Project Report

On

“VALUE ADDED TAX AND GOODS AND SERVICES TAX”

At

Session 2018-2019

Submitted To: A.P. LAKHWINDER SINGH

Submitted by:LOVEJEET SINGH

Roll no: 170220010

1
ACKNOWLEDGEMENT
It is a matter of great pleasure to present this report on the entitled “VALUE
ADDED TAX AND GOODS AND SERVICES TAX” undertaken by me as part
of my M. COM curriculum. I am thankful to maharaja ranjit singh punjab technical
university for offering me such a wonderful challenging opportunity and I express
my deepest thanks to faculties of the collage and whose guidance and support was
available to me all the time.

It is my pleasure to pen down these lines to express sincere thanks to the people
who helped me along the way in completing my project. I find inadequate words to
express my sincere gratitude towards them. I also express my gratitude towards my
training guide, for the placing complete faith and confidence in my ability to carry
this project and for providing us her time inspiration, encouragement, help,
valuable guidance, constructive criticism and constant interest. He took personal
interest in spite of numerous commitments and busy schedule to help us complete
this project. Without his sincere and honest guidance of my respected project guide
we would have not been able to reach this present stage. I express my deep sense
of gratitude to my family members and to my dear friends for their support and
encouragement during the entire course of study.

2
CERTIFICATE

This is certified that the project “VALUE ADDED TAX AND GOODS AND
SERVICES TAX” is abonified work done by LOVEJEET SINGH roll
no.170220010 a student of bhai gurdas college sangrur during the academic 2018 -
2019 .

3
DECLARATION
The undersigned hereby declare that project report entitled “VALUE ADDED
TAX AND GOODS AND SERVICES TAX” written and submitted by LOVEJEET
SINGH student of BHAI GURDAS COLLEGE SANGRUR in M. COM under the
guidance of my mentor Mr.LAKHWINDER SINGH is original work and the
conclusion drawn therein is based on the material collector by my own efforts. I
also hereby declare that, this study has not permitted by me to publish anywhere.

4
 PREFACE

In today’s world, organizations that fail to adjust their learning

management practices and solutions often struggle with
organizational growth or productivity. As a result, leading
companies are abandoning traditional methods of learning in
favour of more effective solutions-often involving technology
innovations-that engages talent and improve performance .This
report highlights key trends affecting the future of enterprise
learning and recommendations for selecting the right provider
.This thought made me to work on this project.
I have attempted to live up these requisites while preparing this
report. Industrial training is a part of professional courses. With
the help of industrial training I am able to understand the work
undertaken in company.
Success of an organization depends largely on successful
handling of Finance .Financial management is central aspect of
any organisation, GST replacing VAT other indirect taxes will
surely affected the working of a financial manager and his
management of handling with taxes and returns of an
organisation which will affect financial management.

5
INDEX

S.NO INDEX PAGE.NO.

1. INTRODUCTION TO COMPANY 7-13

2. INTRODUCTION OF THE TOPIC 14-36

3. REVIEW OF LITERATURE 37-58

4. OBJECTIVE OF STUDY 59-60

5. RESEARCH METHODOLGY 61-64

6. DATA ANALYSIS AND INTERPRETATION 65-75

7. FINDINGS AND SUGGESTIONS 76-78

8. LIMITATIONS 79

9. CONCLUSION 80

6
10. BIBLIOGRAPHY 81-82

11. ANNEXTURE 83-85

CHAPTER 1

INTRODUCTION
TO
COMPANY

7
INTRODUCTION
COMPANY PROFILE

Solitaire Infosys Private Limited (SIPL) is a global IT solutions provider

company with extensive workforce of efficient employees. They offer complete
cycle of IT services in the domains of Software Development, Web-based
Technologies and Internet Marketing.
Company quality as well as business-driven advent distinguishes us from
conventional web design companies. Being a pioneer website design &
development company, They don’t just deliver the job-They deliver it keeping in
mind the best for company. And this might be the reason that brings clients back to
us again and again.
SIPL Emphasis On:
The Service: They value relationships with consumers and have embellished
company by rendering above average service.

8
The Professionalism: A web Application that looks incredible conveys a
professional view of company business and would really exhibit for company.
The Technology: A website that will have good technicality, designing and
developing professional who will make the websites ranging from a simple place
holder to dynamic database driven web sites.

Mission and Vision of the company

Vision: Be with you in every step of the way from the idea creation and
developing a business model straight through to design and technology
implementation.
Mission: To Endow client qualitative and consistent Web Service.
History
Solitaire Infosys Private Limited is a Private incorporated on 06 June 2011. It is
classified as Non-govt Company and is registered at Registrar of Companies,
Chandigarh. Its authorized share capital is Rs. 900,000 and its paid up capital is Rs.
100,000.It is involved in other computer related activities [for example
maintenance of websites of other firms/ creation of multimedia presentation for
other firms etc.Solitaire Infosys Private Limited's Annual General Meeting (AGM)
was last held on 30 June 2016 and as per records from Ministry of Corporate
Affairs (MCA), its balance sheet was last filed on 31 March 2016.
Present Status
Current status of Solitaire Infosys Private Limited is - Active.
Management
Directors of Solitaire Infosys Private Limited are Jogvinder Singh and Rajesh
Sharma.
Offices
India
9
C-110, Industrial Area Phase-VII, Mohali INDIA, Phone: +91-9876656700 +91-
9872220856
Email: info@slinfy.com

USA
24891 Owens Lake CIR, Lake Forest, CA, 92630-2522.
Canada
SUITE 208, 3474-93, STREET NW EDMONTON ALBERTA-T6E 6A4,
CANADA.

Objectives of company
They aim to push company limits and accomplish beyond the definition of success
at the same time redefining excellence with every step and endeavor we undertake.
They believe in the power of a bond that we build with company clients and the
power of people that are connected by the wonders of technology. They are driven
by company beliefs and principles that have helped us touch and impact lives of
the people working with us and the people we proudly serve. There objective is to
bring together people with diverse opinions and point of views to generate new
possibilities and opportunities by turning the potential of technology into evocative
solutions.

What Solitaire does

At Solitaire Infosys, they work with enhanced and smart strategies to build and
deliver the most robust, flexible and sophisticated solutions and services for
company clients. They have over time extended company expertise to a multitude
of IT services with an innovative approach to cater to and engage with the growing
and changing market trends. There high end services extend from building
10
company business online from a scratch with the most promising and pioneering
technologies and hands on solutions, to maintaining and upholding company
business models for a long term and ever growing revenue as well as reputation.
They function while collaborating with company clients to generate comprehensive
strategies to capitalize on company cutting-edge applications. The wide band of
company services hoists the flagship of many accolades. They serve with par
excellence in the following spheres of technology and business:

 Web Development
 Mobile Applications
 Digital Marketing
 Maintenance Services and Products

DIGITAL MARKETING SERVICES

SMO
SEO
EMAIL MARKETING
PPC

Products
 Campus edge:
Solitaire Infosys Inc, a leading IT firm has invented a solution “Campus Edge”
which helps educational institutions to collect all the data automatically. This
Software is specially designed to meet all the data management requirements of
educational institutions. Campus Edge is carefully crafted to reduce the manual
efforts of institution to maintain and store daily data of students & staff members.

11
Campus Edge Software has following modules:

E-Enquiry Manager,E-Admission Manager,E-Fee Manager,E-Accountant

Manager,E-Inventory Manager,E-Planner Manager,E- Attendance Manager,E- HR
Manager,E- Payroll Manager,E- Library Manager,E- Examination Manager,E-
Cyber Manager,E- Location Manger

 The twitt
The Twitt is an aspiring media and publishing website that defines this generation
of Gadgets and Gizmos. The Twit aims to introduce us to the most eclectic and
newest technologies. They serve to be company one stop platform to stay
informed, enthused and gripped by the marvels of Technology. Find the most
exquisite information on the most avant-garde topics. Voice company ideas and
opinions and join the Digital Revolution.
 Pin goo adventure:
Pin goo adventure is a game from all groups which is entertaining and rich
graphics with a wonderful gaming experience.
Clients
NAME LOGO
44 AUTO SALES

DUNGO BOOK

BEXORD

CARRIER VIEW

12
ONE MARKET

SILVER FERN

PUBLZT

ASA PROPERTY SERVICES

ACTIVE LIFE CENTER

CAR SHARE

PAINT PERFECTION

SCARECROW

CONSUMER CREDIT REPORTING

COMPANY
CREW BEAN

VIDCRUSH

SBK

MAX MSG

13
EXPERT PLUMBING
&ROOTER.INC.

CHAPTER 2
14
 INTRODUCTION
TO
TOPIC

VALUE ADDED TAX

Introduction
A value-added tax (VAT), known in some countries as a goods and services tax
(GST), is a type of that is assessed incrementally, based on the increase in value of
a product or service at each stage of production or distribution. VAT essentially
compensates for the shared services and infrastructure provided in a certain locality
by a state and funded by its taxpayers that were used in the elaboration of that
product or service. Not all localities require VAT to be charged and goods and
services for export may be exempted VAT is usually implemented as a destination-
based tax, where the tax rate is based on the location of the consumer and applied
to the sales price. Confusingly, the terms VAT and GST, and are sometimes used
interchangeably. VAT raises about a fifth of total tax revenues both worldwide and

15
among the members of the Organization for Economic Co-
operationandDevelopment(OECD).As of 2018, 166 of the world'sapproximately
193 countries employ a VAT, including all OECD members except the United
States ,which uses asales taxsystem instead.
There are two main methods of calculating VAT: the credit-invoice or invoice-
based method, and the subtraction or accounts-based method. Using the credit-
invoice method, sales transactions are taxed, with the customer informed of the
VAT on the transaction, and businesses may receive a credit for VAT paid on input
materials and services. The credit-invoice method is the most widely employed
method, used by all national VATs except for Japan. Using the subtraction method,
at the end of a reporting period, a business calculates the value of all taxable sales
then subtracts the sum of all taxable purchases and the VAT rate is applied to the
difference. The subtraction method VAT is currently only used by Japan, although
subtraction method VATs, often using the name "flat tax", have been part of many
recent tax reform proposals by US politicians. With both methods, there are
exceptions in the calculation method for certain goods and transactions, created for
either pragmatic collection reasons or to counter tax fraud and evasion.

History
Germany and France were the first countries to implement VAT, doing so in the
form of a general consumption tax during World War I. The modern variation of
VAT was first implemented by France in the 1950s.Maurice Laure Joint Director
of the France Tax Authority, the Direction Generale des Imports implemented the
VAT on 10 April 1954, although German industrialistDr.Wilhelm von
Siemensproposed the concept in 1918. Initially directed at large businesses, it was
extended over time to include all business sectors. In France, it is the most
important source of state finance, accounting for nearly 50% of state revenues.
A 2017 study found that the adoption of VAT is strongly linked to countries with
corporatist institutions.

16
Features of Value Added Tax in India
 Similar goods and services are taxed equally. So a similar television from all
brands will be taxed the same

 VAT is levied at each stage of production and hence makes the taxation
process easier and more transparent

 VAT reduces chances of tax evasion and fosters compliance

 Encourages transparency in sale of goods and services at the tiniest level

Calculation of VAT

VAT is actually calculated as the difference between input tax and output tax.

17
VAT = Output Tax – Input Tax

Where output tax is the tax received by the seller for sale of his goods and services
and input tax is the tax paid by the seller for raw materials required to manufacture
his goods and services.

