A Study on the effect of GST on Construction Industry with reference

to Reliance Infrastructure Ltd.

A Project Report Submitted in Partial Fulfillment of the
Requirement for the Award of the degree of
Bachelor of Commerce
Submitted By
Akhil Kumar Ramesh Halpani
2019-2008038

Under the guidance of

Smt. S. Kanchana
M.Com , APSET
Assistant professor

Department of Commerce
Gayatri Vidya Parishad College for Degree and PG Courses (Autonomous),

Affiliated to Andhra University

Dwarakanagar Campus.

Visakhapatnam- 530016.

2019 – 2022
 DECLARATION

I hereby declare that the project work entitled “ A study on the effect of GST on Construction

Industry with reference to Reliance Infrastructure Ltd.” an original report submitted towards

the partial fulfillment for the award of Bachelor of Commerce degree affiliated to Andhra

University, Visakhapatnam and it is not submitted anywhere either in part or in full for degree

or post-graduation of any university.

Place: VISAKHAPATNAM AKHIL KUMAR RAMESH HALPANI

2019- 2008038
Date:
 CERTIFICATE

This is to certify that the Project work entitled “ A study on the effect of GST on Construction

Industry with reference to Reliance Infrastructure Ltd.” is a genuine and bonafide work

done by Akhil Kumar Ramesh Halpani, A student of third year B.Com., Gayatri Vidya

Parishad College for Degree and PG Courses (Autonomous), Visakhapatnam for the award of

Bachelor of Commerce Degree from Andhra university under my guidance and supervision.

Visakhapatnam Smt. S. Kanchana

Date:
 ACKNOWLEDGEMENT
I am also thankful to all those who have incidentally helped I sincerely feel that the
credit of the project work could not be narrowed to only one individual. As the whole work is
the outcome of the whole hearted co-operation from many people with whose guidance and
support I would not have been able to complete this project successfully.

I would like to express my sincere gratitude to Prof. P. V. SARMA, Secretary and

Correspondent, Gayatri Vidya Parishad College for Degree and PG Courses (Autonomous),
Visakhapatnam for his continuous motivation towards completion of the project.

I would like to express my sincere gratitude to Prof. P. RAJAGANAPATI, Member

Gayatri Vidya Parishad for his continuous motivation towards completion of the project.

I am grateful to Prof. S. RAJANI, Principal, Gayatri Vidya Parishad College for Degree
and P.G Courses (Autonomous),Visakhapatnam for having allowed me to take up this project
and utilize all the resources available from the college.

I would like to express my sincere gratitude to Prof. P.V. MOHINI, in charge Director,
Dwarakanagar Campus, Gayatri Vidya Parishad College for Degree and P.G. Courses
(Autonomous), Visakhapatnam for giving me an opportunity to work in this project.

I would like to thank K. Gowri Sankar, Head of the Department of Commerce Gayatri
Vidya Parishad, and College for Degree and P.G. Courses (A), Visakhapatnam for giving me
an opportunity to work in this project and providing kind suggestions as and when required.

I would like to thank Smt.S.KANCHANA,Assistant Professor for his valuable

guidance and support for the completion of my project work.

My special thanks to all the members of the staff in the Department of Commerce, who
have helped me in the completion of my project.

I would like to thank my parents and my friends who encouraged me throughout my

educational endeavour and my project work.

AKHIL KUMAR RAMESH HALPANI

2019-2008038
 INDEX
S.NO TOPICS PAGE.NO

1. INTRODUCTION
Introduction
Objectives
Scope of study 1-14
Methodology
Limitations of study
Chapterisation
2. CONCEPTUAL PROFILE
History of GST
Objectives of GST
SWOT analysis
Opportunities 15-31
3. COMPANY PROFILE
Reliance Infrastructure
Mission and Vision
SWOT analysis
Awards and Recognitions 32-45

4. DATA ANALYSIS AND 46-66

INTERPRETATION
5. FINDINGS, SUMMARY, 67-70
SUGGESTIONS AND CONCLUSION

ANNEXURES

BIBLIOGRAPHY
 CHAPTER – 1
INTRODUCTION

1
 CHAPTER-1

INTRODUCTION
Introduction in Construction industry, there has always been a need to improvise the way of working to achieve
better results, saving in time, energy and cost. In doing so, there are lot of shortcuts taken, lots of time saving
activities are conducted which results in inadequate data regarding all aspects of the projects. There are certain
things which are completely absent when it comes to documentation of all the project da ta on completion of
project. In all these things, there exists a scope of improvement, in order to regularize this, the finance ministry
has put up Goods & Service Tax (GST) in order to regularize the construction sector. Introduction of Goods &
Service Tax (GST) by the government of India has led to a lot of ambiguity in the Construction industry because
it’s not only a new thing to deal with but, it will also regularize the so called “Unorganized Sector”. To arrive at
a conclusion, detailed studies starting from the gestation phase to the handover phase would depict in detail where
are the area of concern where the cost of project has affected due to GST implementation. These studies not only
give a clearer picture of what all area of concern are to be seen to eliminate the unnecessary cost but it will also
help the project manager to analyze and form such schedules that are met with as per the scheduled cost and time
frame to nullify the effects of cost variation in the building construction industry. So, to get a clear picture of
increase or decrease in cost due to GST, detailed study of a project before and after GST is done for a check in
cost variation. A single tax structure is definitely a welcome move and the introduction of Goods and Services
Tax (GST) seeks to do just that by way of amalgamating a large number of Central and State taxes into a single
tax. GST will not only address the concerns of double taxation but will also help in reducing the overall tax burden
on goods and services. Furthermore, it will also help in making Indian goods competitive internationally thus
providing a much-needed boost to the economy.

The real estate industry is one of the most pivotal sectors in India and has seen a phenomenal growth, not just in
cities, but even small towns. GST is another development that will have a significant impact on this sector. Let’s
take a look at the impact of GST on the construction industry and the real sector.
Taxation System
Tax system raises money to finance government. All governments require payment of money
taxes from people. Government use revenue to pay soldiers, police, to build dams and roads, to
operate schools and hospitals, to provide food for the poor and medical care facilities etc.
So, taxation is the most important source of revenue for modern government typically
accordingly for 90% or more of their income.
In the ever changing economic scenario globalization, liberalization and privatization policies of
the Government, in recent years, have made an indelible impact by bringing into force new
economic system in India. During the later part of the 20th century the globalization wind which
swept across the countries embraced all the countries including those which were hither to
consider as conservative and communist, either by policy or rule. This opening up of domestic

2
economies to international stakeholders has led to a number of opportunities to every
participating country along with the threat of being exploited by the counter parts.
So, it is a race where the economists to grab economic benefits to the maximum possible extent
by fulfilling the needed requirements. To what extent we are able to exploit the economic
benefits depends upon the extent we are able to create an environment congenial for such an
activity. Due to this fact it is imperative for every country to analyze the contemporary situation
and find out and forecast the expectations of the world economic environment, so as to ascertain
the demands to be fulfilled and accordingly set the stage by adopting necessary policies, to fulfill
the demands of the globalised world and make fit oneself to exploit the opportunities to attain
economic growth and thereby achieve all round development of the country.
Over the centuries system of taxation has been shaped and reshaped to make it acceptable,
effective and efficient. The journey of restructuring the tax system has been going on to make it
more and more meaningful. While the innovations and developments in information and
communication technology have made the tax system more objective, transparent and effective,
the innovations and developments in finance and business models, globalization and
liberalization policies, emergence of MNEs as lead players, increase in the international trade
have contributed in making the tax system a complex one.
In recent years, India has been viewed as an attractive and dynamic investment destination, and
has witnessed an increased presence of multinational enterprises (MNEs) and a consequential
increase in cross-border trade. This has created many opportunities to the Government for
improving tax system of the country. In India, since the inception of New Economic Policy
(NEP) in 1991, a host of significant developments have taken place in the tax system.

Different types of Taxes

Different types of taxes in India

Prevalence of various kinds of taxes is found in India. Taxes can be either direct or indirect.
However, the types of taxes even depend on whether a particular tax is being levied by the
central or state government or any municipalities. Following are some of the major taxes levied
by the Indian government:

3
1.Direct Taxes
A direct tax is a tax that is paid by an individual or an organization to the imposing entity or to
be precise. Direct Tax is the one which is paid to the government by the tax payers. These tax
payers include people and organization both also it is directly imposed by the government and
cannot be transferred for payment to some other entity. To name a few of the direct taxes, which
are imposed by the Indian government are:
 Corporate Tax

 Banking Cash Transaction Tax

 Capital Gains Tax

 Tax Avoidance Treaty

 Fringe Benefit Tax

 Securities Transaction Tax

 Personal Income Tax

 Tax incentives.

2.Indirect Taxes
An indirect tax is tax collected by an intermediary from the person who bears the ultimate
economic burden of the tax. The intermediary later files a tax return and forwards the proceeds to
government with the return. Indirect Tax is a type of tax where the incidence and impact of
taxation does not fall on the same entity
Some of them are:
 Goods and Services Tax

 Custom Duty and Octroi Tax

Goods and Services Tax:

The law on GST was brought to action in July 2017, with 17 indirect taxes under its purview. All
major services and service tax has been subsumed under the GST-
On the state level:
 State excise duty
 Additional excise duty
 Service tax
 Countervailing duty
 Special additional custom duties

4
At the central level, it covers:
 Sales Tax
 Entertainment Tax
 Central sales Tax
 Octroi and entry Tax
 Purchase Tax
 Luxury Tax
 Taxes on lottery gambling and betting
 Levis on products outside GST purview:
 Taxes on products that use alcohol and petroleum products.

Custom Duty and Octroi Tax:

Levied upon goods imported into the country from abroad. The tax of custom duty is paid at the
entry port of a country such as the airport. The rate of taxation is variable as per product’s nature.
Octroi is charged upon the goods entering a municipal zone.

Newly Implemented Indirect Tax (GST)

GST is a highly regarded tax system for the country. It is amongst the latest indirect tax systems
operating under the constitution of India. The importance of this taxation regime lies in the fact
that it covers under itself various other indirect taxes operating inside the country. This tax
regime has been brought in mark a change in the economy of the country and to lessen the
cascading effects from tax duties that deliver overall market inflation.

GST Advantages:
 Transparency and Accountability: - GST will lend a whole lot of transparency in the
real estate sector while also playing a major role in minimizing unscrupulous (black money)
transactions. Currently, there is a huge percentage in every projects where expenditure goes
unrecorded on the books. GST by curbing the practice of fake billing on purchase-side will
help cut down cash component in construction, which in turn, will help in boosting

stakeholders‘ confidence.

