INTRODUCTION

The Goods and Services Tax (GST) is a value added tax to be implemented in India,
thedecisionon which is pending.GST is the only indirect tax that directly affects all
sectors and sections ofour economy. The goods and services tax (GST) is aimed at
creating a single, unified market thatwillbenefit both corporate and the economy.
Under the GST scheme, no distinction is
made between goods and services for levying of tax. In other words, goods and servi
ces attract thesame rate of tax. GST is a multi-tier tax where ultimate burden of tax
fall on the consumer ofgoods/ services. It is called as value added tax because at
every stage, tax is being paid on thevalue addition.Goods and Service Tax is a
comprehensive tax levy on manufacture, sale andconsumption of Goods and
services. GST is termed as biggest tax reform In Indian TaxStructure. It will not be an
additional tax; it will include central excise duty, service taxadditional duties of
customers at the central level, VAT, central sales tax, entertainment tax,octroi, state
surcharge, luxury tax, lottery tax and other surcharge on supply of goods
andservices. The purpose of GST is to replace all these taxes with single
comprehensive tax, bringing it all under single umbrella. The purpose is to eliminate
tax on tax. Given the passage ofthe Constitution (122nd) Amendment Bill, 2014 for
Goods and Services Tax (GST) in the LokSabha on 6th May, 2015, the Government of
India seems committed to replace all the indirecttaxes levied on goods and services
by the Centre and States and implement GST by 2016. WithGST, it is anticipated that
the tax base will be comprehensive, as virtually all goods and serviceswill be taxable,
with minimum exemptions. This paper highlights the concept of GST. It explainsthe
features of the suggestedGST. It also throws light on benefits and limitations of
implementing GST in India

Objective of study

The objective of the study is to highlight the impact of GST on economic growth of India
which is said to be a one of major taxation reform post independence. The new reform
has helped the country to increase its GDP tax ratio on par with the global taxation
system. The study adopted exploratory research model based on past literature using
information from research journals, reports, news papers and magazine covering wide
collections of academic literature on India's growth story post GST implementation. The
study concludes that introduction of GST received a mixed response from stakeholders
initially and have brought both positive and negative changes in the performance of all
the sectors of the economy. The model result finds that the government spending ratio is
1:0.27 which means if the government spends one crore, the 27 lakh comes from GST
tax collection

Impact of GST on GDP of india

The service sector is a worst hit, if GST implemented at 17-18% rate. The service tax
has been increased from 12.36% to 14% last year and further 0.5% as swachh Bharat 
cessand 0.5% as KrishiKalyanCess this year, if this is increased by another 3-4%
thatwould be a definite setback for service sector and for consumers too.
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This increases tax revenue for the governments which raisesthe capital
expenditure;whichin turn boost the growth of economy.
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GST will also bring the unorganized sector which enjoys the cost advantage, into the
tax bracket.
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Single tax rate will decrease the price of goods (currently, for a customer, the tax
burdenof goods is anywhere between 25-30 per cent while GST proposes a tax rate of
18 percent and may be lowered in following years) thereby increases consumption
expenditurewhich in turn rises the profits Introducing GST and Its Impact on Indian
Economy for
companies. It’s
 definitely a win
 – 
win situation for companies as well as consumers.
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With more than 160 countries implemented GST, it helps to streamline tax
systemglobally.
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GST also removes the custom duties applicable on exports. This has major
implicationsfor the Indian economy: making exports tax-free would spur trade for our
economy.
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Our competitiveness in foreign markets would increase on account of lower cost
oftransaction while the imports will be taxed same as domestic goods and services.
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It provides tax credit to the manufacturers and reduces tax burden and thereby
foster production and growth.
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Additionally, GST is also expected to exclude state excise on alcohol and tobacco
fromits purview. This implies that a large revenue source still rests with the state
governmentto generate cash flows from.

On Various Sectors:
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IT sector:
 Today, most IT service providers have a multi-locational presence with
the preferred mode of service tax compliance being on a centralized basis from a singl
elocation and IT service provider also enjoys the input service credits as well as
enjoys therefunds. But under GST, service provider may be required to pay State GST
or CentralGST or Integrated and GST across multiple states, which is not clear yet.
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E-Commerce:
 Supply chain decisions are vital for e-commerce industry. With theimplementation of
GST it will resolve the supply chain issues, as the shipment andreturns across the
country will be done more efficiently and with lesser paper work. Asthe tax
standardized across all the state boarders, companies will be able to execute

Tourism, Hospitality and Restaurant:

Presently, the rates in these industries are higher due to the existing
multiple taxes. With the implementation of RNR (Revenue Neutrality Rate) which is
more than Introducing GST and Its Impact on Indian Economy the present tax rate,
this would definitely discourage tourists and users of services and adversely affects
the growth of sector. 

