PROJECT REPORT

TITLE OF THE PROJECT

“GST ‘2017’ AND IT’S IMPACT ON FEW SECTORS”

SUBMITTED BY:

NAME:

REGISTRATION NO:

UNIVERSITY ROLL NO:

COLLEGE ROLL NO:

NAME OF THE COLLEGE:

SUPERVISED BY:

NAME:

NAME OF THE COLLEGE:

Month & Year Of Submission:

February 2018

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 SUPERVISOR’S CERTIFICATE

This is to certify that a student of B.com Honours in Accounting & Finance of under the

University of Calcutta has worked under my supervision and guidance for her Project Work and

prepared a Project Report with the title “GST ‘2017’ AND ITS IMPACT ON FEW

SECTORS” which she is submitting, is her genuine and original work to the best of my

knowledge.

Place : __________________________________

Date: Signature

Name :

Designation :

Name of the College :

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 STUDENT’S DECLARATION

I hereby declare that the Project Work with the title “ GST ‘2017’ AND ITS IMPACT ON

FEW SECTORS” submitted by me for the partial fulfilment of the degree of is my original

work and has not been submitted earlier to any other University/Institution for the fulfilment 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 acknowledged providing details of such literature in

the references.

Place : _____________________________________

Date: Signature

Name :

Address :

Rgd No. :

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 ACKNOWLEDGEMENT

Words are indeed inadequate to convey my deep sense of gratitude to all those who have helped
me in completing this project to the best of my ability. Being a part of this project has certainly
been a unique and a very productive experience.

First of all, I would like to thank for providing me an opportunity to undertake a project as partly
fulfilment of course.

I would also like to thank my project supervisor for guiding me about preparing the project
report and I am very thankful to office staff and the library staff of for their useful guidance and
advice.

Any omission in this brief acknowledgement does not mean any lack of gratitude.

Thanking You

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 TABLE OF CONTENTS

CHAPTER TITLE PAGE NO.

I INTRODUCTION 1-5
1.1 Background of the Study 1-2
1.2 Rationale of Study 2
1.3 Objectives of Study 2
1.4 Literature Review 3-4
1.5 Research Methodology 5
1.6 Limitations of the Study 5
II CONCEPTUAL FRAMEWORK 6-17
2.1 Overview 6
2.1.1 Dual GST 7
2.1.2 Inter-state GST 7
2.1.3 GST Rates 7
2.1.4 Threshold Limits 8
2.1.5 Input Tax Credit 8-9
2.1.6 Administration & Management 9-10
2.1.7 Goods & Services Covered 10-11
2.1.8 GST And Its Effect On Inflation 11
2.1.9 Impact Of GST On GDP 12-13
2.1.10 GST VS VAT 13-16
2.2 International Scenario 16-17

III PRESENTATION OF DATA ANALYSIS AND FINDINGS 18-38

3.1 Presentation Of Data
3.1.1 Impact of GST on Real Estate Sector 18
3.1.2 Impact of GST on Banks And NBFCs In India 19-20
3.1.3 Impact of GST on FMCG Sector 20-21
3.1.4 Impact of GST on Manufacturing Sector 22-23
3.1.5 Effect of GST on Agricuture Sector 24
3.1.6 Impact of GST on Hospitality Sector 25
3.1.7 Effect of GST on Health care & Pharmaceutical Sector 26
3.2 Data Analysis 27-36
3.3 Findings 37-38

IV CONCLUSION & RECOMMENDATION 39-41

4.1 Conclusion 39-40
4.2 Recommendation 41
REFERENCES 42
QUESTIONNAIRE 43

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 I. INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Goods and services precisely on the amount of value addition achieved. It seeks to eliminate
inefficiencies in the tax system that result in ‘tax on tax’, known as cascading of taxes. GST is a
destination-based tax on consumption, as per which the state’s share of taxes on inter-state
commerce goes to the one that is home to the final consumer, rather than to the exporting state.
GST has two equal components of central and state GST.

The introduction of Goods and Services Tax (GST) would be a very significant 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 mitigate 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, which is currently estimated to be around
25%-30%. Introduction of GST would also make Indian products competitive in the domestic
and international markets. Studies show that this would have a boosting impact on economic
growth. Last but not the least, this tax, because of its transparent and self-policing character,
would be easier to administer.

Goods and Service tax bill officially known as the constitution (one hundred and twenty second
amendment) bill, 2014 a national value added tax to be implemented in India from June 2016.

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The GST implementation in India is ‘Dual’ in nature, i.e, it would consist of two components:
one leived by the Centre (CGST) and another leived by the State and Union Territories (SGST).
However, base of tax levy would be identical.

The Goods and Service Tax (GST) is the biggest and substantial indirect tax reform since 1947.
The main idea of GST is to replace taxes like value-added tax, excise duty, service tax and sales
tax. It will be leived on manufacture sale and consumption of goods and services. GST is
expected to address the cascading effect of the existing Tax structure and result in uniting the
country economically. Currently in India complicated indirect tax system is followed with
imbrications of taxes imposed by the union and states seperately. GST will unify all the indirect
tax under an umbrella and will create a smooth national market

The proposed taxation system was totally new so it provoked me for taking up this topic for the
project. An attempt has been made to find out GST and its impact on few sectors like agricultural
sector, helath care and pharma sector, real estate sector, banking sector, fast moving consumer
goods (FMCG) sector, manufacturing sector, and hospitality sector. Both primary as well as
secondary data have been resorted to.

1.2 RATIONALE OF STUDY

The main focus of GST is to remove “Tax on Tax Effect” and provide for common national
markets for Goods and Services. An effect of such tax is to reduce the Cascading effect, which
will certainly reduce the tax burden on consumers. The main purpose of GST is also to decrease
the tax rate for many goods and to increase proximity of our tax system ti the global tax system.
Through this project I have tried to look into the most important aspects of GST.

The another main objectives of GST is to eliminate excessive taxation and to bring a uniform
indirect tax leived on goods and services accross a country.

1.3 OBJECTIVES OF STUDY

1.To understand the concept of GST.

2. To understand its impact on different sectors.

3. To know the advantages and challenges of GST in Indian context.

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4. To perceive how GST will work in India.

1.4 LITERATURE REVIEW

Agogo Mawli (Mat 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. Vasanthagopal (2011) Studied and found a balance in conflicting interests of various
stakeholders with the implefication of the constitutional amendment.

Ehtisham Ahmed and Satya Poddar (2009) studied, “Goods and Service Tax Reforms
Intergovernmental Consideration in India” and found that GST introduction will provide
simplier and transparent tax system with increase in ouput and productivity of economy in India.
But the benefits of GST are critically dependant on regional design of GST.

