clause.

Services of funeral, burial, crematorium or mortuary including transportation of the deceased

Sale of land and sale of building where entire consideration has been received after issuance
of completion certificate.

Actionable claims other than lottery, betting and gambling.

Positive and Negative impact of GST on various services and goods

GST will turn India into one common market, leading to greater ease of doing business and
big savings in logistics costs from companies across all sectors. Some companies will gain
more as the GST rate will be lower than the current tax rates they pay, others will lose as the
rate will be higher than the present effective rate. While the rate of GST is yet to be decided,
industry observers have assumed an 18% rate recommended by a government panel in
making their impact calculations. ET looks at the likely impact across sectors .

TECH
Positive
GST will eliminate multiple levies. It will also allow deeper penetration of digital services.

Negative
IT companies can have several delivery centres and offices working together to service a
single contract. With GST, companies might require each centre to generate a separate
invoice to every contracting party. Duty on manufactured goods is going to go up from
existing 14-15% to 18%, which means the cost of electronics from mobile phones to laptops-
will rise.

FMCG
Positive
Companies could generate substantial savings in logistics and distribution costs as the need
for multiple sales depots will be eliminated. FMCG companies pay nearly 24-25% including
excise duty, VAT and entry tax. GST at 17-19% could yield significant reduction in taxes.
Warehouse rationalisation and reduction of overall tax rates, is expected to generate saving
which could cumulatively range between 200-300bps.
Key beneficiaries: Hindustan Unilever, Colgate, GSK, Asian Paints .

Negative
If the recommended 40% “sin/demerit” GST for aerated beverages and tobacco products is
levied, then prices may increase by over 20%. Food companies: many see increase in
effective tax as many companies enjoy concessional rate of excise.

ECOMMERCE
Positive
GST will help create a single unified market across India and allow free movement and
supply of goods in every part of the country. It will also eliminate the cascading effect of
taxes on customers which will bring efficiency in product costs.
Negative
The tax collection at source (TCS) guidelines in the GST regime will increase administration,
documentation workload for ecommerce firms and push up costs.

TELECOM
Positive
Handset prices likely to come down/even out across states. Manufacturers are also likely to
pass on to consumers cost benefits they will get from consolidating their warehouses and
efficiently managing inventory. For handset makers, GST will bring in ease of doing business
as they may no longer need to set up state specific entities and transfer stocks to them and
invest heavily into logistics of creating warehouses in each state across the country.

Negative
Call charges, data rates will go up if tax rate in the GST regime exceeds 15%. Tower firms
won’t be able to set off their input duty liabilities if petro-products continue to stay outside
GST framework. Negative for Bharti Airtel, Idea and Reliance Comm.

AUTOMOBILES
Positive
On-road price of vehicles could drop by 8%, as per a report by Motilal Oswal Securities.
Lower prices can be construed as indirect stimulus to boost volumes. Key beneficiaries:
Maruti Suzuki, M&M; Eicher Motors’ margins may expand.

Negative
Demand for commercial vehicles may be hit in the medium term. GST will subsume local
taxes, reduce time at check-posts, ease logistics hurdles. With fleet productivity increasing,
operators may not feel the need to expand mid-term.

MEDIA
Positive
DTH, film producers and multiplex players are levied service tax as well as entertainment
tax, GST will bring major change and uniformity in businesses. Taxes could go down by 2-
4%.
Multiplex chains will save on revenues as there will be a more uniform tax, unlike current
high rate of entertainment tax levied by different states. It may lower the average ticket price,
and increase the footfalls in multiplexes.
GST will be a big boon to film producers and studios that currently pay service tax on most
of their cost, but cannot charge input credit on creative services (payments to artists etc) as
they fall under the negative list. Under GST, they will be able to claim credit of these services
also, which will help is lowering the overall cost.

INSURANCE
Negative
INSURANCE policies: life, health and motor will begin to cost more from April 2017 as
taxes will go up by up to 300 basis points.
AIRLINES
Negative
Flying to become expensive, as service tax will be replaced by GST. Service tax on fares
currently range between 6% and 9% (depending on the class of travel). With GST, the rate
will surpass 15%, if not 18%, effectively doubling the tax rate.

CEMENT
Positive
The effective rate of tax for cement companies is now 25%. If GST rates are fixed at 18-20%
then the overall tax incidence will be lower GST IS expected to lead to savings in
transportation cost, which currently comprises up to 20-25% of total revenue. One common
market will bring down the number of depots in the country. Ultratech states that its depots
will come down to 100 from 550 at present.