VAT Example
Suppose Ram owns a restaurant and spends Rs.50000 towards obtaining raw
materials. Input tax is 10%, so input tax becomes 10% of Rs.50000 = Rs.5,000
Now after selling the food made by using the purchased raw materials, Ram was
able to make Rs.100000. Supposing 10% output tax, output tax becomes Rs.10000
So, final VAT payable by Ram comes out to be Rs.10000 – Rs.5000 = Rs.5000

18
How To access the Online VAT Filing System?
All producers of goods and services that are registered under the VAT Act 2003
are furnished a user id and password by the Directorate of Commercial Taxes.
Users are required to use this id-password combination to enter the VAT e-filing
system. Alternatively, the Directorate help desk may be contacted for retrieving the
login details.
Preconditions Required For E-Filing Of VAT
Before one decides to file VAT returns online, there are a few points that need to
be noted. These are basically the prerequisites for filing VAT, online.
 Get your TIN Number, Tax Identification Number before you start the
process of e-filing of VAT. TIN is an 11 digit number furnished by the

19
 tax department of your state. This number is used to track all tax related
progress related to your enterprise.
 A user needs to have his/her user-id and password as furnished by the
Directorate office. Without these, no user can login to the system to pay
his/her VAT return, online.
 The password that is furnished to you needs to be changed when you
login to the system for the first time
 VAT returns can be filed online only if you have the software that
accepts data for e-filing of return and then processes it to xml for
uploading later. This client software can be downloaded from the online
portal of Directorate of Commercial Taxes once you have logged in to
the system.

Steps for Filing VAT Returns Online

 Step 1:
Login to the online portal of the Directorate of Commercial Taxes for your
respective state. Since VAT comes under the prerogative of state
governments, hence different states have different VAT e-filing portals.
 Step 2:
If it is the first time you are entering the website, you will be prompted for
password change which you should certainly do.
 Step 3:
Download the PDF version of Form 14D which is the VAT return filing
form. The form is generally available in zipped form across all state
websites.

 Step 4:
After the download is complete, the form and all the downloaded annexures
need to be filled duly with data pertaining to your VAT receipts and other
relevant details.
 Step 5:

20
 Create xml file out of the filled forms by using the downloaded software
from the Directorate of Commercial Taxes online portal.
 Step 6:
Upload the generated xml file as well as the duly filled annexures.
 Step 7:
At this points, all upload could be correct and the process could be over or
there could be errors which the server will prompt and ask you to rectify.
 Step 8:
Once the forms have been submitted successfully, an acknowledgement
receipt will be generated. You can download or print this receipt to keep as
reference for e-filing of VAT.

Advantages of filing VAT returns, Online

Filing VAT returns online is a great way of keeping up with the taxation process.
Some of the most significant advantages of e-filing of VAT are listed below.
 Faster processing of VAT returns since the tax department can easily
avail all the uploaded information pertaining to a particular enterprise
 Online filing of VAT is a less tedious and less time consuming procedure
as compared to manual filing of VAT
 Validation of filled-in forms at the server side ensures there are minimum
confusions and user queries too are minimized. This saves time and effort
of customers as well as that of the tax department
 Details such as pending documents and payments for any dealer are
displayed when he/she logs in to the e-filing system. Users can hence
login and rectify their information or make submissions on time and
avoid paying interest/penalty
 Records of any dealer are maintained on the online tax filing platform
which makes it easier for the tax department to go back and check on
these whenever required. From the user point of view it is convenient
since the user will not have to reproduce relevant documents over and
over again

21
Issues regarding filing of VAT
Filing of VAT has been made easy for traders with the introduction of online e-
filing. However, there are still some issues faced by traders which are related to
VAT return filing and which pose great discomfort to enterprise owners.
 E-filing of VAT return is unable to pick up in some states due to
problems in infrastructure. For example, there are states where VAT
online system servers are unable to take the load during the filing period
and as such certain merchants are unable to access the system and file
their returns on time
 General filing of VAT causes issues since most governments set stringent
deadlines for the same. Merchants are of the view that VAT return filing
is a complicated task and as such more liberal timelines should be
offered. They also want penalty charges, which shoot incredibly after a
particular period of time, to be brought down.
With the above points as reference, filing VAT online can be a really easy process.
However, one really important point to keep in mind is that VAT comes under the
purview of state governments and hence slight deviations in rules and filing
process may be expected.No real "reduced rate", but rebates generally available for
new housing effectively reduce the tax to 4.5%. HST is a combined
federal/provincial VAT collected in some provinces. In the rest of Canada, the
GST is a 5% federal VAT and if there is a Provincial Sales Tax (PST) it is a
separate non-VAT tax. These taxes do not apply in Hong Kong and Macau, which
are financially independent as special administrative regions. The reduced rate was
14% until 1 March 2007, when it was lowered to 7%, and later changed to 11%.
The reduced rate applies to heating costs, printed matter, restaurant bills, hotel

22
stays, and most food. VAT is not implemented in 2 of India's 28 states. Except
Eilat, where VAT is not raised. The VAT in Israel is in a state of flux. It was
reduced from 18% to 17% in March 2004, to 16.5% in September 2005, then to
15.5% in July 2006. It was then raised back to 16.5% in July 2009, and lowered to
the rate of 16% in January 2010. It was then raised again to 17% on 1 September
2012, and once again on 2 June 2013, to 18%. It was reduced from 18% to 17% in
October 2015. The introduction of a goods and sales tax of 3% on 6 May 2008 was
to replace revenue from Company Income Tax following a reduction in rates. In
the 2014 Budget, the government announced that GST would be introduced in
April 2015. Piped water, power supply (the first 200 units per month for domestic
consumers), transportation services, education, and health services are tax-exempt.
However, many details have not yet been confirmed. The President of
thePhilippines has the power to raise the tax to 12% after 1 January 2006. The tax
was raised to 12% on 1 February.

Why is VAT required and how is it useful?

India was one of the last few countries to introduce VAT as a form of tax. Taxation
process in India was believed to be exploited the most by businessmen and
enterprises which had found loopholes for evading taxes. VAT was introduced to
minimize this evasion and render transparency and uniformity to the tax payment
process.

23
Value Added Tax is levied in multiple stages of production of goods and services
and comes under the purview of various state governments. Hence, VAT in India
might slightly differ from one state to another.
 No exemptions under the VAT system. Levying tax at each stage of the
production process ensures better compliance and less loopholes to be
exploited

 VAT, when enforced properly forms an important instrument for tax

consolidation of the country and as such helps towards solving the fiscal
deficit issue to some extent

 Since, VAT is a globally accepted taxation system, it will help India

integrate better into global trade practices

There are at present three types of Value Added Tax (VAT) rates on goods
and services.
 Thestandard rate is currently at 20%
 A special five percent rate applying to domestic fuel,installation of energy-
saving materials in homes and women's sanitary products.
 Thezero rated.

Imports and exports

Being a consumption tax, VAT is usually used as a replacement for sales tax.
Ultimately, it taxes the same people and businesses the same amounts of money,
despite its internal mechanism being different. There is a significant difference
between VAT and Sales Tax for goods that are imported and exported: VAT is
charged for a commodity that is exported while sales tax is not.Sales tax is paid for
the full price of the imported commodity, while VAT is expected to be charged
only for value added to this commodity by the importer and the reseller.This means
24
that, without special measures, goods will be taxed twice if they are exported from
one country that does have VAT to another country that has sales tax instead.
Conversely, goods that are imported from a VAT-free country into another country
with VAT will result in no sales tax and only a fraction of the usual VAT. There
are also significant differences in taxation for goods that are being imported /
exported between countries with different systems or rates of VAT. Sales tax does
not have those problems – it is charged in the same way for both imported and
domestic goods, and it is never charged twice. To fix this problem, nearly all
countries that use VAT use special rules for imported and exported goods:
All imported goods are charged VAT tax for their full price when they are sold for
the first time. All exported goods are exempted from any VAT payments. For these
reasons VAT on imports and VAT rebates on exports form a common practice
approved by the World Trade Organization (WTO).

TYPES OF VAT PRODUCTS

There are at present three types of Value Added Tax (VAT) rates on goods and
services.

 The standard rate is currently at 20%

 A special five percent rate applying to domestic fuel, installation of energy-
saving materials in homes and women's sanitary products.
 The zero rated.

25
Most of the goods and services are standard rated unless the UK government
specifies otherwise. Zero rated goods and services charge VAT at 0% and the
business still can reclaim input tax on its purchases in the normal way.

The main supplies that fall under the zero rated categories at present including the
following:

 Most food and drink except catering, or certain items like chocolate, crisps and
so on, or 'hot food' to be taken away.
 Books and newspapers.
 Young children's clothing and footwear.
 Public transport excluding taxis, hire cars or 'fun' transport, such as steam
railways.
 Exports,
 Sales of, and the construction of, new domestic buildings only.
 Dispensing prescriptions.
 Mobile homes and houseboats

DIFFERENCE BETWEEN VAT AND SALES TAX

Often referred to as the "goods and service tax", theValue Added Taxis distinctly
different from the sales tax levied on exchanges. TheValue Added Tax is a form
of indirect taxthat is imposed at different stages of production on goods and
services.

Summary:
 VAT is levied on both the producer and consumer while a sales tax is levied
on only the end consumer.
 VAT involves tricky accounting while sales tax involves simpler accounting.
 VAT is applied at the various stages of production while sales tax is applied
on the total value of the purchase.
 VAT efficiently avoids evasion of taxes while a sales tax is unable to deal
with this.

TRADE CRITICISM

26
National VAT taxes act as a tariff on imports and their exports are exempt from
VAT (zero-rated).
Because exports are generally zero-rated (and VAT refunded or offset against other
taxes), this is often where VAT fraud occurs. In Europe, the main source of
problems is called carousel fraud. This kind of fraud originated in the 1970s in the
Benelux countries. Today, VAT fraud is a major problem in the UK. There are also
similar fraud possibilities inside a country. To avoid this, in some countries like
Sweden, the major owner of a limited company is personally responsible for taxes.
Under a sales tax system, only businesses selling to the end-user are required to
collect tax and bear the accounting cost of collecting the tax. Under VAT,
manufacturers and wholesale companies also incur accounting expenses to handle
the additional paperwork required for collecting VAT, increasing overhead costs
and prices.
Many politicians and economists in the United States consider VAT taxation on
US goods and VAT rebates for goods from other countries to be unfair practice.
For example, the American Manufacturing Trade Action Coalition claims that any
rebates or special taxes on imported goods should not be allowed by the rules of
the World Trade Organisation. AMTAC claims that so-called "border tax
disadvantage" is the greatest contributing factor to the $5.8 trillion US current
account deficit for the decade of the 2000s, and estimated this disadvantage to US
producers and service providers to be $518 billion in 2008 alone. Some US
politicians, such as congressman Bill Pascrell, are advocating either changing
WTO rules relating to VAT or rebating VAT charged on US exporters by passing
the Border Tax Equity Act. A business tax rebate for exports is also proposed in the
2016 GOP policy paper for tax reform. The assertion that this "border adjustment"
would be compatible with the rules of the WTO is controversial; it was alleged that
the proposed tax would favour domestically produced goods as they would be
taxed less than imports, to a degree varying across sectors. For example, the wage
component of the cost of domestically produced goods would not be taxed.