Nitin Kumar (2014) studied, “Goods and Service Tax- A Way Forward” and concluded that
implementation of GST in India help in removing economic distortion by current by indirect tax
system and expected to encourage unbiased tax structure which is indifferent to geographical
locations.

Pinki, Supriya Kamma and Richa Verma (July 2014) studied, “Goods and Servicve Tax-
Panacea For Indirect Tax System in India” and concluded that the new NDS government iin
India is positive towards implementation of GST and it is beneficial for central government, state
government and as well as for consumers in long run if its implementation is backed by strong IT
infrastructure.

Ahmad, E., & Poddar, S. (2009), GST remorms and inter-governmental Considerations in
India, in their working papers have given a detailed explaination about the shortcomings of the
current tax regime and the objectives of the tax reform. Besides these it also gave options for
Centre and Statw GST. It threw light on the tax base and tax rates for various sectors. It
conducted by giving means of harmonizing taxes and ways of administering them.

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Kumar, N. (2014), Goods and Services tax in India: a way forward, presented the
background, salient features and the impact of GST in the present tax scenario in India. It also
highlighted the benefits to various shareholders.

The constitution (122nd Amendment) , Bill 2014 (GST) share the behind GST is to subsume all
existing indirect taxes under one tax which will be levied on Goods and Services. This shall
intend to harmonize the tax system across the country.

Girish Garg, (2014) studied and found that GST is the most analytical step towards the
comprehensive indirect tax reforms in our country.

Kumawat, Pallawal (2015), Emergence of Goods and Service tax (GST) in India, paper also
presented the background, sallient features and the impact of GST in the present tax scenario in
India. It also gave details of the taxes2 that will be subsumed with the implementation of GST.

Raman s (2010), Migration to GST: Preparedness and level of knowledge, Understanding,

Application and Skills of Human Resources in the Government and the Industry. In this
paper the author has conducted a primary research to know the opinions or the suggestion of the
top officials, middle level tax officials, department staff, trade and industry, professionals and
general public. And the author also discuss about GST in different countries, recent
developments in GST.

IANS (Indo Asian News Service) (2014) points out that the final consumer wil bear only GST
charged by the last dealer in the supply chain with the set off benefits at all previous stages.

Kellar (2009) analyses that GST will bring a qualitative change in the tax system by
redistributing tax burden equitably, boosts GDP in the long run through cost reduction and it will
be successful if taken in similar fashion at both centre and state.

According to Sharma and Neha (2014) GST is a better approach of charging tax on Goods as
well as Services to solve the existing problem of tax evasion, distortion and cascading effect
which can be minimised through this and broaden tax base structure increasing tax revenues
which may be used for the growth of the nation.

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1.5 RESEARCH METHODOLOGY:

The researcher has used primary data and secondary data. Primary data concludes a structured
form of questionaire, 100 respondants were interviewed through the said structured questionaire.
Mainly South Calcutta people were considered to be the respondants. Secondary data includes
magazines, internet, books, journals, articles, and some market survey using tools like asking
question through phone, etc.

The essential part of any report is research methodology. The field was conducted to analyze the
implementation and importance of goods and service tax.

1.6 LIMITATIONS OF THE STUDY:

All the economic/scientific studies are faced with various limitations and therefore this project
work is no exception to this phenomenon. The various limitations of the study are:-

 Time constraints - due to shortage or less availability of time it may be possible that all
the relatedand concerned aspects may not be covered in this project.
 Limited area to study – study being conducted was very wide and analysis requires
expertise knowledge and skill which was lacking.

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 II. CONCEPTUAL FRAMEWORK

2.1 OVERVIEW OF GST

Goods and Services Tax (herein after referred as “GST”) is a major step in history of the
country’s indirect tax regime moving towards one country one tax. This much awaited tax
reform seeks to tackel India’s present indirect tax structure which is quite complex in terms of
multiplicity in number of taxes, tax rates, exemptions, thresholds limits, fillings, administration
etc.

The Constitutional (One Hundred and Twenty Second Amendment) Bill, 2014 introducing GST
received the assent of the President on 8th September, 2016 and the same has been notified as the
Constitution (101st Amendment) Act, 2016 (herein after referred to as “ The Constitutional
Amendment Act”). This Act amends the Constitution to introduce the goods and service tax
(GST) by empowering the Parliament and the State Legislatures to make laws on GST.

Goods and Services Tax (GST) is an indirect tax which was introduced in India in 1 July 2017
and was applicable throughout India which replaced multiple cascading taxes leived by the
central and state governments. It was introduced as The Constitution (One Hundred and First
Amendment) Act 2017, following the passage of Constitution 122nd Amendment Act Bill. The

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GST is governed by a GST Council and its Chairman is the Finance Minister of India. Under
GST, goods and services are taxed at the following rates, 0%, 5%, 12%, 18% and 28%. There is
a special rate of 0.25% on rough precious and semi-precious stones and 3% on gold.

2.1.1 DUAL GST:

The Central GST and State GST would be levied simultaneously on every transaction of supply
of goods and services except except the exempted goods and services, goods which are outside
the purview of GST and the transactions which are below the prescribed threshold limits.
Further, both would be levied on the same price or value unlike State VAT which is levied on the
value of the goods inclusive of CENVAT. While the location of the supplier and the recipient
within the country is immaterial for the purpose of CGST, SGST would be chargeable only when
the supplier and the recuipient are both located within the State.

2.1.2 Inter-State GST:

The Empowered Committee has accepted the recomendations of the Working Group of
concerned officials of Central and State Governments for adoption of IGST model for taxation of
inter-State transaction of Goods and Services. The scope of IGST Model is that Centre would
levy IGST which would be CGST plus SGST on all inter-State transactions of taxable goods and
services. The inter-State seller will pay IGST on value addition after adjusting available credit of
IGST, CGST, and SGST on his purchases. The Exporting State will transfer to the Centre the
credit of SGST used in payment of IGST. The Importing dealer will claim credit of IGST while
discharging his output tax liablity in his own State. The Centre will transfer to the importing
State the credit of IGST used in payment of SGST. The relevant information will also be be
submitted to the Central Agency which will act as clearing house mechanism, verify the claims
and inform the respective governments to transfer the funds.

2.1.3 GST RATES:

There will be two tax rate for SGST – lower rate for necessary and basic importance items and a
standard rate for all other goods. Further, there will be a special rate for precious metals and a list
of exempted items. Rates charged across all state and the central level will be uniform along with

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the regulations, definitions and classifications. However, as per latest development, it has been
agreed to include a floor rate with bands to allow States the freedom to have a high or low rate.

2.1.4 THRESHOLD LIMITS:

Threshold exemtions is built into a tax regime to keep small traders out of tax net. This has three-
fold objectives:

 It is difficult to administer small trader and cost of administering is very high in

comparison to the tax paid by them.
 The compliance cost and compliance effort would be saved for such small traders.
 Small traders get relative advantage over large enterprises on account of lower tax
incidence.

