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DR. SHAKUNTALA MISRA NATIONAL REHABILITATION

UNIVERSITY
Lucknow

Faculty of Law
PROJECT ON

‘AN OVERVIEW OF GOODS AND SERIVCES TAX’

For

COURSE ON LAW OF TAXATION (INDIRECT TAXES)

CLASS: B.Com., LL.B (Hons.) 8th Semester

Submitted by

SHUBHAM PAL

B Com LL.B/2016-17/06

Roll NO-164140064

Under the Supervision of

MR. SANDEEP MISHRA SIR

(GUEST FACULTY)
Faculty of Law

Dr. Shakuntala Misra National Rehabilitation University

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ACKNOWLEDGEMENT

I would like to express my special thanks of gratitude to my teacher MR. SANDEEP MISHRA
SIR who gave me the golden opportunity to do this wonderful topic “AN OVERVIEW OF
GOODS AND SERVICES TAX” which also helped me in doing a lot of Research and I came
to know about so m any new things I am really thankful to them.

SHUBHAM PAL

TABLE OF CONTENTS
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1. Historical background of GST ………………………………………….04 - 05

2. Concept of GST……………………………………………………………06

3. Meaning of GST……………………………………………………………07

4. Types and different taxes under gst……………………………………...08 - 09

5. Salient Features of GST………………………………………………….10 – 11

6. Opportunities of GST…………………………………………………….12 – 13

7. Benefits of GST…………………………………………………………..14 – 15

8. Conclusion………………………………………………………………….15

9. Bibliography………………………………………………………………..16

AN OVERVIEW OF GOODS AND SERVICES TAX

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Concept and Introduction of Tax

Taxation is the inherent power of the state to impose and demand contribution upon persons ,
properties , or right for the purpose of generating revenues for public purposes.

Taxes are enforced proportional contributions from persons to property levied by the law making
body of the state by virtue of its sovereignty for the support of the government and all public
needs.

Why are Taxes Levied ?

The reason for levy of taxes is that they constitute the basic source of revenue to the government.
Revenue so raised is utilized for meeting the expenses of government like defense, provision of
education , health care, Infrastructure facilities like roads , dams etc.

What are the Reasons of Taxation ?

1. Provide the basic facilities for every citizen of country.

2. Finance government multiple projects and schemes.

3. Protection of Life.

4. Responsibility of citizen to the Nation.

Historical Background of Goods and Service Tax in India

1. Amaresh Baghchi Report , 1994 suggests that the introduction of Value Added Tax will
act as root for implementation of Goods and Service Tax in india.

2. Ashim Dasgupta, 2000 empowered committee, which introduces VAT system in 2005 ,
which has replaced old age taxation system in India.
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3. Vijay Kelkar Task Force 2004, it strongly recommended that the integration of indirect
taxes in to the form of GST in India.

4. Announcement of GST to be implemented by 1 st April , 2010 After successfully

implementation of VAT system in India and suggestion various committees and task forces on
GST, the union government first time in union budget 2006-07 announced that the GST would
be applicable from 1st April 2010.

5. The Government has formed various joint working groups of state finance ministers to
study the impact of GST various states.

6. The empowered committees of state finance ministers after various meetings reached on
amicable formula for implementation of GST in India.

7. Task force of finance ministers has submitted their report in December 2009 on structure
of GST in India.

8. In August , 2013 Standing committee on Finance tabled its report on GST Bill.

9. In December, 2014 revised constitution Amendment bill was tabled in Parliament.

10. On June 14, 2016 , the ministry of finance released draft model law on GST in public
domain for views and suggestions .

11. GST bill passed in Rajya Sabha on 3rd August , 2016 the constitution amendment (122nd )
bill 2014 was passed by Rajya Sabha with concern amendments.

a. The changes made by Rajya Sabha were unanimously passed by Lok Sabha.

b. After the passage of amendment bill in Rajya Sabha and the charges subsequently
ratified and passed by the lok sabha unanimously, the bill was adopted by a majority of
state Legislatures where in approval by at least 50% of the state Assemblies was
required.

c. The final step to the constitution (122nd ) amendment bill, 2014 becoming an act was
taken when the Honorable President of India gave his final assent on September 8,
2016.
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12. In 2017 – Four GST related bills become act to following Presidents assent and
passage in parliament:

a. Central GST Bill.

b. Integrated GST Bill .

c. Union Territory GST Bill.

d. GST (compensation to states ) Bill.