How GST impacts consumer goods (FMCG) industry

The new Goods and Services Tax (GST) regime will bring several benefits for the economy,
and could particularly vitalise the fast-moving consumer goods (FMCG) industry.
Apart from driving supply chain efficiencies, bringing untaxed players into the tax net—a
large section of the industry still operates in the unorganized segment— will level the playing
field for the larger, established players in the industry.
However, the GST rate structure shows that not all FMCG companies stand to benefit
from the new regime.

Products to be taxed at higher rate

GST beneficiaries
The rates for various FMCG segments have mostly been along expected lines. Items of mass
consumption—toothpaste, soaps, hair oil—have been put under the 18% tax slab,
significantly lower than the 22-24% tax rate they have been paying. This is in accordance
with the government’s stance of keeping tax rates low for mass consumption products. In
fact, the GST rate schedule indicates that nearly 81% of all items are in the 18% tax bracket
or below. The remaining 19% fall in the 28% tax slab.
Products to be taxed at lower rate

The FMCG companies, whose tax incidence has come down under the GST regime, are
likely to pass it on to the consumers in the form of lower prices. “With the anti-profiteering
clause in place, companies would be required to pass on the benefit of tax rates to the
consumer in the form of lower prices,” says Sanjay Manyal, Analyst, ICICI Securities.
Lower prices could potentially support volume growth for certain products, particularly in the
rural segment. “We believe it could result in a faster consumption shift from unbranded to
branded products, spurring volume growth for FMCG companies. Simultaneously, it will also
bring operational efficiency with rationalisation of supply chain by removing bottlenecks,”
says Manyal. Analysts also point out that tax exemption provided to several critical products
required for food processing—jaggery,cereals and milk— would benefit this industry.
So, which are the companies that stand to gain from a benign tax regime? The extent of
impact would depend on the product mix of the companies. Oral care major Colgate
Palmolive is likely to emerge as the biggest beneficiary. “Colgate pays an effective tax of 25-
26%. The new 18% tax on toothpastes (make up 80% of the company’s sales) is a positive,
particularly as it levels the playing field against Dabur and Patanjali, who enjoy tax benefits,”
says a Motilal Oswal report. Hair and edible oil companies too will benefit. “Marginally
lower rates in hair oil with no increase in edible oil rates will benefit Marico,” says an Axis
Capital report.

Adversely impacted firms

Surprisingly, some of the widely consumed products have been placed under the highest tax
slab of 28%—slightly higher than the rate levied earlier. “Higher tax rate in paints and
possibly baby food will marginally impact Asian Paints and Nestle,” says the Axis Capital
report. Higher tax rate for detergents and shampoo is a real dampener since these are daily-
use, mass consumption items. Manufacturers will have to pass on the higher tax incidence to
consumers in the form of higher prices of these goods.
However, it will not have much impact on the sale volumes, say analysts. Most of the items
belonging to the premium category have been put under the highest tax slab of 28%. These
include health supplements, skin care, aerated drinks, liquid soap, among other goods. But
this is not going to have a particularly negative impact on manufacturers as they had been
paying similar taxes earlier. The increase, in some cases, is only marginal.
However, the firms who were focusing on premiumisation of their product mix to drive
profitability, could be hurt because of the higher taxes. These firms may have to rethink
strategy and realign their portfolio. Ayurvedic products—a segment that is seeing increased
focus from leading FMCG players—are to be taxed at 12%, slightly higher than the
prevailing rate. This may hurt Dabur, which has a wide portfolio of ayurvedic products.
Emami too could come under pressure. Ayurvedic players were expecting the tax rate to go
down, given the government’s thrust on popularising traditional Indian medicine.

For most other FMCG majors, the GST rate structure is likely to be neutral or marginally
positive, as their broad portfolios would see a mixed impact. In case of HUL, for instance, tax
incidence has reduced for soap, toothpaste and tea, but increased for detergent, shampoo and
skin care. For Godrej Consumer Products, lower tax incidence on soaps and insecticides is a
positive, but higher tax rate for hair dye is a negative.

How will GST affect my taxation as a common man?