A uniform GST threshold acorss States in desirable and, therefore, the Empowered Committee
has recomended that a threshold of gross annual turnover of Rs. 20 lakh and Rs. 10 lakh both for
goods and services for all the States and Union Territories may be adopted woth adequate
compensation for the States (particularly, the States in North-Eastern Region and Special
Category States). Keeping in view the interest of small traders and small scale industries and to
avoid dual control, the States considered that the threshold for Central GST for goods is kept at
Rs. 1.5 crore.

2.1.5 INPUT TAX CREDIT

One of the fundamental features of GST is the seamless flow of input credit across the
chian(from the manufacture of the goods till it is consumed) and across the country.

Input credit means at the time

of paying tax on output, we
can reduce tax we have
already paid on inputs and pay
the balance amount

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Input tax credit can be claimed by a person registered under GST only if he fulfils ALL the
conditions as prescribed.

 The dealer sgould be in possession of tax invoice.

 The said goods/services have been received.
 Returns have been filed.
 The tax charged has been paid to the government by the supplier.
 When goods are received in installments Input Tax Credit can be claimed only when the
last lot is received.
 No Input Tax Credit will be allowed if depreciation has been claimed on tax companent
of a capital good

Input Tax Credit can be claimed only for business purposes.

Input tax credit will not be available for goods and services exclusively fot:

 Personal use
 Exempt supplies
 Supplies for which Input Tax Credit is specifically not available.

If they are used for non-business (personal) purposes, or for making exempt supplies Input Tax
Credit cannot be claimed. Apart from these, there are certain other situations where Input Tax
Credit will be reversed.

Input tax credit will be reversed in the following cases :

1. Non-payment of invoices in 180 days.

2. Credit note issued by ISD by seller.
3. Inputs partly for business purpose and partly for exempted suppliers or for personal use.
4. Capital goods partly for business and partly for exempted supplies or for capital goods.
5. Input Tax Credit reversed iss less than required.

2.1.6 ADMINISTRATION & MANAGEMENT

THE GST COUNCIL –

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The GST Council has been set up with the help of these members, Finance Minister as the
Chairperson, Union Minister of State in charge of Revenue or Finance as its member and
Finance or Taxation or another minister nominated by each SGs as its member.

The following quorum and weightage of votes shall be required for decision taking by the GST
Council:

 Quorum :- 50% of the total member of Members of GST Council.

 Voting in GST Council :- Every decision required at least 3/4th of weighted votes of
members present as per following principle
 Vote of CG :- weightage of 1/3rd of total vote cast
 Vote of all SGs taken together :- weightage of 2/3rd of total vote cast.

Based on the recommendations of the GST Council, the Parliament passed CGST & IGST laws
and the State Legislature have passed their respective SGST laws. Thus the GST Council
recommended the following decisions :

1. Taxes, cesses and surcharge subsumed in GST,

2. Goods and Services to be subject to or exemted in GST,
3. Model GST laws, principles of levy, apportionment of IGST,
4. Principles that governs the place of supply,
5. Threshold limit of turnover,
6. GST rates including flooe rates with bands of GST,
7. Special provisions with respect to the states of Arunachal Pradesh, Assam, Jammu
Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himchal Pradesh
and Uttarakhand,
8. Or any other related matter.

2.1.7 GOODS & SERVICES COVERED

GST will be levied on supply of goods and services.

 Alcohol for human consumption

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Alcohol for human consumption does not fall under the purview of GST in India at present. The
taxes imposed to Alcohol for human consumption are continued as per the structure before GST
implementation.

 Petroleum Products viz. Petroleum crude, motor spirit (petrol), high speed diesel, natural
gas and aviation turbine fuel

Petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel ect.
are not attracted by GST. However, the taxes for these products are attracted as per the structure
before introduction of GST.

 Electricity

The category, Electricity has been kept aside under the purview of GST at present. So, electricity
does not fall under GST at present. However, the taxes applicable for electricity is continued as
before.

2.1.8 GST AND ITS EFFECT ON INFLATION

RBI’s monetary policy review suggests that more than 50% of the Consumer Price Index (CPI)
basket will not come under GST. The implementation of the goods and services (GST) has
disrupted businesses, supply chains and to some extent consumption as well. But when it comes
to retail inflation. GST is likely to have minimal or no impact at all. The Reserve Bank of India’s
(RBI’s) monetary policy report says that GST is non-inflationary. For every product which will
see a price increase due to higher
taxation, there is an offsetting
price fall elsewhere.

However, the central bank noted

that a one-off increase in prices
could be seen in the first year of
the tax reform implementation
because companies will choose to
hike prices initially. A dipstick

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survey of price movements of 18 commodities (denominated by consumer durables and fast -
moving consumer goods) by RBI showed that their weighted average price has gone up by 0.8%.

2.1.9 GST IMPACT ON GROSS DOMESTIC PRODUCT (GDP) IN INDIA

The biggest tax reform i.e. Goods and Service Tax is now a part of Indian Economy. A new and
unified tax structure is followed for indirect taxation on the place of various tax laws like Excise
duty, Service Tax, VAT, CST etc. and for sure the new tax regime is determined to eliminate the
cascading effect of tax on transaction of products and services, and it will result in availability of
product and services to consumers at lower price. It is expected that it will be helpful in
increasing production and the purchasing power of the buyer which may increase the GDP by
1% to 3%.

Latest GDP Data for July-September

Quarter : India’s GDP has been recorded at 6.3
percent in the quarter of July – September, with
a fast approach towards better number than 5.7
in the previous quarter. With some expectations
for 6.7 percent in the financial year 2018, to the
7.3 percent and 7.5 percent in the FY 19 and FY
20 respectively. There is some hindrance to the
GDP number due to GST as speculated by the
experts but, many economists are likely to maintain 6.5 percent. So here in this article, we will
see the GST impact on the Indian Economy-

GST POSITIVE IMPACT OF GDP : There will be one tax rate for all which will create a
unified market in terms of tax implementation and the transaction of goods and services will be
seamless across the states. The same will
reduce the cost of the transaction.

In a survey, it was found that 10-11 types

of taxes levied on the road transport
businesses. So the GST will be helpful to

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reduce transportation cost by eliminating other taxes.

After GST implementation the export of goods and services will become competitive because of
nill effect because of nill effect of the cascading effect of taxes on goods and products. In a
research done by NCAER, it was suggested that GST would be the revolution in Indian
Economy and it could increase the GDP by 0.9 to 1.7 percent.

GST NEGATIVE IMPACT ON GDP

As the rates are 5%, 12%, 18%, and 28% and if the GST rate on service will be finalised at 5%
or 12% then cost of services will get reduced while in else case if the rate will be 18% or 28% on
services then services will become costlier and it will lead to inflation for a short period.

