Goods and Services Tax is an indirect tax which is imposed in India to
upgrade and support the monetary development of the country. The vast majority
of the Developed nations have executed Goods and Services Tax Bill (GST).
Notwithstanding, in India, GST was laid out in 1999. An advisory group was set
up to plan the model of GST. Yet, GST was re-launched on 1 July 2017 by the
Indian government. There was a major shout for its execution. The GST supplanted
every one of the different taxes which were taken by state and central
To that end it is said "One Nation One Tax" which implies there is no need to
pay some other tax in all around the country. The study deliberately audits the
effect of GST in India. This research paper gives the bibliometric
representation and a feeling around of GST of the public. It was observed that
the government's intention of GST was to bring every one individuals of the
country under the tax and to forestall the progression of black money. In any
case, it was seen that bunches of Indian citizens‟ opinions were in a
predicament. So, it is recommended to revisit the structure and keep a scope of
GST is a tax structure which is effectively settled in numerous nations all
around the world and presently it is a piece of Indian Economy. It was presented
around a decade prior yet got deferred because of governmental issues between
administering party and opposition. At last, GST became effective at 12 PM on 1
July 2017 by the president of India through the execution of constitutional
amendment. It is considered as the greatest taxation change in Indian Economy.
India is presently the fifth biggest economy on the planet according to IMF & is
viewed as one of the world's quickest developing economies.
A value added tax that will replace all other indirect taxes is GST. GST will
boost the GDP gradually. It will also enhance the level of India in both
domestic and international market. It is one of the biggest economic reforms in
India and can be said as a single tax which is imposed on the supply of various
goods and services. It is a comprehensive, multistage destination-based tax.
GST In Indian Economy:
GST stands for Goods and Services tax. Before the execution of GST, there were
numerous indirect taxes which the organizations and businesses needed to pay.
After the implementation of GST which is one of the greatest and huge financial
change. Fundamentally, the point is to give a rearranged and a tax structure
which is imposed on the financial exercises and will help in expanding the
productivity of the organizations.
It is a comprehensive nature tax which is levied on manufacturing, selling and
consuming goods and services. GST has supplanted practically every one of the
roundabout taxes aside from some which states and central levy taxes. Very
nearly, 160 nations across the globe have executed GST instead of indirect
GST is collected by the state, where the goods and services are consumed. This
states that it is a destination-based tax. India has implanted a dual GST model
i.e both the states and central will levy taxes on goods and services. GST was
finally implemented with effect from 1st July 2017. SGST is the GST collected by
The central GST which is collected by the Centre is called CGST. The tax
applicable on interstate and import transactions is called IGST which is again
collected by Centre and the tax applicable on transactions within the union
territories without legislature like Daman & Diu, Chandigarh, Lakshadweep
islands is called UTGST, collected by the Union territory.
Need for GST In India:
The introduction of GST is one of the significant stages of economic reform in
the country. GST is essentially summation of different state and local taxes
into a one single tax. GST helps in decrease of twofold taxation, falling
impact, issue of arranging and clearing taxes, variety of taxes and so on. GST
made a more extensive tax base, rationalization of tax construction and
harmonization of state and Center organization.
Before GST there were different VAT rates across the country which differ from
state to state but with the introduction of GST, there is a uniform tax system
across the country and the taxes are divided between the state and the central
government. GST will help in reduction of tax theft and corruption in our
Goods and Services tax influences each individual and business. There is some
ups and downs in business areas before all else, in light of the fact that it
won't show impact in instantly. Authors have concentrated on the significance of
VAT in the Indian Economy and its impact on the general public, business,
industry in India utilizing the information which is made by the government.
Authors have also referenced that as per specialists GST is probably going to
improve the arrangement of tax collection and will support the financial
advancement of India.
GST will almost eliminate cascading impact on the creation and circulation cost
of goods and services. This reduced cost of goods and service leading to
accelerated GDP growths without tax barriers will leads to economies of scale in
manufacturing industry and reduces the supply chain cost.