13. In 2017 GST Council finalizing the GST Rules and GST Rates.

14. When GST is Applicable – Modi Govt. Want to applicable GST Bill from 1st
July 2017, Due to a some legal Problems GST Bill is not applicable before 1st July
2017.

Concept Of Goods and Service Tax (GST)

Introduction Of GST

The reference of GST was first made in the Indian Budget in 2006-07 by the Finance
Minister Mr. P. Chidambaram as a single centralized Indirect tax. The GST constitution
( 122nd ) Amendment Bill 2014 was introduced on December 19, 2014 and passed on May
06, 2015 in the lok sabha and yet to be passed in the Rajya Sabha.

The bill seeks to amend the constitution to introduce Goods and Services tax vide proposed
new article 246 A. This article gives power to Legislature of every state and parliament to
make laws with respect to goods and services tax where the supplies of goods or of service
take place . Recently, Union Minister Mr. Arun Jaitley said that GST could be implemented
as early as January 1, 2016.

Meaning Of Goods and Service Tax (GST)

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Clauses 366 (12A) of the constitution Bill defines GST as “ goods and service tax” means
any tax on supply of goods, or services or both except taxes on the supply of the liquor for
human consumption. Further the clause 366 (26A) of the Bill defines Services means
anything other than Goods.
Thus it can be said that GST is a comprehensive tax levy on manufacture , sale and
consumption of goods and services at a national level . The proposed tax will be levied on
all transactions involving supply of goods and services, except those which are kept out of
its preview.

Purpose of GST

The Two Important Purposes of GST are followings:

Single Umbrella Tax Rate:

GST shall replace a number of indirect taxes being levied by union and state government.

Removing Cascading Effect :

GST is intended to remove Tax on Tax Effect and provides to common national market for
Goods and Services.

Types Of Categories under GST rate

The GST tax is levied based on Revenue Neutral Rate . For the purpose of imposing GST
tax in India, the goods and services are categorized in to four.

Exempted Categories under GST in India :

The GST and council and other GST authorities notifies list of exempted goods. Such goods
are not fallen under payment of GST tax. The authorities may modify or amend the list time
to time by adding deleting any item if required by notification to public.
Essential Goods and Services for GST in India
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Essential Category of goods and services are charged very lower GST rate. Essential
goods and services are the goods and services for necessary items under basic
importance.

Standard Goods and services for GST in India

A major share of GST tax payers falls under this category of Standard Goods and
Service. A Standard rate is charged against the goods and services under this category.

Special Goods and Services for GST tax Levy

Under special category of goods and services, GST rates would be high. Precious metals
including luxury items of goods and services fall under special goods and services for
GST rate implementations.

GST rates in India at a glance

Exempted categories : 0

Commonly used Goods and Services : 5%

Standard Goods and Services fall under 1st Slab : 12%

Standard Goods and Services fall under 2nd Slab : 18%

Special category of Goods and Services including Luxury Goods : 28%

Types Of Goods and Service Tax in India

1. CGST ( Central Goods and Service Tax) :GST to be levied by the center.

2. SGST ( State Goods and Service Tax ) : The GST is to be levied by the states is State
GST (SGST) .

3. IGST ( Integrated Goods and Service Tax ) : Integrated GST will be levied by the
center and the states concurrently .

Different Taxes are Cover under GST

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1. State taxes which will be subsumed in SGST :

VAT/ Sales Tax.

Luxury Tax.

Entertainment Tax ( unless it is levied by local bodies)

Taxes on Lottery, betting, and gambling.

2. Central Taxes which will be subsumed in CGST :

Central Excise Duty.

Additional Excise Duty.

Service Tax.

The Excise duty levied under the medical and toilet preparation Act.

Additional Customs Duty.

Education Less.

Surcharges.

