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Submitted for the Degree of B.com Honours in Accounting & Finance under the
University of Calcutta.
SUBMITTED
BY: AYUSS KUMAR SONAR
NAME OF THE CANDIDATE
CU REGISTRATION NO.: 121-1111-0046-21
CU ROLL NO. : 211121-21-0011
COLLEGE ROLL NO. : 102
SUPERVISED BY
NAME OF THE SUPERVISOR : DR. S. GANGOPADHYAY
NAME OF THE COLLEGE : CHITTARANJAN COLLEGE
4 4
Supervisor’s Certificate
SIGNATURE: ………………..
NAME:- DR. S. GANGOPADHYAY
NAME OF COLLEGE: - CHITTARANJAN COLLEGE
PLACE
KOLKATA
DATED
1
Student’s Declaration
I hereby declare that the project work with the title Unlocking the Mysteries of
GST:Goods & Services tax submitted by me for the partial fulfillment of the
degree of B.com. Honours in Accounting & Finance under the University of
Calcutta is my origin and has not been submitted earlier to any other
University/Institutionfor the fulfillment 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 acknowledge providing details of such literature in the references.
SIGNATURE:-…………….
NAME: - AYUSS KUMAR SONAR
REGISTRATION NO: - 121-1111-0046-21
ROLL NO: - 211121-21-0011
PLACE
KOLKATA
DATE:-
2
ACKNOWLEDGEMENT
No work can be carried out without the help and guidance of various
persons. I am happy to take this opportunity to express my gratitude to those
who have been helpful to me in completing this project.
At the outset I would like to thank our Principal Dr. K. M. Mukherjee and
my Supervisor Dr. S. Gangopadhyay for their valuable advices and
guidance during my project completion, also for their timely help
concerning various aspects of project.
Last but not the least I want to thank our teachers of Commerce Department.
Their guidance are playing a pivotal role in the completion of the project.
Without their valuable guidance I cannot complete the project. Their role to
the completion of the project from various angles are auspicious for me.
DATE: JULY,2024
3
CONTENTS
15-21
NATIONAL SCENARIO 21-22
INTERNATIONAL SCENARIO
ANALYSIS 24-26 23
FINDINGS 27-28
REFERENCES
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4
CHAPTER 1
INTRODUCTION
TO GOODS
AND SERVICES
TAX
(GST)
5
1.Introduction:
GST is a tax on goods and services with comprehensive and continuous chain of
set-off benefits up to the retailer level. It is essentially a tax only on value
addition at each stage, and a supplier at each stage is permitted to set-off,
through a tax credit mechanism, the GST paid on the purchase of goods and
services. Ultimately, the burden of GST is borne by the end-user (i.e. final
consumer) of the commodity/service
With the introduction of GST, a continuous chain of set-off from the original
producer’s point and service provider’s point up to the retailer’s level has been
established, eliminating the burden of all cascading or pyramiding effects of an
indirect tax system. This is the essence of GST. GST taxes only the final
consumer. Hence the cascading of taxes (tax-on-tax) is avoided and production
costs are cut down.
As already noted, prior to the introduction of GST, the indirect tax system of
India suffered from various limitations. There was a burden of tax-on-tax in the
pre-GST system of Central excise duty and the sales tax system of the States.
GST has taken under its wings a profusion of indirect taxes of the Centre and
the States. It has integrated taxes on goods and services for set-off relief.
Further, it has also captured certain value additions in the distributive trade.
There is now a continuous chain of set-offs which would eliminate the burden
of all cascading effects.
Presently, services sector in India constitutes a tax base with vast potential
which has not been exploited as yet. It is in this context that GST is justified as
it has subsumed under it almost all the services for the purpose of taxation.
Since major Central and State indirect taxes have got subsumed under GST, the
multiplicity of taxes has been substantially reduced which, in turn, would
decrease the operating costs of the country’s tax system. The uniformity in tax
rates and procedures across the country will go a long way in reducing
compliance costs.
In a nutshell, GST is a comprehensive indirect tax levy on manufacture, sale and
consumption of goods as well as services at the national level. GST is an
indirect tax for the whole of India to make it one unified common market. GST
is designed to give India a world class tax system and improve tax collections. It
would end the long-standing distortions of differential treatment of
manufacturing sector and services sector. GST will facilitate seamless credit
across the entire supply chain and across all States under a common tax base.
