INTRODUCTION TO G.S.

T BILL

Submitted By:

Pravas Naik

Roll No: 119

B.A. LLB (HONS.)

SUBMITTED TO:

Mr. Rana Navneet Roy

(FACULTY: TAXATION)

HIDAYATULLAH NATIONAL LAW

UNIVERSITY

RAIPUR, CHHATTISGARH

Date of submission: 21/08/2017

 DECLARATION

I Pravas Naik, hereby declare that, the project work entitled, ‘Introduction To G.S.T
Bill’ submitted to H.N.L.U., Raipur is record of an original work done by me under
the guidance of Navneet Rana, Faculty Member, H.N.L.U., Raipur

Name-Pravas Naik

Roll no-119

Semester -V
 TABLE OF CONTENTS

I. Declaration
II. Table of contents
III. Acknowledgement
IV. Objectives of the study
V. Research Methodology

1. Introductions…………………………………..….….1
2. History……………………………………...………....2
3. Taxation scheme…………………………………...…4
4. Goods and Services Tax Network (GSTN)………….5
5. Conclusion.....................................................................7
6. References......................................................................8
 ACKNOWLEDGEMENT

I Pravas Naik feel myself highly elated, as it gives me tremendous pleasure to come
out with work on the topic “Introduction To G.S.T Bill”. I am thankful to my teacher,
Navneet Rana who gave me this topic. I am highly obliged for his guidance in doing
all sorts of researches, suggestions and discussions regarding my project topic by
devoting his precious time.

I thank to the H.N.L.U for providing Computer, library facility. And lastly, I would
like to thank my friends and all those persons who have helped me in the completion
of this project.

Name- Pravas Naik

V- Semester
 Objectives

 To understand the G.S.T Bill

Research Methodology

Nature of Research
This research work is written on Introductions To G.S.T Bill.

Sources of Data
This study is done with the help of secondary data. This secondary information has
been obtained from published sources such as E-books, official websites, online PDF
etc.
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INTRODUCTION

Goods and Services Tax (GST) is an indirect tax which was introduced in India on 1 July 2017
and was applicable throughout India which replaced multiple cascading taxes levied by
the central and state governments. It was introduced as The Constitution (One Hundred and First
Amendment) Act 2017, following the passage of Constitution 122nd Amendment Bill. The GST
is governed by a GST Council and its Chairman is the Finance Minister of India. Under GST,
goods and services are taxed at the following rates, 0%, 5%, 12%,18% and 28%. There is a
special rate of 0.25% on rough precious and semi-precious stones and 3% on gold. In addition,
access of 15% or other rates on top of 28% GST applies on few items like aerated drinks, luxury
cars and tobacco products. GST was initially proposed to replace a slew of indirect taxes with a
unified tax and was therefore set to dramatically reshape the country's 2 trillion-dollar
economy. The rate of GST in India is between double to four times that levied in other countries
like Singapore.

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HISTORY
The reform process of India's indirect tax regime was started in 1986 by Vishwanath Pratap
Singh with the introduction of the Modified Value Added Tax (MODVAT). A single common
"Goods and Services Tax (GST)" was proposed and given a go-ahead in 1999 during a meeting
between then Prime 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 then finance minister of West Bengal, Asim Dasgupta to design a GST
model.

The Ravi Dasgupta committee was also tasked with putting in place the backend technology and
logistics (later came to be known as the GST Network, or GSTN, in 2017) for rolling out a
uniform taxation regime in the country. In 2003, 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 the 12th Finance Commission.

After the fall of the BJP-led NDA government in 2004, and the election of a Congress-

led UPA government, the new Finance Minister P 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 2014, the NDA government was re-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 2016 to implement GST. In May 2016, the Lok Sabha 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
GST Bill and the President Pranab Mukherjee gave his assent to it.

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A 21-members select committee was formed to look into the proposed GST laws. State and
Union Territory GST laws were passed by all the states and Union Territories of India except
Jammu & Kashmir, paving the way for smooth rollout of the tax from 1 July 2017. 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 Goods and Services Tax was launched at midnight on 30 June 2017 by 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.

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. These 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.