5


 Input Tax Credit :-Although the GST rate of 18% on the supply of works contract in the
construction sector may be higher than the previous rates, the regime of local composition
schemes is over, though now they are eligible for full input tax credit. However, many of the
listed construction services such as constructions of dams, roads etc. which were previously
exempted are now under the GST purview. This basically means the average construction
contract in the previous regime which used to hover around the 11–18% range is now
chargeable at a flat rate of 18%. As a matter of fact, if you take exempted services into
consideration, this marked difference is more pronounced, like certain infrastructure services
are no more exempt in current regime. Having said that, thanks to the availability of input tax
credit, the construction sector is expected to benefit in the long run. This is because, under the
GST regime, the input tax credit on the raw materials would result in an overall neutral tax
incidence for construction services. Additionally, with GST, real estate developers will have
access to free input tax credits on GST paid for services and goods purchased by them while
the rate of GST on outward supply is 12% including the value of land. As the inward supply
consist of many a items with more than 12% rate, it is expected not a very significant cash flow
will involve in paying GST on outward supply. This will not only help in reducing the cost for
the developers but owing to this, they can even pass on the benefit of these credits asa reduction
to potential buyers.

1. In the GST system, when all the taxes are integrated, it would make possible the taxation
burden to be split equitably between manufacturing and services.
2. GST will be levied only at the final destination of consumption based on VAT principle and
not at various points (from manufacturing to retail outlets). This will help in removing
economic distortions and bring about development of a common national market.
3. GST will also help to build a transparent and corruption free tax administration.
4. Presently, a tax is levied on when a finished product moves out from a factory, which is paid
by the manufacturer, and it is again levied at the retail outlet when sold.
5. GST is backed by the GSTN, which is a fully integrated tax platform to deal with all a spects
of GST.

6
Overall, GST is expected to help bring a lot of required transparency and accountability. Moreover,
owing to the expected free flow of credit, developers should be able to enjoy an increase in overall
margin. Whether these benefits trickle down to the consumers is yet to be seen as the pricing in this
sector tends to be dictated by market forces rather than costing policies. Looking from the consumer
point of view, the one primary advantage would be in terms of decrease in the overall tax burden on
goods and increased transparency in tax system. GST will also help in eliminating unnecessary
paperwork while eliminating time wastage spent by good suppliers at various state borders. One thing
for sure is , the impact of GST will be felt albeit after a while.

Impact of GST on real estate:

The construction of a complex building, civil structure, or a part thereof, intended for sale to a buyer,
wholly or partly, is subject to 12 per cent tax with full input tax credit (ITC), subject to no refund in
case of overflow of ITC. In other words, residential construction services, will invite GST at the rate
of 12 per cent, which will apply to developers selling residential units before completion of
construction to the home buyers.
According to the JM Financial report on GST, for states with non-composite VAT (Karnataka, Tamil
Nadu, Andhra Pradesh), the transaction value changes marginally from 10-11% to 12% under the new
regime. With input cost credits available, developers in these regions may witness improvement

7
in margins in case no price revision takes place (subject to the anti-profiteering clause).
Abhishek Anand, assistant vice-president (Equity Research), JM Financial Ltd, explains: “In the
current regime, states with composite VAT require developers to pay lower VAT rates on the total
property value without any input tax benefit (Maharashtra, Haryana) or partial benefit (intra state
offset- Bangalore). Under this regime, developers pass on the transaction cost – VAT (1%) and service
tax (4-5%) to buyers (total 5-6%). Developers get offset for only the input service tax component. In
the GST regime, the transaction cost increases to 12%, with input credit available on both, services
and material. Property transaction costs will increase by 6%, in case no input credit is passed on by
developers. If developers pass on the input credit to buyers, the property price increase could be
restricted to 1-2%.” If the developers pass on the credits completely and bring down thebase prices,
then, home buyers may marginally benefit under the GST regime.
Nevertheless, stamp duty will continue to be applicable, irrespective of whether the property is under-
construction or constructed, in the pre-GST and post-GST regime.

Will GST help home buyers?

With the introduction of the Goods and Services Tax (GST), the total incidence of tax will increase
from 5.5 per cent to 12 per cent. However, developers will be able to avail of input credit, on all the
goods and services purchased and spent in the construction of the property.
Shrikant Paranjape, president of CREDAI Pune Metro, maintains that “The impact of the GST on
property prices, will be difficult to gauge at this stage because of the lack of clarity on abatement for
land value. In a product, where the major raw material is not covered by the GST and the completed
unit is also not covered by the GST, the tax input benefit will be hard to calculate or justify. Only the
market forces, the ready reckoner rates and time, will decide whether and how much benefit will be
passed on by the developers to the purchasers.”
Moreover, the prices of input materials can also be volatile. Cement and steel prices can soar, without
warning. Similarly, sand is always in short supply and not available in the monsoons. Hence, it is likely
that these industries may not pass on the entire benefit of tax credit.
Another important factor that needs to be examined, is the stage of construction. If the project is at an
advanced stage, where substantial cost has already been incurred before the application of the GST,
very little input credit will be available and very less benefit will be passed on. If the project is at an
early stage, more benefits can be passed on.

8
GST on under construction property – Affordable housing:
It is important to note that housing projects (affordable housing is currently exempted from service tax
and a clarification is expected from the government for exemption from GST), then, affordable homes
may become cheaper under the GST regime.

Impact of GST on property prices – Luxury segment:

In the case of premium properties, while the basic construction cost may come down a little, but as the
input tax credit is limited to 12 per cent, it will not be sufficient to bring down the fresh tax liability to
nil because of the taxes paid on other expenditures.

GST rates for real estate – Input materials

HSN Description of goods Rate

Chapter 72 Steel 18 %

2523 Cement 28%

6802 Marble and granite 28%

2515 Blocks of marble and granite 12%

Chapter 68 Sand lime bricks and fly ash bricks 12%

2505 & 2517 Natural sand, pebbles, gravel 5%

8428 Lifts and elevators 28%

Under the tax regime, many of the construction materials are under the 18 and 28 per cent slab. For
example, steel and steel products, are mostly in the 18 per cent segment and cement and prefabricated
structural components for building or civil engineering, are in the 28 per cent slab. However, as the
input tax credit is available on products utilized for construction, the overall tax incidence should be
neutralized.

GST on ready properties:

If the OC for the project has been received, then, no GST will be applicable. A CRISIL report points
out that at present, a developer pays excise tax and VAT, on inputs like cement and steel, at 27.7 per
cent and 18.1 per cent, respectively, which vary from state to state. Now, under the GST regime, cement
and steel will be taxed at 28 per cent and 18 per cent, respectively, while other inputs like

9
paint and white goods, will be taxed at 28 per cent. The final product – the housing unit – will be taxed
at 12 per cent, with credit for taxes paid on inputs. As the tax levied on the entire cost including the
land will be 12 per cent, the amount would be sufficient to provide for the input credit for developers.
Hence, a buyer opting for a ready-to- move-in apartment, is saved from the tax burden.
However, the tax calculations under the GST regime, for the real estate market, are not so simple. For
example, the GST on under-construction projects will be charged to home buyers on the sale price but
the credit can be availed by the developers, only on the cost of construction. As the builder will have
to pay the GST on the full project and the input availed is only on the construction cost, there may be
a gap that is no less than 30 per cent. Consequently, construction property the developer will hike the
prices in that proportion, to make sure this gap is bridged.

Refund to customer on cancellation

Previous regime:

 Rule 6(3) of Service tax Rules, 1994permits Builder to adjust service tax refunded to customer
on cancellation of flats/ units against his tax liability of the month in which refund is made
 No time limit for such adjustment

GST regime:

 Whether builder is entitled to issue credit note u/s 34 and claim the tax adjustment? Provision
speaks of deficiency of service and not “non-provision of service”
 Does this mean that adjustment of GST refunded on advance against GSTliability is not
permissible?
 Section 54(8)(c) permits refund of tax paid on supply which is not providedeither wholly or
partially

Debit note and Credit note in Works Contract- DN and CN should be issued by supplier only U/s
34 of GST Act

10
Sale of Completed flats – Reversal of ITC

 Section 17(2) provides that where goods or services are used partly for effecting taxable
supplies and partly for exempt supplies, ITC credit attributable to taxable supplies can
only betaken
 Exempt Supply is defined u/s 2(47)] to include non-taxable supply
 Non-taxable supply is defined u/s 2(78) of the Act to mean:
 Supply of goods or services or both
 Which is not liable to tax under CGST or IGST Act
 Section 17(3) specifically includes sale of building and sale of land as exempt supply
 Sale of completed flat will be exempt supply for the purpose of reversal of ITC u/s 17(2) of
the Act from start of the project.
 Also builder may liable to pay interest on such reversal of credit for the period starting from the
date of completion certificate till date of actual reversal.

Free Supplies by the Builder to the contractor

 A supply without consideration to non-related persons is not “supply” as defined u/s 7 of

CGST Act
 As such activity is not a supply, same will not be liable to GST
 It is not an exempted supply as defined u/s 2(47) of CGST Act
 It is not wholly exempt u/s 11 of CGST Act
 It is not a Nil rated supply
 It is not a non-taxable supply as defined u/s 2(78) of CGST Act

ITC Overflow- Refund

Not allowed in capacity of builder. Builder can use overflow credit,

 In other project as set of for

 Get Income tax deduction as write off to Profit and Loss account.

11
GST is definitely reducing developers’ construction costs, by negating double or triple taxation to a more
moderate level, through input tax credit. While there are no significant variations in the overall taxes,
GST has certainly eliminated the tax-on-tax system. Also, shady transactions are being minimized
considerably, bringing in transparency and accountability into the sector.

However, end-users have not received a consummate benefit because of the inherent
ineffectiveness of the anti-profiteering provisions. They will only benefit, if the base property
prices are reduced and the developers pass on the tax credits to their customers. While the
tax-on-tax has been eliminated with the advent of GST, the overall outgo from home buyers’
pockets seems to have increased, considering that even after passing on of ITC, they may
have to pay three to four per cent more than in the earlier service tax + VAT regime.

GST on maintenance charges of housing societies

Under the earlier service tax regime, housing societies were required to register themselves
under the law of service tax, if the aggregate of maintenance charges levied by the housing
society exceeded Rs 10 lakhs in a financial year. However, under the Goods and Services
Tax (GST) regime, this limit has been doubled to Rs 20 lakhs. So, if the aggregate of
maintenance charges levied by the housing society exceeds the threshold of Rs 20 lakhs in
a financial year, it has to register itself under the GST laws and obtain a registration number.

While computing the limit of Rs 20 lakhs, even the exempt items like recovery of property
tax and electricity charges from the member, are to be taken into account. So, a housing
society has to collect GST from its members ,if the aggregate of the charges during a
financial (whether subject to GST or not) exceeds Rs 20 lakhs. Even though the threshold
limit for registration is Rs 20 lakhs for a housing society, it is not required to levy GST, if
the amount of maintenance charge for each of the flat or office does not exceed Rs 7,500
for month.
OBJECTIVES:
1. To study the concept of Goods and Services Tax (GST) and its impact on Indian
Construction Industry.
2. To understand how GST will work in India.

3. To know the benefit of goods and service tax to economy, business and the
industry and consumers.

12
 METHODOLOGY:

The research was based on both primary data and secondary data. Primary data was
collected by using questionnaire and the study focuses on extensive study of secondary data
collected from government websites, various national and international journals and
articles, publications, conference papers, government reports, newspapers, magazines
which focused on various aspects of tax structure and GST.