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2. Literature Review:
Taxation system is as old as the human civilisation. This has evolved over the ages and
Chanakya’s Arthashastra is the famous treatise on the subject of the ancient times. However, with
the regular evolution of the economic activities combined with adoption of different forms of
administration the taxation systems were bound to change. The further evolution came with the
scientific discoveries, expansion of economic activities, growth of population, improvisation of
production systems among others. The present paper aspires to look into the acceptance and
success of the GST system. It tries to look into the different factors which are bound to judge the
effects that try to mould the overall GST implementation mechanisms. For the said purpose,
firstly an analysis of existing taxation system has been undertaken in brief and thereafter
literature survey has been attempted to know the experiences of researchers and scholars from
other parts of the world. It is apparent through this exercise that while at one side, GST serves the
economic uniformity in the economy, this noble purpose takes time and lot of evolution and
experience through implementation process is required. Major conclusions have been enumerated
as the need of the consumers ‘awareness, and need of managerial expertise and experience for
successful implementation of the GST system. It has also been pointed out that the effect of GST
may differ for different sectors in the same economy in different degrees.
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3.Objectives of GST in India:
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4.Methodology:
The study focuses on extensive study of Secondary data collected from various books, National &&
international Journals, government reports, publications from various websites which focused on
various aspects of Goods and Service tax. Study is exploratory in nature and based on secondary data.
Thru the intensive study of Literature study attempts to systematically present the Impact,
Advantages, issues and challenges of GST in India. Literature of Tax expert agencies, Government
websites of various countries has been considered for drawing the comparison between the Indian
GST and GST as in ASEAN Countries.
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operational efficiency and warehouses would be set up at locations that would help in
reaching customers faster and reduce costs.
10. Regulation of the unorganized sector : For a large unorganized sector that exists in
business, GST has provisions for online compliances and payments, and availing of input
credit only when the supplier has accepted the amount, thereby bringing accountability and
regulation to these businesses.
Advantages Of GST:
1.Simplification of Tax Structure: GST replaces multiple indirect taxes with a single tax,
streamlining the tax structure and making compliance easier.
2.Elimination of Cascading Effect: GST is a value-added tax that is levied only on the value
added at each stage of production, thus eliminating the cascading effect of taxes.
3.Wider Tax Base: GST aims to bring more businesses under the tax net, increasing tax
revenues for the government.
4.Promotion of Transparency: GST is a transparent tax system with online registration, filing,
and payment processes, reducing tax evasion.
5.Boost to GDP: By promoting ease of doing business and reducing tax burden on
businesses, GST can contribute to economic growth.
Disadvantages Of GST:
1.Initial Implementation Challenges: Transitioning to GST can be complex and time-
consuming, especially for businesses accustomed to the previous tax regime.
2.Impact on Small Businesses: Compliance costs may disproportionately affect small
businesses, especially in the initial phases of GST implementation.
3.Possible Inflationary Pressures: The introduction of GST can lead to temporary inflationary
pressures as businesses adjust to the new tax rates and pass on increased costs to
consumers.
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4.Complex Tax Structure: Despite its aim to simplify the tax system, GST can still be complex
due to multiple tax rates and exemptions.
5.Potential Revenue Loss for States: States may face revenue loss in the short term due to
the shift from state taxes to GST, leading to concerns about fiscal autonomy.
6.PLANNING
7.THE FOUR TIER TAX STRUCTURE OF GST:
The Goods and Service Tax in India is organized in such a way that all the necessary services and
some food items are placed in the lowest bracket, and the other luxury goods and services and de-
merit goods are placed in the highest bracket.
The GST council has set the four-tier structure at 0%,5%,12% and 18% and 28%.The Government
has decided in an attempt to keep inflation in check to exclude essential items such as basic food
commodities from tax. However, a 5% tax will be applicable for common commodities. Most of the
standard services will fall under the 12%, and 18% tax slab and the luxury items will fall under the
28% slab.
Under this category, the GST council has decided to exempt or not charge any taxes on a few of
the basic commodities. Most of the items in the Consumer Price Index (CPI) comes under the zero
rate. Basically, in simple words, no GST will be charged on these goods.
The following items stated below are some of the GST-Exempted Goods:
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Raw vegetables including potatoes, onions, and various leguminous vegetables, etc
Live animals such as sheep, goats, live poultry, birds, bird’s eggs in the shell, fresh fish
Wheat, corn, maize, cereal grains, soybeans that have yet to put into containers
Human blood and various components of the same
Fresh ginger, melon, roasted coffee beans, unprocessed green tea leaves, etc.
Raw materials such as raw silk, silk waste, khadi fabric, khadi yarn, charcoal, firewood,
handloom fabrics and wool (not processed).
Tools and instruments such as hearing aids, spades, shovels, tools used in agricultural
purposes, handmade musical instruments, etc.
*There are many more products that are exempted from GST and the products mentioned above
are just an indication of some of the products that qualify for zero GST.
Under this slab, a 5% rate will apply to most of the common commodities and services.