Transport sector:
GST is a positive for transportation sector in two ways, as it reduces the logistics cost
and increases the efficiency both within India and exports.

Land, Real Estate, and Renting: Currently, real estates are taxed in the
form of stamp duty and rental transactions are covered under service tax.
Construction activities and works contracts are liable to service tax. So this sector is
currently under multiple tax burdens. As of now, it is not clear whether real
estate/land activities are covered under GST net or not as this is a cash cow for
both state and central.

Tobacco Products: As per the provisions of constitution (115th

amendment), states can impose only VAT and central can impose both
VAT and excise duty (States have made a request to impose both Vat
and state excise). Tobacco manufacturing companies presently pay VAT
of about 25 percent plus excise duty. It is feared that there products
may be taxed at about 40 percent in GST regime, which is definitely a
huge tax burden.

Economy : The implementation of GST is expected to be a positive

move for growth of Indian economy. Government is attempting to
remove bottlenecks of indirect tax structure by introducing GST.
Information Technology (IT) is the backbone of GST which will help
government to control revenue losses on account of tax evasion. Since
every transaction is monitored online, there is no escape from tax
payment under GST. Implantation of GST would definitely increase the
numbers of tax payers and reduce tax evasion too. India could see its
positive impact over growth of economy in days to come. Experts
expect 3 to 4 years is the ideal time economy would take to boost
itself. It is observed that GST had a negative impact over economy, GDP
rate was 7.1 percent in fiscal year 2016-17, whereas GDP rate fallen
down to 5.7 percent in second quarter of 2017-18. Post
implementation of GST India could expect growth in industrial development
of various segments like FMCG, Pharma, Chemicals, Real Estate Warehousing and
Logistics etc. However macro benefits emanating from implementing GST are far
outreach the negatives, it is also an important change communicated to the world
at large that we are focused on one path for economic progress. GST is a single
taxation system that has replaced the number of indirect taxes. Elimination of
cascading effect from indirect tax system and introduction of antiprofiteering
measure would help to reduce the prices of goods and services, which may result in
control over inflation. Consumers may expect single prices of commodities
throughout the country. Sharing of equal revenue by Central and State
governments may create equal opportunities for development of States and States
would be less dependent over Central government for funds. Since GST is
consumption based destination tax, States with large number of consumers would
get more revenue. This would encourage industrial development of industrially
backward States. Introduction of GST in the country would impact real estate
market in a positive way, ready to move houses and re-sale houses are free from
levy of GST, whereas under construction houses are kept under 12 percent tax rate
slab, Prices of new under-construction houses may go up by 8 percent and reduce
buyers’ market by 12 percent. Move from various point of taxations structure viz.
Central Excise on manufacturing, Service Tax on provision of service and Sales Tax
on Sale of goods to single point taxation i.e. supply of goods or services would bring
uniformity and transparency in indirect tax structure. This change would bring
more assesses into tax net. As per OECD, economic growth of country is predictable
to rise to 3.5 percent this year and may increase to 3.7 percent in 2018. As per the
OECD Economic Outlook, the global GDP forecast has slightly improved since June
2017, with the near momentum becoming more synchronized across the world.
The developments in developing market economies have been more varied with
positive surprises in China and Russia, and a downward revision in India in part due
to transitory factors. The opinion of OECD about Indian economy is projected to
grow at a lower than expected rate of 6.7 percent this fiscal due to the “transitory
effects” of demonetization and the Goods and Services Tax (GST) implementation.
According to Morgan Stanley, currency changes programme and GST had led to a
deceleration in development momentum. However, considering that these events
are already in the rear view mirror, we expect the underlying economic growth
momentum to restate them, leading to a re-acceleration in growth. Morgan Stanley
projects GDP development of India 6.4 per cent and 7.4 per cent in 2017 and 2018,
respectively, as against 7.6 per cent and 8.0 per cent previously. The revised new
financial 2018 and fiscal 2019 growth estimates are at 6.7 per cent and 7.5 per
cent, respectively. GST may help government to increase its revenue by assuring
avoidance of tax evasion, this surplus revenue may contribute to the various
infrastructural development projects of country. In July, 2016 Excise duty collection
was Rs. 31,782 crore and Service Tax collection was Rs. 19,600 crore. GST
amounting Rs. 92,283 crore collected by government in July, 2017, which includes
 Rs. 14,894 crore Central GST (CGST), Rs 22,722 crore State / UT GST (SGST/ UTGST),
Rs 47,469 crore Integrated GST (IGST) and Rs 7,198 crore compensation cess levied
on demerit and luxury goods. As per Niti Aayog Rs 26.48 lakh crore tax collection is
expected by 2019-20, which was Rs. 17.03 lakh crore in 2016-17. It predicts a 14
per cent growth in 2017-18, followed by 16 per cent and 17 per cent in the next
two financial years. It further predicts the indirect tax buoyancy to grow from 1.06
per cent in 2017-18 to 1.11 per cent in 2018-19 and 1.17 per cent in 2019-20. This
increased revenue will contributes economic development of country