With the rajya sabha set to pass the long-awaited goods and services tax (gst) bill, country's
most trans-formative tax reform in decades is likely to affect in the common man in
numerous ways.
1.Eating out to get expensive
For eating out, if you spend rs 1000. Currently you pay on an average 18.5 per cent as service
tax and vat.
So apart from the service charge, you usually have to bear the burden of rs 1185.
Under the gst regime, its expected that the rates can be fixed at 18 per cent or above.
Accordingly at 20 per cent approximate tax rate, your bill is set to go up, to at least 1200
rupees.
"Services will get more expensive if gst is implemented as states will now have the services
under their net and hence it will mean they can fix higher rates," said dk pant, chief
economist, india ratings-fitch ratings.

2. Phone bills to get expensive

As the states are expected also to decide service tax rates, your phone bill could see
escalation of taxes.
So on a bill of rs 1000 on which you pay service tax of 15 percent and finally pay rs 1150.
Post the gst, if the tax rate is fixed at 18 per cent then you will have to shell at least rs 1180.
Rajan mathews, cellular operators association of india told india today, "Under the gst, the
tax rate is bound to go up and the telecom operators will have to pass it on to the consumers,
we can look at internet packs and call rates getting higher."

3. Readymade garments to get cheaper

Buying clothes and fashion brands will be cheaper, as the effective excise duty (7.5per cent)
and vat of average 5per cent will be subsumed in gst slab.
So if you pick up a rs 1000 t-shirt today, you pay 1125 including various taxes. But if gst is
kept at 12 percent, then your final bill will be rs 1120.

4. Buying car is cheaper

Buying a car will not only be easier in different states with price similarity between
manufacturing and non-manufacturing states but tax experts believe it will be cheaper as
well.
For example, a rs 5 lakh car attracts excise duty of 12.5 per cent, and along with vat roughly
comes to rs 6.25 lakh. Now under the gst it is expected to go down as much as rs 35,000 if the
rate is fixed at 18per cent, so for you the price will be rs 5.9 lakh rupees
"We will see more tax competitive rates and will reduce prices for consumers. We are
looking forward to the gst", roland folger, ceo, mercedes-benz india told india today.

5.Buying phones to get expensive

If you planning to buy an imported phone from the market the countervailing duty and vat
comes to 12.8 per cent.
So if the gst council decides to peg the rate at 18 percent, then for a rs 10,000 phone for
which you pay rs 11,280 currently, you will have to shell out rs 11,800.

6.Led tvs to get cheaper

But watching tv could get cheaper, as part of the make in india initiative, the gst is expected
to be lower.
So at present for rs 20,000 led tv you pay around 24.5 per cent tax shelling out rs 24,900
eventually.
As the gst rate is expected to be at 18 per cent, for you the cost will come down to rs 23,600

7.Jewellery to get expensive

Tax experts have pointed how currently only 2 per cent of effective taxes is passed on to the
consumers but as per the gst model, at least 6 per cent rates could be imposed, impacting the
jewellery purchase.

8. Online buying
Buying bags, shoes, electronics online will be getting more expensive as the e-commerce
industry comes into a tax net and will have to pay tax deducted at source for every purchase
from its sellers.
So e-commerce companies which will see shrinking of profit margins & increase tax
compliance net could slash discounts & freebies that they offer.
"E-commerce will see revision of its tax compliance and its time we understand the industry
in india. But consumers can benefit from lower logistical cost and faster delivery. Overall tax
collection will be a challenge, harishankar subramaniam, national leader, indirect tax, ey.

Impact of GST on consumers/common man

In the GST system, taxes for both Centre and State will be collected at the point of sale. Both
will be charged on the manufacturing cost. Individuals will be benefited by this as prices are
likely to come down and lower prices mean more consumption, and more consumption
means more production, thereby helping in the growth of the companies.

In the long run, the lower tax burden could translate into lower prices on goods for
consumers. The tax structure will be made lean and simple.

All Indirect taxes will cut down to one tax , good for common man to understand and to
follow .It can bring more transparency

Fall in Prices of some of Goods: removing such layered taxation, prices of some goods are
likely to come down. However, this benefit generally doesn't reach the ultimate consumer as
sellers tend to raise underlying prices and increase their profit which offsets the gain due to
lower taxes. But I hope that some benefit will definitely reach the consumer.

Less corruption - Number of departments will reduce which in turn may lead to less
corruption

ANALYSIS AND INTERPRETATION

4.1 INTRODUCTION TO ANALYSIS:

In order to extract meaningful information from the data them. The analysis can be conducted
by using simple statistical tools like percentages, averages and measures of dispersion.
Alternatively, the collected data may be analysed, the data analysis is carried out. The data
are first edited, coded and tabulated for analysing by using diagrams, graphs, charts, pictures
etc. Data analysis is the process of planning the data in an ordered form, combining them
with the existing information and extracting from them.