CRITICISM
The "value-added tax" has been criticized as the burden of it falls on personal end-
consumers of products. Some critics consider it to be a regressive tax, meaning that
the poor pay more, as a percentage of their income, than the rich Defenders argue
that relating taxation levels to income is an arbitrary standard, and that the value-
added tax is in fact a proportional tax in that people with higher income pay more
in that they consume more. The effective progressiveness or regressiveness of a

27
VAT system can also be affected when different classes of goods are taxed at
different rates To maintain the progressive nature of total taxes on individuals,
countries implementing VAT have reduced income tax on lower income-earners as
well as instituted direct transfer payments to lower-income groups, resulting in
lower tax burdens on the poor.
Revenues from a value-added tax are frequently lower than expected because they
are difficult and costly to administer and collect. In many countries, however,
where collection of personal income taxes and corporate profit taxes has been
historically weak, VAT collection has been more successful than other types of
taxes. VAT has become more important in many jurisdictions as tariff levels have
fallen worldwide due to trade liberalization, as VAT has essentially replaced lost
tariff revenues. Whether the costs and distortions of value-added taxes are lower
than the economic inefficiencies and enforcement issues (e.g. smuggling) from
high import tariffs is debated, but theory suggests value-added taxes are far more
efficient.
Certain industries (small-scale services, for example) tend to have more VAT
avoidance, particularly where cash transactions predominate, and VAT may be
criticized for encouraging this From the perspective of government, however, VAT
may be preferable because it captures at least some of the value added. For
example, a building contractor may offer to provide services for cash (i.e. without
a receipt, and without VAT) to a homeowner, who usually cannot claim input VAT
back. The homeowner will thus bear lower costs and the building contractor may
be able to avoid other taxes (profit or payroll taxes).
Another avenue of criticism of implementing a VAT is that the increased tax
passed to the consumer will increase the ultimate price paid by the consumer.
However, a study in Canada reveals that in fact when replacing a traditional sales
tax with a VAT consumer prices including taxes actually fell, by –0.3%±0.49%.

GOODS AND SERVICES TAX

Introduction

28
Goods and Service Tax (GST) is anindirect tax(orconsumption tax) levied in
Indiaon the supply of goods and services. GST is levied at every step in the
production process, but is refunded to all parties in the chain of production other
than the final consumer.

Goods and services are divided into five tax slabs for collection of tax - 0%, 5%,
12%, 18% and 28%. Petroleum products, alcoholicdrinks, electricity, and real
estate are taxed separately by the individual state governments. There is a special
rate of 0.25% on rough precious and semi-precious stones and 3% on gold. In
addition access of 22% or other rates on top of 28% GST applies on few items like
aerated drinks, luxury cars and tobacco products. Pre-GST, the
Statutory tax rate for most goods was about 26.5%, Post-GST; most goods are
expected to be in the 18% tax range.The tax came into effect from July 1, 2017
through the implementation ofOneHundred and First Amendment of the
Constitution of India by the Indian government. The tax replaced existing multiple
cascading taxes levied by thecentral andstate governments.
The tax rates, rules and regulations are governed by the GST Council which
comprises finance ministers of Centre and all the states. GST simplified a slew of
indirect taxes with a unified tax and is therefore expected to dramatically reshape
the country's 2.4 trillion dollar economy. Trucks travel time in interstate movement
dropped by 20%, because of no interstate check posts.

FORMATION
The reform process of India's indirect tax regime was started in 1986 by
Vishwanath Pratap Singh, Finance Minister in Rajiv Gandhi’s government, with
the introduction of the Modified Value Added Tax (MODVAT). Subsequently,
Prime Minister P V Narasimha Rao and his Finance Minister Manmohan Singh,
initiated early discussions on aValue Added Tax (VAT) at the state level. A single
common "Goods and Services Tax (GST)" was proposed and given a go-ahead in
1999 during a meeting between thePrime Minister Atal Bihari Vajpayee and his
economic advisory panel, which included three former RBI governors IG Patel,
Bimal Jalan and C Rangarajan. Vajpayee set up a committee headed by the Finance
Minister of West Bengal, Asim Dasgupta to design a GST model.

29
The Ravi Dasgupta committee which was also tasked with putting in place the
back-end technology and logistics (later came to be known as the GST Network, or
GSTN, in 2017). it later came out for rolling out a uniform taxation regime in the
country. In 2002, the Vajpayee government formed a task force under Vijay Kelkar
to recommend tax reforms. In 2005, the Kelkar committee recommended rolling
out GST as suggested by the12thFinance Commission.
After the defeat of the BJP-led-NDA government in the 2004 Lok Sabha Election
and the election of a Congress-led UPA government, the new Finance MinisterP
Chidambaram in February 2006 continued work on the same and proposed a GST
rollout by 1 April 2010. However, in 2010, with the Trinamool Congress routing
CPI (M) out of power in West Bengal, Asim Dasgupta resigned as the head of the
GST committee. Dasgupta admitted in an interview that 80% of the task had been
done.
In the2014 Lok Sabha election, the Bharatiya Janata Party-led NDA government
was elected into power, this time under the leadership of Narendra Modi. With the
consequential dissolution of the 15th Lok Sabha, the GST Bill – approved by the
standing committee for reintroduction – lapsed. Seven months after the formation
of the Modi government, the new Finance Minister Arun Jaitley introduced the
GST Bill in the Lok Sabha, where the BJP had a majority. In February 2015,
Jaitley set another deadline of 1 April 2017 to implement GST. In May 2016, the
LokSabha passed the Constitution Amendment Bill, paving way for GST.
However, the Opposition, led by the Congress, demanded that the GST Bill be
again sent back to the Select Committee of the Rajya Sabha due to disagreements
on several statements in the Bill relating to taxation. Finally in August 2016, the
Amendment Bill was passed. Over the next 15 to 20 days, 18 states ratified the
Constitution amendment Bill and the President Pranab Mukherjee gave his assent
to it.
A 21-member selected committee was formed to look into the proposed GST laws.
After GST Council approved the Central Goods and Services Tax Bill 2017 (The
CGST Bill), the Integrated Goods and Services Tax Bill 2017 (The IGST Bill), the
Union Territory Goods and Services Tax Bill 2017 (The UTGST Bill), the Goods
and Services Tax (Compensation to the States) Bill 2017 (The Compensation Bill),
these Bills were passed by the Lok Sabha on 29th March, 2017. The Rajya Sabha
passed these Bills on 6th April, 2017 and was then enacted as Acts on 12th April,
2017. Thereafter, State Legislatures of different States have passed respective State
Goods and Services Tax Bills. After the enactment of various GST laws, Goods
and Services Tax was launched all over India with effect from 01 July 2017. The
Jammu and Kashmir state legislature passed its GST act on 7 July 2017, thereby

30
ensuring that the entire nation is brought under an unified indirect taxation system.
There was to be no GST on the sale and purchase of securities. That continues to
be governed by Securities Transaction Tax (STT).

Launch
The President Launching Goods and Services Tax (GST) on 1st July 2017
The GST was launched at midnight on 1 July 2017 by the President of India
,Pranab Mukherjee, and the Prime Minister of India Narendra Modi. The launch
was marked by a historic midnight (30 June – 1 July) session of both the houses of
parliament convened at the Central Hall of the Parliament. Though the session was
attended by high-profile guests from the business and the entertainment industry
including Ratan Tata, it was boycotted by the opposition due to the predicted
problems that it was bound to lead to for the middle and lower class Indians. It is
one of the few midnight sessions that have been held by the parliament - the others
being the declaration of India's independence on 15 August 1947, and the silver
and golden jubilees of that occasion. After its launch, the GST rates have been
modified multiple times, the latest being on 18 January 2018, where a panel of
federal and state finance ministers decided to revise GST rates on 29 goods and 53
services. Members of the Congress boycotted the GST launch altogether. They
were joined by members of the Trinamool Congress, Communist Parties of India
and the DMK. The parties reported that they found virtually no difference between
the GST and the existing taxation system, claiming that the government was trying
to merely rebrand the current taxation system. They also argued that the GST
would increase existing rates on common daily goods while reducing rates on
luxury items, and affect many Indians adversely, especially the middle, lower
middle and poorer classes.

Collections
Month Collections Change
May ₹940.16 billion (US$14 billion)
₹1,034.58 billion (US$15
April
billion)
March ₹892.64 billion (US$13 billion)
February ₹851.74 billion (US$13 billion)
January ₹863.18 billion(US$13billion)
Decembe
₹867.06 billion (US$13 billion)
r

31
Novemb
₹808.08 billion (US$12 billion)
er
October ₹833.46 billion (US$12 billion)
Septemb
₹951.31 billion (US$14 billion)
er
August ₹931.41 billion (US$14 billion)
July ₹940.00 billion (US$14 billion)

Returns
Around 38 lakh new taxpayers have registered under GST regime and the total
count has crossed crore if we include the 64 lakh earlier ones.
No of
Month Change
returns
December 63 lakh
November 64 lakh
October 65 lakh
September 69 lakh
August 67 lakh
July 63 lakh

Taxation scheme
Taxes subsumed
The single GST replaced several taxes and levies which included: central excise
duty, service tax additional customs duty, surcharges, state-level value added tax
and Octroi. Other levies which were applicable on inter-state transportation of
goods have also been done away with in GST regime. GST is levied on all
transactions such as sale, transfer, purchase, barter, lease, or import of goods
and/or services.
India adopted a dual GST model, meaning that taxation is administered by both the
Union and State Governments. Transactions made within a single state are levied
with Central GST (CGST) by the Central Government and State GST (SGST) by
the State governments. For inter-state transactions and imported goods or services,
an Integrated GST (IGST) is levied by the Central Government. GST is a
consumption-based tax/destination-based tax, therefore, taxes are paid to the state
32
where the goods or services are consumed not the state in which they were
produced. IGST complicates tax collection for State Governments by disabling
them from collecting the tax owed to them directly from the Central Government.
Under the previous system, a state would only have to deal with a single
government in order to collect tax revenue.

Rates
The GST is imposed at variable rates on variable items. The rate of GST is 18% for
soaps and 28% on washing detergents. GST on movie tickets is based on slabs,
with 18% GST for tickets that cost less than Rs. 100 and 28% GST on tickets
costing more than Rs.100 and 5% on readymade clothes. The rate on under-
construction property booking is 12%.Some industries and products were
exempted by the government and remain untaxed under GST, such as dairy
products, products of milling industries, fresh vegetables & fruits, meat products,
and other groceries and necessities.
Check posts across the country were abolished ensuring free and fast movement of
goods.
The Central Government had proposed to insulate the revenues of the States from
the impact of GST, with the expectation that in due course, GST will be levied on
petroleum and petroleum products. The central government had assured states of
compensation for any revenue loss incurred by them from the date of GST for a
period of five years. However, no concrete laws have yet been made to support
such action. GST council adopted concept paper discouraging tinkering with rates.

Goods Kept Outside the GST

 Alcohol for human consumption.
 Petrol and petroleum products (GST will apply at a later date) viz. Petroleum
crude, High speed diesel, Motor Spirit (petrol), Natural gas, Aviation turbine fuel.

Which Countries Collect the GST?

France was the first country to implement the GST in 1954, and since then an
estimated 160 countries have adopted this tax system in some form or another.
Some of the countries with GST include Canada, Vietnam, Australia, Singapore,

33
the U.K., Monaco, Spain, Italy, Nigeria, Brazil, and South Korea. India joined the
GST group on July 1, 2017.

Amendment
The One Hundred and Twenty Second Amendment Bill of the Constitution of
India, officially known as The Constitution (One Hundred and First
Amendment) Act, 2016, introduced a national Goods and Services Tax in India
from 1 July 2017.
The GST is a Value added Tax (VAT) proposed to be a comprehensive indirect tax
levy on manufacture, sale and consumption of goods as well as services at the
national level. It will replace all indirect taxes levied on goods and services by the
Indian Central and state governments. It is aimed at being comprehensive for most
goods and services.