This mainly includes the rest of the items under the Consumer Price Index and the mass
consumption products. Some of these items are-frozen vegetables, coffee, tea, rail tickets,
economy air tickets, takeaway food, fertilizers, etc.
Most of the goods and services come under this slab. To keep inflation in check, the
government has decided to keep two standard rates for the products and services. The
12% slab consists of -butter, cheese, handbags, jewelry boxes, cellphones, frozen meat,
business class air tickets, movie tickets priced under ₹100, etc. Some of the items under
the 18% slab are-pasta, pastries, cakes, vacuum cleaners, hairdryers, panels, wires, IT
services, telecom services, etc.
More than 200 products will come under the 28% tax slab. This mostly consists of luxury
products. Some of these items include-pan masala, paint, cement, automobile, washing
machine, shampoo, sunscreen, motorcycles, aerated water, etc. For some of the products
under the 28% slab category, an additional cess has been fixed by the government.
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8.TYPES OF GST:
I. Central Goods and Services Tax (CGST).
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CHAPTER 2
CONCEPTUAL
FRAMEMORK OF
GST
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.NATIONAL SCENARIO OF GST.
1.IMPACT OF GST ON INDIAN ECONOMY:
It may increase the flow of FDI.
GST will increase the government's revenue in the long.
A single tax would help in lowering the final selling price for the consumer.
Uniformity in tax laws will lead to single point taxation for supply of goods or services all
over India.
It will also reduce litigation and waste of time of the judiciary and the assessee due to
frivolous proceedings at various levels of adjudication and appellate authorities.
Reduce tax burden on producers and build a fire under growth at the hand of more
production. This replicate taxation prevents manufacturers from producing to their
optimum capacity and retards growth.
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 also help in removing the custom duties on exports. Our
competitiveness in foreign markets would increase on account of lower cost of
transaction.
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2.GST IMPACT ACROSS SECTORS:
TECH
GST will eliminate multiple levies. It will also allow deeper penetration of digital
services.
Duty on manufactured goods will increase from 14-15% to 18%, so electronic products
would be expensive.
FMCG
Companies could stir substantial savings in logistics and distribution costs as requirement
for countless sales depots will be eliminated. FMCG companies have to pay around 24-
25% tax and GST would help in reduction of tax. Reduction of overall tax rates, is
expected to generate saving.
ECOMMERCE
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. It may increase the
workload for ecommerce firms and push up costs.
TELECOM
Handset prices likely to come down/even out across states. Manufacturers are further
likely to come through with flying colours on to consumers charge benefits they will earn
from consolidating their warehouses and efficiently managing inventory. For handset
makers, GST will require ease of doing job as they take care of no longer require to
strengthen state adamant entities and relinquish stocks to them and invest heavily into
logistics of creating warehouses in each state across the country.
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.
AUTOMOBILES
On road price of vehicles could drop by 8%. Lower price can be construed as indirect
stimulus to boost the volume. The demand for commercial vehicles may increase. GST
will help in reducing the time at check-posts, and will ease logistics hurdles. With fleet
productivity increasing, operators may not feel the need to expand the midterm.
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MEDIA
Service tax and entertainment tax are levied on DTH, film producers and multiplex
players. GST will captivate major critical point and dreariness in businesses. Taxes could
go down by 2-4%. Multiplex chains will amass on revenues as there will be in a superior
way uniform load, unlike current high outlay of entertainment thorn in one side levied by
different states. It may lower the average ticket price and increase the footfalls in
multiplex. GST will be a carrying a lot of weight boon to silver screen producers and
studios that currently conclude service tax on most of their charge, 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 policies: life, health and motor will begin
to cost more from April 2017 as taxes will increase..
AIRLINES
Airlines may become expensive, as service tax will be replaced by GST. Earlier service
tax on air tickets were 5.6% on economy class and 8.4% on business class . Now rate of
GST on economy class would be 5% and 12% on business class.
CEMENT
Currently tax rates on cement are 27% - 32% but GST will bring down the rate to 18-
20%. It will help in reduction in logistics costs. India is second largest producer of
cement in the world.
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3.REGISTRATION UNDER GST
1.INTRODUCTION:
Registration of any business entity under the GST Law implies obtaining a unique number
from the concerned tax authorities for the purpose of collecting tax on behalf of the
government and to avail input tax credit for the taxes on his inward supplies.
2.ADVANTAGES OF REGISTRATION:
The following are advantages to a taxpayer who obtain registration under GST:
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3.SPECIAL CATEGORY STATES UNDER GST:
1. Arunachal Pradesh
2. Assam
3. Jammu & Kashmir
4. Manipur
5. Meghalaya
6. Mizoram
7. Nagaland
8. Sikkim
9. Tripura
10. Himachal Pradesh
11. Uttarakhand
Note:
(2) The small businesses, having turnover below the threshold limit can,
however, voluntarily opt to register.