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Taxation scheme
Taxes subsumed
The single GST replaced several former taxes and levies which included: central excise
duty, services 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 government of that state. 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; therefore, taxes are paid to the state 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 different rates on different 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. 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.

The introduction of the GST increased the costs of most consumer goods and services in India
including food, hotel charges, insurance and cinema tickets. Upon its introduction in the country,
GST led to a number of protests by the business community, primarily due to an increase in
overall taxes and hence the prices of goods.

Check posts across the country were abolished ensuring free and fast movement of goods.

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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.

Goods and Services Tax Network (GSTN)

As per the government website on GST, "Goods and Services Tax" Network (GSTN) is a
nonprofit organization proposed to be formed for creating a website/platform for all the
concerned parties related to the GST, namely stakeholders, government and taxpayers to
collaborate on a single portal. When up and running, the portal is supposed to be accessible to
the central government which allows it to track down every transaction on its end while
taxpayers are advertised to have the ability of connecting this to their tax returns. However, its
efficacy and efficiency is yet to be tested. The IT network was touted to be developed by
unnamed private firms. The known authorized capital of GSTN is ₹10 crores (US$1.6 million)
in which Central Government holds 24.5 percent of shares while the state government holds 24.5
percent and rest with private banking firms for smooth running of the transactions.

Benefits of GST:

 Subsume all indirect taxes at the centre and the state level.
 One-Country-One-Tax.
 Reduce the cascading effect of taxes on taxes.
 Increase productivity and transparency, increase tax-GDP ratio.
 Reduce/Eliminate tax evasion and corruption.

Exemptions:
 Alcoholic liquor for human consumption is exempt from GST.
 Initially, GST will not apply to: 
 Petroleum crude, 
 High speed diesel, 

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 Motor spirit (petrol), 

 Natural gas, and 
 Aviation turbine fuel. 
 The GST Council will decide when GST will be levied on them.
 Tobacco and tobacco products will be subject to GST. The centre may also impose excise
duty on tobacco
Salient Features of GST

 About 2/3 GST Council members come from the states and any decision of council can
be enforced only after it secures the assent of 75% of the members.
 If states think that they are losing the revenues due to GST implementation, they are
empowered to impose 1% more tax than the accepted GST for the first two years.
 If states incur revenue losses due to introduction of GST, the centre will compensate
100% loss for first three years, 75% of the loss on the fourth year and 50% of the loss in the
fifth year.
 Though petroleum products are part of the GST regime, there will be no tax levied on
them and states can continue to levy their value-added tax. In the beginning, the centre will
collect excise tax for some years.
 All the state and central taxes will be levied through a single tax. As a result, several
taxes will be abolished and the practice levying taxes on taxes – tax cascading - will also be
abandoned.

Some Problems on GST:

 Doesn't include petroleum and alcohol products. Heavy loss to the exchequer.
 Very high rates compared to current VAT.
 Tax-sharing between states and the Centre was another bottleneck.

Present Update on GST at Cabinet:

 Cabinet cleared changes in the GST Constitutional Amendment Bill,

dropping 1% manufacturing tax and providing guarantee to compensate states for any
revenue loss in the first five years of roll out of the proposed indirect tax regime.

OTHER CONTRIES WHO HAVE ACCEPTED G.S.T

 Goods and Services Tax (Australia)

 Goods and Services Tax (Canada)

 Goods and Services Tax (Singapore)

 Goods and Services Tax (Hong Kong)

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CONCLUSION

Indian system of taxation of goods and services is characterized by cascading, distortionary tax
on production of goods and services which leads to miss-allocation of resources, hampering
productivity and slower economic growth. To remove this hurdle, a pure and simple tax system
like GST (Goods and Service Tax) is need of the hour in the country. An ideal tax system
collects taxes at various stages of manufacturing, supply, wholesale, retailing and lastly at the
final consumption. It is based on the add-on value by the manufacturer, supplier and retailer at
each stage of the value chain. Tax paid at each stage is based on the amount of value added and
not on the entire amount.

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REFERENCE

For my project utilized many interesting sites and encyclopedias a few of which
are-

1. Economictimes.indiatimes.com
2. www.hindustantimes.com

3. www.ibef.org