Latest Update
As per 25th GST Council meeting on 18thJanuary 2018
Rates for 29 Goods and 53 Services have been revised*.
 Goods taxed at 0%- Vibhuti, De-oiled rice bran and parts used to
manufacture hearing aids
 Reduced from 28% to 18%- Old and used motor vehicles [medium
and large cars and SUVs] without ITC, Public transport Buses that run on
Biofuel, Services of joy rides, Go-karting
 Reduced from 28% to 12% –Old and used motor vehicles [other than
medium and large cars and SUVs] without ITC
 Reduced from 18% to 12% –Drinking water packed in 20 litres
bottles, Drip irrigation system, sprinklers, Biodiesel, Sugar boiled
Confectionery, Services of construction of metro / mono-rail, mining of
petrol crude

34
  Reduced from 18% to 5% –LPG for household use, Tamarind Kernel
Powder, Mehendi paste in cones, Raw materials and Consumables needed
for Launch vehicles/satellites, Services of Tailoring
 Reduced from 12% to 5%-Velvet fabric( Without Refund of ITC),
Articles of straw, of esparto or of other plaiting materials
 Reduced from 3% to 0.25%-Diamonds and precious stones
 Rate Increased from 0% to 5%-Rice bran (other than de-oiled rice
bran)
 Rate Increased from 12% to 18%-Cigarette filter rods
 Services included in the Exemption List:
 Providing information under RTI Act, 2005
 Legal services provided to Government

REFORMS
One of the major reforms in the Indian Taxation System is the introduction of
GST, i.e. Goods and Services Tax. It aims at removing the cascading effect, i.e.
double taxation. GST is a tax on value addition, imposed on the production,
distribution and consumption of goods and services. It is commonly contrasted
with Value Added Tax, shortly known as VAT, which is an indirect tax levied at
each stage of manufacture and distribution of goods on the incremental value.

What are the good sides and the bad sides of GST
(goods and services tax)?
 The goods & service tax (GST) is a value added tax that will replace all
indirect taxes levied on goods & services by Government, both central
&states,once it is implemented. Gst is to consolidate all state economies.This
will be one of the biggest taxation reforms that will take place in India once
the bill gets officially the green signal to implement. The basic idea is to
create a single,cooperative& undivided Indian market to make the economy

35
 stronger & powerful. The gst will see a significant breakthrough towards an
all-inclusive indirect tax reform in the country.
 In the year 2000,for the 1st time, the idea of initiating the Gst was made by
the then BJP Govt under the leadership of AtalBehari Vajpayee. An
empowered committee was also formed for that,headed by AsimDesagupta(
the then Finance Minister of the West Bengal Govt). The committee was
formed to design the model of the GST & at the same time inspect the
preparation of the IT rollout.
 Advantages of GST bill.
 Introduction of Gst is very useful in emerging environment of the Indian
economy.
 It increases production & distribution of goods &services.separate taxes for
goods &services,which is present taxation system,requires division of
transaction values in to value of goods & services for taxation,leading to
grater complications
 GST will be levied only at the final destination of consumption based on
VAT principle & not at various points.This helps to remove economic
distortions & bring abt development of a command national market
 According to experts,by implementing the Gst,India will gain $15 billion a
year.This is because,it will promote more exports,create more employment
opportunities & growth. It will divide the burden of tax between
manufacturing & services.
 Disadvantages of GST bill
 First &foremost,the basic exemption limit in excise of Rs.1.5 crore will be
taken away in Gst,thereby slowly killing the SSI. Thousands & lakhs of
industries in India are surviving only for reason that they are not required to
pay excise if their turnover does not exceed 1.5 crore.This had made their
products cost efficient & saleable in market
 Certaintly,the big industrial houses are going to get benefited in massive
way
 Another disadvantage is that overall economy would grow. The real wealth
of our country also would grow. But this growth would be with out
development. The majority of the people would be at the mercy of big
bussiness houses. The rich would become more rich& the poor would be
more poor. Huge inequalities in income & wealth would be visible

Key Differences between VAT and GST

36
The fundamental differences between VAT and GST are explained, with the help
of following points:
 VAT or Value Added Tax is an indirect tax, wherein tax is imposed at the state
level, at every stage of production and distribution of goods and services, with
credit for tax paid at the previous stage. GST expands to Goods and Services
Tax, which is a single tax, levied on the supply of the goods and services that
relies on the principle of value addition.
 While VAT is levied on the sale of goods, in GST the point of taxation is the
supply of goods and services.
 The registration and payment under VAT regime are performed offline, whereas
GST is completely an online system, wherein the registration, filing of return
and all other function can be performed through a common GST portal managed
by Goods and Services Network (GSTN).
 When it comes to registration of supplier, in VAT system the registration
becomes mandatory when the turnover of the supplier is beyond Rs. 10 lakhs.
On the contrary, if the aggregate turnover of the supplier exceeds Rs. 20 lakhs,
then he/she is required to obtain registration under GST.
 VAT system is a summary based system of taxation, wherein the seller of the
goods has to submit the return, at the end of the particular period. Conversely,
GST is a transaction based taxation system.
 In case of the VAT, the seller state collects the revenue, whereas, in GST, the
collection of revenue is done by the consumer state.
 In VAT system, the manufacturer of excisable products is charged excise duty
on its production and VAT on intra-state sales, which causes double taxation.
On the other hand, excise duty is subsumed in GST, and so there are no chances
of double taxation on such items.
 Under VAT system, input tax credit cannot be availed, in case of interstate sales.
For instance: Suppose, on the manufacture of cloth, central excise duty
(CENVAT) is levied and VAT is imposed on its sale within the state. Although
both CENVAT and VAT both are a value-added tax but set off is not possible

37
 because they CENVAT is levied by the central government, and State
Government imposes VAT. Unlike, GST is based on the principle, ‘one nation
one tax’, so input tax credit is available for the interstate sales.

Criticisms of proposed GST are mostly wrong

When the 122nd amendment Bill for amendment of the Constitution is due for
discussion in Parliament, it is but natural that there will be criticism and appraisal
of the proposed model. I am writing here to say that the criticism should not be
unfair. I shall discuss which are the unfair criticisms and which have some validity.
One of the most unfair criticisms is that the proposed model is not ideal and is
fractured due to compromises made mostly under the pressure of the states. What
is not remembered is that all kinds of goods and services tax (GSTs) in federal
countries all over the world are imperfect. Brazil's GST is so complicated that
economists have called it a patchwork quilt. In European Union also the structure
is defective such that in poorer countries like Italy and Spain, etc, there is a lot of
cash sale. Even in Canada, each state collects it own sales tax apart from the
central levy of seven per cent. In India, we have been able to subsume the sales tax,
which is a better model than in Canada.
The exclusion of petroleum, liquor and tobacco, which accounts for nearly 40 per
cent of total revenue, has been a point of criticism. However, it is to be understood
that the share of revenue on petroleum may be high, but to judge the impact on the
GST on the basis of just share of revenue is to miss the macroeconomic picture.
Petroleum is a bulk commodity and is also traded in bulk. So the impact of non-
inclusion of petroleum does not adversely affect the creation of a common market
for the general merchandise, like raw materials and machines. Moreover, there can
be a proper system of value-added tax (VAT) at state level and CENVAT at the
central level for petroleum and tobacco, which will solve the problem of input
credit. No great harm is done if parallel VAT runs with GST. For alcohol, tobacco
and mineral oil, even in the European Union, there is excise in addition to VAT
with different rates in different countries. Saying that GST without petroleum is
not GST at all, is just over reaction.
Another criticism is that the present model does not include real estate. This point
is entirely without merit. Real estate does not fall in the definition of goods and
services. There will have to be many amendments of Constitutional provisions if it
is to be included, namely Entries 63, 54,18 and 19 of State List and Entry 84 of

38
Union List. This will bring about tremendous strife between Centre and the states .
It is now prevalent only in Canada, Australia, New Zealand and Singapore.

CHAPTER 3
REVIEW OF
LITERATURE

39
Tax reforms have drawn the attention of researchers both in India and abroad.
The implementation of VAT of comprehensive nature, or at central and state
levels both, may also involve some elements of tax design. Most of the
countries have introduced VAT in the last about 25 years. In India also
indirect tax reforms have drawn attention only after introduction of economic
reforms in the country. Therefore, the literature on VAT is of recent origin.
The Value Added Tax does not have a long history admittedly, there is not as
much literature available on this topic as other forms of tax system. So, in
other words, only a limited number of studies have been undertaken on VAT
and those too with different perspectives. An attempt thereby, has been made
to review the literature on VAT. Purohit (1982), examined the fiscal
importance of sale tax in the state finances in India. Overall, the share of sales
tax in own revenue of the states increased from about 31 per cent in 1960-61 to
57 per cent in 1978-79. He presented economic analysis of sales tax structure
in India and pointed out that wide variations prevailed among different states
in the rates of sales tax. There was multiplicity of rates and in certain states
there were as many as 17 different rate categories, which had no justification.
He pointed out that states should follow Orissa pattern, where there were only