LIMITATIONS OF THE STUDY:

Every study has certain limitations and the present study is no more exception. These are:

1. The sample size was small and cannot be applied to the entire population.
2. GST is new launched tax system so some complications are faced by the people.
3. The sample size is very small compared to the total population of the region.
4. The study was conducted with the basic assumption that the information given
by the respondent is factual and represents their true feelings and behavior.
5. Since all the products and services are not widely used by all the customers it is
difficult to draw realistic conclusions based on the survey.

SCOPE OF THE STUDY:

There are many research projects regarding the students’ perception towards GST, Public
Awareness, Impact of GST and so on. “A Study on Impact of GST on Construction
Industry” is an untouched topic, hence the present study has been undertaken to fill up
that gap.

After the implementation of GST, many State and Central taxes have been subsumed.
This awareness about the change in Indirect taxation system must exist among commerce
students as it would help in their professional career. So, this study is undertaken to focus
on whether commerce students are aware of basic GST knowledge.

13
 CHAPTERIZATION:

CHAPTER-1 INTRODUCTION

It is all about the introduction part. It mainly consists about introduction to the project and its
details. Then comes the various objectives of the study which states the various aims of the project.
The scope and limitations of the project is also shown under this chapter. Methodology is clearly
stated.

CHAPTER-2 INSTITUTIONAL PROFILE

This chapter consists of the mission, origin and history of the institution on which the project is
done. SWOT analysis, its objectives, unique achievements and future plans of the institution.

CHAPTER-3 CONCEPTUAL PROFILE

This chapter consists of theoretical aspects of the project and application of the concept to the
institution.

CHAPTER-4 FINDINGS, ANALYSIS AND INTERPRETATION

This chapter consists of the analysis and interpretations drawn from the questionnaires, tables and
pie charts. It consists of the findings and the overall interpretation derived from the analysis.

CHAPTER-5 SUMMARY AND SUGGESTIONS

This chapter consists of the short briefing of the overall report and some suggestions to the
institution.

14
CHAPTER-2
CONCEPTUAL
PROFILE

15
GST

The GST came into force on July 1, 2017, through implementing the 101 st Constitution of India
by the Indian government. The GST replaces the existing multiple cascade taxes levied by the
central government and the state governments. Goods and services are divided into five tax
plates for tax collection – 0%, 5%, 12%, 18% and 28%. However, petroleum products, alcoholic
beverages, and electricity are not covered by the GST and are taxed separately by individual
governments under the tax system.

Definition
The goods and services tax (GST) is “a tax on goods and services with value creation in every
phase with a comprehensive and continuous chain of benefits from service providers point to the
retailer level where only the end consumers should bear the tax”. The GST is a destination-based
consumption tax levied on several production distribution stages of goods and services. It
combines various taxes like state and local tax, entertainment tax, excise tax, surcharges, and
octroi. It applies to the transaction value that includes packaging, commission, and other costs
during the sale. A silent feature of GST would be good and services considered to be the same,
and within the supply chain, they are taxed once until customers can access them. Thus, the tax
reforms give companies and SMEs equal rights and tax the inventory/stock transfers uniformly.

16
Historical Background of Goods and Services Tax in India
History of GST has begun in India started before two decades and was made successful in the
Year 2017. History of GST will help you under the benefits of Goods and Services Taxes and the
Advantages over other type of taxes. History of GST given in different stages, its transformation

From other tax types and more informative data on GST is given in the article.
GST or Goods and Services Tax came into use from July 1, 2017 replacing number of other
Taxes that was applied till June 30, 2018. The discussion on the GST Bill has been in process for
More than two decades and the bill was passed to implement GST from July 1, 2017 by the
Prime Minister of India and his Finance Minister Arun Jaitley. GST was launched on the
Midnight of July 1, 2017. The single GST replaced several taxes and levies which included:
Central excise duty, services tax, additional customs duty, surcharges, state-level value added tax
And Octroi. We follow the dual GST system i.e. GST for State and Central named SGST and
CGST, respectively. Let us have an overview on the history of GST from the content below as an
Eye-opener.

Overview on history of GST

 2006 – First announcement of GST was made by the Union Minister during the 2006-

2007 budget, that it would be introduced on April 1, 2010.

 2009 – Empowered Committee released the first Discussion Paper.

 2011 – 115th Amendment Bill was introduced and subsequently lapsed

 2014 - 122nd Amendment Bill was introduced in Lok Sabha

 August 2016 - One Hundred and First Amendment Act was enacted

 September 2016 - The first GST Council Meeting was conducted

 March 2017 - CGST, SGST, IGST, UTGST and Compensation Cess Act was

recommended by GST Council.

 April 2017 - CGST, SGST, IGST, UTGST and Compensation Cess Act were passed

 1 July 2017 - GST laws, Goods and Services Tax was launched all over India.

 7 July 2017 - Jammu and Kashmir state legislature passed its GST

17
 Salient Features of the Proposed GST Model:

Dual GST: Following are the salient features of GST Model:

1) The GST shall have two components: one levied by the Centre (hereinafter referred to as Central GST), and the
other levied by the States (hereinafter referred to as State GST).Rates for Central GST and State GST would be
prescribed appropriately, Reflecting revenue considerations and acceptability.
2) The Central GST and the State GST are to be paid to the accounts of the Centre and the States separately
3) Central GST and the State GST would be applicable to all transactions of goods and
Services made for a consideration except exempted goods and services, goods which Outside the purview of GST.
4) Since the Central GST and the State GST are to be treated separately; taxes paid
against The Central GST shall be allowed to be taken as input tax credit (ITC) for the Central GST and could be
utilized only against the payment of Central GST. The
same principle Will be applicable for the State GST.
5) The administration of Central GST to the Centre and for State GST to the States
would be Given.
6) To the extent feasible, uniform procedure for collection of both central GST and the
State GST would be prescribed in the respective legislation for the Central GST and
the State GST.
7) The tax payer would need to submit periodical returns, in common format
Introducing GST and Its Impact on Indian Economy as far as possible to both the
Central GST Authority and to the concerned State GST authorities.
8) Each tax payer would be allotted a PAN-Linked taxpayer Identification number with a Total of 13/15 digits.
This would bring the GST PAN-Linked system in line with the Prevailing PAN-Based system for Income Tax,
facilitating exchange and taxpayer Compliance

Both Centre and States will simultaneously levy GST across the value chain. Tax will
Be levied on every supply of goods and services. Centre would levy and collect Central Goods
And Services Tax (CGST), and States would levy and collect the State Goods and Services Tax
(SGST) on all transactions within a State.
In India, at present there are various forms of taxes on product and services such as value-added
Tax, excise duty, service tax, and sales tax levied on the manufacture, sale and consumption of
Goods and services in the country. In one or the other way, it is creating cascading impact of
Taxes i.e. tax on tax on production and distribution cost of goods and services. There is a need to
Exclude cascading effects of taxes, which in turn will significantly improve the competitiveness
Of original goods and services that impacts the GDP growth. Cascading tax revenues have
Differential impacts on firms in the economy with relatively high burden on those not getting full

18
 Offsets. This analysis can be extended to international competitiveness.

New Article 366(12A) of the Indian Constitution defines Goods and Services Tax (GST) to mean
any tax on supply of goods or services or both except taxes on the supply of the alcoholic liquor
for human consumption. GST is a consumption based tax/levy. It is based on the “Destination

principle.” GST is applied on goods and services at the place where final/actual consumption
happens. As we know, GST is a tax which is passed till last stage; we have multiple indirect
taxes which will be added to final cost, GST helps to streamline all those taxes and reduce the
amount of tax, eliminates double charging in the system.

Importance of GST:

Presently, the Constitution empowers the Central Government to levy excise duty on
Manufacturing and service tax on the supply of services. Further, it empowers the State

Governments to levy sales tax or value added tax (VAT) on the sale of goods. This exclusive
Division of fiscal powers has led to a multiplicity of indirect taxes in the country. In addition,
Central sales tax (CST) is levied on inter-State sale of goods by the Central Government, but
Collected and retained by the exporting States. Further, many States levy an entry tax on the
entry Of goods in local areas.

a) This multiplicity of taxes at the State and Central levels has resulted in a complex indirect

Tax structure in the country that is ridden with hidden costs for the trade and industry.
Firstly, there is no uniformity of tax rates and structure across States. Secondly, there is
Cascading of taxes due to ‘tax on tax’. No credit of excise duty and service tax paid at the
Stage of manufacture is available to the traders while paying the State level sales tax or

19
VAT, and vice-versa. Further, no credit of State taxes paid in one State can be availed in other
States. Hence, the prices of goods and services get artificially inflated to the extent of this ‘tax on
tax’.

b) The introduction of GST would mark a clear departure from the scheme of distribution of
fiscal powers envisaged in the Constitution. The proposed dual GST envisages taxation
of the same taxable event, i.e., supply of goods and services, simultaneously by both the
Centre and the States. Therefore, both Centre and States will be empowered to levy GST
across the value chain from the stage of manufacture to consumption. The credit of GST
paid on inputs at every stage of value addition would be available for the discharge of
GST liability on the output, thereby ensuring GST is charged only on the component of
value addition at each stage. This would ensure that there is no ‘tax on tax’ in the
country.

c) GST will simplify and harmonize the indirect tax regime in the country. It is expected to
reduce cost of production and inflation in the economy, thereby making the Indian trade
and industry more competitive, domestically as well as internationally. It is also expected
that introduction of GST will foster a common or seamless Indian market and contribute
significantly to the growth of the economy.

Mission

 Provide common and shared IT infrastructure and services to the Central and State
Governments, Tax Payers and other stakeholders for implementation of the Goods & Services Tax (GST).

 Provide common Registration, Return and Payment services to the Tax payers.
 Partner with other agencies for creating an efficient and user-friendly GST Eco-system.
 Encourage and collaborate with GST Suvidha Providers (GSPs) to roll out GST Applications
for providing simplified services to the stakeholders.
 Carry out research, study best practices and provide Training and Consultancy to the Tax
authorities and other stakeholders.
 Provide efficient Backend Services to the Tax Departments of the Central and State
Governments on request.
 Develop Tax Payer Profiling Utility (TPU) for Central and State Tax Administration.
 Assist Tax authorities in improving Tax compliance and transparency of Tax Administration
system.
 Deliver any other services of relevance to the Central and State Governments and other
stakeholders on request.

20
 History of GST in India - Detailed Events:

The detailed events according to various timelines for GST implementation in India is granted below:

During 1999:
The idea of Goods and Services Tax (GST) in India started during meeting held in 1999 between Prime
Minister Atal Bihari Vajpayee and his economic advisory panel, which included three former RBI
governors namely IG Patel, Bimal Jalan and C Rangarajan.

During 2000:
On July 17, 2000, Indian Government under Vajpayee leadership set up the Empowered
Committee (EC) of State Finance Ministers to design a nationwide GST model.
This committee was headed by Asim Dasgupta (Finance Minister of West Bengal) and its members
are State Finance Ministers of Karnataka, Madhya Pradesh, Maharashtra, Punjab, Uttar Pradesh,
Gujarat, Delhi and Meghalaya. This committee which had formulated the design of State VAT (Value
Added Tax) was requested to come up with a roadmap and structure for the GST with the following
objectives:

 To monitor the implementation of uniform floor rates of sales tax by States and Union
Territories;
 To monitor the phasing out of the sales-tax based incentive schemes;
 To decide milestones and methods of States to switch over to VAT; and
 To monitor reforms in the Central Sales Tax system existing in the country. 