GST is supposed to diminish the production cost by 15% to 20% in a large number
of the items considering full info tax credit which will well affect the costs
of item. GST will remove the tax distortions from the economy. Which will lead
to stable growth based on the strength of the country. A simplified tax system
will attract more manufacturing investment for growth. Multiple taxes that
currently exist will no longer be roadblock. This will reduce the compliances to
be fulfilled as compared to present situation.
GST Tax Slab:
The study about GST provided many statistical information. It was found that
there are about five slabs for the collection GST -0%, 5%, 12%, 18%, 28%. But
some products like electricity, alcohol and petroleum goods are not included in
GST. It can be taxed by the state government individually according to the old
There is a 4-level tax sections as per which the tax rate is forced on different
items and services. After the execution of GST, there is an adjustment of the
tax structure. The taxes are forced on items, contrast as indicated by their
need in everyday life.
The tax sections are as follows:
- Zero tax:
some items enjoy zero tax rate on various goods, which are Barley, wheat,
oats, kajal (other than kajal pencil stick), sanitary napkins, music books,
coloring books and drawing books for children, all types of salt and human
hair, hotel and lodge bill under Rs. 1000, bank charges on saving account
and Jan Dhan Yojana.
- 5% tax rate:
Some goods which are taxed under 5% slab are cashew nuts, aggarbati, kites,
postage stamps, bio gas, insulin, matting, walking sticks, Pawan chakki atta,
braille typewriter, braille paper, braille watches and other hearing aids,
takeaway food restaurants, hotel with room tariffs less than Rs. 7500 and
special flights for pilgrims.
- 12% tax rate:
Some goods which are taxed under 12% slab are plastic beads, ketchups,
sauces and mustard sauces, all kinds of diagnostic kits and reagents,
notebooks and copies, spoons & forks, fish knives, fixed speed diesel
engines, cake knives, skimmers, playing cards, carrom board and other board
games, two-way radio used by military and police forces, corrective
spectacles, Business class air tickets and movie tickets under Rs. 100.
- 18% tax rate:
Some goods which are taxed under 18% slab are kajal pencil sticks, plastic
tarpaulin, toilet cases, dental wax, school bags other than leather bags or
leather composition, aluminum foil, rear tractor tyres or tyre tubes,
printers other than multifunction printers, weighing machine other than
electronic weighing machine, electrical transformer, static converters, CCTV,
baby carriages, televisions and monitors (up to 32 inches), ball bearings
and roller bearings, set up box for TV, electrical filaments, power banks of
lithium-ion batteries and bamboo furniture, Movie tickets above Rs. 100,
branded garments, telecom and financial services and restaurants inside
hotels with bill of Rs. 7500 or above.
- 28% tax rate:
Goods which are taxed under this slab are pan masala, dishwasher, weighing
machine, paint, cement, hair clippers, motorcycles, sunscreen, betting on
casinos and racing, hotel stay bill above Rs. 7500, and automobiles.
Effect Of GST On Growth Of Economy:
Mainly three components of society are affected by the change in tax rates of
goods and service, namely: Consumer, Producer and Country. To explain the effect
of this shift in tax here are some examples explained below.
The effect on restaurant industry which has shifted its tax rate from 18% to 5%.
Tax distribution of restaurant charges after GST shows that the tax charged from
the consumers has decreased as compared to pre-GST tax scheme. Prior all the
restaurants used to charge 18% but now the tax charged on all restaurants is 5%.
Now let's take an example of Tobacco industry which has moved to 28% of tax slab
which was earlier charged with excise duty only. Many reports of WHO has said
that India is one of the countries having highest no. of mouth cancer patients
because of tobacco. Tobacco kills more than 1 million people each year as per
WHO report. GST Council declared tax on tobacco and tobacco-related products.
The GST council fixed a GST rate of 28% on all tobacco products with an
additional compensation on cigarettes. India is not only a major producer of
tobacco but also a leading exporter. Only 11% of the tobacco is consumed in the
form of legal cigarettes whereas market for cigars is still at a budding stage.