40
four rates. While examining the taxation of inputs, he suggested elimination of
the tax on inputs or full set-off of the tax paid on raw materials. Examining the
arguments for and against first and last-point tax, he suggested 35 a mixture of
different systems. He opined that either the states should go in for value added
tax or two-point tax with set-off. As surcharge and additional sales tax
increased effective rate of sales tax, the sales tax structure should be
rationalized so that effective rate is comparable with the neighbouring states.
He also pointed out the limitations of Central Sales Tax (CST) and discussed
the need for revamping CST rates. He also highlighted the need to tax the
services. Further, examining the impact andincidence of sales tax, he
concluded that sales tax might not always be regressive because progression
could be introduced through rate variations, exemptions and adoption of
physical ingredient rule. He concluded that as sales tax had a significant role in
fiscal structure of the states, the tax structure should be reformed to make it
economically rational and administratively expedient. Purohit (1993),
examined the system of commodity taxation in India and discussed the
problems which could arisein introducing VAT in view of the federal structure
of the country. He pointed out that the prevailing system of commodity
taxation in India was unintegrated and gave rise to many problems like
multiplicity of levies, complexity of structure, high tax rates, cascading effect,
lack of transparency, vertical integration and narrow base, etc. He emphasized
the need for immediate tax reforms like reducing the number of rates, reducing
tax incidence, sales tax reforms, adoption of VAT and broadening the tax base
by bringing services under tax net. He brought out the documentary and
accounting obligations under MODVAT. While examining the existing sales
tax administration, 36 he brought out the problem areas for introducing VAT,
41
which included need for more staff, training of tax personnel, suitable
computational technology, Tax Identification Number (TIN) and auditing.
Purohit (1995), in his another study, examined the structure and administration
of sales taxation in India. He expressed the opinion that failure to administer
the sales tax properly could defeat its purpose and threaten the canon of equity.
It could create parallel economy due to increased tax evasion. He brought out
the features of sales tax administration, examined its operational requirements,
which included management information system (MIS) and suggested certain
improvements in the operation and administration of sales tax. He opined that
tax administration has important role in achieving the objectives of tax policy.
He emphasized the need for strengthening sales tax administration to pave way
for adoption of VAT in place of sales tax. Burgess, Howes and Stern (1995), in
their study on value added tax options for India analyzed that the pressure of
aggregate revenue, the requirement of a reduced role for customs duties for the
liberalization of the economy, and the complexity and strains of the current
system together point clearly towards the desirability of tax reform in India.
Since domestic indirect taxes provide the major source of revenue, they
deserve special attention. They argued that India would benefit from moving
toward a system of value added taxation (VAT) and focused on the way in
which a VAT (or VATs) can be best introduced into India given the country’s
federal structure. Three different 37options are distinguished : a central VAT,
dual VAT, and states' VAT. They argued that the first is politically infeasible,
that the second represents the best way forward in the short-term, and that the
third deserves consideration as a long run option. Special attention is paid to
the problems that would arise under either a state's or a dual VAT with regard
to taxing inter-state trade. Murti (1995), stated that a comprehensive VAT
42
covers value added at all the three levels of business activities, i.e.,
manufacturing, wholesaling and retailing. He distinguished between three
types of VAT, i.e., consumption VAT, net income VAT and gross income
VAT; and opined that a comprehensive VAT with consumption base, the tax
credit method, following destination principle to determine VAT on
international and inter-state trade flows could be an ideal commodity tax
structure for India. There could be ideally two types of tax regimes in India
with central and state VATs. There could be parallel central and state VATs on
the same base from manufacturing to retailing or central VAT up to
manufacturing stage and the state VAT at wholesaling and retailing stages. He
further pointed out that VAT system with one or two rates might have to be
supplemented by special excise and subsidies to take care of the problems of
equity, environment and social bads like tobacco and alcohol. Bagchi (1995),
termed the operating sales tax system as unworkable. Different problems in the
system including multiple cascading levies, numerous rates, drawing hair-
splitting distinction among commodities, large number of exemptions which
narrowed the tax base, ‘tax wars’ among the states which 38led to bizarre
results, cumbersome laws and procedures resulting in thousands of cases
pending before courts, etc. did not reflect comfortable picture about
commodity taxation in India. He opined that simplifying sales tax and
removing the drawbacks, was not the solution and stated that superiority of
sales tax lay in taxing consumption of goods and services in the economy
without needless interference with market forces and freeing of exports from
domestic trade taxes in a way which was not otherwise possible. VAT also
offered a buoyant but nondistortionary source of revenue for governments by
virtue of wide base and structure. He cautioned that VAT should apply to all
43
goods and services with minimum exclusions and should also strictly adhere
to the principle of destination, following preferably tax credit method.
Purohit(1997), reported that most of the federations did not adopt VAT. Brazil
was the only country with independent VAT both at federal and state levels,
and as such the researcher tried to examine the salient features of VAT
implementation in Brazil. The share of VAT in total domestic taxes on goods
and services increased in Brazil, indicating increased fiscal role of the tax. The
federal VAT in Brazil was levied on delivery of industrial products at
producer’s level. The tax rates were based on degree of processing of
commodities and nature of commodities. As such more revenue came from
cars, tobacco products, beverages, chemical products and machinery
industries. The state VAT was imposed by states on sale of goods, while
services were covered under a separate tax. There were five rate categories in
state VAT, depending upon the nature of the 39products. In the inter-state
sales, origin principle was followed and tax was imposed by exporting state.
However, to neutralize the impact of level of development, the tax rate on
inter-regional transactions varied according to destination, the rate being lower
for exporting to less developed and higher for exporting to more developed
region. Municipal governments were also authorized to impose tax on services
which was not included in state VAT. It was reported that Brazil was further
contemplating to reform the VAT system. The researcher suggested that India
could also follow Brazilian model of VAT. Michael (2000), in his paper titled,
“VIVAT, CVAT and All That : New Forms of Value Added Tax for Federal
Systems in 2000” stated that conventional wisdom has it that the value added
tax is not a suitable instrument for lower-level jurisdictions (‘provinces’) in a
federal system. The problems that arise when it is so used have become a
44
serious constraint on the development of the VAT — and closer economic
integration — in Brazil, the EU, India and elsewhere. In his study, he describes
and compares two recent proposals for forms of VAT intended to alleviate
these difficulties: the VIVAT and CVAT. Both enable the VAT chain to be
preserved on inter-provincial trade without compromising the destination
principle (allowing provinces to tax consumption at different rates) or
introducing new scope for game-playing by the provinces. The key difference
between them is that the CVAT requires sellers to discriminate between buyers

located in different provinces of the federation, whereas VIVAT requires them

to discriminate between registered and nonregistered buyers. 40D.OSei (2000),
in his article on political liberalization and the implementation of Value Added
Tax in Ghana, examined an aspect of Ghana’s political economy in the 1990s,
covering its transition to democracy from military dictatorship and how this
change process impacted in its attempt to implement a VAT. It assesses the
claim that political transition from autocracy to democracy improves policy-
making and policy outcomes. Ghana’s experience of implementing VAT
typifies an inherent problem in African governance, that of lack of adequate
capacity for improved policy-making and for the institutionalization of
inclusive politics and public accountability. The VAT case served in the end to
impose a previously absent level of public accountability on the Ghanaian
growth. Purohit (2001a) examined roadmap for national and subnational VAT
in India and stated that in the unique indirect tax system in India, central
government had the power to impose broad spectrum of excise duties on
manufacturing; and states had power to impose sales tax and other taxes like
entry tax, octroi, motor vehicle tax, and passenger and road tax. Although tax