In a report, DBS bank noted that initially, GST will lead to the rise in inflation rate which will
remain for a year but after that GST will positively affect on the economy.

As we know Real Estate also plays an important role in Indian economy but some experts thinks
that GST will impact the Real Estate business negatively as it adds up the additional 8 to 10
percent to the cost to reduce the demand about 12 percent.

2.1.10 GST VS VAT

The current indirect tax system in India is characterised as

multi-stage taxation with levy of taxes not only at the central
level but also at the state level. Customs duty is imposed on
imports, central excise on manufacture, central state tax
(CST)/ value – added tax (VAT) at the time of sale and
service tax on provision of services. Other taxes such as
octroi, entry tax and cess are also levied by municipal and local authorities.

Finally Goods and Service Tax, commonly known as GST ia reality now and it has brought the
Indian taxation system under its unique ideology ‘one nation, one tax ’. The advent of GST has
subsumed all the indirect taxes in India, including Value Added Tax(VAT), Service tax, Excices
duty, and Octroi. These indirect taxes or VAT were levied on each step of value addition of the

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product, thus creating a cascading effect. Therefore, GST was introduced to bring down
unwanted inflation in the economy.

WHAT IS VAT?

VAT- the Value Added Tax, was applicable for goods nad services. Service tax took care of the
services rendered. The previous taxation system included several indirect taxes along the supply
chain, resulting into high tax rates paid from the pocket of the ultimate consumer.

WHAT IS GST?

However, GST is applicable for both goods and services, together with uniforming pricing. GST
is one tax that is levied on manufacturing, selling, and consumption of goods and services. It is a
destination -based tax, distributed maong the Central Government and the State Governments
under the components Central GST (CGST) and State GST (SGST).

HOW IS GST DIFFERENT FROM VAT?

In the words of many eminent economists, VAT and GST are just two names for one tax, but on
evaluating minutely, you observe the contrast. First and foremost, it’s important to understand
how valuation of goods is considered under their respective perspective.

VAT is calculated on the market price of goods. Further, excise duty and VAT add up to it.

For Example: Suppose a manufacturer sells a machinery worth Rs. 3000 to a distributor. The
invoice would reflect:

Price of goods = 3000/-

Excise duty @ 12.5% = 375/-

Subtotal = 3375/-

VAT @ 14.5% on subtotal = 490/-

The total payable amount by the customer = 3865/-

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Whereas, GST will be only charged on the selling price and the subsequent parts of SGST and
CGST would add to the value of goods as per their percentage. The invoice under GST scenario
would reflect:

Price of goods = 3000/-

CGST @ 9% = 270/-

SGST @ 9% = 270/-

The total payable amount by the customer = 3540/-

The total difference of the two taxes = 3865-3540 = 325/-

Thus, GST has eliminated the additional, indirect and reduntant taxes and has reduced the burden
on the common taxpayer. However, there is more in terms to draw comparison between VAT
and GST. Let’s have a look at major points of difference amongst the two.

8 KEY POINT OF DIFFERENCES BETWEEN VAT AND GST

1. Taxable event

VAT – On Sale of goods.

GST – On every supply of goods or service.

2. Tax between state and center

VAT – Only State govt. Gets the whole share for welfare of state’s public.

GST – GST is collected under SGST and CGST for every sale from same state. The
corresponding center and state amount then gets bifurcated.

3. Input Credit

VAT – Dealer has right to deposit his net VAT liabilty by deducting input VAT on goods
purchased and from output on goods sold.

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GST – As GST is applicable on goods as well as services provided, the GST portal system
calculates the Input credit which is used for payment during the next GST liability.

4. Input tax credit on service of goods

VAT – Not applicable, as VAT is only for goods, not services.

GST – The paid GST on services adds up to total input GST comparable to total output GST,
which may be on goods sold. Finally, the tax payer gets the input credit on tax for the services
availed by the products you purchased.

5. Taxation on services

VAT – VAT is not applicable on provided or sold services. Services tax is charged additionally
@ 14.5%.

GST – GST rates for services depend on ntaure of service. It may be 12% and 18% and 28%
depending on the sector. Most services come under 15% GST.

6. Return Filing

VAT – Must the file return by 20th of succeeding month.

GST – Must file return for sales by 10th, purchase by 15th and payment by 20th of succeeding
month.

7. Compulsion for VAT No. & GST No.

VAT – If turnover is beyond RS. 10 Lakh.

GST – If turnover is or beyond RS. 20 Lakh.

2.2INTERNATIONAL SCENARIO

Importance of GST has been well acknowledged by many developed and fastest developing
economies of the world. The concept of GST might be new to or country but it’s an old concept
and it was France to implement GST for the first time in the owrld in 1954, Since then many

21
countries have implemented GST for the smooth development of their economy. The journey of
GST in some of the developed countries are discussed below :

 European Union (EU): European Economic community adopted GST throughout the
Europe, replacing cascading multi stage turnover tax owing to the ease with which it
handled cross-border transactions and facilitated development of a common market.
 Canada: In Canada, GST is applicable on supply of most goods and services including
real property and intangible personal property. Cnada has a federal government like India
and a federal GST was introduced in 1991.
 New Zealand: In New Zealand, GST was enacted in 1988 and was designed as a
comprehensive tax base including many difficult-to-tax goods and services. The New
Zealand GST become an international benchmark for indirect tax design.
 Australia: Implementation of new tax system package in Australia including GST in 1999
is considered as a landmark change to the Australian tax system. The GST replaced the
federal wholesale sales tax with a single tax rate of 10% on supply of most of the goods
and services.
 Singapore: GST was implemented at a single tax rate of 3% on 1 April 1994 with an
assurance it would not be raised for at least 5 years. The role of GST in the economic
development of Singapore can not be undermined. It was the first reform in the taxation
system which made it as one of the best nation in ease of doing business.
 Malaysia: In Malaysia GST was implemented in 2015, after debating for 26 years!
Consumer confidence nosedived; inflation went up; anti-GST protests in capital Kuala
Lumpur. After initial hiccups things have settled down with 70% respondents reoporting
business growth in 2015.

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Currently, there are 160 countries in the world that have implemented GST in some form or the
other.

III. PRESENTATION OF DATA ANALYSIS AND FINDINGS

3.1 PRESENTATION OF DATA

3.1.1 IMPACT OF GST ON REAL ESTATE SECTOR

INTRODUCTION – GST may bring a lot of relief to the real estate sector. Supply chain
mechanism in real estate sector to be revamped after implementation of GST.