A high percentage of revenue collection from tobacco of government is from legal
cigarettes and such a small percentage of 11% doesn't affect the revenue much if
the prices are changed at minimal level.
The tobacco industry had neutral impact is less consumption of since the 5% Cess
declared by the government of India is less than the rate expected by the
tobacco industry. There Tobacco after implementation of GST but there is not
much difference in the revenue generated from Tobacco as people who can afford
it at 28% are still having it.
Therefore, both these examples entail that the shift of goods and services in
different tax slab have been beneficial for economy.
The GST bill gave rise to many benefits which are mentioned in this section.
Goods and Services can become cheaper for the people on the longer run. Prices
of cinema tickets, T.V., Bikes, Cars, washing machines, restaurant services may
come down. GST Registration and fill the forms is a simple and very easy online
procedure. Replacing multiples taxes also reduces documentations and saves time.
One of the most important benefits of GST is elimination of cascading effect of
tax,i.e., "Tax on Tax". Moreover, as manufacturing will get more competitive,
GST will boost.
Make in India initiative of the Indian Government. All imported goods will be
charged and it will bring quality with taxation on local products. GST will be
monitored by both state and central government officers so there are very little
changes of escaping from paying the taxes.
There are some disadvantages of GST. The transaction fees in financial sector
have become more expensive which increased by 3% from 15% to 18% and GST regime
also appears to be unfavorable for telecommunication sector. There is a negative
impact on the real estate market. In Rajasthan many people are working in marble
factories will be losing business as marble falls in the 28% slab.
It's an online procedure so many businesses have to fill procedures for online
records and in online procedures many types of confusion and issues arising. GST
search number (GSTIN) is a method to ensure that the GST is paid by your unique
identity but many businesses are not registered GST but they will show their
GSTIN in bill.
The impacts of GST on the economy of the country are as follows:
- With the execution of GST, Service sector is expected to be impacted
more in comparison to trading sector.
- Due to GST Ecommerce shopping, online booking, Tobacco, insurance
premiums have got expensive, on the other hand Basics food items like edible
oil, wheat, rice pulses, four wheelers, Electric goods have got cheaper.
- In India, when GST was not implemented, every state was acting like
different country because it had its own law for tax but in Two-tiered One
Country-One Regime there is only one tax which is applied all over the
country now the transportation has become easier, and reduce the fear of
foreign investors due to regularization of Indian market under one tax.
- Tax collection will go up because many people came under the tax loop,
so the chances of bribes as well as people cannot escape from it.
- Due to GST corruption will decrease because it will be checked central
government as well as state government.
- After implementation of GST, it will lower the price of products which
is purchasing by the citizens and it will increase the demand and
economically if demand increases production increases and it will lead to
job opportunities and reduces the unemployment.
- Economy grew 7.4% in 2017-2018, after the first year of implementation
of GST, which is slightly higher than 7.2% in 2016-2017, but lower than 7.8%
The implementation of GST has given a positive notion in 150 countries across
the world and it will give a positive impact on the Indian service sector. It
will increase the GDP undoubtedly but it will take some years to show the effect
because economic growth may not jump immediately, but its beneficial for the
economy of the country. So, we can conclude by stating that the execution of GST
will give relief to the producers and consumers by giving them input tax credit
Good and services tax likely bring balance to government empowerment. The
malicious activity of not paying the tax will go away under this regime so that
both Government, as well as consumers, can take profit. This helps the Indian
economy to become stronger and more stable.
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.
- ClearTax (2019): Impact of GST on the Indian Economy.
- Nayyar, A., Singh,I. (2018): A Comprehensive Analysis of Goods and
Services Tax (GST) in India. Indian Journal of Finance , 12(2)
- Taxmann Goods and Services Tax (2020): Top stories and Updated on GST.
- The Economic Times (2020): GST updates. https://economictimes.indiatimes.com/topic/GST-