Premium Essay

Gst in India

In: Business and Management

Submitted By KIRUPALINI
Words 8698
Pages 35
Budgetary Research Review Vol. 4 (1)

www.buget-finante.ro

Goods and Services Tax (GST) in India: prospect for states by Mohd. Azam Khan1 and Nagma Shadab2
Department of Economics, Aligarh Muslim University, India

Abstract: Goods and services tax (GST) is a broad based and a single comprehensive tax levied at every stage of the production and distribution chain with applicable set-off in respect of the tax remitted at previous stages. It is basically a tax on final consumption integrates the union excise duties, custom duties, services tax and state VAT. Presently around 140 countries have adopted the GST pattern, including India. The GST would be beneficial for the consumers as it reduces the final burden of taxation. For Government it leads the reduction of tax compliance efforts and administrative costs and for business units it leads transparency, complete set-off and removal of cascading effect of taxation. It is in this background that the present paper tries to explain the significance of GST in India and its prospects for states to generate revenue and ensure transparency in tax structure. This paper is organized into seven sections. Section two presents justification for dual structure of GST in India. The third part presents the rate structure under GST work in India. The fourth segment is concerned with the working of GST in India. The fifth part shows the international experiences of GST at state level in India. The seventh and final part is related to conclusion and policy recommendations. Keywords: Goods and service tax, budgetary revenues, India JEL Classification: H2, H71

1 2

E-mail: azamkhanamu@gmail.com E-mail: shadab.nagma7@gmail.com

38

Budgetary Research Review Vol. 4 (1)

www.buget-finante.ro

1. Introduction The value added tax (VAT) at central and state level has been considered to be a major step – an important...

Similar Documents

Premium Essay

Gst Comparison Between Malaysia, Singapore and India

...OVERVIEW Overview of GST GST (good and service tax), other words it also known as VAT (value added tax). It have implemented in many countries throughout the world. Currently there are 170 counties in the world that have implemented GST /VAT. NO REGION No of country 1 ASEAN 7 2 Asia 19 3 Europe 53 4 Oceania 7 5 Africa 44 6 South Africa 11 7 Caribbean, Central and North America 19 Table 1: No of countries implement GST/VAT Sources: Ministry of Finance GST is a multi-stage tax system, this is due to its nature which the tax is collected based on the supply of goods and services at each of the supply chain from the supplier to the retailer stage of the distribution. Even though GST is imposed at every stage of the supply chain, but the tax element will be not become a part of the cost of the product, because the GST paid on the business inputs is claimable as input tax. Where the business will pay the GST as output tax and claim for the input tax from the customs. In addition, it does not matter how many stages where a particular goods and services goes through the supply chain because the input tax incurred at the previous stage is always deductible by the businesses at the next in the supply chain. GST consider as a broad based consumption tax, which includes all sectors of the economy. In Malaysia the GST have been establish in a very clear manner, for example all goods and services made in......

Words: 15950 - Pages: 64

Premium Essay

Gst the Next Big Reform

...next big reform – GST Submitted to – Prof. I. Sridhar By, Ashwin R Golapkar Section E 2012PGP120 TABLE OF CONTENTS Introduction ....................................................................................................................................................... 3 Objectives of Tax reforms ............................................................................................................................. 5 Implementation of the Existing System .................................................................................................. 11 Shortcomings of the Existing Tax Structure .......................................................................................... 13 Alternatives Available in the implementation ....................................................................................... 18 Tax base and Rates ........................................................................................................................................ 25 Implementation of GST in other countries......................................................................................... 37 Data Analysis and Interpretation........................................................................................................... 38 BIBLIOGRAPHY ............................................................................................................................................. 40 LEGAL ASPECTS OF BUSINESS | GST-the next big......

Words: 14431 - Pages: 58

Premium Essay

Goods and Services Tax

...or simply put GST is believed to solve many issues when it comes to the taxation policy in India. Before we jump into the technicalities of GST, let me set some pretext for those who have little idea about this topic. Our country, India, is a land of Taxes! Currently, we have numerous taxes like Sales Tax, Value Added Tax, Service Tax, Income Tax, Central Excise, Customs, Countervailing Duty, Special Additional Duty and what not. As a manufacturer, one need to pay these many taxes to government and the total amount that goes into taxes is fairly large. The reason being, the manufactured goods has to go through several stages (intermediate parties) before it finally reaches to the customer. And, the taxes are levied on the goods at each stage. That means same tax is levied on the product more that once before it reaches to the end customer. We call this scenario-Tax on Tax. In 2004, the government came up with an idea of VAT where in this problem of tax on tax was taken care of. In VAT the dealer only adds the tax on the value added on goods by him and does not pay the taxes on the values added on the goods by previous customers. But, as you can figure it out, VAT deals with the taxes only on goods. What about tax on services? Further, the VAT was implemented on the state level. Centre continued to charge the central taxes on the goods and services. To solve this problem, government came up with the idea were all the taxes will be subsumed under one head i.e. GST. In......