During 2003:
The Vajpayee led government formed a task force to recommend tax reforms. This task force was under
Vijay Kelkar on the implementation of Fiscal Responsibility and Budget Management (FRBM) Act, 2013.

During 2004:
Vijay Kelkar recommends GST to replace the existing tax regime. Vajpayee headed BJP-led NDA
government fell.

During 2006:
On 28 February, 2006, under Congress-led UPA government, new Finance Minister P
Chidambaram continued work on the same. He proposed 1 April, 2010 as deadline for GST
implementation throughout India.

During 2007:
On May 10, 2007, a Joint Working Group on GST was formed, which submitted its report to the
Empowered Committee (EC) on November 19, 2007.

21
During 2008:
On April 2008, Empowered Committee (EC) finalised its view on GST, submitted a report titled “A model
and roadmap for Goods and Services Tax (GST) in India”.

During 2009:
The Empowered Committee (EC) released its First Discussion Paper (FDP) on GST in November, 2009,
based on discussions within and between it and the Central Government.

During 2010:
Finance Minister P Chidambaram had announced that GST will be implemented from April, 2011.

During 2011:
In the Lok Sabha, the 115th Constitution Amendment Bill was introduced for the levy of GST on all
goods and services across India.

During 2012:
In 8th November, 2012, a ‘Committee on GST Design’ was constituted, with members as officials of the
Government of India, State Governments and the Empowered Committee was.

During 2013:
In August 2013, Standing Committee submitted its report on GST. In November 2013, EC rejected
Government’s proposal to include petroleum products under GST regime.

During 2014:
Under the leadership of Narendra Modi, the NDA government was re-elected into power. The new Finance
Minister Arun Jaitley introduced the GST Bill (122th Constitution Amendment) in the Lok Sabha.

During 2015:
In February 2015, Jaitley set another deadline for GST implementation in India as 1 April 2016.

During 2016:
On August 3, 2016, Rajya Sabha passed the GST. In 12 August 2016, when Assam became the first state to
pass GST.

On September 8, 2016, Hon’ble President of India gave his final assent for Constitution 122nd Amendment
Bill, 2014. Constitutional 101st Amendment Act came into force which empowers both the States and
Centre to levy this GST.

On September 23, 2016, GST Network was formed, it is an online network designed to solve the problems
and questions of consumers and businessmen.

During 2017:
On 16 January, 2017, Jaitley announces 1 July, 2017 as GST rollout deadline.
On 20 March, 2017, Cabinet approved CGST, IGST and UT GST and Compensation bills.
On 27 March, 2017, Lok Sabha and Rajya Sabha pass all the four key GST Bills - Central GST (CGST),

22
Integrated GST (IGST), State GST (SGST) and Union Territory GST (UTGST).

On 18 May, 2017, the GST Council fits over 1,200 goods in one of the four rates of GST (5%, 12%, 18%,
24%).
On 19 May, 2017, the GST Council decides on 5, 12, 18 and 28 percent as service tax slabs.
On 20 May, 2017, GST Council fixed four GST tax rates in India (5%, 12%, 18%, 24%) for all goods and
services.

During Midnight of 30 June, 2017 - GST came into force across India except Jammu & Kashmir.

During Midnight of 7 July, 2017 - Jammu and Kashmir, the only State missed to adopt the Goods and
Services Tax (GST) on July 1, finally joined the GST regime.

OBJECTIVES OF GST

Goods and Service Tax (GST) is a comprehensive tax levy on manufacture, sale and consumption of goods
and service at a national level under which no distinction is made between goods and services for levying of tax.
It will mostly substitute all indirect taxes levied on goods and services by the Central and State governments in
India. The objectives of GST are as follows:

TO ELIMINATE THE CASCADING EFFECT OF INDIRECT TAXES ON SINGLE

TRANSACTION
The basic objective of GST is to remove cascading effect of the taxes. Cascading effect of taxes meanlevy of
tax on tax. GST would be levied only towards the net value added portion and not towards the entire portion
of value as the tax payer would enjoy input tax credit.

TO SUBSUME ALL THE INDIRECT TAXES AT THE CENTRE AND STATELEVEL

Barring few indirect taxes, all the major indirect taxes levied by central and state governments have been
subsumed into GST. Thus, the taxpayer and supplier need not bother about paying multiple indirect taxes under
different laws.

TO REDUCE THE TAX EVASION AND CORRUPTION

GST would help in curbing of tax evasion and reduce corruption in tax department. In the system ofGST,
there would be less chance to claim false input tax credit as it requires matching of invoices

23
between recipient and the suppliers. Input tax credit can be claimed only if the tax has been deposited bythe
registered supplier to the Government. Each invoice wise matching and verification would be made to ensure
that taxes are properly paid to the government.

TO INCREASE THE PRODUCTIVITY

GST would help in increasing the enterprise productivity and efficiency. Under the previous tax regime, there
were many constraints relating to logistics and impractical procedures regarding claim of input tax credit. There
was also levy of entry tax in few States on entry of goods into states. In GST regime, entrytax has been subsumed.
Number of checks on State borders would also reduce due to removal of check posts. These factors would help
in increase of productivity.

TO INCREASE TAX COMPLIANCE

Tax compliance under GST is expected to be more compared to the previous tax regime. As the number of tax
laws have been subsumed, the tax payer would have to comply mainly with GST law with returnsand registration
needed. There is no need to file different returns and obtain different registration for compliance.

TO INCREASE THE TAX TO GDP RATIO AND THE REVENUE SURPLUS

GST would increase the tax to GDP ratio and it is expected to be about 11.9% by 2019-20. The more taxto GDP
ratio, the more would be the tax collections and it indicates the status of better economic system of the country.
More tax compliances and wider tax base would result in higher tax revenue to the government and the objective
of GST is to have a revenue surplus to the government.

TO ACHIEVE THE POLICY OF ONE NATION ONE TAX

GST replaces multiple indirect taxes which were existing in the previous regime. There is a single andneutral
tax in most cases so there would not be any differences in the tax rates between one state to another state. In
this way, GST law has achieved the policy of one nation one tax.

TO PROVIDE A SEAMLESS CREDIT OF INPUT TAXES

Cross-sectional credit of input was not allowed earlier. Also, there were many restrictions and conditions in
previous tax regime. In GST, much simpler rules have been laid to utilize the cross-sectional credit of input taxes.
For example, a trader who was earlier not allowed to take credit of service tax paid on services is allowed to take
credit on goods as well as services. The seamless system of credit would

ensure that the taxes on supplies are paid to the extent of value additions and net liability.

24
 SWOT ANALYSIS

The SWOT analysis on GST can provides the information that is helpful in matching the resources and capabilities to
theenvironment in which it operates. It helps in analyzing the strengths, weaknesses, opportunities and threats that are
facingin monitoring of GST in the country. It helps to focus on the strengths, minimizing the threats and take the
greatest possible advantage of opportunities available.

Strength of GST :

Some of the strengths of GST are –

The GST Tax is applicable on all goods and services except some exempted products mentioned inthe exemption list
ofthe Act.

 GST will subsume taxes like Central Excise Duty (1944), Central Sales Tax (1956) Service Tax

 (1994) and a host of state levied taxes including Value Added Tax (VAT) It will drop out the cascading effects of
tax on production and distribution of goods and services

 Better Compliance and online submission of details would result in less paper work

 This would eventually lead to more tax revenue

 Simplification of tax collection and administration

 Lower burden of taxes on end consumers

 Give edge to the industry on their foreign competitors

 Easy flow of resources across the country

 Widening the tax base of Central as well as State

 It will reduce cascading effect of taxes

GST would be dual taxation system. Weakness of GST:

Some of the weakness of GST are –

 The duel model of GST results in complicated billing and reconciliation

 The system is fully technology driven but in our country people are not more habitual of technology 

 GST is a subsume of various States and Central taxes but many more are left at the discretion of State
Government Increase in operating cost of business

 This system is very fond of technology

25
Opportunities of GST:

Some of the opportunities of GST are -

 The rates of GST are set at ground level which will help States and Unions to collect more revenue. This will
result in Growth of Revenue for State and Central Government

 GST will reduce average tax burden on consumers. They will be certain about their taxes which will reduce
evasion of taxes.

 GST can provide the opportunity of corruption free Indian revenue services. This may help in uprooting the
black money economy and bringing all under traders and service providers under the tax regime.

Low prices of manufactured products

 Increase in GDP

 Increase in exports due to price competitiveness.

Opportunities of GST –
To the consumers:
(i). Simpler tax system

(ii). Reduction in prices of goods and services due to elimination of cascading

(iii). Uniform prices throughout the country

(iv). Transparency in taxation system

(v). Increase in employment opportunities

Opportunities of GST –

To the trade/industry:
(i). Reduction in multiplicity of taxes

(ii). Mitigation of cascading/double taxation

(iii).More efficient neutralization of taxes especially for exports

(iv).Development of common national market

(v). Simpler tax regime-fewer rates and exemptions

26
 Opportunities of GST –

To the Central/State Governments:

(i). A unified common national market to boost Foreign Investment and “Make in India” campaign

(ii). Boost to export/manufacturing activity, generation of more employment, leading to reduced poverty
and increased GDP growth

(iii). Improving the overall investment climate in the country which will benefit the development of
states.

(iv). Uniform SGST and IGST rates to reduce the incentive for tax evasion

(v). Reduction in compliance costs as no requirement of multiple record keeping

Threats of GST: Some of the Threats of GST are –

 The mechanism in GST is still complicated, it cannot completely eliminate black money and tax
evasion.

 Initial burden on consumers due to a temporary increase of cost of goods and services.

 GSTC (Goods and Service Tax Council) will set the benchmark for resolving the dispute on
recommendations of GSTC. It means GSTC will lay down the criteria for GSTC itself. It is against
the principle of natural justice.

 GST is not a guarantee in itself that it would not be influenced by political parties and politicians
will not use it as a win-loss game.

 Inter-states supply of goods and services are considered as import and IGST will be applied (1%) in
addition to custom duties.

 The Central government promised for compensation to loss making states for a period of 5 years.
The compensation will be as: 100% for first 3 years, 75 % for 4th year and 50% for 5th year. So, it is
possible that all states does not implement it in effective manner to get compensation.

 GST is not friendly with banking sector, because the cost of goods become cheaper after GST and it
will promote export. Presently, 14% service tax is being levied on baking transactions. GST will
make these transactions more costly. Over and above, in most of countries banking sector is
excluded from GST.

27
 GST Registration
According to GST rules, it is mandatory for a business that has a turnover of above Rs.40 lakh to
register as a normal taxable entity. This is referred to as the GST registration process. The turnover
is Rs.10 lakh for businesses that are present in hill states and North-Eastern states. The GST
registration process can be completed within 6 working days.