3. Taxes that will not be subsumed:

Stamp Duty.

Electricity Duty.

Other Entry taxes and Octori Entertainment Tax ( levied by local

bodies.) Basic Customs duty and safeguard duties on import of goods in

to India. Professional Tax.

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Salient Features of GST

The salient features of GST are as under:

(i) The GST would be applicable on the supply of goods or services as against the present
concept of tax on the manufacture and sale of goods or provision of services. It would be a
destination based consumption tax.

(ii) It would be a dual GST with the Center and States simultaneously levying it on a common
tax base. The GST to be levied by the Center on intrastate supply of goods and / or services
would be called the Central GST (CGST) and that to be levied by the States would be called the
State GST (SGST).

(iii) The GST would apply to all goods other than alcoholic liquor for human consumption and
five petroleum products, viz. petroleum crude, motor spirit (petrol), high speed diesel, natural gas
and aviation turbine fuel. It would apply to all services barring a few to be specified

(iv) Tobacco and tobacco products would be subject to GST.

(v) The GST would replace the following taxes currently levied and collected by the

Center:

a. Central Excise duty

b. Duties of Excise (Medicinal and Toilet Preparations)

c. Additional Duties of Excise (Goods of Special

Importance) d. Additional Duties of Excise (Textiles and

Textile Products) e. Additional Duties of Customs

(commonly known as CVD)

f. Special Additional Duty of Customs (SAD)

g. Service Tax h. Central Surcharges and Cess so far as they relate to supply of goods and
services.
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(vi) State taxes that would be subsumed under the GST are: a. State VAT b. Central Sales Tax c.
Luxury Tax d. Entry Tax (all forms) e. Entertainment and Amusement Tax (except when levied
by the local bodies) f. Taxes on advertisements g. Purchase Tax.

(vii) The CGST and SGST would be levied at rates recommended by the GST Council.

(viii) There would be a floor rate with a small band of rates within which the States may fix the
rates for SGST.

(ix) The list of exempted goods and services would be common for the Center and the States
which would be finalized by GST Council.

(x) An Integrated GST (IGST) would be levied and collected by the Center on inter-State supply
of goods and services. Accounts would be settled periodically between the Center and the States
to ensure that the SGST portion of IGST is transferred to the destination State where the goods or
services are eventually consumed.

(xi) Tax payers shall be allowed to take credit of taxes paid on inputs (input tax credit) and
utilize the same for payment of output tax. However, no input tax credit on account of CGST
shall be utilized towards payment of SGST and vice versa. The credit of IGST would be
permitted to be utilized for payment of IGST, CGST and SGST in that order.

(xii) HSN (Harmonized System of Nomenclature) code shall be used for classifying the goods
under the GST regime. It is being proposed that taxpayers whose turnover is above Rs. 1.5 cores
but below Rs. 5 cores shall use 2 digit code and the taxpayers whose turnover is Rs. 5 cores and
above shall use 4 digit code. Taxpayers whose turnover is below Rs. 1.5 cores will not be
required to mention HSN Code in their invoices.

(xiii) Exports shall be treated as zero-rated supply. No tax is payable on export of goods or
services but credit of the input tax related to the supply shall be admissible to exporters and the
same can be claimed as refund by them.

(xiv) Import of goods and services would be treated as inter-State supplies and would be subject
to IGST in addition to the applicable customs duties. The IGST paid shall be available as ITC for
payment of taxes on further supplies.
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(xv) The laws, regulations and procedures for levy and collection of CGST and SGST would be
harmonized to the extent possible.

Opportunities of GST

1. An end to cascading effects

This will be the major contribution of GST for the business and commerce. At present, there are
different state level and center level indirect tax levies that are compulsory one after another on
the supply chain till the time of its utilization.

2. Growth of Revenue in States and Union

It is expected that the introduction of GST will increase the tax base but lowers down the tax
rates and also removes the multiple point This, will lead to higher amount of revenue to both the
states and the union.

3. Reduces transaction costs and unnecessary wastage's

If government works in an efficient mode, it may be also possible that a single registration and
single compliance will suffice for both SGST and CGST provided government produces
effective IT infrastructure and integration of such infrastructure of states level with the union.