Words: 642 - Pages: 3

Premium Essay

Goods and Service Tax in India

...What is GST? The Goods and service tax is an initiative towards a reform in which this tax will replace all the indirect taxes in the Centre as well as the State, which can be levied in case of a sale being made or a service being provided. It is especially necessary in the current scenario, due to the degrading effects of the present tax system of CENVAT and State Vat system and the other complexities that prevail in the tax system of India. Some of the taxes that will be replaced under the central taxes are Service Tax, Surcharges, Central Excise Duty, Customs Duties and other Excise Duties. Some of the taxes that will be replaced under the state taxes are Luxury Tax, Entertainment Taxes, Tax on gambling and betting, Lottery Taxes, surcharges etc., as long as they are related to entry tax and the supply of goods and services. Due to reasons, which are social, environment related as well as those related to import dependence, certain products like high-speed diesel, alcohol (human consumption) is not included. Also, the direct taxes will be exempted from the GST, including capital gains, corporate and income tax. To better understand GST, consider the following: There exists a manufacturer, retailer and dealer (wholesaler). Goods and Service Tax is 10%. Now assume that the manufacturer buys the raw materials worth Rs 100 for Rs 140. Therefore, the total GST he will pay is Rs 4 by getting a tax credit of Rs 10 on the raw materials he had purchased. Now,......

Words: 2236 - Pages: 9

Free Essay

Goods and Service Tax India

...Introduction Billed as India’s biggest indirect tax reform since independence- Goods and Service Tax once introduced has the potential to boost economic growth and according to analyst add around 0.9%-1.5% to our GDP. GST has been implemented by over 150 countries owing to its transparency and revenue increasing capabilities. The idea of GST is almost a decade old and was first proposed by a committee chaired by tax expert Vijay Kelkar in March 2004 after much deliberations and delays P.Chidambaram and Pranab Mukherjee formally introduced the legislation in Lok Sabha in March 2011. Thereafter the Bill has been stuck up in a quagmire of political opportunism and delay. The law, if finally passed by both houses of parliament will come into force from April 2016. 2.Nuanced understanding of GST As opposed to a single comprehensive tax which is a global norm India has decided to adopt the dual GST model where there are two components- central GST (CGST) and a state GST (SGST) hence the Centre and state will legislate and administer the taxes concurrently. GST will subsume various disparate taxes viz. Central excise duty, VAT, Service tax and also other taxes like luxury tax, entry tax thereby reducing the compliance cost and at the same time simplifying the tax structure. GST is primarily a destination based tax and requires that the SGST accrues to the destination state this caused dissent among some predominantly manufacturing states like Maharashtra, Gujarat and Tamil......

Words: 1055 - Pages: 5

Premium Essay

Literature Review

...Literature Review 1.1 Readiness, Perception and Awareness of people towards GST. The literature on the GST is extremely wide . The are many areas that can be focus on basically while doing my research . The most highlight areas on GST is on the public reaction towards GST in Malaysia before the implementation which can known their readiness , perception and awareness on GST. According to ( Mohd Rizal Palil ,2011) he has done a research in Malaysia on the impact of Good and Service Tax towards Middle Income Earners. The author has done survey towards people all around Kuala Lumpur through questionnaire. Based on the finding of his research he reveals that most of the employees does not support the government decision for the implementation of GST and also they strongly does not accept the fact that GST will be implemented in the nearest future. At the same time they strongly does not support the implementation. Based on (K. Saira ,2010) he has done a research on the awareness of the people towards GST and his finding indicates that people are not aware that GST will be charge on Goods and Services. The researcher conclude that people are not aware of GST as soon its going to be control in their life. Beside that they are not aware that it will impact on the economy very well. (K. Saira ,2010) There is also another research which is concerning about the perception of Tax Payers on GST by (Tan Mei Lian ,2010) .The author has also done survey questionnaire towards......

Words: 5096 - Pages: 21

Premium Essay

Goods and Services Tax

...The IT Strategy for GST Empowered Group on IT Infrastructure on GST headed by Shri Nandan Nilekani Preface The broad IT plan for enabling GST was presented to the Government of India and the Empowered Committee of State Finance Ministers under the Chairmanship of Dr. Asim Dasgupta on July 21, 2010. This document is a follow-up to that presentation and feedback thereon and describes the IT strategy for GST implementation. This document is at the draft stage, and will evolve as various stakeholders and experts are consulted. 1. 1. Table of Contents Preface ...................................................................................................................................................... 1 Introduction ................................................................................................................................... 2 1.1 1.2 The merits of GST ................................................................................................................................ 2 Urgency .................................................................................................................................................... 2 Desirable features of Goods & Service Tax Network (GSTN)........................................... 3 Stakeholders .......................................................................................................................................... 4 Workflows .............................................