GST registration can be easily done on the online GST portal. Business owners can fill a form on
the GST portal and submit the necessary documents for registration. Businesses must complete the
GST registration process. It is a criminal offense to carry out operations without registering for
GST and heavy penalties are levied for non-registration.

GST Registration
The process by which a taxpayer gets registered under Goods and Service Tax (GST) is GST
registration. Once the registration process has been completed, the Goods and Service Tax
Identification Number (GSTIN) is provided. The 15-digit GSTIN is provided by the Central
Government and helps to determine whether a business is liable to pay GST.

Eligibility to register under GST

1. GST Registration must be completed by the following individuals and businesses:

2. who have registered under the tax services before the GST law came into effect.
3. Non-Resident Taxable Person and Casual Taxable Person
4. Individuals who pay tax under the reverse charge mechanism
5. e-commerce aggregators
6. that have a turnover that exceeds Rs.40 lakh. In the case of Uttarakhand, Himachal Pradesh, Jammu & Kashmir,
and North-Eastern states, the turnover of the business should exceed Rs.10 lakh.
7. Input service distributors and agents of a supplier
8. Individuals who supply goods through an e-commerce aggregator.
9. Individuals providing database access and online information from outside India to people who live in India other
than those who are registered taxable persons.

Types of GST Registration

Under the GST Act, GST Registration can be of various types. You must be aware of the different
types of GST Registration before selecting the appropriate one. The different types of GST
Registration are:

 Normal Taxpayer
 Casual Taxable Person

28
 Composition Taxpayer
 Non-Resident Taxable Person

Key Facts about GST Registration

Some of the important points that you must know about GST registration are mentioned below:
 No charges are levied to complete the GST registration process.
 In case businesses do not complete the registration process, 10% of the amount that is due or Rs.10,000 will be
levied. In the case of tax evasion, 100% of the amount that is due will be levied as a penalty.
 GST registration is mandatory for businesses that have an annual turnover of Rs.20 lakh and more.
 In case the supply is provided in several states, GST registration must be completed in each state

Steps to complete GST registration process online

The step-by-step procedure that individuals must follow to complete GST Registration is mentioned below:

Step 1: Visit the GST portal – https://www.gst.gov.in

Step 2: Click on the ‘Register Now’ link which can be found under the ‘Taxpayers’ tab
Step 3: Select ‘New Registration’.
Step 4: Fill the below-mentioned details:
 Under the ‘I am a’ drop-down menu, select ‘Taxpayer’.
 Select the respective state and district.
 Enter the name of the business.
 Enter the PAN of the business.
 Enter the email ID and mobile number in the respective boxes. The entered email ID and mobile number must be
active as OTPs will be sent to them.
 Enter the image that is shown on the screen and click on ‘Proceed’.
Step 5: On the next page, enter the OTP that was sent to the email ID and mobile number in the respective boxes.
Step 6: Once the details have been entered, click on ‘Proceed’.
Step 7: You will be shown the Temporary Reference Number (TRN) on the screen. Make a note of the TRN.
Step 8: Visit the GST portal again and click on ‘Register’ under the ‘Taxpayers’ menu.
Step 9: Select ‘Temporary Reference Number (TRN)’.
Step 10: Enter the TRN and the captcha details.
Step 11: Click on ‘Proceed’.
Step 12: You will receive an OTP on your email ID and registered mobile number. Enter the OTP on the next page
and click on ‘Proceed’.
Step 13: The status of your application will be available on the next page. On the right side, there will be an Edit
icon, click on it.
Step 14: There will be 10 sections on the next page. All the relevant details must be filled, and the necessary
documents must be submitted. The list of documents that must be uploaded are mentioned below:
 Photographs
 Business address proof
 Bank details such as account number, bank name, bank branch, and IFSC code.

29
 Authorisation form
 The constitution of the taxpayer.

Step 15: Visit the ‘Verification’ page and check the declaration, Then submit the application by using one of the
below mentioned methods:
 By Electronic Verification Code (EVC). The code will be sent to the registered mobile number.
 By e-Sign method. An OTP will be sent to the mobile number linked to the Aadhaar card.
 In case companies are registering, the application must be submitted by using the Digital Signature Certificate (DSC).
Step 16: Once completed, a success message will be shown on the screen. The Application Reference Number (ARN)
will be sent to the registered mobile number and email ID.
Step 17: You can check the status of the ARN on the GST portal.

Documents required for GST Registration

Here are the documents required to complete GST Registration:
 PAN card
 Aadhaar card
 Business address proof
 Bank account statement and cancelled cheque
 Incorporation Certificate or the business registration proof
 Digital Signature
 Director’s or Promoter’s ID proof, address proof, and photograph
 Letter of Authorisation or Board Resolution from Authorised Signatory

GST Registration Via Authentication of Aadhaar

New businesses can secure their GST registration with the help of the Aadhaar. The process is
simple and quick. The new process came into effect from 21 August 2020. The procedure to opt
for Aadhaar authentication is mentioned below:

 When you apply for GST registration, you will be provided with an option to choose Aadhaar authentication.
 Select ‘YES’. The authentication link will be sent to the registered email ID and mobile number.
 Click on the authentication link.
 Enter the Aadhaar number and select ‘Validate’.
 Once the details have been matched, an OTP will be sent to the registered mobile number and email ID.
 Enter the OTP to complete the process. You will get the new GST registration within three working da ys.

Penalty for Not Registering or Late Registering Under GST

If you do not pay tax or pay a lesser amount than what is due, the penalty that is levied is 10% of
the due amount (in case of genuine errors). However, the minimum penalty is Rs.10,000.
If you have not registered for GST and are deliberately trying to evade tax, the penalty levied is
100% of the due tax amount.

Input Tax Credit – ITC

30
 Input credit means at the time of paying tax on output, you can reduce the tax you have already
paid on inputs and pay the balance amount.

Who can claim ITC

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

a. The dealer should be in possession of tax invoice

b. The said goods/services have been received
c. Returns have been filed.
d. The tax charged has been paid to the government by the supplier.
e. When goods are received in installments ITC can be claimed only when the last lot is received.
f. No ITC will be allowed if depreciation has been claimed on tax component of a capital good
A person registered under composition scheme in GST cannot claim ITC.

How to claim ITC

All regular taxpayers must report the amount of input tax credit (ITC) in their monthly GST returns
of Form GSTR-3B. The summary figure of eligible ITC, Ineligible ITC and ITC reversed during
the tax periods A taxpayer can claim ITC on a provisional basis in the GSTR-3B to an extent of
20% of the eligible ITC reported by suppliers in the auto-generated GSTR-2A return. Hence, a
taxpayer should cross-check the GSTR-2A figure before proceeding to file GSTR-3B. A taxpayer
could have claimed any amount of provisional ITC until 9 October 2019. But, the CBIC has
notified that from 9 October 2019, a taxpayer can only claim not more than 20% of the eligible
ITC available in the GSTR-2A as provisional ITC. This means that the amount of ITC reported in
the GSTR-3B from 9 October 2019 will be the total of the actual ITC in GSTR-2A and the
provisional ITC being 20% of the actual eligible ITC in the GSTR-2A. Hence, matching of the
purchase register or expense ledger with the GSTR-2A becomes crucial.

Documents Required for Claiming ITC

The following documents are required for claiming ITC: 1. Invoice issued by the supplier of
goods/services 2. The debit note issued by the supplier to the recipient (if any) 3. Bill of entry 4.
An invoice issued under certain circumstances like the bill of supply issued instead of tax invoice
if the amount is less than Rs 200 or in situations where the reverse charge is applicable as per GST
law. 5. An invoice or credit note issued by the Input Service Distributor (ISD) as per the invoice
rules under GST. 6. A bill of supply issued by the supplier of goods and services or both.

31
CHAPTER – 3
COMPANY
PROFILE

32
INTRODUCTION :
Reliance Infrastructure Limited (R-Infra), formerly Reliance Energy Limited (REL) and Bombay Suburban
Electric Supply (BSES), is an Indian private sector enterprise involved in power generation, infrastructure, construction
and defence.[3] It is part of the Reliance Anil Dhirubhai Ambani Group. The company is headed by its chairman, Anil
Ambani, and chief executive officer, Punit Narendra Garg (since 6 April 2019). The corporate headquarters is in Navi
Mumbai.[4] Reliance Infrastructure's interests are in the fields of power plants, metro rail, airports, bridges, toll roads, and
defence. It is a major shareholder in the other group company, Reliance Power and Reliance Naval and Engineering
Limited.
In Fortune India 500 list of 2019, Reliance Infrastructure was ranked as the 51st largest corporation in India with first
rank in 'Infrastructure Development' category. As of March 2018, Reliance Infrastructure has 56 subsidiaries, 8 associate
companies, and 2 joint-ventures. The EPC Business division of the company in 2018 has bagged various orders,
including ₹7,000 crore Versova-Bandra Sea Link project,[5] ₹3,647 crore Uppur Thermal Power Project, ₹1,881 crore
National Highway projects from NHAI in Bihar & Jharkhand,[6] ₹1,585 crore Mumbai Metro Line-4 project,[7] ₹1,081
crore Kudankulam Nuclear Power Plant project[8] and others.
HISTORY :
The predecessor company, Reliance Energy Limited, came into existence when it took over an 83 -year-old government
undertaking, the Bombay Suburban Electric Supply (BSES) in 2002. [9] BSES was originally founded in October 1929.
In April 2008, Reliance Energy Limited changed its name to Reliance Infrastructure Limited. [10][11] The company entered
the road building industry in 2006 with two National Highway projects in Tamil Nadu (Namakkal-Karur and Dindigul-
Samayanallur), both sections of National Highway 44 (formerly NH 7).[12] In 2011, it was announced that the company
was planning to buy out licences to build road projects from companies unable to do so. [13]
In September 2018, at a time of financial stress, R-Infra sold its power transmission business in Mumbai to Adani
Electricity Mumbai Limited for ₹18,800 crore (equivalent to ₹210 billion or US$2.8 billion in 2020).[14]
BSES DELHI :
Till 2002, the Delhi Vidyut Board (DVB) used to supply electricity to NCT of Delhi, except areas of Lutyens and
Cantonment which were & are still catered by New Delhi Municipal Council (NDMC) and Military Engineer
Services (MES) respectively. The same year in July, DVB was unbundled and was split into 3 distribution companies
namely, BSES Rajdhani Power Limited (BRPL), BSES Yamuna Power Limited (BYPL) & Tata Power Delhi
Distribution Limited (TPDDL). Both BRPL and BYPL are 51:49% joint venture between Reliance Infrastructure
and Government of Delhi. Since then, BRPL supplies electricity to South & West Delhi covering an area of 750 sq. km.
Similarly, BYPL supplies electricity to Central & East Delhi covering an area of around 200 sq.km.
TRANSPORATION :
Airports:
Reliance Infrastructure with its subsidiary company, Reliance Airport Developers Limited (RADL) operated five minor
brownfield airports in various small towns of Maharashtra, viz. Nanded Airport, Latur Airport, Baramati
Airport, Yavatmal Airport, and Osmanabad Airport. In March 2019, the company received a contract from the Airports
Authority of India (AAI) worth ₹648 crores (USD 92 million) for the construction of Rajkot Greenfield Airport at Hirasar
in Rajkot district of Gujarat state.