Real estate sector is one

of the most pivotal sector
of the Indian economy.
Real estate sector plays a
vital role in employment
generation in India. The
importance of Real estate
sector can be understood
with its average 5-6%
GDP contribution and
stimulating demands for
more than 250 ancillary industries.

23
GST REGIME FOR REAL ESTATE SECTOR: GST would bring a lot of transparency in the
real estate sector and minimize unscruplous transactions. Under the current tax laws, VAT and
Service tax charged by different Contractors and excise duty, entry tax, octroi is paid on the
procurements. GST law will increase the margin in the hands of contractor/developer by
removing all the above- mentioned taxes.

GST RATE ON REAL ESTATE: Currently, the sale of land and buildings have been kept out
of the ambit of GST but it is expected to be taxed with in a period of a year. Cement will be
taxed at the rate of 28% under GST. It is higher the current average rate of tax around 23-24%
but a lot of additional taxes charged over the average rate would be subsumed under GST. Iron
rods and pillars used in construction of buildings is charged at the rate of 18% which is similar to
the current average rate of 19.5%.

3.1.2 IMPACT OF GST ON BANKS AND NBFCs IN INDIA:

Implementation of GST is standing true to its slogan of “One Nation, One Tax” and turning it
into reality. GST is making impact on every business sector in the country, including the service
sector. The service sector, most specifically, financial services based on funds and insurances
(Non-Banking Financial Company) NBFCs and Bank are impacted the most. Withdrawing
money from an ATM has become easier owing to its place in every locality, irrespective of
whether you an account in that bank or not. However, almost all of us have received a text
message or a phone call from our respective banks where we have an account, informing us that
after a certain number of transactions and specific amount withdrawl the bank will charge us a
nominal fee as per the instructions of the Reserve Bank of India. Though this isn’t new to us now
with the implementation of GST, where service tax was earlier charged at 15% now, it will be
replaced by 18 percebt GST. Some impacts and issues relating to the provisions in the Model
GST Law are discussed below.

REGISTRATION HAS BECOME A PROBLEM: During the pre- GST regime, banks and
NBFCs with Pan-India operations cou;d release its service tax compliance by a single centralised
registration process. Now, under the current GST regime, these banks and NBFCs need to get
different registration for each state that they work into. Along with the burdent of GST

24
cpmpliance, the filing of returns has also expanded generously wherever periodicitry of returns,
level of details needed in such returns and number of return formats are concerned.

ADJUDICATION AND ASSESMENT MADE DIFFICULT: The assesment was performed

by the state regulators under which a particular branch is registerred in the previous tax regime.
Now, under GST , all registered branches of banks and NBFCs will need to justify its position as
per its chargeability in a respective state and a valid reason for using ITC in different states.
Under the pre-GST regime, a taxpayer was adjudged by only one adjudicating authority for an
issue.

TRANSACTIONS SUBJECT TO GST : There are certain services provided by banks and
NBFCs that are impacted by the implementation of GST. Some of the services include

1. Loan: Loan being money to money transaction, is not subject to GST. Moreover, the
interest that is to be charged on loans is also exempted from GST.
2. Lease: Lease, in financial sectors, can either be a supply of services (transfer of right to
use goods for cash, deferred payment, etc.) or supply of goods (transfer of title in goods),
which will attract GST at the rate similar to assets that are leased out.
3. Hire Purchase: Hire Purchase transaction includes a hirer providing an asset for use on
hire rental basis and a right to acquire the asset at the end of the hiring tenure at a
nominal rate. This transaction will, therefore be charged at the same rate at which a hired
asset is charged under GST.

3.1.3 IMPACT OF GST ON FMCG SECTOR

25
 The Indian FMCG Sector is the
fourth largest sector in the economy
with a total market size in excess of
US$ 13.1 billion. Fast Moving
Consumer Goods (FMCG) goods
are popularly named as consumer
packaged goodsa. Items in this
category include all consumables
(other than groceries/pulses) people buy at regular intervals. FMCG is also one of the fastest
growing sectors among all the sectors in the Indian economy. Within the FMCG sector, food
product is the leading segment, accounting for 43% of the overall sectors

POST-GST IMPACT ON FMCG SECTOR:

The fast-moving consumer goods (FMCG) segment is the fourth largest sector in the Indian
economy. It has grown from US$ 9 billion in FY 2000 to US$ 49 billion in FY 2016-17 and has
an expected compound annual growth rate (CAGR) of 20.6 percent to reach US$ 103.7 billion
by 2020, according to the India Brand Equity Foundation’s July 2017 presentation. Within the
FMCG sector, food product is the leading segment, accounting for 43 percent of the overall
sector. Personal care (22 percent) and fabric care (12 percent) come next in terms of market
share.

GST IMPACT: The total current tax rate for the FMCG induster is around 22-24 percent. Under
GST. The tax rate comes to an average of 18-20 percent. Lets’ look at how the new tax rates
under GST impact major
products within the sector:

Companies such as Patanjali,

ITC, HUL, and Marico are either
slashing the prices of goods or
increasing the volume of the
products on dispatches made
from 1 July onward, extending

26
the tax benefits to consumers under the GST regime. In particular, HUL has slashed the price of
its detergent soap Rin bar of 250 gm from Rs. 18 to Rs. 15 and increased the weight of its Surf
Excel bar costing Rs. 10 from 95 gm to 105gm. Lower prices could potentially support volume
growth of certain products, particularly in the rural segment. “ We believe it could result in a
faster consumption shift from unbranded yo branded products, spurring volume growth for
FMCG companies. Simultaneously, it will also bring operational efficiency with rationalization
of supply chain by removing bottlenecks,” says Sanjay Manyal, Analyst, ICICI Securities. He
also pointed out that tax exemption provided to several critical products required for food
processing – jaggery, cereals, and milk – would benefit the industry.

TOP GAINS AND LOSSES: Wondering who will gain and who will lose from the new GST
structure? Companies such as Marico will benefit from the change in the rates of edible oil, and
the rates of hair oil have decreased in their favour as well. Colgate-Palmolive will also gain
under GST, as toothpaste will become cheaper now.

On the other hand, gifting dry fruits on festivals will become an expensive affair now as the rates
have increased from 4-5 percent to 12 percent. Also, the rates of dairy products like ghee, butter,
and cheese have increased from an average rate 4-5 percent to 12 percent. This increase will
have a negative ripple effect and hurt the entire ecosystem of farmers, retailers, distributors, and
bottlers in India. This increase in tax will further limit the growth of the beverage industry,” said
the Indian Beverage Association (IBA) in a statement.

3.1.4 IMPACT OF GST ON MANUFACTURING SECTOR

GST – the unified tax system that is set to revolutionize indirect taxation in India – is finally
here. Some of the key proposed advantages are streamlining of tax payments, reduction in tax
frauds, and ease of doing business. Here is a look at how these will play out in the manufacturing
domain.