45
reform committees recommended adoption of comprehensive VAT, covering
all commodities and services but the dichotomy of tax power created obstacles
in adopting European style VAT in India. He brought out the problems and
prospects of introducing VAT in India in view of the experience of states
which experimented in adopting VAT in one form or the other. Andhra
Pradesh introduced VAT on selected items with effect from April 1, 1995 for
resellers only. Kerala also introduced VAT on resellers in the case of select
items but did not grant set-off on 41taxes paid on inputs. Maharashtra moved
towards real VAT with effect from October 1, 1995. Existing tax structure
prior to introduction of VAT was simplified and ‘additional tax’ and ‘turnover
tax’ were abolished. It also provided set-off on input tax paid by
manufacturers. Efforts were made to make VAT system neutral and
transparent. Thus, the experience of the states showed that except
Maharashtra, no other state attempted to introduce VAT in its proper form, as
the first and foremost prerequisite of VAT was to give input tax credit. Further,
he pointed out that there was no requisite preparedness of tax department for
introduction of VAT. Purohit (2001b) examined the evolution of sales tax in
India and the efforts at introducing VAT. He discussed different categories of
sales tax according to coverage, legal basis and total turnover. Discussing the
fiscal role of sales tax, he reported that in most of the states, sales tax
constituted more than 50 per cent of the states’ own tax revenue. The buoyancy
coefficients of sales tax revenue were estimated to be greater than one in most
of the states. The analysis of structure of sales tax indicated large variations in
rates and multiplicity of rates. Exemptions were granted to large number of
commodities and services. The treatment of inputs varied from state to state.
Levy of surcharges, additional sales tax and tax on resellers aggravated the
46
complexities in the structure of sales tax. He suggested short-term and
medium-term measures to reform the sales tax, and the major medium-term
measure was to introduce stateVAT. Further, when the states adopted VAT, he
suggested important changes in CST and existing system of taxation. He
42pointed out that certain reforms were to be carried out in sales tax for
introduction of VAT, which included registration of dealers, raising exemption
limit, smooth processing of returns, simplified payment procedures, and
prompt and proper assessment. He also suggested some reforms in the
governance of state–VAT , which included mechanism to oversee its
operation, separation of duties of different functionaries of VAT department,
integrated management information system, procedure for risk management
and reducing interaction of dealers with the department. Mukhopadhyay
(2002) examined the issue of implementation of VAT going wrong in India.
Providing details of revenue from CST to the states in India during the period
1990 to 2002, he reported that Maharashtra, Tamil Nadu, Andhra Pradesh,
Haryana, Uttar Pradesh and West Bengal were to lose a lot of revenue if CST
was abolished. As there was no consensus and no attempt to reach compromise
in the interests of the states, VAT was introduced in an imperfect manner in
the states. No enough thought had gone into drafting of the Acts in this
context. He concluded that if it was pointed where exactly the efforts went
wrong, it would not be difficult to improve matters. Yasmin (2004) examined
sales taxation in Jammu &Kashmir with respect to its structure, fiscal
significance, feasibility of replacement by VAT; and suggested some policy
prescriptions. She found sales tax to be highly elastic and buoyant in the State.
The tax base had been widened considerably, but there was still scope to
widen the base and coverage of sales tax as there was a long list of exempted
47
goods, 43which could attract at least 4 per cent tax. There was prominence of
first-point single stage sales tax. Though firstpoint sales tax had administrative
advantage but the tax base became narrower. She opined that VAT appeared
to be better alternative for extending tax base but suggested gradual
introduction, starting with select items. She stated that VAT could cover some
of the deficiencies of first-point sales tax. It would reduce tax evasion
considerably. She also cautioned about the problems which would arise when
VAT was introduced. Rao (2004) tried to examine the extent of gain or loss to
the states from the introduction of value added tax, having features of uniform
design, tax credit for inputs, extension of tax base to transactions beyond the
first-point sale and zero-rating of interstate trade and international exports. She
stated that exclusion of services from the base would not eliminate the problem
of cascading from the tax system. As manufacturing sector output was the
major basis of sales tax, the estimation of impact of VAT was limited to
registered manufacturing sector only. If the entire cost of tax was passed on as
higher prices of output, then the result would be reduction in value of output.
The effects of introduction of VAT were classified into four parts, i.e., loss
from providing input tax credit, loss from reduced value of output, loss from
removal of CST, and gains from taxing second and subsequent sales within
the state. With certain assumptions, she estimated the losses, gains and net
impact on different states for the year 1997-98. With 15 per cent rate of VAT,
the impact (loss) varied from Rs. 932 crore for U.P. to Rs. 1054 crore for
Maharashtra. However, she reported that this exercise did 44not take certain
features of the economy into account which included zero-rating of exports,
turnover taxes on second and subsequent sales by some states, impact of
introduction of VAT and withdrawal of CST on structure and locational choice
48
of business/industry. The author further argued that homogeneity in VAT rates
and structure was required to reduce the scope of tax competition among the
states and neutrality of tax system to economic activity. However,
homogeneity in rates might not ensure that all states retain their existing level
of revenue. As tax-GSDP ratio varied, this indicated that different states had
different interests, therefore, at later stage, the states might change the VAT
rates and structure. The author concluded that on the basis of assumptions,
some states seemed to gain consistently from introduction of VAT, while the
others were expected to lose. The losses could be avoided by changing the
VAT rates and structure but this could be a hindrance in the formation of a
common internal market. She cautioned that Central Government’s assurance
for compensation in case of losses in revenue from introduction of VAT could
invite negative response from states in terms of slackness of efforts in
collection of VAT. Empowered Committee (2005) laid down the roadmap of
state-level VAT in India in the White Paper, which consisted of three parts. In
Part-I, justification of VAT and background were discussed. Problems of
double taxation and multiplicity of taxes were cited as the major drawbacks of
sales tax structure. The merits of VAT were reported to be input tax credit,
abolition of other than VAT taxes, rationalization of overall tax burden, self-
45assessment by dealers, transparency and higher growth in revenue. To
harmonize the VAT design in the states, common points of convergence with
certain flexibility were reported to be the basis, which were elaborated in Part-
II. These points included: input tax credit, its coverage and carrying over;
treatment of opening stock; compulsory issue of tax invoice, cash memo or
bill; registration; small dealers and composition scheme; tax payer’s
identification number; return; procedure of self-assessment of VAT liability;
49
audit; declaration form; incentives; other taxes; penal provisions; coverage of
goods under VAT; VAT rates and classification of commodities. In PartIII of
the paper, related issues were discussed, which included provision of
compensation to states in case of losses, resulting from implementation of
VAT to the extent of 100 per cent of loss in the first year, 75 per cent in the
second year and 50 per cent of the loss in the third year of introduction of
VAT. Other related issues discussed were: phasing out of Central Sales Tax
(CST), need forincluding imports under VAT chain, decision on collection and
appropriation of service tax, need for close interaction with trade and industry,
and comprehensive campaign at state level to communicate the benefits of
VAT to common people, traders and industrialists in simple and transparent
manner. Co-operation of all sections of people in the country was sought for
introduction of state level VAT. Nour and Pramanik (2005) stated that VAT is
a multi-point turnover tax imposed at each stage of production and distribution
on sales minus cost incurred. They discussed different variants of VAT, i.e.,
gross product type, income type, 46consumption type and the wages type.
They also discussed the three methods of computing VAT, i.e., addition
method, subtraction method and credit (invoice) method. From the methods of
computing, they brought out that VAT helped in reducing tax evasion, whereas
sales tax had considerable scope for evasion. They suggested that for better
administration of VAT, each taxpayer be allotted a master file and Tax
Identification Number (TIN). They concluded that VAT would help in
improving allocative efficiency, growth and balance of payments; avoiding
cascading effect; providing less scope for vertical integration; and facilitating
accuracy of tax refunds on exports. Bezborah and Singh (2005) pointed out
the weaknesses of sales tax structure which included lack of uniformity in tax
50
rates, multiplicity of rates, cascading nature, pyramiding effect and revenue
loss due to incentives. While reporting essentials of good sales tax structure,
they opined that VAT was a good alternative for sales tax. However, VAT also
has some black spots. Further, they brought out implementation problems of
VAT in India. They also discussed the issues of uniformity of rates, removal of
CST, making service tax VATable, unification of taxes, threshold limit and
refund mechanism; and concluded that implementation of VAT in India should
not be delayed further. Misra (2005) opined that Value Added Tax was a
measure to broad-base the tax net and countries all over the world have
adopted this miracle tax. He pointed out that the superiority of VAT lay in the
fact that it prevented cascading effect of taxation 47and reduced tax evasion.
Cross verification of accounts of all the enterprises has been made possible
with the help of computers under VAT and as such accounts could not be
manipulated. VAT could lead to capital formation in the country when
depreciation is made deductible from tax base and tax on capital goods is
offset against VAT liability. VAT could also improve balance of payments of
the country as exports are zero-rated. However, VAT might not be suitable for
a large country with a strong federal system. The author stated that for
introduction of VAT, existing tax rates be rationalized, tax credit system be
introduced in place of incentives and steps be taken to abolish CST.
Sthanumoorthy (2005) reported that states in India carried out a path-breaking
tax reform by replacing defective sales tax with Value Added Tax (VAT). The
author pointed out that sales tax system suffered from many structural
weaknesses, includingmultiplicity of sales tax rates and commodity categories
in each state; wide differences in rates within and between states; cascading
effect due to its imposition on a large number of inputs; tax competition among
51
states; tax exportation; large number of exemptions; application of surcharge
and additional levies; additional sales tax and turnover tax; entry tax and
octroi; complicated and wide variety of tax rules and widespread tax evasion.
Even when policy-makers were advocating replacement of sales tax with VAT,
the attempts were initiated in early 1990s. The process was delayed due to
several implementation problems and finally Central Government persuaded
majority of the states to switch over to VAT with effect from 1.4.2005. The
author discussed important issues and 48challenges in implementation of VAT
and in this context experience of some of the Indian states and countries
operating VAT system was reported. Sharma (2005) opined that VAT
emerged as one of the most fundamental component of ambitious process of
implementation of VAT in India since 1991 but the process of implementation
faced constraints in a federal country like India as the experience of Brazil
suggested. The major constraint in implementation of dual VAT in India was
that mutual cooperation between centre and states was quite low. The fear of
revenue loss as a result of introduction of VAT and phasing out of Central
Sales Tax (CST) was the major difficulty in implementing dual VAT. The
author opined that ‘no tax credit’ in case of inter-state trade, as laid down in
White Paper of the Empowered Committee (2005) undermined the basic
benefit of enforcing VAT system, i.e., removing the distortion in movement of
goods across the states. The integration of national VAT and state VAT into
GST was also stated to be a distant dream. The author highlighted the need to
develop a ‘federal friendly model’ of VAT that could be implemented in India
without compromising federal principles. Mukhopadhyay (2005) brought out
the global experiences of VAT and practical difficulties in introducing it in
India. He presented VAT design along with central excise and sale tax
52
structure. While bringing out the evolution of VAT, the author brought out the
variations in definitions, procedures and statutes in Indian states despite
Empowered Committee’s efforts to provide common platform. He also brought
out the major 49constraints in adopting VAT in India. In the origin and
destination principles, inter-state trade posed a major problem. He advocated
removal of CST with introduction of VAT. The author also explained
administrative and procedural requirements for introducing VAT. Bird (2007),
in the preliminary document, argued that in Canada, state value added tax was
more likely to be the right way to tax state level sales. He gave three major
reasons for introduction of VAT in place of retail sales tax (RST) which
included taxing sales, taxing business and replacing other taxes. Discussing the
economics of choice between VAT versus RST, he established the superiority
of VAT because RST has cascading effect and subject to abuse. He advocated
inclusion of services under VAT net. Further, he discussed the issues relating
to revenue, eroding of revenue by exemptions, selfenforcing nature of VAT
and reducing of tax evasion to establish the superiority of VAT. He pointed out
that even when VAT has to deal with much larger number of tax payers, its
administration is still easier because the onus is on the taxpayer to keep the
record to claim input tax credit to be presented to the authorities, if they doubt
the legitimacy of the credit. Discussing the broader issues of states and exports,
he stated that inter-state sales would not create more problems under VAT than
under RST. He concluded that VAT is the best form of consumption tax both
economically as well as administratively. He suggested that government
should check unwarranted price increases, protecting the interests of
lowincome consumers and taxing services at discounted rate. He 50suggested
that remaining states of Canada should also more seriously explore the
53
possibility of adopting state VAT. Bansal (2008) opined that as some states
did not join the VAT system, the fractured implementation of VAT could
cause some problems. She stated that CST and VAT were not compatible as
CST was not VAT able and credit could not be claimed for CST. The
producing states got considerable revenue from CST while consuming states
did not get much revenue and some states hesitated in joining VAT system.
Examining the Delhi experience of VAT, she reported that VAT needed honest
and efficient government machinery for cross checking and linking production
activities with tax liabilities of the firms but such machinery was lacking. VAT
put additional burden on tax authorities, producers and shopkeepers to keep the
records. There was no uniformity in rates in the states. The Empowered
Committee covered only 550 commodities under VAT rates and left others to
states to decide. As a result there were variations in rates even in neighbouring
states. Further, she stated that co-operation of taxpayers was needed in self-
assessment and keeping correct accounts butthisco-operation was not
forthcoming. As the government machinery was not able to do cross checking,
there was lot of tax evasion. She termed the VAT procedure as complicated.
From the review of available literature, it clearly emerges that the topics
undertaken in these limited research studies mainly focus on the drawbacks of
sales tax and make justification for the introduction of VAT. Similarly,
problemswhich could arise in introducing VAT have also been explored in
51some studies. There are only few studies which explore the effects of VAT
after its introduction. Significance of this study lies in the fact that it
empirically examines the introduction of VAT after the replacement of sales
tax in the states. The study undertakes an in-depth analysis of Punjab and
Haryana states and recommends measures needed to improve revenue
54
collection from VAT. It takes into consideration the secondary data as well as
primary data collected from the traders and consumers. Thus, the present study
is much more comprehensive as compared to the earlier studies. 52

“An Overview of Goods and Service Tax (Gst) In India”

Abstract:

India’s Tax structure is very complicated at present and it is also very complex
in nature. It consists of cascading effects of tax. GST is one single indirect tax
for the whole nation, which will make India one unified common market. It is
levied on the supply of goods and services. Despite the success of VAT, there
are still many shortcomings in present VAT system. India needs a well
designed and well structuredGSTmodel to overcome the shortcomings of
VAT. The author tries to highlights the background, objectives and advantages
of the proposed GST and the challenges against it. The paper also describes the
impact of GST in the present tax scenario in India. Key Words: Tax, Goods,
Service, Trade, National, consumer.

Introduction:

Every nation of the world must have a good tax system for their economic
development. India moved towards the road of tax reforms since 1980 but still
there are some issues which should be solved earliest. GST is considered as a
biggest tax reforms in India since its independence. At present, we are
suffering from a complicated indirect tax system by states and central
Governments. GST is a hope that it will change the structure of tax system in

55
India. GST will subsume all kind of indirect taxes of central and state
governments in to a simple unique tax. The proposed GST is a long time
pending issue in India.

Review of Literature:

Dr. G. Sunitha and P. Satischandra broadly discussed about GST in their

research paper titled “Goods and Service Tax (GST): As a new path in Tax
Reforms in Indian Economy”. The authors have tried to explain the concept of
GST and different models of GST. They also focussed on the impact of GST
on Indian markets. According to them the current tax structure is the main
hurdle for growth of Indian economy. New tax structure of GST will remove
this hurdles and boosts Indian economy. Dr. R. Vasanthagopal concluded in
“GST in India: A Big Leap in the Indirect Taxation System” in International
Journal of Trade, Economics and Finance, Vol. 2, No. 2, April 2011 that GST
will be booming Indian economy. According to him India is suffering from
complicated tax system. GST will give a boost to the Indian economy. Garg
summarizes in the article “Basic Concepts and Features of Good and Services
Tax in India” published in International Journal of scientific research and
Management, 2(2), 542-549 about impact of GST on Indian Tax structure and
find out that GST will strengthen nation’s economy and development. Neha
and Manpreet Sharma describes about GST in their research paper titled “A
study on Goods and Service Tax in India”. They tried to find out the benefits
of GST and current status of GST in India. According to them we are moving
towards GST due to faults in our current indirect tax structure. Our current

56
indirect tax structure is unable to increase the competitiveness of industries.
Both the authors’ emphasis on the benefits of GST. Nitin Kumar write a
research paper named “Goods and Service Tax in India-A Way Forward” in
“Global Journal of Multidisciplinary Studies”, Vol. 3, Issue6, May 2014 and
he noted that implementation of GST in Indiawill be a great move and it will
be remove all the problems of current tax structure in India.

Objectives of the Study:

The design of this research is descriptive in nature. Necessary secondary data

has been collected from various research papers, magazines, articles, news
papers, websites etc. The objectives of the paper are:

1) To understand the concept and necessity of GST.

2) To study the features of GST.

3) To examine the advantages of GST.

4) To study the challenges against GST.

Present Indirect Tax Structure In India:

At present major components of indirect taxes are as under. Government

collects indirect taxes in different ways like Excise Duty, Service tax, sales
tax/vat, Custom Duty, Central sales Tax,Octroietc.These taxes are playing an
important role in the total income of government. The rates of all the indirect
taxes are different as per their types and rules and regulations of
government.Excise, Duty, Service , Tax, Sales , TAX/VAT, Custom , Duty,
Central , Sales Tax

57
What Is GST?

The full form of GST is Goods and Services Tax. GST is a tax that is
applicable to Goods and Services both and it is levied at every stage of supply.
It is applied to all taxable goods and services in India. There will be two
components of GST in India CGST and SGST. Central Government will
collect CGST and State Government will collect SGST. It is a destination
based tax. In the case of interstate trading, GST will be collected by Central
Government and distributed it to the imported states. Various Models of
GST:France was the first country of the world to implement GST in 1960.
There are various models of GST across the world. State GST: In this model
of GST, tax levied by different states of a nation. This system of GST is
applicable in United States of America. National GST: In this system tax
levied by Centre with provisions for sharing with its states and/or provinces.
Nations like China and Australia are following this system of indirect tax
system. Non Concurrent Dual GST: In this model of tax, GST on goods
levied by states and GST on services levied by Centre. Concurrent Dual
GST: In this model of GST, tax levied by Centre & State on both goods
&services. Canada and Brazil has adopted this type of GST. India also
proposed to accept this type of tax structure of GST. Quebec Model: in this
model, there is a provision for separate legislation of tax for National/states.,
National GST, Non Concurrent , Dual GST Concurrent , Dual GST, Quebec ,
ModelState

To understand the concurrent Dual GST model, we have to understand

three different words.