33
 Metro projects:

 Line-1 of Phase-1 of Mumbai Metro: One of the three metro lines in this phase was awarded to a consortium led by R-
Infra. The other two lines were awarded to other parties. Mumbai Metro One Pvt Ltd, which is a consortium of R-
Infra, Veolia Transport, and Mumbai Metropolitan Region Development Authority (MMRDA) secured the contract for
the ₹23.56 billion (US$310 million) Versova-Andheri-Ghatkopar section. Mumbai Metro I is operational.[15] The
project will be implemented on a Build-Operate-Transfer basis, where the consortium will collect revenue for 35 years
and then hand over the infrastructure to the government. [16]
 Line 4 of Phase 2 of Mumbai Metro: The contracts for three "packages" (18 stations) have been awarded to a consortium
led by R-Infra, but apparently, the contract does not include the laying of any tracks. The total length of Line-4 is
32.32 km (20.08 mi) with 32 stations, and the line will connect Wadala to Kasarvadavali via Ghatkopar and Mulund.
Out of this, the contract for constructing three "packages" (18 stations) has been awarded to the "Reliance-Astaldi Joint
Venture." Construction began in June 2018 and is expected to be completed by 2021.
 Delhi Airport Metro: The Delhi Airport Metro Express is Delhi Metro's Orange line connecting New Delhi railway
station to Dwarka Sector-21 metro station, through the Indira Gandhi International Airport. It was opened to the public
on February 23, 2011. It has 6 stations covering a length of 22.7 km. All six metro stations on the Orange line are called
City Airport Terminals (CATs).
Toll roads:
Reliance Infrastructure is the largest concessionaire of the National Highways Authority of India (NHAI), having
received as many as eleven contracts to build roads under the NHDP Phase-V. These eleven contracts involve
constructing about 1,000 km of highway and expressway projects worth ₹120 billion (US$1.6 billion). All the projects
are on Build–Operate–Transfer scheme of funding, where R-Infra is required to raise all its own funds and gets to
collect tolls on the road for a period of thirty years. Three of the projects (all in Tamil Nadu) are already
operational.[17] The eleven projects are:

Toll Plaza on NK Toll Road

 DA Toll Road (180 km six-lane between Delhi and Agra on NH-2 in the state of Haryana and Uttar Pradesh)[18]
 PS Toll Road (140 km six-lane road connecting Pune and Satara in Maharashtra on NH-4)
 HK Toll Road (60 km six-lane connecting Hosur and Krishnagiri in Tamil Nadu on NH-7)
 DS Toll Road (53 km four-lane connecting Dindigul with Samayanallur in Tamil Nadu on NH-7)
 NK Toll Road (43 km four-lane connecting Namakkal and Karur in Tamil Nadu on NH-7)
 KM Toll Road (71 km four/ six-lane connecting Kandla and Mundra ports in Gujarat on NH-8A)
 JR Toll Road (52 km four/ six-lane connecting Jaipur and Reengus in Rajasthan on NH-11)

34
  TD Toll Road (87 km four-lane connecting Trichy and Dindigul in Tamil Nadu on NH-45)
 TK Toll Road (82 km four-lane connecting Trichy and Karur in Tamil Nadu on NH-67)
 SU Toll Road (136 km four-lane road connecting Salem with Ulundurpet in Tamil Nadu on NH-68)[19]
 GF Toll Road (four-lane connecting Gurgaon–Faridabad (33.1 km) and Ballabgarh–Sohna (33.9 km) for State
Highway in Haryana)
Bridges:
Reliance Infrastructure and Hyundai Engineering formed a joint venture to build the Worli-Haji Ali Sea Link, part of
the Western Freeway.[20][21] The consortium was also to toll the Bandra Worli Sea Link for 40 years.[22] In early 2012,
the Municipal Corporation of Greater Mumbai proposed constructing a 35 km coastal road between Nariman
Point and Kandivali.[23]
Reliance protested against this project as it claimed it would incur losses. [24] Subsequently, the Government of
Maharashtra appointed a committee to look into the matter.[25] Later, it was reported that the MSRDC was likely to
cancel the deal with Reliance due to the latter not having started construction two years after signing the
agreement.[26] Afterwards, it was announced that the deal was canceled as the mediation report stated that it was
impossible to build.[27]
POWER PROJECTS :
EPC contracts:
Projects where the Engineering-Procurement-Construction (EPC) contract was awarded to Reliance Infrastructure
Limited:

 3,960 MW Sasan Ultra Mega Power Project: (6×660 MW) at Sasan village in Singrauli district, Madhya Pradesh.
This is designated as an UMPP by the Government of India.
 2,400 MW Samalkot Thermal Power Project: (3×800 MW) gas-fired thermal power project at Samalkot in East
Godavari district of Andhra Pradesh.
 1,200 MW Rosa Thermal Power Project: (4×300 MW) coal-based thermal power plant in Rosa village, Shahjahanpur
district, Uttar Pradesh. The plant is fully functional.
 1,200 MW Raghunathpur Thermal Power Project: (2×600 MW) power project in West Bengal. The plant is owned
by Damodar Valley Corporation.
 1,200 MW Rajiv Gandhi Thermal Power Project: (2×600 MW) located near Barwala in Hisar district, Haryana. The
plant is owned by Haryana Power Generation Corporation.
 600 MW Deenbandhu Chhotu Ram Thermal Power Project: (2×300 MW) in Yamunanagar district of Haryana. The
plant is owned by Haryana Power Generation Corporation.
 600 MW Butibori Thermal Power Project: (2×300 MW), at Butibori near Nagpur, Maharashtra. The plant is not
functional.
 500 MW Dahanu Thermal Power Project: (2×250 MW) coal based power plant located at coastal Dahanu town
in Palghar district in Maharashtra.
BoP contracts:
Projects where the Balance of Plant (BoP) contract was awarded to Reliance Infrastructure Limited:

 Unit (5 & 6) of Parichha Thermal Power Project: located at Parichha near Jhansi in Uttar Pradesh, the plant is owned
by Uttar Pradesh Rajya Vidyut Utpadan Nigam.
 Unit (7 & 8) of Panipat Thermal Power Project – II: (2×250 MW) located at Panipat. The plant is owned by Haryana
Power Generation Corporation Limited (HPGCL).

35
 DEFENCE :

 Reliance Defence Limited (RDL), established on 28 March 2015 as a subsidiary of Reliance Infrastructure has 11
subsidiaries in niche segments of the defence sector. RDL has organized the structure into defence, marine, and land
systems with a focused approach towards aiming capabilities and developing in-house expertise in Land-based
weapon platforms and systems, Air Combat vehicles, aircraft and avionics, Missiles, Unmanned systems, and C4ISR
systems, Surface & sub-surface shipbuilding and development. R-Infra has already acquired Pipavav Defence and
Offshore Engineering Company Limited in Gujarat.[citation needed]
 Dhirubhai Ambani Aerospace Park spread over 400 acres land at MIHAN in Nagpur, planned with an aim to
create a comprehensive eco-structure through backward integration under the Government of India's Make in
India program for indigenous manufacturing of aerospace components. This aerospace park, first of its kind in India,
comprising a cluster of manufacturers will indigenously deliver major aircraft components, spares and avionics
requirements of the aerospace industry.[citation needed]
SUBSIDIARIES :
As of March 2020, Reliance Infrastructure Limited has 58 subsidiaries[28] including Reliance Defence, Dassault
Reliance Aerospace, BSES Rajdhani Power, BSES Yamuna Power, BSES Kerala Power, Reliance Naval Systems,
Reliance Airport Developers, Mumbai Metro One, Reliance Sealink One, Delhi Airport Metro Express, Reliance
Smart Cities, Thales Reliance Defence Systems, Reliance Power Transmission, Reliance Aerostructure and Reliance
Helicopters.
Our Vision
To be amongst the most admired and most trusted integrated utility companies in the world, delivering reliable and
quality products and services to all customers at competitive costs, with international standards of customer care-
thereby creating superior value for all stakeholders.
To set new benchmarks in standards of corporate performance and governance through the pursuit of operational and
financial excellence, responsible citizenship and profitable growth.
Our Mission

 To attain global best practices and become a world-class utility.

 To create world-class assets and infrastructure to provide the platform for faster, consistent growth for India to
become a major world economic power.
 To achieve excellence in service, quality, reliability, safety and customer care.
 To earn the trust and confidence of all customers and stakeholders, exceeding their expectations and make the
Company a respected household name.
 To work with vigour, dedication and innovation with total customer satisfaction as the ultimate goal.
 To consistently achieve high growth with the highest levels of productivity.
 To be a technology driven, efficient and financially sound organisation.
 To be a responsible corporate citizen nurturing human values and concern for society, the environment and above all
people.
 To contribute towards community development and nation building.
 To promote a work culture that fosters individual growth, team spirit and creativity to overcome challenges and attain
goals.
 To encourage ideas, talent and value systems.
 To uphold the guiding principles of trust, integrity and transparency in all aspects of interactions and dealings.

36
 SWOT ANALYSIS OF RELIANCE INFRASTRUCTURE :
STRENGHTS :
1.The company portfolio includes some the prestiguos project such as mumbai and new delhi metros and the
tilaya umpp
2. fitch india ratings has awarded an rating “ IND AAA” debt rating for the company

WEAKNESS ;
1. Realiance infrastructure external involvement in PPP market potentially exposes the company
To demand risks associated to external economic shocks.
OPPURTUNTIES :
1. Strong population growth driving forward for economic infrastructure development throughout the country
.
2. Indian government is looking to improve the regulatory regime to make the business environment more
attractive for private players in this sector of infrastructure .its also opening up the sector by public private
partnership .
THREATS :
1. Lack of widely available domestic expertise to take on large infrastructure and civil engineering projects .
2. Reliance Infrastructure Ltd (R-Infra), a part of the Anil Ambani-led Reliance Group, plans to sell either all or
most of its 11 road projects to pare debt, according to three people familiar with the development, joining
companies that are putting assets on sale to reduce their debt burden.
3. R-Infra has appointed consulting firm EY, formerly known as Ernst and Young, to oversee the sale, said the
people, who didn’t want to be identified. The aim is to reduce some of the Rs.21,976.18 crore of debt it had on its
books at the end of the last fiscal year.
4. R-Infra’s spokesperson declined to comment on the matter. An e-mail sent to EY on Friday did not elicit a
response.
5. Two of the three people said EY is taking the projects, with a total length of 968km and on which R-Infra has
spent around Rs.11,700 crore, to potential buyers and is yet to finalize their sale.
6. One of the three people is from R-Infra, another an investment banker and the third is with a private equity fund.
7. The plan comes at a time when nearly 50 roads projects are up for sale in the country as infrastructure companies
building them struggle with problems including delayed government approvals, land acquisition hassles and a
funding crunch in the face of high borrowing costs.