27
 Make In India & Manufacturing :

The manufacturing sector in India contribues

a mere 16% to the overall GDP. However, the
potential to mske this a high-growth and high-
GDP sectoe is huge. The “Make In India”
campaign by Prime Minister Narendra Modi
makes this possibility real, by giving impetus
to the sector. Furthermore, PwC estimates
that India will become will become that fifth
largest manufacturing company in the world
by the end of 2020. It would be interesting to
know how the Goods and Services Tax of
GST impact this roadmap.

Impact of GST on Manufacturing:

GST is one of the key policy changes that will

have a direct impact on manufacturing
establishments. So far, the existing complex tax structure has been a dampener, resulting in the
slow growth of the sector.

Overall, GST is expected to have a positive impact and boost manufacturing. Here is why:

 Removal of multiple valuations will create simplification: The old tax regime subjects
manufacture goods to excise duty, which is calculated on differently in different states.
 Improved cash flows: Under the new tax laws, manufacturers can claim input-tax
credit on input goods, which seems to be a positive sign for cash flow. SMEs are
keenly observing the time difference between tax credit and the credit and the credit
being available.
 Single registration process will provide ease of registration: The old regime required
manufacturers to register eaxh manufacturing facility seperately, even those in the same
state. GST will simplify the plant registration process by allowing single registration
process for all manufacturing entities within the same state..

28
  Removal of cascading will lead to lower cost-to-customer: The old tax regime does not
allow manufacturers to claim tax credit on inter-state transaction taxes such as octroi,
central sales tax, entry tax, etc. This results in cascading of taxes – an extra cost to the
manufacturing company. The unified GST regime will eliminate multiple taxes and thus
lower cost of production; this, in turn, will mean lower pricing for the customer. For
example, prior to 1 July 2017, SMEs in manufacturing used to pay Excise Duty, Central
State Tax and sometimes VAT too at 12.5%, 2% and 5.5% respectively. With GST in
effect, they are required to pay 18% in taxes.
 Restructuring of supply chain: To allign with the GST law, businesses will be required
to realligns the supply chains. However, this is a blessing in disguise. Till date, most
supply chain structuring has been designed around how to manage tax regimes

Manufacturers, however, are concerned about the following aspects:

 Increase in mmediate working capital requirement: Branch transfers and depo-

transfer will be treated as taxable under GST; IFST will be applicable on thsese
transfers. This increases the requirement for immediate working capital.
 More stringent and elaborate transaction management: GST aims to achieve better tax
compliance. To make this possible, manufacturers must work towards streamlining
existing transactions; this means additional resources and costs. For example, under
GST, credit in respect to an invoice can be taken only up to one year of the invoice
date.

3.1.5 EFFECT OF GST ON AGRICULTURE SECTOR

GOVERNMENT PLANNING ‘ONE NATION, ONE MARKET’ IN AGRICULTURE

SECTOR.

The governments model law for agricultural reforms aims to allow farmers a wider choice of
market beyond the local mandi.

29
The impact of GST on agricultural sector is foreseen to be positive. The agricultural sector is the
largest contributing sector the overall Indian GDP. It covers around 16% on Indian GDP. The
implecation of GST would have an impact on many sections of the society. One of the major
issues faced by the agricultural sector is the transportation of agriculture products across state
lines all over India. It is highly probable that
GST shall resolve the issue of
transportation. GST may India with its firts
National Market for the agricultural goods.
Special reduced rates should be declared for
items like tea, coffee, milk under the GST.

IMPACT OF GST ON
AGRICULTURAL SECTOR: GST is
essential to improve the transparency,
reliability, timeline of supply chain
mechanism. A better supply chain mechanism would ensure a reduction in wastage and cost for
the farmers/retailers. GST would also help in reducing the cost of heavy machinery required for
producing agricultural commodities. Under the model GST law, dairy farming, poultry farming,
and stock breeding are kept out of the definition of agriculture.

Fertilizers an important element of agriculture was oriviously taxed at 6% (1% Excise + 5%

VAT). In the GST regime, the tax on fertilizers have been increased to 12%. The same impact is
on Tractors. Wavier on the manufacture of Tractors is removed and GST of 12% has been
imposed. This is beneficial as now the manufacturers will be able to claim Input Tax Credit.

3.1.6 IMPACT OF GST ON INDIAN HOSPITALITY SECTOR

Goods and Service Tax, or GST! This seems to be the word everyone is treating with complete
trepidition. There is still a lot of uncertainity and wairness in what the next few months will
bring, and what all changes need to be made.

30
 So how does GST affect the Indian
hospitality sector? Just a few days
back, the GST council provided a
slight sigh of relief to mid-market
and luxury hotels by stating that
only rooms with a tariff of
Rs.7,500 and more, and not
Rs.5,000 as declared earlier, would
have a GST of 28%. Hotel room
with a tariff between Rs. 2,500 to Rs. 7,500 would have a GST of 18%.

The GST on room tariffs proves to be a double-edged sword; before GST a hotel room with a
tariff of Rs. 5000 would attract about taxes amounting to about 20%, therefore, the same room
would be priced at Rs.6000 before GST and Rs. 5900 after GST. On the flip side a room with a
tariff of Rs. 7500 with taxes would be priced at Rs. 9000 before GST and Rs. 9600 after GST. It
will only be logical if the hotelier fixes the price at Rs. 7499 so that the final amount to the
customer would be around Rs. 8850 as it falls under 18% tax slabs.

Many hotels, nowadays, have some sort of dynamic pricing (done manually), which fluctuates
depending on demand and supply. Now since GSR also varies depending on the tariff, hotels
need to ensure that their billing system or PMS is able to alter the tax as per the pricing of the
room across all their distribution channels. The first few months may require some double
checking, but PMS software, such as Hotelogix is already GST ready to make the transition
trouble free for hotels.

A slight relief to the luxury hotel segment is that the GST on their restaurants has been revised.
Initially, the council planned to impose a GST of 28% on the restraunts and five-star hotels but
after a lot of opposition from the hospitality sector they brought it down to 18%.

3.1.7 EFFECT OF GST ON HEALTH CARE & PHARMACEUTICAL SECTOR

As the GST sets in, pharmaceutical companies have to pay more in manufacturing cost as raw
material cost goes up by 7% and hence the MRP of the product need to be changed to abosorb
that impact.

31
 2016-17 has been tenure of
prolific significance, as India saw a
plethora of reforms, set to change how
the market functions. Amongst the lot,
GST is the single biggest tax reform
which all industries are witnessing
today. Yet, there is a great deal of
ambiguity surrounding it as its impact
on various industries like
pharmaceutical industry is unknown today, creating a lot of uncertainity in the whole supply
chain. To comprehend the impact of GST, we need to get grips on the intricate spectrum of
pharmaceutical supply chain.