Words: 2956 - Pages: 12

Premium Essay

Indian Retail Industry

...OVERVIEW India is the fifth largest retail market globally, with a size of INR 16trn, and has been growing at 15% per annum. Organized retail accounts for just 5% of total retail sales and has been growing at 35% CAGR. Though the journey has so far been rather mixed, organized retail is being tipped as one of the biggest gainers from growing consumerism and rising income. India’s robust macro and microeconomic fundamentals, such as robust GDP growth, higher incomes, increasing personal consumption, favourable demographics and supportive government policies, will accelerate the growth of the retail sector. 1) Learning from the Past: During2005-2007, the sector was in a hyper growth phase. In pursuit to capture market, companies made strategic as well as operational errors which has been broadly classified as follows: I .Race for increasing retail space resulting in haphazard growth ii. Unviable formats iii. High lease rentals iv. Manpower costs and productivity issues v. Poor back end infra structure vi. Entry of too many new players 2) Consolidation:Duringtheglobalslowdownphaseof2007-2009,theIndianretailplayerspausedtorealizetheirpastmistakesandtooktimeandefforttore-organizethemselves:i.Focusonprofitablegrowth * Exit from unprofitable stores/formats * Rental renegotiation/revenue sharing arrangements * Reduction in salaries/higher manpower productivity * Significant investments in backend ...

Words: 3256 - Pages: 14

Premium Essay

Textile Industry Analysis

...GST- HANDLOOM AND TEXTILE SECTOR INTRODUCTION The Textile industry contributes 2% to India’s GDP .India is the largest producer of cotton and jute and second largest producer of silk and manmade fibre and filament in the world. Cotton majorly dominates the yarn and the fabric stage. Who produces them? The handloom and textile weavers. Any loom which is operated manually is called a handloom whereas textile is a flexible material composed of natural or synthetic fibres, formed by weaving, knitting, knotting etc. The textile industry employs the maximum number of people after agriculture. It directly employs upto 50 million and indirectly upto 60 million people (approximately). The Goods and Services Tax (GST) is the biggest tax reform in India...

Words: 1896 - Pages: 8

Premium Essay

Goods and Service Tax

...What is GST? Goods and Services Tax is a comprehensive tax levy on manufacture, sale and consumption of goods and services at a national level. Through a tax credit mechanism, this tax is collected on value-added goods and services at each stage of sale or purchase in the supply chain .The system allows the set-off of GST paid on the procurement of goods and services against the GST which is payable on the supply of goods or services. However, the end consumer bears this tax as he is the last person in the supply chain. What are the benefits of GST? 1. Credit Scheme: GST will be levied on supply of goods and services and the supplier will be allowed credit for the GST paid on purchases. The credit would be seamless except that the credit of CGST paid will not be allowed for set-off against SGST payable and vice versa. This will eliminate the he cascading effect and reduce the price. 2. Subsuming all Taxes: GST should subsume all major indirect taxes levied by the Central Government i.e. central excise, customs and service tax and majority of the taxes levied by the State Government i.e. VAT, luxury tax, entertainment tax, etc. In this regard, tax on petroleum products and alcohol are intended to be kept either outside or tax additionally under GST. 3. Export-oriented industries -internationally more competitive as entire taxes in supply chain would be refunded (zero-rating) 4. Import-substituting industries would also become competitive as prices of Indian ...

Words: 1057 - Pages: 5

Free Essay

Tfdfg

...ESSAY FOR SBI DESCRIPTIVE TEST CYBER CRIMES Millions of people around the world use computers and the internet every day. We all use it in school, work even at home, computers have made our lives easier it has brought so many benefits to the society but it has also brought some problems and cybercrimes with them. Today, the world is moving towards a point where everything from banking stock exchanges, are traffic control, telephones to electric power, health care, welfare and education depends on software. This exponential growth, and the increase in the capacity and accessibility of computers coupled with the decrease in cost, has brought about revolutionary changes in every aspect of human civilization, including crime. As a result, the increased capacities of information systems today come at the cost of increased vulnerability. Information technology has begun to produce criminal opportunities of a variety that the brightest criminals of yore could not even begin to dream about. The term “Cyber Crime” has nowhere been defined in any statute or Act passed or enacted by the Indian Parliament. Any criminal activity that uses a computer either as an instrumentality, target or a means for perpetuating further crimes comes within the ambit of cyber crime. It is rapidly evolving from simple e-mail mischief where offenders send obscene e-mail, to more serious offences like theft of information, e-mail bombing to crashing servers etc.There are various forms of cyber crime like...