. Consumers: Government looks keen to put goods and services of necessity

under Nil or lower tax rate slab. Agricultural & dairy products, electricity, banking
services, health & education services and public transport are few of them under
NIL tax rate slab of GST. Processed and branded food items, Edible Oils. kerosene,
LPG and road transport are taxable under 5 percent of GST slab rate, where as
other FMCG items, industrial products, chemicals, metals, Rail & Air transport and
hotel and restaurant services are kept under 12 percent and 18 percent rate slab of
GST. Only luxury items and services viz. Consumer goods, Cars, Motor Cycles,
Cement, Perfumes, Pan Masala, Shampoo, Gambling, Lottery and 5 star hotels are
taxable under 28 percent tax slab of GST. Government is keen to reduce hardship
faced by consumers and recently shifted 177 items to 18 percent GST slab from 28
percent slab of GST. Now only 50 items are taxable under 28 percent slab of GST.
Formula used by GST council to distribute items amongst 4 tier tax slab is based on
tax structure of various goods and services under earlier tax regime. Goods and
services those were exempted under earlier tax regime, are continue to enjoy tax
holiday under GST too. Goods & Services those were taxable at 6 percent rate of
VAT, Sales Tax & Excise Duty, are taxable under 5 percent tax slab of GST. Hence
consumers can expect 1 percent tax relief on goods and services of necessity.
Goods taxable at 12.5 percent rate of Excise Duty & 6.5 percent rate of VAT were
bearing aggregate 19 percent tax burden under earlier tax regime, these items are
likely to fall under 18 percent of GST slab, whereas goods taxable at 12.5 percent
rate of Excise Duty & 13.5 percent rate of VAT were bearing aggregate 29 percent
tax burden under earlier tax regime, these items are likely to fall under 28 percent
of GST slab. Under earlier tax regime various taxes were imposed on car viz. Excise
Duty, VAT, Infrastructure Cess, Entry Tax, LBT etc. The total tax burden on car was
nearly 30 percent to 45 percent under earlier tax regime. Small cars would become
cheaper under GST as only 28 percent GST and 1 percent & 3 percent
Compensation cess is leviable on such cars. Small cars or cars under four-meter
length powered by a petrol engine not greater than 1.2-litre or a diesel engine not
greater than 1.5-litre would be taxed at 28 percent & 1 percent or 3 percent
Compensation Cess. For petrol cars, the effective tax rate would be 29 per cent.
However, for diesel cars the effective tax rate would be 31 percent. Midium
segment cars, luxury cars and SUVs depending on their size, would attract
Compensation Cess ranging from 15 percent, 20 percent and 22 percent. For
medium size cars, luxury cars and SUVs the effective tax rate would be 43 percent,
48 percent and 50 percent respectively. But at another side some services would
become costlier under GST. Under earlier tax regime services were taxable
Advantages of GST
 Reduction in prices: Due to full and seamless credit, manufacturers or
traders do not have to include taxes as a part of their cost of production, which is a
very big reason to say that we can see a reduction in prices. However, if the
government seeks to introduce GST with a higher rate, this might be lost
Increase in Government Revenues: This might seem to be a little vague.
However, even at the time of introduction of VAT, the public revenues actually
went up instead of falling because many people resorted to paying taxes rather
than evading the same. However, the government may wish to introduce GST at a
Revenue Neutral Rate, in which case the revenues might not see a significant
increase in the short run.

Less compliance and procedural cost: Instead of maintaining big records,

returns and reporting under various different statutes, all assesses will find
comfortable under GST as the compliance cost will be reduced. It should be noted
that assesses are, nevertheless, required to keep record of CGST, SGST and IGST
separately

Move towards a Unified GST: Internationally, the GST is always preferred in a

unified form (that is, one single GST for the whole nation, instead of the dual GST
format). Although India is adopting Dual GST looking into the federal structure, it is
still a good move towards a Unified GST which is regarded as the best method of
Indirect Taxes. The following are the some more salient features of the proposed
pan-India Goods and Services Tax regime that was approved by the Lok Sabha by
way of an amendment to the Constitution:
 GST, or Goods and Services Tax, will subsume central indirect taxes like excise
duty, countervailing duty and service tax, as also state levies like value added tax,
octroi and entry tax, luxury tax. Introducing GST and Its Impact on Indian Economy
 The final consumer will bear only the GST charged by the last dealer in the supply
chain, with set-off benefits at all the previous stages.  As a measure of support for
the states, petroleum products, alcohol for human consumption and tobacco have
been kept out of the purview of the GST.  It will have two components - Central
GST levied by the Centre and State GST levied by the states.  However, only the
Centre may levy and collect GST on supplies in the course of inter-state trade or
commerce.  The tax collected would be divided between the Centre and the states
in a manner to be provided by parliament, on the recommendations of theGST
Council.  The GST Council is to consist of the union finance minister as chairman,
the union minister of state of finance and the finance minister of eachstate.  The
bill proposes an additional tax not exceeding 1% on inter-state trade in goods, to be
levied and collected by the Centre to compensate the states for two years, or as
recommended by the GST Council, for losses resulting from implementing the GST

