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A Study On Goods And Services Tax (GST)

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 government.

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 continuous improvement.

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 taxes.

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 state.

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 economy.

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 tax structure.

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% of 2015-2016.
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 setoff.

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. updates

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