Interpretation is the process of drawing conclusions from the gathered data in the study. In
this research the researcher has analysed the data using percentages and graphs.

4.2 DATA ANALYSIS TOOLS USED:

In this research the data analysis tools used are percentages and graphs. The various attributes
were analysed separately and the importance to each was calculated on the basis of the
percentage. The rank having the maximum percentage was taken to be preferred importance
to the particular attribute. After looking at each attribute separately, all the attributes were
considered together to develop a map on the most preferred rank for all the attributes

Overview of Tally ERP 9

Journal Entry
Journal Vouchers are used to adjust the debit and credit amounts without involving the cash
or bank accounts. Hence, they are referred to as adjustment entries.Creating a Journal
Entry: -
Journal entries arc usually used for finalization of accounts. To pass a Journal Voucher,
Go to Gateway of Tally > Accounting Vouchers Click on F7: Journal on the Button Bar or
press F7. For example, there may be entries made for interest accrued or interest due. If you
have to receive Interest from a party, the same can be entered using Journal Voucher.
Debit the Party
Credit the Interest Receivable Account the Journal entry is displayed as shown:

SPECIAL KEYS FOR VOUCHER NARRATION FIELD:

ALT+R: Recalls the Last narration saved for the first ledger in the voucher, irrespective of
the voucher type.
CTRL+R: Recalls the Last narration saved for a specific voucher type, irrespective of the
ledger.
Allowing Cash Accounts in Journals:
Journals are adjustment entries, which do not involve Cash account and Bank account.
However, in exceptional cases where the user would like to account Journal entries involving
Cash/Bank Account. Tally.ERP 9 has the flexibility of passing such entries by enabling the
option under F12 configuration.
To enable Cash Accounts in Journal voucher.
Set Allow Cash Accounts in Journals to Yes in Fl2: Configure (Voucher Entry
Configuration).

To pass a Journal voucher with Cash/Bank Ledger,

Go to Gateway of Tally > Accounting Vouchers > Select F7: Journal
Press the spacebar at the Debit or Credit field.
The Journal Voucher Screen with Cash/Bank Ledger selection will appear as shown:

Debit Note Entry

Debit Note is a document issued to a party stating that you are debiting their Account in your
Books of Accounts for the stated reason or vice versa. It is commonly used in case of
Purchase Returns, Escalation/De- cscalation in price, any other expenses incurred by you on
behalf of the party etc.

Debit Note can be entered in voucher or Invoice mode. You need to enable the feature in Fl1:
Accounting or Inventory features.

To use it in Voucher mode you need to enable the feature in Fl 1: Accounting Features - Use
Debit / Credit Notes. To make the entry in Invoice mode enable the option F11: Accounting
Features - Use invoice mode for Debit Notes. To go to Debit Note Entry Screen, Go to
Gateway of Tally > Accounting Vouchers
Click on Ctrl+F9: Debit Note on the Button Bar or press Ctrl+F9. You can toggle between
voucher and Invoice mode by clicking Ctrl+V. Pass an entry for the goods purchased
returned to Supplier A:

SPECIAL KEYS FOR VOUCHER NARRATION FIELD:

I. ALT+R: Recalls the Last narration saved for the first ledger in the voucher, irrespective of
the voucher type.
2. CTRL+R: Recalls the Last narration saved for a specific voucher type, irrespective of
the ledger.

Credit Note Entry

Credit Note is a document issued to a party staling that you are crediting their Account in
your Books of Accounts for the stated reason or vice versa. It is commonly used in case of
Sales Returns. A Credit Note can be entered in voucher or Invoice mode. You need to enable
the feature in Fl I: Accounting or Inventory features.
To use it in Voucher mode you need to enable the feature in Fl 1:
Accounting Features - Use Debit I Credit Notes. To make the entry in Invoice mode enable
the option Fll: Accounting Features - Use invoice mode for Debit Notes. To go to Credit Note
Entry Screen:

Go to Gateway of Tally > Accounting Vouchers

Click on Ctrl+F8: Credit Note on the Button Bar or press Ctrl+F8. You can toggle between
voucher and Invoice mode by clicking Ctrl+V. Pass an entry for goods sold returned from
Customer A:

SPECIAL KEYS FQR VOUCHER NARRATION FIELD:

ALT+R: Recalls the Last narration saved for the first ledger in the voucher, irrespective of
the voucher type.
CTRL+R: Recalls the Last narration saved for a specific voucher type, irrespective of the
ledger.
 Overview of TDS

Tax deducted at source (TDS) is a tax that is deducted from income that a company in India
pays to a recipient or supplier if the income amount exceeds a specific statutory limit in a
financial year.
The types of income that are subject to TDS include:

 Salary.