58
CGST- Central Goods & Service Tax

SGST- State Goods & Service Tax

IGST- Integrated Goods & Service Tax

CGST will be levied by Central Government on intra state supply of Goods

and/or services and it will be paid to the account of Central Government.
SGST will be levied by State Government on intra-state supply of goods
and/or services and it will be paid to the account of State Government. IGST
will be levied by Central Government on inter supply of goods and/or and
services and it will be paid to the account of Central Government. Additional
tax to be levied by Central Government on Inter-state supply of goods.

Rates of GST:

GST Council declares a four tier tax structure of 5%, 12%, 18% and 28% with
lower rates foe essential items and the higher rates for luxury and de-merits
goods. With a view to keeping inflation undercontrol, essential items like food
will be taxed at zero rates.

Benefits Of GST:

There are so many advantages of GST to the different stakeholders like

Government, Consumers and Manufacturers etc. The benefits of the proposed
GST to different parties are as under.At present tax is collected by the states
where the products are manufacturing wherein GST tax will be collected by
the state where the product gets consumption. So those states get additional
income where consumption is more. GST, Intra-State, CGST SGST, Inter
State, IGST & Additional Tax

59
 Benefits to Customer:

The most important impact of GST is that it will reduce the cost of a product or
service and customer gets direct advantages of it. Customers can get products
or service on lower price than the current situation of VAT. It will increase the
purchasing power and saving capacity of customer. And finally customers can
make additional investment from their savings.

Benefits to Traders/Manufacturers:

At present condition there is a situation of multiple taxes in VAT system. GST

will overcome on all the shortcomings of current system of VAT. Cost of
production will be reduced and manufacturers will be able to sell their products
on lower/competitive rates. They can upward the graph of selling and profit
also.

Benefits to Government:

Government also gets advantages from replacing VAT by GST. GST is a very
easy indirect tax system. It is very easy to understand and also easy to
implement. It will broaden the current tax structure in India. Government can
get more and more investment from consumers whose saving increased by

GST.

Challenges Against GST In India:

The biggest challenge against GST is compensations to state Governments

from Central Governments. At present in India, indirect taxes are levied by
both Central and State Governments. VAT is a main indirect tax and it’s

60
contributed highest in the income of state governments. After GST, state
governments will face financial loses and due to this they will be more
depended on Central Governments and Financial Commission. Another big
challenge against GST is valuation of stock transfer. There is also a big issue
of Registration process in GST.It also requires a solid IT infrastructure for
implementation of GST in India. GST also required changing in accounting
system of corporate world.

Conclusion:

There are various challenges in the way of Goods & Service Tax, but its
advantages are more than its disadvantages. It will also give India a world class
and a smart tax system. It requires rational use and effective implementation of
GST in a nation like India. The main aim behind GST is to replace VAT. GST
is a comprehensive indirect taxthat subsumes all types of indirect taxes of
central and state governments in it. We can say that GST will provide relief to
Consumers, Manufacturers and Governments and whole nation.

Works Cited:

I. Garg, G. 2014. Basic Concepts and Features of Good and Services Tax in
India. International Journal of scientific research and Management. 2(2):542-
549.

II. Khurana, A. & Sharma, A. 2016. Goods and Services Tax in India - A
Positive Reform for Indirect Tax System.International Journal of Advanced
Research. 4(3): 500-505.

61
III. Kumar, N. 2014. Goods and Service Tax in India-A Way Forward.Global
Journal of Multidisciplinary Studies.3(6).

IV. Neha& Sharma, M. 2014. A study on Goods and Service Tax in India.The
International Journal’s Research Journal of Social Science and Management.
3(10):119-123.

V. Sehrawat, M. &Dhanda, U. 2015. GST in India: a key tax reform.

International Journal of Research-Granthaalayah. 3 (12):133-141.

VI. Shaik, S., Sameera, S. &Firoz, S. 2015. Does Goods and Services Tax
(GST) Leads to Indian Economic Development? IOSR Journal of Business and
Management. 17(12): 01-05.

VII. Sunitha, G. &Sathischandra, P. 2017. Goods and Services Tax (GST): As

a new path in Tax reforms in Indian economy. International Journal of
Research in Finance and Marketing. 7(3): 55-66.

VIII. Vasanthagopal, R. 2011. GST in India: A Big Leap in the Indirect

Taxation System. International Journal of Trade, Economics and Finance.2(2).

IX. The institute of cost accountants of India.An Insight of GST in India. 1.

X. The Empowered Committee of Finance Ministers, New Delhi. 2009. First

Discussion Paper on Goods and Services Tax in India.

XI. www.gstindia.com

62
 CHAPTER 4

OBJECTIVE

OF

STUDY

63
Objectives of the study
.
1. To know the perception of companies employees over GST and
VAT taxation system.
2. To study the opinion on GST implementation by government of
India.
3. To know GST has increase revenue of government, work of CA
and efficiency in taxation system.
4. To understand the concept and necessity of GST.
5. To study the features of GST.
6. To examine the advantages of GST.
7. To study the challenges against GST.

64
 CHAPTER 5
RESEARCH
METHODOLOGY

RESEARCH METHODOLOGY

INTRODUCTION
65
This chapter outlines the research methodology used to answer the research. The
chapter also discusses how the sample was derived, the sample size, the research
instrument, data collection procedures.

Need of study
Objectives of the study
1. To know the perception of companies employees over GST and VAT
taxation system.
2. To study the opinion on GST implementation by government of India.
3. To know GST has increase revenue of government, work of CA and
efficiency in taxation system.
4. To understand the concept and necessity of GST.
5. To study the features of GST.
6. To examine the advantages of GST.
7. To study the challenges against GST.

Research design
To design is to plan, that is, designing is a process of deliberate anticipation
directed towards bringing an expected situation under control. It is an arrangement
of conditions for collection and analysis of data in a manner that aims to combine
relevance to the research purpose with economy in procedure. All research
involves the elements of observation, description and the analysis of what happens
under certain circumstances. The present study is designed to know the
performance measurement tools of offline and online marketing activities. The
research study is a survey, as it has definite objectives, planning analysis and
interpretation of the data gathered, and skilful reporting of the findings.

Research type

66
This research is descriptive in nature. Descriptive research will be carried out to
analyzed and interpret the responses of the various respondents surveyed in the
internship program.
Sampling method/techniques
The sampling methods that have been adopted for the research is as follows:
Sampling technique: simple random sampling method has been used.
Sample size: Sample size is considered to be the quantity of data that has been
collected for the study. Due to limitation of time and scope of the study the number
of respondents from which the data is collected is 20. The sample size contains
employee at various profiles viz. gender, age, job profile such as HR manager, Java
trainer, Android trainer, networking administration, PHP trainer, Business
Development Manager, Marketing Manager, Accountant, and Lecturer.
Sample area: Sample area is considered to the location where the study has been
conducted. The location may comprise of certain boundaries which the researcher
would have been able to easily cover up for the study.
Training at Patiala branch solitaire Infosys
Survey conducted: Patiala

Instrument
A structured questionnaire was selected for the study. The questionnaire is
consisting of 10 questions. Mixed type options questionnaire is used.

Data collection
For collecting the data the both primary and secondary sources are used.
Primary sources
1. Conversations with the solitaire Infosys employees
2. Discussions with the employees who handle the technical field as well as
management team too.

67
3. Questionnaires is used in interviews
4. Working at different desks of solitaire Infosys.
Secondary sources
Solitaire Infosys websites
Various publications and manuals
Website documents
Other Internet sources

68
 CHAPTER 6

DATA ANALYSIS
AND
INTERPRETATION

DATA ANALYSIS AND INTERPRETATION

Analysis 1
OPTION NO. OF TOTAL NO. OF PERCENTAGE
RESPONDENTS RESPONDENTS

69
Totally Agree 3 20 15
Partially Agree 2 20 10
Moderately Effective 3 20 15
Partially Disagree 8 20 40
Totally Disagree 4 20 20

Interpretation:
The chart number 1 depicts that majority of 40% respondents are partially disagree,
followed by 20% totally disagree, followed by 15% both totally agree and
moderately effective, followed by 10% partially agree.

Analysis 2
OPTION NO. OF TOTAL NO. OF PERCENTAGE
RESPONDENTS RESPONDENTS
Partially Disagree 3 20 15
Totally Agree 2 20 10
Partially Agree 6 20 30
Can’t Say 7 20 35
Totally Disagree 2 20 10

70
Interpretation:
The chart number 2 depicts that majority of 35% respondents are can’t say about
the implementation of GST, followed by 30% partially agree, followed by 15%
partially disagree; followed by 10% both totally agree and totally disagree.

Analysis 3
OPTION NO. OF TOTAL NO. OF PERCENTAGE
RESPONDENTS RESPONDETNS
Totally Agree 6 20 30
Partially Agree 4 20 20
Can’t Say 5 20 25
Partially Disagree 4 20 20
Totally Disagree 1 20 5

71
Interpretation:
The chart number 3 depicts that majority of 30% respondents are totally agree who
think GST was planned in well manner and 25% respondents can’t say anything
about this, followed by 20% partially agree and partially disagree, followed by
5%totally disagree.

Analysis 4
OPTION NO. OF TOTAL NO. OF PERCENTAGE
RESPONDENTS RESPONDENTS
Increase 7 20 35
Not Effect 5 20 25
Decrease 5 20 25
Can’t Determine 3 20 15

72
Interpretation:
The chart number 4 depicts that majority of 35% respondents are definitely think
with the GST the work of C.A has been increases, followed by 25% both who
think the work of C.A has been decrease and not effected, followed by 15% can’t
determine.

Analysis 5]
OPTION NO. OF TOTAL NO. OF PERCENTAGE
RESPONDENTS RESPONDENTS
Totally Disagree 7 20 35
Partially Disagree 5 20 25
Can’t Say 2 20 10
Partially Agree 4 20 20
Totally agree 2 20 10

73
Interpretation:
The chart number 5 depicts that majority of 35% respondents are totally disagree
who think the slabs of GST is right way to lieved tax different good and services,
followed by 25% partially disagree, followed by 20% partially agree followed by
10% both totally agree and can’t say.

Analysis 6
OPTION NO. OF TOTAL NO. OF PERCENTAGE
RESPONDENTS RESPONDENTS
Totally Agree 3 20 15
Partially Agree 7 20 35
Can’t Say 2 20 10
Partially Disagree 6 20 30
Totally Disagree 2 20 10

74
Interpretation:
The chart number 6 depicts that majority of 35% respondents are partially agree,
followed by 30% partially disagree, followed by 15% totally agree, followed by
10% both can’t say and totally disagree

Analysis 7
OPTION NO. OF TOTAL NO. OF PERCENTAGE
RESPONDENTS RESPONDENTS
Totally Agree 1 20 5
Partially Agree 10 20 50
Can’t Say 2 20 10
Partially Disagree 4 20 20
Totally Disagree 3 20 15

75
Interpretation:
The chart number 7 depicts that majority of 50% respondents are partially agree
who think there should be a one standard tax rate for all goods and services like
other countries, followed by 20% partially disagree, followed by 15% totally
disagree , followed by 10% can’t say, followed by 5% totally agree .