Efforts. Recognition. Awards:

E&C Business-

 "Outstanding Contribution in Power Generation" Award for Sasan UMPP during 6th E&C World Award;
 "Rashtra Vibhushan Award 2016-17" - Diamond Award for outstanding project on Infrastructure for Sasan UMPP &
Best Initiative in Renewable Energy for Solar PV;
 "Best Power Infrastructure Project" Award 2016 for Sasan UMPP from Dun & Bradstreet Infra.

Mumbai Metro One Private Limited (MMOPL)-

 Best Metro of the year -2016 by Indian Merchants' Chamber;

 Award for best service provider and Fun at work (organization category) - Times Ascent;

37
  Greentech Foundation Award for outstanding achievement in Employee Engagement(Gold Award).

BSES Rajdhani Power Limited (BRPL) and BSES Yamuna Power Limited (BYPL)-

 Achievement Award in Supervisor/ Artisan Category Award to BRPL from Construction Industry Development
Council;
 Overall Distribution Operations Award to BRPL from Indian Chamber of Commerce;
 AT&C Loss Reduction by improving the DT Cleaning mechanism using PDCA approach (at field level) and Net
Metering of Solar Power Generation Projects Award to BRPL from BSE Limited;
 Safety Award to BRPL and BYPL from British Safety Council, (International Award), London;
 National Gaurav Award for Operational Excellence Award to BYPL from Indian Brave Hearts Foundation;
 Innovative Practice Award to BYPL viz. Seamless SCADA adaption using power management tool and Lab
Tracking Module from Independent Power Producer Association of India;
 DL Shah National Quality Award for Intelligent Outage Management System Award to BYPL from Quality Council
of India

Real estate industry is one of the most important pillars of the Indian economy. Real estate industry
contributes between 6-8% to India’s Gross Domestic Product (GDP) and it stands second after IT industry in
terms of employment generation.

With multiple taxes applicable previously like Service tax and VAT, with GST coming into the
picture,indirect taxation in this sector is wholly revamped.

The pre-GST taxability of Real Estate Transactions

NATURE OF DUTY RATE OF TAX WHEN WAS THE TAX

REQUIRED TO BE PAID?
or WHAT TRIGGERED
TAX?
VAT 1% to 4% On sale of under construction
properties.
Service Tax 4.5% “
Registration Charges 0.5% to 1% “
Stamp Duty Charges 5% to 7% “

VAT, Registration Charges, Stamp Duty Charges vary from state to state. VAT was not applicable on
completed or ready to sale properties under the erstwhile indirect tax regime, Cenvat Credit on inputs used for
the construction of a building or a civil structure or any part thereof was restricted too.

38
 Taxability of Real Estate Transactions under GST

PARTICULARS APPLICABILITY RATE OF INPUT TAX CREDIT

TAX

On ready-to-move (RTM) Not applicable – Because

properties for which Sale of building is treated
completion certificates as activity or transaction
are issued which shall be treated - Not available
neither as a supply of
good nor a supply of
service as per
SCHEDULE III of CGST
Act,2017

On Under Construction Applicable as supply of

Properties (For Homes services as per Schedule I
8% Available
Purchased Under Credit- of CGST Act, 2017
Linked Subsidy Scheme)

On Under Construction Applicable as supply of

Properties (Other than services as per Schedule I
12% Available
above) of CGST Act, 2017

On resale properties Not applicable - Not available

On Land purchase and Not applicable. As per

sale Schedule III, sale of land
- Not available
is neither supply of goods
nor services.

Works contract Applicable 18% Available

Composite supply of Applicable 18% Available

works contract

39
Composite supply of Applicable 12% Available
works contract to
Government authorities

Composite supply of Applicable 12% Available

works contract- for use by
general public

Composite supply of Applicable 12% Available

works supply- Affordable
housing

* NOTE: The homes purchased under the Credit-Linked Subsidy Scheme (CLSS) attracts 12% GST rate. The
applicable rate will be 8% after cutting the 1/3rd amount towards the cost of land.

Impact on Buyers

Under the earlier tax regime, buyers had to pay VAT, Service tax, Registration charges & Stamp duty on
purchase of properties under construction. Also since VAT, Registration charges & Stamp duty were state
levies, prices of properties varied from state to state. Moreover, developers had to pay various duties like sales
tax (CST), custom duty, OCTROI etc. for which credit was not available.

Under GST, a single tax rate of 12% is applicable on properties under construction while GST is not applicable
on completed or ready to sale properties which was the case in previous law. Hence buyers will benefit from
reduction of prices under GST. In the short-term, buyers may stick to “wait and watch” approach to gain more
understanding on the impact of GST on property prices and defer buying decision.

Also, in the long term, GST will a positive impact on buyers if the benefit of input tax credit received by the
developer is passed on to the buyer.

Impact on Developers / Builders / Contractors

Under the previous tax regime, developers had to bear Excise duty, VAT, Customs duty, Entry taxes etc. on raw
materials / inputs and Service tax on various input services like approval charges, architect professional fees,

40
labor charges, legal charges etc. ITC was not available for duties like CST, Customs duty, Entry Tax etc. This
would impact the pricing and subsequently the burden was transferred to the buyer.

Under GST, developers’ construction costs are significantly reduced as multiple taxes are subsumed and due to
the availability of input tax credit. Also, reduction in cost of logistics will be an added benefit. Hence developers
may see improvement in margins.

On the downside, developers have to do multiple calculations to arrive at ITC in order to pass it on to the
buyers. Hence, in most cases, they can pass on the ITC only during the final stages. This lack of transparency on
ITC, may affect the developers since buyers may resort to “wait and watch” approach and defer buying
decision.

And, in the erstwhile laws, a large portion of expenditure remained unrecorded in the books. Under GST,
availability of credit on inputs and cloud storage of invoicing has reduced under recording of expenditure.

Impact on other Stakeholders

The impact on the allied services like labor, material suppliers, service suppliers etc. depends on the increase or
decrease in the tax levied on these goods and services. This will have a consequential impact on real estate
industry as a whole. For example, earlier cement was taxed at an effective rate of 27 -31 percent which will now
be taxed at 18 percent. Increase in cement prices will result in consequential increase in the overall cost of
construction. GST Rates for some of the goods relating to the construction industry are given below:

Product Rate of GST

Sand 5%

Sand & Fly ash Bricks 12%

Steel 18%

Paints 18%

Marble and granite 28%

Cement 18%

41
Reverse Charge Mechanism (RCM) & its Impact

The concept of RCM has been borrowed from the erstwhile Service tax law. The scope of RCM has
significantly expanded in GST which may adversely impact the developers.

 One of the significant additions to RCM under the GST law is, if goods are procured / service are
received from a person who is not registered under GST, a registered person under the GST has to pay
GST on all such supplies.
 In cases where services are received from goods transporters, legal services received from an individual
or firm, services received from the government or local authorities, like municipalities, etc. (subject to
exceptions), developer has to pay the GST on the same.
 Also, under GST, the developer cannot adjust the tax payable under RCM against the input credit
available from the GST paid on the inputs. Instead, it has to be paid by cash/bank payment.

This will increase the costs and has a negative impact on the developers, especially the small developers.

Treatment of Input Tax Credit, Eligibility and Ineligibility

Under GST, credit of taxes charged on all input and /or input services which are used or intended to be used in
the course of furtherance of business would be available subject to exceptions.

Conditions for Claiming ITC

A registered person will be entitled to claim input tax credit only upon fulfillment of the following conditions:

 He has the possession of tax invoice (purchase invoice) / debit note.

 He has received the goods and /or services or both;
 The tax charged on such supply is paid to the Government by the supplier.
 He has furnished a valid return.
 The goods and services should not have been used for personal use.

42
Applicability of Stamp Duty

For the limited purpose of calculating the GST, stamp duty and registration charges are excluded. Stamp
duty will continue to be applicable on both completed properties and under-construction properties as was
the case with pre-GST regime.

GST on maintenance charges for housing societies

Flat owners are liable to pay 18% GST on residential property, if they pay at least Rs 7,500 as maintenance
charge to their housing society. Housing societies or residents’ welfare associations (RWAs) that collect Rs
7,500 per month per flat, also have to pay 18% tax on the entire amount. Housing societies which have an
annual turnover of less than Rs 20 lakhs are, however, exempted from paying the GST. For the GST to be
applicable, both the conditions should apply – i.e., each member should pay more than Rs 7,500 per month
as maintenance charge and the annual turnover of the RWA should be higher than Rs 20 lakhs.

The government has also clarified that the entire amount is taxable, in case the charges exceed Rs 7,500 per
month per member. For example, if the maintenance charges are Rs 9,000 per month per member, the 18%
GST on flats will be payable on the entire amount of Rs 9,000 and not on Rs 1,500 (Rs 9,000-Rs 7,500).
Also, owners with multiple flats in the same housing society will be taxed for each unit separately.

On the other hand, RWAs are entitled to claim ITC on tax paid by them on capital goods (generators, water
pumps, lawn furniture, etc.), goods (taps, pipes, other sanitary/hardware fittings, etc.) and input services
such as repair and maintenance services.

GST on rent

Landlords do not have to pay GST on real estate rental income, as long their premises are let out for
residential purposes. However, the GST regime treats renting out of residential property for business
purposes as supply of services, thus, including rental income under its purview. An 18% GST on residential
flats is charged on such rental income under the new regime, if the rent amount per year exceeds Rs 20
lakhs. In this case, landlords also have to register themselves, to pay the GST on their rental income.

Unlike under the Service Tax regime, the threshold limit for applicability of GST has been increased from
Rs 10 lakhs per annum to Rs 20 lakhs. So, many of the landlords who were covered under the Service Tax

43
regime, will go out of the indirect tax net, under the GST. On letting-out of commercial properties, a GST at
18% is levied.

GST on home loan

While there is no applicability of the GST on home loan repayment as far as the borrower is concerned,
financial institutions offer several ‘services’ as part of home loans. Based on the fact that these are services,
the applicability of GST comes into picture. Consequently, if you are taking a housing loan, the bank would
charge GST on the processing fee, technical valuation fee and legal fee.

GST on govt housing schemes

The government has clarified that government-led mega housing projects meant for the common man, will
attract only 1% GST under the new regime. These housing schemes include as the Jawaharlal Nehru
National Urban Renewal Mission, the Rajiv Awas Yojana, the Pradhan Mantri Awas Yojana and housing
schemes of state governments.