There are two key things that have changed are the manufacturing price-many raw materials for
API and products have moved from 5% VAT bracket to 12% GST bracket and a lot of medicine
salts / compounds have moved from 5% to 12% GST bracket. Also there are a lot of food and
medicine supplements which have moved from 12.5%-15% to 18 and 28% brackets, marking a
record hike in price. For this, we need to understand the margins at which the supply chain
operates. The C&F agent operates at 4-6% margin on MRP, distributor wholesaler operates at 7-
8% margin on MRP and retailers at 20% margin on medicines.

As the GST sets in, pharmaceutical companies have to pay more in manufacturing cost as raw
material cost goes up by 7% and hence the MRP of the product need to be changed to absorb that
impact. While speaking about the overall impact of GST to end consumer, as manufacturing cost
is between 10-15% of product MRP, the GST impact to the end consumer is less than 1% by
cutting C&F cost, yet paying higher GST on finished product, the total net impact resulting to
almost 4% to the end consumer.

3.2 DATA ANALYSIS

10 questions were given in a questionaire and a survey was made among 100 people in South
Kolkata to know their opinion on GST. Taking all responses in consideration the following pie
charts are made.

32
Q1. Did you faced any problem after implementation of GST?

PARTICULARS NO. OF RESPONDENTS PERCENTAGE (%)

YES 40 40%
NO 60 60%
TOTAL 100 100%

RESPONSE
YES NO

43%

57%

INTERPRETATION – On the basis of my above question I have found out that out of 100,
40% people are have faced problem after implementation of GST, and 60% of people did not
faced any problem after implementation of GST.

Q2. Do you think GST will act as a burden for the consumers?

PARTICULARS NO OF RESPONDENTS PERCENTAGE (%)

YES 45 45%

33
NO 55 55%
TOTAL 100 100%

Response
YES NO

45%
55%

INTERPRETATION – On the basis of my above question I have found out that out of 100,
45% of people think GST will act as a burden for the consumers, and 55% of people thinks GST
will not act as a burden for consumers.

Q3. Do you think your household budget has been affected after implementation of GST?

PARTICULARS NO OF RESPONDENTS PERCENTAGE (%)

YES 30 30%

34
NO 70 70%
TOTAL 100 100%

Response
YES NO

30%

70%

INTERPRETATION – On the basis of my above question out of 100, 30% of people thinks
that their hosehold budget has been affected after introduction of GST, and 70% of people thinks
GST has not affected their household budget.

Q4. Do you think GST is a fair tax?

PARTICULARS NO OF RESPONDENTS PERCENTAGE (%)

35
YES 65 65%
NO 25 25%
May be 10 10%
TOTAL 100 100%

Response
YES NO May be

10%

25%

65%

INTERPRETATION – On the basis of my above question out of 100, 65% of people thinks
GST is a fair tax, 25% of people does not think so, and the rest 10% of people are confused about
it.

Q5. Do you think implementation of GST had cause higher price of goods and services?

PARTICULARS NO OF RESPONDENTS PERCENTAGE (%)

36
 YES 77 77%
NO 23 23%
TOTAL 100 100%

Response
YES NO

23%

77%

INTERPRETATION – On the basis of my above question out of 100, 77% thinks that GST has
caused higher higher price of goods and services, while 23% of people does not think so.

Q6. Do you think India was ready for implementing GST?

PARTICULARS NO OF RESPONDENTS PERCENTAGE (%)

37
 YES 35 35%
NO 65 65%
TOTAL 100 100%

Response
YES NO

35%

65%

INTERPRETATION – On the basis of my above question out of 100, 35% of peoples thinks
that India was ready for implementation of GST but 65% of people’s does not thinks the same.

Q7. According to you which is more beneficial ?

PARTICULARS NO OF RESPONDENTS PERCENTAGE (%)

38
 VAT 25 25%
GST 75 75%
TOTAL 100 100%

Response
VAT GST

25%

75%

INTERPRETATION – On the basis of my above question out of 100, 25% of people thinks
VAT is more benegicial on the other hand 75% of people thinks GST is more beneficial.

Q8. Do you think GST should be implemented in future with better economic condition?

39
PARTICULARS NO OF RESPONDENTS PERCENTAGE (%)
YES 80 80%
NO 20 20%
TOTAL 100 100%

Response
YES NO

20%

80%

INTERPRETATION – On the basis of my above question out of 100, 80% of people thinks
GST should be implemented in future with better economic condition and 20% does not thinks
the same.

Q9. Has GST resulted in inflation?

40
 PARTICULARS NO OF RESPONDENTS PERCENTAGE (%)
YES 85 85%
NO 15 15%
TOTAL 100 100%

Response
YES NO

15%

85%

INTERPRETATION – On the basis of my above question out of 100, 85% of people thinks
GST has resulted in inflation while 15% of people doesnot thinks so.

Q10. Do you want GST to be withdrawn?

41
PARTICULARS NO OF RESPONDENTS PERCENTAGE (%)
YES 33 33%
NO 67 67%
TOTAL 100 100%

Response
YES NO

33%

67%

INTERPRETATION – On the basis of my above question out of 100, 33% of people thinks
GST should be withdrawn while 67% of people does not thinks so.

3.3 FINDINGS

42
By circulating the questionnaires to 100 people and noting down their responses the followings
things are found:

 It has been noticed that most of the people have not faced any sort of problem after the
implementation of GST as according to them GST is just a name replaced for VAT, while
there are some who has faced problem after the implementation of GST like paying more
for certain goods and services which was a sort of necessary consumption for them.
 Most of the people in my survey has thinks GST did not act as a burden for the
consumers, as according to them they are rather paying the same for the goods and
services and even paying low for certain goods and services. On the other hand there are
few people who thinks that GST is a burden for them.
 Household budget has been effected for quite a number of people, after the
implementation of GST. While majority of people thinks that GST has not at all effected
their household budget rather it has helped in reducing the price of the essentials.
 “GST is a fair tax” has been agreed by majority of peoples, while according to some
peoples they do not consider GST as a fair tax and the minority thinks it depends upon
the situation and also the goods and the services provided.
 Majority of people thinks that GST has increased or raised the price of goods and
services includinng some of the necessary items, while minority section of people thinks
GST has not increased or raised the price of goods and services.
 India was ready for the implementation of GST is the opinion of quite a number of
people, while majority part thinks that India was not ready for the implementation of
GST as according to them poor and middle class people cannot sustain suck hike in the
price of goods and services.
 Minority section of people thinks that VAT was more beneficial for them as the use to
pay less for many goods and services including necessary ones, while majority section of
people thinks that GST is more beneficial as it will have favorable impact for the
economy in middle and long term basis.
 GST should be implemented in future with better economic condition is the view point of
majority of people, while few people thinks its good that GST is already implented.