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Sec 23(1)(b): An agriculturist, to the extent of supply of produce out of
cultivation of land.
6.DEEMED REGISTRATION:
If the Proper Officer fails to take action in 3 working days from the date of submission, the
registration is deemed to have been approved.
The Proper Officer is satisfied with the clarification; he may approve the grant of registration
to the applicant within 7 working days on receipt of such clarification.
If no reply is furnished by applicant in response to notice issued or Proper Officer is not
satisfied with the clarification, he shall reject such application with reasons in writing and
inform the applicant in Form GST REG-05.
Where no action is taken in 7 working days on the clarification received from the applicant,
the registration is deemed to have been granted.
7.Certificate of Registration:
8.CANCELLATION OF REGISTRATION:
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(Sources:www.researchgate.net)
22
CHAPTER 3
ANALYSIS &
FINDINGS
OF GST
23
ANALYSIS:-
1.GST Collection - Trends
The presented chart offers a comprehensive view of the GST collection trends of the
Indian Government since the fiscal year 2018. It is meticulously designed to
encompass three critical dimensions of analysis:
a) Yearly Trends: This aspect traces the annual progression of GST collections,
providing insights into the broader fiscal patterns and economic health over the years.
Overall, the chart serves as a valuable tool in understanding the dynamics of GST
revenue generation, reflecting both the stability and volatility in government
collections across different time frames (excluding data on cess on imported
goods).
Fig.1(Sources:paragkar.substack.com)
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The GST collection data for the Government of India reveals a significant upward trajectory
since FY22. The fiscal year 2022 saw an impressive growth of 23.6%, which was closely
followed by a 21.8% increase in FY23. Currently, with a steady monthly growth rate
hovering between 10 to 15%, projections suggest that the collections could reach
approximately Rs 5 lakh crore in the next three months of the current financial year.
This would culminate in a total collection nearing Rs 20 lakh crore, marking an 11.3%
growth compared to the previous fiscal year.
Moreover, a closer examination of the chart highlights a distinct pattern in the GST
collections. Typically, there is a noticeable spike at the beginning of each fiscal year, which
then transitions into a phase of steady growth. Following this initial surge, the collection
figures gradually stabilize, settling at more moderate levels. This cyclical pattern underscores
the dynamism inherent in the GST collection trends, influenced by various economic factors
and seasonal variations.
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GST Collections - State Wise Breakup
Below is the GST collection trends broken down by various states. The data is aggregated till
Oct 23.
Fig.2(Sources:paragkar.substack.com)
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FINDINGS
The data in the above table reveals a critical insight: the top 10 states are responsible
for 76% of the total GST collections. It's important to note that these figures do not
encompass GST collected on imports, which accounts for approximately 26% of the
total revenue. To illustrate, in FY 2023, out of the total GST collections of Rs 17.97
lakh crore, Rs 13.25 lakh crore were amassed domestically from states, while the
remaining Rs 4.72 lakh crore originated from import-related collections. The rising
volume of imports has notably bolstered the GST revenue from this segment, as is
evident from the subsequent figure. This trend underscores the significant
contribution of import-based GST to the overall fiscal landscape, complementing
the domestic GST collections.
Fig.3(Sources:paragkar.substack.com)
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Central Government's Share in GST Collections
Our analysis focuses on the Central Government's portion of GST collections. Utilizing data
from the Controller General of Accounts (CGA), as depicted in the accompanying figure, we
gain insights into the Central Government's tax revenue trends.
Fig.4 (Sources:paragkar.substack.com)
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CHAPTER 4
CONCLUSION
&
RECOMMENDATIO
NS
29
CONCLUSION
With the reduction in tax rates on various goods and services, the cost
of various goods and services has been reduced. Thus, making the
products affordable, and this has led to an increase in demand, which
in turn would increase in production and hence will make the
economy grow faster. Also, by placing the demerit goods in the
highest tax slab, 28% GST council has focused on discouraging the
consumption of such sin goods so as to make India a better place to
live.
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RECOMMENDATIONS
Goods and Service Tax was an epitome of the ideal tax mechanism at
the time of its implementation. The assumption is somewhere proved
right as the GST system has reduced effective tax rates and boosted
supply chain efficiencies of businesses. On the other hand, it is also
prevalent that the system is not at all simple and has burdened the
taxpayer even more with tax-filing complexities. Now it is invariably
needed to introduce a set of amendments contributing towards the
certainty of the GST system.
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REFERENCES
REFERANCES
www.slideshare.net
www.legalserviceindia.com
www.paragkar.substack.com
www.okcredit.in
www.infinitycompliance.in
www.blog.saginfotech.com
www.cleartax.in
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