Disadvantages of GST Tax

 Would impact the Real-State Market – GST Tax would swell negative
remarks on the real-estate as perceived, GST will increase the cost of the new homes
by 8% which in turn will cease the demand by 12%.

 Old Wine in a New Bottle – According to the experts, terms such as GST
which includes CGST, SGST, and IGST is nothing but just a new name in accordance
with the existing tax systems. Kind of old wine in a new bottle.

 Costlier Service – The current Service Tax stands at 15% as of now which will
increase to 18%-20% when GST is levied. As such many services will be on the
costlier side with telecom, airline and banking affected majorly. In fact, insurance
and petroleum are also said to be majorly affected by the enactment of GST Tax.

 Complexity for the Businessmen – According to the proposal of the GST Tax,
the control on business will be rendered to Central and State Governments with
businessmen binding by-laws. As such complexity may arise for many businessmen
across the nation.

 Income Tax Credit Mismatch – As the change in tax guard will take place, the
first few instances of application would mean high tax paying at the start. That said,
they will only be able to exercise the tax input on the latter stages when the loop is
exercised. With that in place, there would be ITC mismatch during the early uses of
GST Tax.

 Disability Tax – Opposition has called it as a Disability Tax as many of the

things related to disabled people which were earlier Tax-Free are now included in
GST Taxation. Prior to implementation of GST, brail paper, typewriter, hearing aid
and motorized wheelchair were tax-free whereas these things are being taxed now.
Opposition have made pleas to roll back the tax on such items
 Expensive Banking and Insurance – On one end, Modi government is trying
to give a push to banking services and insurance in India and on another side of the
picture, the government has decided to tax banking and insurance service at higher
rates when compared to the previous rates
 Impact on Discounts – GST has also had an impact on discount and reward
programs as well. The product is being taxed at the rates pre-discount whereas the
products were earlier taxed at post discount prices. Most of the companies have also
suspended reward programs on temporary basis because of complexities of GST
 Mid-Year Launch – Government has chosen a mid-year launch for GST and
this will lead to problems in taxation and reporting during the end of the financial
year. Ideally, the government should have launched GST at end of financial year as
this would have avoided a lot of confusion during taxation and reporting.
 Registration in the Many States Required–As per GST, the seller would
require registering in all the states that it does business in and that would increase
the complexity for the seller. The government should have created a provision for
centralized registration of State GST as this would have helped many sellers during
the rollout.
 Changing Tax Slabs– Earlier the government had a higher tax slab for many
products but in a recent revision, the government has changed the tax slabs for the
many products. This includes the restaurants as well. The changing tax slab means
the higher operational cost for the organizations and it also makes the changes in
software complicated.
 Petrol not Under GST– The Petrol doesn’t come under GST and that is one of
the major controversial issues. The petrol is taxed at a much higher rate and if the
government is rolling out a unified taxation system then each and everything should
be taxed under GST.
 Online Taxation– Online taxation system is an advantage as well as
disadvantage. Many people are not able to process their taxes and this forces them
to reach out to a third party for tax filing purpose. This has increased the overall cost
for such small businessman who needs to approach the third party for filing tax.
 Higher Tax Burden for SME– There is a certain tax burden on small and
medium enterprise because of this GST. As per the information, earlier, the
organization with a turnover of over Rs 1.5 crore had to pay excise duty but now
even a businessman with a revenue of over Rs 20 Lakh has to pay the GST.

DATA REGARDING THE FACTS OF IMPACT OF GST ON GDP OF INDIA

Conclusion: At the end we can say no doubt it is the biggest ever change in tax
structure of India. There will be fall in prices of some commodities but on the other
hand price of some other goods and services will rise. There is threat of inflation
too and states may face reduction in their financial resources. But overall it will be
a great change.Prior to VAT implementation, the tax structure was considered
problematic primarily due to the “cascading effect of taxes” whereby an item is
taxed more than once from the production to the final retail sales stage. Exporters
were also becoming less competitive in the international market due to the huge
input costs involved (tax burden of a commodity increases manifold as it is taxed
repeatedly) through the earlier salestax mode–reflected in higher prices of
products as compared to global competitors.