43
 GST has resulted in inflation is what the majority of people thinks, while the minority
section has contrary opinion about this subject as according to the minority section that
there was sustainable rise in price which is good for the economy.
 GST should not be withdrawn is the opinion of majority number of people, while the
minority number of people wants GST to be withdrawn as it is difficult for them to
sustain such hike in price.

44
 IV. CONCLUSION & RECOMMENDATION

4.1 CONCLUSION

GST is now no news to anyone, this is one of the biggest decision taken by the Indian
government. For the same reason, July 1 was celebrated as Financial Independence day in India
when all the Members of Parliament attended the function in Parliament House. The transition to
the GST regime which is accepted by 159 could not be easy.

GST has a very powerful impact on many things including GDP also. The Gross Domestic
Product has a tendency to loom on the shoulders of revenue generated in a economy. Still, a
worthwhile point includes that the GST has a capability to extend the GDP by a total of 2% in
order to complete the ultimate goal of increasing the per-capita income of every individual.
Overall we feel that the impact on inflation could be somewhere between marginal increase in
the short run. In the medium to long-term, GST should put down pressure on inflation through
efficiency gains, reduction in lower transportation cost.

Impact of GST on agricultural sector has raised the cost of few agricultural products which is
anticipated due to the rise in inflation index for a brief period. Though, implementation of GST is
going to benefit a lot, the farmers/distributurs in the long run as there will be a single unified
national agricultural market. GST would ensure that farmers in India who contribute the most to
GDP, will be able to sell their produce for the best available price.

The introduction of GST has come as a game changer for the pharmaceutical sector. Every
pharma professionals have their own view on this. Some claim that it’s a win-win situation for
the government while some are doubtful aboutit. But one thing is for sure; it has made it much
easier for the taxpayer by making a uniform way of paying a tax. The pharmaceutical and
healthcare sectors are huge the GST will minimize the cascading effects of manifold taxes that is
applied to one product. It is expected that the GST will have a constructive effect on the Pharma
industry in a variety of ways.

The banking sector is one of the largest service sectors in India. Banks have always been a huge
pillar of the Indian economy and taxpayers are literally banking on them for GST
payments/financial needs. Moreover, the IT system will have to be vigilant enough to solve the

45
complexities related to GST procedures and compliance at a higher volume. With GST, services
are expected to attract 18% GSR. The rate is higher by 3% from the previous service tax rate of
15%.

The Indian FMCG sector is the fourth largest sector in the economy with a total market size in
excess of US$ 13.1 billion. Fast Moving Consumer Goods (FMCG) goods are popularly named
as consumer packaged goods. Since different products are taxed at different rates, some products
becoming more expensive falling under 12% tax bracket while other becoming cheaper, and
basic food products such as milk, wheat, rice and fresh vegetables have been kept under the NIL
bracket. Some companies will gain with lower tax and distribution costs, and thus may respond
by increasing product volume and reducing prices, while others may lose with higher taxes, and
thus need to compensate by higher prices.

Under GST, the hospitality sector standsto reap the benefits of uniform rates, easy and better
utilization of input credit. The Hotel and Restaurant Association of Western India had been
lobbying for a GST rate of 5% as it believed that a lower rate will bring more tourists. However,
the GST Council deemed it fit to set the rate at 18%.

The effect of GST on the maufacturing sector is positive. It provides a unique oppurtunity to
steamline business operations to become more compliance and profitability-oriented, rather than
tax-oriented. It puts power in the hands of business leaders to bring about positive change and
steer their enterprises on a growth path, powered by GST compliance.

The main impact of GST on real estate sector is expected to be neutral under GST. Though still,
there is going to be a substantial benefits from GST as it will bring a lot of required transparency
and accountability. Developers/Contractors would reap the benefit of many taxes subsumed
under by GST.

Now, from the consumer point of view, the biggest advantage would be in terms of reduction in
the overall tax burden on goods and services. But there are products, whose prices have been
increased in such a level that regular consumption for those has been decreased, which was a sort
of necessary items for that. For some consumers GST is acting as a burden and majority of them
thinks that GST is just a named which replaced VAT.
Overall we can say that GST is a Short-term Pain, but Long-term Gain.

46
 4.2 RECOMMENDATION

For Government:

The distilation of various approach can be summarised as under:

a) Sufficient preperation need to be made by both Central and State governments for
implementing GST at all levels.
b) There should not be lack of co-ordination between the Centre and the State which can
affect the system and also the revenues generated.
c) It should include alcohol and petroleum product or else which would lead to incurring of
huge losses.
d) Sudden implementation of GST might create confusion to common man.
e) All effort should be made by the government to keep the GST rate as low as possible.
f) Effort should be made for not affecting the equity of the society, i.e. poor should be
charged equal to rich.
g) Sudden implementation of GST might create confusion to the common man, so
government could have taken some time before implementing GST.

For Citizens:

A citizens, even we have a duty towards making our economy a clean and a rapidly growing one,
which can be done only by cooperating with government:-

a) Record and report all transaction and honestly pay tax wherever applicable
b) Report all tax evasive attempts if observed
c) Consumer should embrace GST as it is a transparent tax and also reduces numbers of
indirect taxes
d) Not only government but we should also make an attempt to educate the general public
about GST and encourage them to pay tax regularly

It is clear that GST wil not only boost the economy by increasing GDP but will also increase tax
revenue earned by the government within 2 years. Many of the pieces of the puzzles have been
put in place, and if both government and citizen join hands, we can be one of the most powerful
clean and developed economies in the world.

47
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5. Indirect Tax Committee, Institute of Chartered Accountants Of India(ICAI), 2015
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growth-by-2percent/story/8474.html
11. IANS, May 6th, 2015 Delhi, Business Standard retrieved from
http://www.business-standard.com/article/economy-policy/what-is-gst-and-how-it-will-
change-taxation-in-india-115050600828_1.html

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 QUESTIONNAIRE
Name:

Gender: Male ( ) Female ( )

Phone Number:

1. Did you faced any problem after implementation of GST?

o YES
o NO
2. Do you think GST will act as a burden for the consumers?
o YES
o NO
3. Do you think your household budget has been effected after implementation of GST?
o YES
o NO
4. Do you think GST is a fair tax?
o YES
o NO
o MAY BE
5. Do you think implementation of GST had cause higher price of goods and services?
o YES
o NO
6. Do you think India was ready for implementing GST?
o YES
o NO
7. According to you which is more beneficial ?
o VAT
o GST
8. Do you think GST should be implemented in future with better economic condition?
o YES
o NO
9. Has GST resulted in inflation?
o YES
o NO
10. Do you want GST to be withdrawn?
o YES
o NO

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