Analysis8
OPTION NO. OF TOTAL NO. OF PERCENTAGE
RESPONDENTS RESPONDENTS
Totally Agree 3 20 15
Partially Agree 5 20 25
Can’t Say 2 20 10
Partially Disagree 8 20 40
Totally Disagree 2 20 10

76
Interpretation:
The chart number 8 depicts that majority of 40% respondents are partially disagree
who think GST will enhanced increase transparency indirect tax collection,
followed by 25% partially agree, followed by 15% totally agree ,followed by 10%
both can’t say and totally disagree.

Analysis 9
OPTION NO. OF TOTAL NO. OF PERCENTAGE
RESPONDENTS RESPONDENTS
Totally Agree 6 20 30
Partially Agree 2 20 10
Can’t Say 4 20 20
Partially Disagree 4 20 20
Totally Disagree 4 20 20

77
Interpretation:
The chart number 9 depicts that majority of 30% respondents are totally agree who
think GST will help government to raised better functioning of Indian Taxation
System, followed by 20% can’t say and partially disagree and totally disagree,
followed by 10% partially agree.

Analysis 10
OPTION NO. OF TOTAL NO. OF PERCENTAGE
RESPONDENTS RESPONDENTS
Totally Agree 3 20 15
Partially Agree 6 20 30
Can’t Say 1 20 5
Partially Disagree 7 20 35
Totally Disagree 3 20 15

78
Interpretation:
The chart number 10 depicts that majority of 35% respondents are partially
disagree who think GST will help government to increase revenue from GST
collection over previous Indirect taxes, followed by 30% partially agree , followed
by 15% both totally agree and totally disagree , followed by 5% can’t say.

CHAPTER 7

FINDINGS
AND
SUGGESTION
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FINDINGS

 The study reveals/stated/figured out that currently GST is not much smarter
way instead of other indirect taxes system which was previously in working.
 The study reveals respondent agrees that GST was implemented in the hustle
by Modi Government.
 The study reveals that respondent is not agreeing that GST was implemented
in the well planned manner.
 The stated that the GST has increased the work for C.A
 The study figured out that respondents are totally disagree, and they think
the slab of GST is not right way to lieved tax on different goods.
 The study figured out that 50% respondents agree with the decision of
government to keep out petrol, diesel, and alcohol and 40% were against this
statement. Approximately there are equal (in favour and against) towards
this statement.
 The study reveals that respondents are agree who think there should be one
standard rate for all goods and services like other countries.

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  The study find out that 40% respondents are agree with the statement, the
GST will enhanced increase transparency indirect tax collection and 40%
were against this statement. Approximately there is equal opinion towards
this statement.

SUGGESTIONS
 The present study reveals that there are positive behavioural changes in the
VAT assesses with regard to their financial and tax management,
mobilization and utilization of funds, compliance of tax law, proper
maintenance of accounts and statements, regular filling of returns and
prompt payment of tax.
 Section 171 0f the CGST Act provides for the Anti-profiteering measures so
as to ensure that benefit of credit available is ultimately passed on to the
consumer.
 In order to get GSTN and related procedures, an optional access provided to
the interested assesses to help them with training and understanding of
GSTN systems.
 IN order to support smooth transition to GST, TRANS 1 format for service
providers are released instantly.

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  The Government of India and State Governments should sensitize their own
departments about GST implications and need to revisit the contractual
clauses for price variation (upwards or downwards).
 In lines with Central Excise Tariff Act, Interpretive notes to GST
classification of Goods as well as Services are provided to ensure the correct
classification of goods.
 In order to maintain the level playing field, Petroleum products and
electricity to be brought within the ambit of GST immediately.

CHAPTER 8
LIMITATIONS

LIMITATIONS OF STUDY
82
1. Since the survey conducted involved a great deal of human perceptions, the
result might be biased.

2. The data from the sample may not reflect the universe since it is restricted only
to few customers/employees.

3. As the topic is wide so all the matters regarding the study could not be analyzed.

4. There was limited time for the research.

5. Sometimes customers didn’t respond with sincerity and concentration.

CHAPTER 9
CONCLUSION

Conclusion

83
By and Large, VAT emerged as a reformation to the old sales tax to remove the
cascading effect, to a great extent. Likewise, GST was adopted over the VAT,
which subsumed other taxes, such as excise duty, surcharge, cess, entry tax and so
forth, which also improved the taxation system in India. However, with the passage
of the GST Bill, the government will have to put up a mad scramble to put together
all the mechanisms and state approvals in place to implement the GST by its
rollout date of April 1, 2017.

Additionally, companies and tax collectors will have to be prepared on the

necessary changes. Some companies may even have to overhaul their business
processes to make way for the new tax change.

Nowadays there are so many things heard about GST, little right and many wrong.
GST, is like a book which has been hardly read but everybody is giving opinion
about it.
Here, i will try to explain the GST in the most unusual, simple and interesting way.

For a common man GST stands for ' Goods and Services Tax", and is proposed to
be a comprehensive indirect tax levied on manufacturing, sale and consumption of
goods as well as services at the national level. It will replace all other indirect taxes
levied on goods and services by the Indian Central and State governments.

CHAPTER 10
BIBLOGRAPHY
BIBLIOGRAPH
"GST Bill: How the tax reform advanced through the years", The Indian Express,
11 August 2015
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"Race for GST committee chairman hots up", Business Standard, 2015
"'Goods & Service Tax - Important things to know'".Mysharebazaar.com.
"All 4 GST bills passed in Loksabha PM Modi congratulated country | GST in
India | GST news | GST updates | GST consultant | GST Registration". GST-
SEVA. 2017-03-29. Retrieved 2017-03-29.
"PRS / Bill Track / The Constitution (122nd Amendment) (GST) Bill,
2014".www.prsindia.org. Retrieved 13 August 2016.
"President Pranab Mukherjee gives assent to Constitution Amendment Bill on
GST". The Times of India.Retrieved 10 September 2016.
"President gives assent to GST Bill". The Hindu. 8 September 2016. Retrieved 10
September 2016.
"The Constitution (One Hundred and Twenty Second Amendment) Act, 2016"
(PDF).Ministry of Law. 8 September 2016. Retrieved 29 September 2016.
"Assam becomes the first state in the country to pass GST Bill". The Times of
India.Retrieved 13 August 2016.
"Assam becomes first state to ratify GST Bill". The Hindu. 12 August 2016.
Retrieved 13 August 2016.
"After Assam, Bihar Assembly ratifies GST Bill". Firstpost. 16 August 2016.
Retrieved 18 August 2016.
Varma, Gyan (17 August 2016). "GST bill: Nitish Kumar goes goodwill hunting".
Mint.Retrieved 18 August 2016.
. Archived from the original on 9 October 2007.Retrieved 5 September 2007.
Ahmed, Ehtisham and Nicholas Stern. 1991. The Theory and Practice of Tax
Reform in Developing Countries (Cambridge University Press).
Bird, Richard M. and P.-P.Gendron .1998. "Dual VATs and Cross-border Trade:
Two Problems, One Solution?" International Tax and Public Finance, 5: 429–42.
Bird, Richard M. and P.-P.Gendron .2000. "CVAT, VIVAT and Dual VAT;
Vertical ‘Sharing’ and Interstate Trade," International Tax and Public Finance, 7:
753–61.
Smart, M., & Bird, R. M. (2009). The impact on investment of replacing a retail
sales tax with a value-added tax: Evidence from Canadian experience. National
Tax Journal, 591-609.
Keen, Michael and S. Smith .2000. "Viva VIVAT!" International Tax and Public
Finance, 7: 741–51.

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Keen, Michael and S. Smith .1996."The Future of Value-added Tax in the
European Union," Economic Policy, 23: 375–411.
McLure, Charles E. (1993) "The Brazilian Tax Assignment Problem: Ends, Means,
and Constraints," in A Reforma Fiscal no Brasil (São Paulo: FundaçäoInstituto de
PesquisasEconômicas).
McLure, Charles E. 2000. "Implementing Subnational VATs on Internal Trade:
The Compensating VAT (CVAT)," International Tax and Public Finance, 7: 723–
40.
Muller, Nichole. 2007. IndischesRechtmitSchwerpunkt auf
gewerblichemRechtsschutzimRahmeneinesProjektgeschäfts in Indien, IBL
Review, VOL. 12, Institute of International Business and law, Germany. Law-and-
business.de
Muller, Nichole. 2007. Indian law with emphasis on commercial legal insurance
within the scope of a project business in India. IBL Review, VOL. 12, Institute of
International Business and law, Germany.
MOMS, PolitikensNudanskLeksikon 2002, ISBN87-604-1578-9.
OECD. 2008. Consumption Tax Trends 2008: VAT/GST and Excise Rates, Trends
and Administration Issues. Paris: OECD.
Serra, J. and J. Afonso. 1999. "Fiscal Federalism Brazilian Style: Some
Reflections," Paper presented to Forum of Federations, Mont Tremblant, Canada,
October 1999.
Sharma, Chanchal Kumar 2005. Implementing VAT in India: Implications for
Federal Polity. Indian Journal of Political Science, LXVI (4): 915–934. ISSN0019-
5510SSRN.com

CHAPTER 11
ANNEXURE
86
ANNEXURE

Dear Sir/ Madam

I am LOVEJEET SINGH doing my internship at solitaire
Infosys. I have to submit a report on the “VALUE ADDED TAX AND GOODS
AND SERVICES TAX” as a part of my internship programme. For that I am
conducting a survey on solitaire Infosys employees/customers. I would glad and
grateful if you help me in the process through answering the survey questions.

QUESTIONNAIRE
(1) Do you think GST is a better and smart taxation system than VAT and other
indirect tax?

(A)Totally Agree (D)Moderately Effective

(B) Partially Agree (E)Totally Disagree
(C) Partially Disagree

(2) Do you think GST was implemented in hustle by Modi government?

(A) Totally Agree (D) Partially Disagree

(B) Partially Agree (E) Totally Disagree

(C) Can’t Say

(3) Do you think GST was implemented is well planned manner?

(A) Totally Agree (D) Partially Disagree

(B) Partially Agree (E) Totally Disagree

(C) Can’t Say

(4) What do you think with the GST the work of C.A has been is increased or
decreases?

87
(A) Increased (C) No effect

(B) Decreased (D) Can’t Determine

(5) Do you think the slab of GST is right way to lieved tax on different goods and
services?

(A) Totally Agree (D) Partially Disagree

(B) Partially Agree (E) Totally Disagree

(C) Can’t Say

(6) The item such as petrol, diesel and alcohol etc. which are not taxed according
to GST are kept out of GST. Taxation is a right decision of government?

(A) Totally Agree (D) Partially Disagree

(B) Partially Agree (E) Totally Disagree

(C) Can’t Say

(7) Do you think there should be one standard tax rate for all goods and services
like other countries?

(A) Totally Agree (D) Partially Disagree

(B) Partially Agree (E) Totally Disagree

(C) Can’t Say

(8) Do you think GST will enhanced increase transparency indirect tax collection?

(A) Totally Agree (D) Partially Disagree

(B) Partially Agree (E) Totally Disagree

(C) Can’t Say

(9) Do you think GST will help government to raised better functioning of Indian
Taxation System?

(A) Totally Agree (D) Partially Disagree

88
 (B) Partially Agree (E) Totally Disagree

(C) Can’t Say

(10) Do you think GST will help government to increase revenue from GST
collection over previous Indirect Taxes?

(A) Totally Agree (D) Partially Disagree

(B) Partially Agree (E) Totally Disagree

(C) Can’t Say

89