4. Eliminates the multiplicity of taxation

One of the great advantages that a taxpayer can expect from GST is elimination of multiplicity of
taxation. The reduction in the number of taxation applicable in a chain of transaction will help to
clean up the current mess that is brought by existing indirect tax laws.

5. One Point Single Tax

Another feature that GST must hold is it should be ‘one point single taxation’. This also gives a
lot of comforts and confidence to business community that they would focus on business rather
than worrying about other taxation that may crop at later stage. This will help the business
community to decide their supply chain, pricing moralities and in the long run helps the
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consumers being goods competitive as price will no longer be the function of tax components but
function of sheer business intelligence and innovation.

6. Reduces the corruption

It is one of the major problems that India is overwhelmed with. We cannot expect anything
substantial unless there exists a political will to root it out. This will be a step towards corruption
free Indian Revenue Service.

Benefits of GST

(A) Make in India

(i) Will help to create a unified common national market for India, giving a boost to Foreign
investment and “Make in India” campaign

(ii) Will prevent cascading of taxes as Input Tax Credit will be available across goods and
services at every stage of supply;

(iii) Harmonization of laws, procedures and rates of tax;

(iv) It will boost export and manufacturing activity, generate more employment and thus
increase GDP with gainful employment leading to substantive economic growth;

(v) Ultimately it will help in poverty eradication by generating more employment and more
financial resources;

(vi) More efficient neutralization of taxes especially for exports thereby making our products
more competitive in the international market and give boost to Indian Exports;

(vi) Improve the overall investment climate in the country which will naturally benefit the
development in the states;

(vii) Uniform SGST and IGST rates will reduce the incentive for evasion by eliminating rate
arbitrage between neighboring States and that between intro and inter-state sales;
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(viii) Average tax burden on companies is likely to come down which is expected to reduce
prices and lower prices mean more consumption, which in turn means more production thereby
helping in the growth of the industries . This will create India as a ” Manufacturing hub”.

(B) Ease of Doing Business

(i) Simpler tax regime with fewer exemptions;

(ii) Reductions in the multiplicity of taxes that are at present governing our indirect tax
system leading to simplification and uniformity;

(iii) Reduction in compliance costs - No multiple record keeping for a variety of taxes - so
lesser
investment of resources and manpower in maintaining records;

(iv) Simplified and automated procedures for various processes such as registration, returns,
refunds, tax payments, etc;

(v) All interaction to be through the common GSTN portal- so less public interface between
the taxpayer and the tax administration

(vi) Will improve environment of compliance as all returns to be filed online, input credits to
be verified online, encouraging more paper trail of transactions;

(vii) Common procedures for registration of taxpayers, refund of taxes, uniform formats of tax
return, common tax base, common system of classification of goods and services will lend
greater certainty to taxation system;

(viii) Timeliness to be provided for important activities like obtaining registration, refunds, etc;

(ix) Electronic matching of input tax credits all-across India thus making the process more
transparent and accountable.

(C) Benefit to Consumers:

(i) Final price of goods is expected to be lower due to seamless flow of input tax credit between
the manufacturer, retailer and service supplier;
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(ii) It is expected that a relatively large segment of small retailers will be either exempted from
tax or will suffer very low tax rates under a compounding scheme- purchases from such entities
will cost less for the consumers;

(iii) Average tax burden on companies is likely to come down which is expected to reduce prices
and lower prices mean more consumption.

CONCLUSION

This study highlighted the overall overview of GST in India. The Government to put in more
effort to ensure that Consumers have a clear understanding and develop a positive perception
towards GST , leading to its acceptance . Good understanding among customers is important as it
can generate a positive perception towards the taxation policy .
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BIBLIOGRAPHY

1. http://www.gstcouncil.gov.in/sites/default/files/GST-an_update_010719.pdf

2. http://www.gstcouncil.gov.in/sites/default/files/GST-Concept-and-Status01072019.pdf

3. https://www.slideshare.net/PankajSharma1221/project-report-on-gst-2018?from_action=save

4. BOOKS – Goods And Services Tax in India _by B. VISWANATHAN