 Interest and dividends.

 Winnings from the lottery.

 Insurance commission.

 Rent.

 Fees from professional and technical services.

 Payments to contractors and subcontractors.

The withholding amounts for TDS can be deducted from an invoice submitted by a supplier
or from the payment that is issued to the recipient or supplier. Examples of recipients and
suppliers include contractors, providers of professional services, employees, and real estate
landlords. Companies submit a TDS certificate to each supplier on a monthly or yearly basis.
The certificate includes the payments, as well as information about the company and supplier.
Companies must also submit an annual return to the government for each recipient or supplier
for the financial year.

TDS must also be deducted from payments issued to third parties by both corporate and non-
corporate entities. The entity must deposit the amount owed for withholding at any of the
designated branches of banks that are authorized to collect taxes on behalf of the government
of India. The entity must also submit the TDS returns, which contain details about the
payments and the challan for the tax deposited to the Income Tax Department (ITD).
For electronic TDS, companies must generate the Form 26Q for each financial quarter. This
is a statutory requirement for the ITD.

Online registration of Pan in Income tax e-filling portal Registration

process

Type in the URL of e-Filing application (https://www.incometax.gov.in/iec/foportal/)

Click on the Register Yourself tab and select Individual’ against the radio button found under
“Individual/HUF".

The user will be directed to the registration page and the user will fill the following fields for
further validation.
Click on the “Continue" button. The registration details page should be displayed
Click on “SUBMIT". If it is success, user will be navigated to the “Registration
successful" screen.
The user receives a confirmation e-mail with an activation link to the registered Email ID. An
SMS along with OTP (One time Password) is also sent to the registered Mobile number.
In order to activate the account, the user should click on the Activation link and enter the
Mobile PIN.
On success, the user account is activated and the database is updated. For Non-Resident
Indian, Mobile PIN is exempted.

SWOT Analysis

STRENGTH WEAKNES S

Partnership Firm Tough Competition from Other Knowledge

Skilled Workers Consulting Agencies
Loyal Customers Adverse Publicity Due to Lawsuits
Strong Brand Equity Weak IT department
Weak Training Procedure for New Audit
assistant
 Opportunity Threats

Complex Tax Laws Enhancing the Opportunity

Increase in Companies Looking for Expert Business Higher Competition in Market
Solutions External Changes
GST Lower Profitability
There are enormous growth prospects in emerging Technology Problem
markets

LIMITATIONS

They have a small staff with limited skill set in many areas. Less number of staff members.
Developments in technology are changing this market. Agasti & Associates needs to adopt
new technology and adapt to the changed market realities.
Change in government policies and procedures may act as threat for company.
A small change in focus of large competitor might wipe out any market position achieved.
Agasti & Associates has many competitors. Under certain circumstances stiff competition can
threaten the margins and hence the survival of the firm.

CONCLUSION

Internship is a bridge between theoretical knowledge and practical knowledge. In review this
internship has been an excellent and rewarding experience. I have been able to meet and
network with so many people that I am sure will be able to help me with opportunities in the
future. As an internee of Agasti & Associates, I have truly enjoyed my internship. I am
confident that this one month internship at Agasti & Associates will definitely help me to
realize my career in the job market. Audit Procedure describes the step by step instructions of
a financial statement audit. This procedure is sufficient for Agasti & Associates. If all these
steps are followed properly, it is possible to ensure a proper conduct of financial statement
audit. But as I stated above, in some cases the auditors of Agasti & Associates violates some
audit standards and not carry out their audit tasks properly. As a result, the quality of audit
work cannot be ensured all the time. But if all these problems can be removed, Agasti &
Associates will be able to maintain its present status and improve its position to the client. So
all the partners and the articled students of Agasti & Associates must be conscious about this
matter.

BIBLIOGRAPHY
Websites:
https://www.wikipedia.org/
https://www.google.com/
https://www.investopedia.com/
https://www.accountingtools.com/
https://tallysolutions.com/
https://incometaxindia.gov.in/