Words: 10004 - Pages: 41

Premium Essay

Haywire

...taxpayers with an annual taxable income of more than 1 crore (10 million) rupees.   c) Property Tax/Capital Gains Tax - This is levied on the capital gains arrived by selling property and stocks. Tax rates are different for long term and short term capital gains.   d) Gift Tax/ Inheritance or Estate Tax - Amount exceeding Rs. 50000 received without consideration by an individual/HUF from any person is subjected to gift tax as income under "other sources". There are exemptions like money received from relatives is not taxable. Marriage gifts and money received through inheritance are also exempt from gift tax. Inheritance tax was earlier in practice but has been repealed by the government.   e) Corporate Tax - Companies operating in India are taxed as...

Words: 786 - Pages: 4

Premium Essay

Digital Tax Reforms

...‘Base Erosion Profit Shifting ‘. The emphasis is mainly on two taxes, namely, ‘Diverted Profit Tax’ and ‘Digital Goods and Service Tax’, which are recently mentioned in the Australian Budget 2015. Organisation for Economic Co-operation and Development’s (OECD) involvement to concrete changes to avoid Base Erosion Profit Shifting (BEPS) has been mentioned. UK’s ‘Google tax’ and the ‘Double Irish Dutch sandwich’ tax evading structure is explained in an effort to elucidate the steps taken by Australian Government to encounter issues similar to them. Facts are stated with regard to the current Australian economy meshing these two new taxes into the existing taxation system. A conclusion is drawn concisely assessing the enforcement of ‘Digital GST’ and ‘Diverted Profit’ taxes and their probable effects on the economy. 1. The need for comprehensive tax reform One of the prime ways of generating economic revenue is to improve the tax capabilities. A good tax system promotes sustainable growth, provides key platform for trade and investments and strengthens the accountability of government to their citizens. The growing complexity in business and technological advances has made it difficult for the existing tax system to keep in pace. Taxes were charged on concrete assets usually that were easy to locate but the emerging mobility has increased the usage of intangible assets that are not easy to estimate. This issue is not resolvable by an individual country. Due to globalisation and......

Words: 1248 - Pages: 5

Premium Essay

Business Ethics

...GOODS AND SERVICE TAX BILL * Same tax rates for all goods and services. * Its not based on income. GOODS AND SERVICES TAX BILL INTRODUCTION Goods and Services Tax is a comprehensive tax levy on manufacture, sale and consumption of goods and services at a national level. GST will replace other taxes levied by central and state government . This would be collected at each stage of purchase or sale. Tax on goods and services will be of same rate at every stage until it reaches the ultimate consumer . Problem statements * One of the major issue is that the tax rate is even for all the goods and services . This will not work for a country with asymmetric federalism . * Non inclusion of petroleum , tobacco , liquor will be a major drawback since most of the country's revenue is made from the three mentioned goods . * India does not have a stable economy as of now . Introducing GST would be a pushback rather than benefit to the country with unstable economy . * Income varies from one person to another . The country can't expect the people under poverty line to pay taxes at the same rate as others . * GST will definitely reduce the price of products but this will inturn lead to less quality goods since the main motive being money for any concern . * * * (income tax) * Liquor/tobacco/petroleum- 85% of india’s income * Not a stable economy- per-capita income is not such that people can pay the......

Words: 283 - Pages: 2

Premium Essay

Retail March 2014

...consumer expenditure 1.0 2010 2020E India consumption expenditure (USD trillion) 1.3 Consumer expenditure estimated to be USD3.6 trillion by 2020 vis-à-vis USD1.0 trillion in 2010 CAGR: 12.7% Indian retail one of the fastest growing markets in the world due to economic growth 0.5 Retail market in India to reach USD1.3 trillion by 2020 from USD0.5 trillion in 2012 2020E 2012 Indian retail market size (USD trillion) Favourable government policies to boost investor confidence and thereby investments across modern retail formats CAGR: 30.0% 27 2012 220 2020E Modern retail market to expand to USD220 billion by 2020 from USD27 billion in 2012 Indian modern retail market size (USD billion) Source: PWC, Economic Times, Aranca Research Notes: CAGR - Compound Annual Growth Rate, E - Estimate CAGR: 7.6% 100 Robust consumption, rural markets to augment FMCG market 12 2006 2025E FMCG market expected to increase to USD100 billion by 2025 from USD12 billion in 2006 FMCG market in India (USD billions) 67,100 CAGR: 19.6% Increasing participation from foreign and private players to boost retail infrastructure 11,192 Modern retail stores projected to reach 67,100 by 2016 from 11,192 in 2006 2016E 2006 Modern retail formats (store counts) 8,500 Rising number of tier-2 and tier3 cities to enhance supermarket space in the country CAGR: 32.8% 500 2006 2016E Supermarkets in India Source:......

Words: 4638 - Pages: 19