Impact of GST on affordable property

The presence of multiple taxes prior to the GST may not have impacted property prices excessively.
Nevertheless, it made tax computation a tedious process for the home buyer. Consequently, not many buyers
would venture to find out the various taxes that added up to the final cost of the property. Although several

GST on affordable housing GST on affordable housing

Affordable housing
before April 1, 2019 after April 1, 2019

Property cost per sq ft Rs 3,500 Rs 3,500

GST rate on flat purchase 8% 1%

GST Rs 280 Rs 35

ITC benefit for material cost of

Rs 270 Not applicable
Rs 1,500 at 18%

Total Rs 3,510 Rs 3,553

teething issues remain, the effect of GST on property, is that it offers better clarity to home buyers about
their tax liability, than the previous regime. With the GST impact on real estate sector resulting in greater

44
 transparency, buyers would have more faith in the taxation of property transactions in India. Moreover,
properties could become more affordable, even if the rates are reduced marginally. Here’s a look at how to
calculate GST on flats’ purchase in the affordable housing segment:

The sales of under-construction housing units has witnessed a slowdown after a peak at the start of the
2010s. The government has since, stepped in, to give this segment a boost by reducing the GST and increasing
the tax deduction limit on home loan interest repayment to Rs 3.50 lakhs. In the Interim Budget 2019, the
government inserted a new Section 80EEA, to offer an additional benefit of Rs 2 lakhs, to first-time buyers of
affordable properties. The GST impact on real estate sector, combined with these cost advantages, are gradually
expected to boost buyer sentiments.

Recall here that among the costs that builders in India had to bear on housing project development were
excise duty, value-added tax, customs duty, inputs and service tax on approval charges, architect
professional fees, labour charges, legal charges and entry taxes on raw materials.

For developers, an increase in demand would help them to sell off their stock and thereby, not have to worry
about paying taxes on inventory. Data available with PropTiger.com show that real estate developers in
India’s eight prime residential markets are sitting on an unsold stock of over 7.23 lakh homes.

Impact of GST on luxury property

Under the new GST rates, buyers of luxury properties will save more than they would have earlier.

Before April 1, After April 1,

Luxury housing
2019 2019

Property cost per sq ft Rs 7,000 Rs 7,000

GST rate on flat purchase 12% 5%

GST Rs 840 Rs 350

ITC benefit for material cost of Rs 13,000 at an average of

Rs 126 Not applicable
15%

Total Rs 7,714 Rs 7,350

45
 CHAPTER-4

FINDINGS, ANALYSIS
& INTERPRETATION

46
 1.Age:

Particulars No. of Respondents Percentage

Below 18 17 22.7%

18-30 54 72%

31-50 1 1.3%

Above 50 3 4%

Total 75 100%

Interpretation:

The above figure shows that 22.7% respondents are below 18 years of age, 72% respondents are between 18 -30
years of age, 1.3% respondents are between 31-50 years of age and the remaining 4% respondents are above 50
years of age

47
2.Gender

Particulars No. of Respondents Percentage

Male 39 52%

Female 34 45.3%

Prefer not to say 2 2.7%

Total 75 100%

Interpretation:

The above figure shows that 52% respondents are male, 45.3% respondents are female and the
remaining 2.7% respondents prefer not to say about their gender.

48
3.Annual Income:

Particulars No. of Respondents Percentage

Below 50,000 6 8%

50,000-1,00,000 14 18.7%

Above 1,00,000 23 30.7%

Prefer not to say 32 42.7%

Total 75 100%

Interpretation:

The above figure shows that the annual income of 8% respondents is below 50,000, annual income
of 18.7% respondents is between50,000-1,00,000, annual income of 30.7% respondents is above
1,00,000 and the remaining 42.7% respondents prefer not to say about their annual income.

49
4.Are you a tax payer?

Particulars No. of Respondents Percentage

Yes 35 46.7%

No 40 53.3%

Total 75 100%

Interpretation:

The above figure shows that 46.7% respondents are tax payers whereas 53.3% respondents are
not tax payers.

50
5.Since how many years are you paying tax?

Particulars No. of Respondents Percentage

2 years 7 9.3%

3-5 years 8 10.7%

More than 5 years 20 26.7%

Not a tax payer 40 53.3%

Interpretation:

The above figure shows that 9.3% respondents are paying tax since 2 years, 10.7% respondents are
paying tax from3-5 years, 26.7% respondents are paying tax from more than 5 years and the
remaining 53.3% respondents are not tax payers.

51
How did you get to know about GST?

Particulars No. of Respondents Percentage

Friends/Family 22 29.3%

Mass media 20 26.7%

Tax consultant 12 16%

Other sources 21 28%

Total 75 100%

Interpretation:

The above figure shows that 29.3% respondents got to know about GST from friends/family, 26.7%
respondents got to know from mass media, 16% respondents got to know from tax consultants and
the remaining 28% respondents got to know from other sources.

52
Do you agree with the implementation of GST in India?

Particulars No. of Respondents Percentage

Yes 54 72%

No 21 28%

Total 75 100%

Interpretation:

The above figure shows that 72% respondents agree with the implementation of GST in India
whereas the remaining 28% respondents do not agree.

53
6.Does the land acquisition get affected?

Particulars No. of Respondents Percentage

Yes 24 32%

No 20 26.7%

Maybe 31 41.3%

Total 75 100%

Interpretation:

The above figure shows that 32% respondents think that land acquisition gets affected, 26.7%
respondents think that it doesn’t get affected and the remaining 41.3% respondents are not sure.

54
7.Do you think implementing GST will cause higher price of goods & services?

Particulars No. of Respondents Percentage

Yes 42 56%
No 17 22.7%
Maybe 16 21.3%
Total 75 100%

Interpretation:

The above figure shows that 56% respondents think that implementing GST will cause higher price
of goods and service whereas 22.7% respondents do not agree and the remaining 21.3%
respondents are not sure about it.

55
8.Do you think all businesses need to be registered under GST?

Particulars No. of Respondents Percentage

Yes 51 68%
No 24 32%
Total 75 100%

Interpretation:

The above figure shows that 68% respondents think that all businesses need to be registered
under GST whereas 32% respondents do not think the same.

56
9.Do you think there is an increase in cost of construction of new buildings?

Particulars No. of Respondents Percentage

Yes 44 58.7%
No 17 22.7%
Maybe 14 18.7%
Total 75 100%

Interpretation:

The above figure shows that 58.7% respondents think that there is an increase in cost of
construction of new buildings whereas 22.7% respondents do not think the same and the remaining
18.7% respondents are not sure.

57
10.How was your experience using GST?

Particulars No. of Respondents Percentage

Poor 14 18.7%
Satisfactory 22 29.3%
Good 30 40%
Excellent 9 12%
Total 75 100%

Interpretation:

The above figure shows that 18.7% respondents had poor experience using GST, 29.3%
respondents were satisfied, 40% respondents had good experience and the remaining 12%
respondents had excellent experience.

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11."There is an increase in duplicate billing." What are your views on this?

Particulars No. of Respondents Percentage

Strongly agree 19 25.3%
Agree 18 24%
Neutral 28 37.3%
Disagree 6 8%
Strongly disagree 4 5.3%
Total 75 100%

Interpretation:

The above figure shows that 25.3% respondents strongly agree about the increase on duplicate
billing, 24% respondents normally agree, 37.3% respondents think that there is neutral effect, 8%
respondents disagree whereas 5.3% respondents strongly disagree.

59
12.Do you think implementation of GST has increased the tax burden on
businessmen in construction industry?

Particulars No. of Respondents Percentage

Agree 33 44%
Neutral 31 41.3%
Disagree 11 14.7%
Total 75 100%

Interpretation:

The above figure shows that 44% respondents agree that GST has increased the tax burden on
businessmen in construction industry, 41.3% respondents think that there is neutral effect and the
remaining 14.7% respondents disagree about it.

60
13."GST affects Indian construction market negatively". What are your views
onthis statement?

Particulars No. of Respondents Percentage

Strongly disagree 17 22.7%
Disagree 13 17.3%
Neutral 26 34.7%
Agree 14 18.7%
Strongly agree 5 6.7%
Total 75 100%

Interpretation:

The above figure shows that 22.7% respondents strongly disagree that GST affects Indian
construction market negatively, 17.3% respondents disagree, 34.7% respondents think there is
neutral effect, 18.7% respondents agree on this and the remaining 6.7% respondents strongly agree
on this.

61
14.GST has caused an increase in cost for material procurement

Particulars No. of Respondents Percentage

Strongly disagree 15 20%
Disagree 10 13.3%
Neutral 23 30.7%
Agree 17 22.7%
Strongly agree 10 13.3%
Total 75 100%

Interpretation:

The above figure shows that 20% respondents strongly disagree that GST has caused increase in
cost for material procurement, 13.3% respondents disagree, 30.7% respondents think there is
neutral effect, 22.7% respondents agree and the remaining 13.3% respondents strongly agree on
this.

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15.Did the implementation of GST made construction projects slower?

Particulars No. of Respondents Percentage

Yes 25 33.3%
No 33 44%
Maybe 17 22.7%
Total 75 100%

Interpretation:

The above figure shows that 33.3% respondents think that GST made construction projects
slower whereas 44% do not think the same and the remaining 22.7% respondents are not sure.

63
16.Has GST made day to day purchases in construction industry more expensive?

Particulars No. of Respondents Percentage

Yes 36 48%
No 17 22.7%
Not aware about GST 22 29.3%
rates on construction
industry
Total 75 100%

Interpretation:

The above figure shows that 48% respondents think that GST has made day to day purchases in
construction industry more expensive, 22.7% respondents do not think the same and the remaining
29.3% respondents are not aware about GST rates.

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17.Is the average GST rate in construction industry preferable?

Particulars No. of Respondents Percentage

Yes 25 33.3%
No 22 29.3%
No idea 28 37.3%
Total 75 100%

Interpretation:

The above figure shows that 33.3% respondents think that the average GST rate in construction
industry is preferable whereas 29.3% respondents do not think the same and the remaining 37.3%
respondents have no idea about it.

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 FINDINGS

 Quantum of materials, machinery & man power required during the construction phase of the project.
 Basic rates of laborers, materials & machinery pertaining to the project under consideration. Percentage of taxes &
their breakup before & application of GST.
 Arriving to the cost of laborers, materials & machinery of the project by application of taxation rates before & after
GST.
 Calculation of cost of construction before & after GST. Critical comparison on the cost arrived in terms of individual
item of work & nature of effect on it.
 Project Scheduling, check for the areas of time & cost overrun.
 Analyzing the areas of risk along with the detailed report on the impact of these risk on the time frame of the project
under consideration.

66
CHAPTER-5

SUMMARY,
SUGGESTIONS
AND
CONCLUSION

67
 SUMMARY

GST shall be the mother of all Indian tax reforms of this centaury and it would subsume most (if not
all) of the existing Central and State level taxes on supply of goods and services.Accordingly, GST
would have a significant impact on business environment andits operations. Tax policies play an
important role on the economy through their impact on both efficiency and equity. A good tax system
should keep in view issues of income distribution and at the same time, also Endeavour to generate tax
revenues to support government expenditure on public services and infrastructure development. The
ongoingtax reforms on moving to a goods and services tax would impact the national economy,
International trade, firms and the consumers.

 The macroeconomic impact of GST is significant in terms of growth effects, price effects, current
account effects and the effect on the budget balance.
 In developing open economy with growing service sector, a change in the tax mix from income to
consumption-based taxes is likely to provide a fruitful source of revenue.
 The proposed structure will simplify the procedure which will end up with equal opportunity for all
the markets and in other hand will leads reduced tax evasion. It is preferred every economy must
adopt GST at national level to make their economy attractive for foreign investors. By implementing
GST, the developing economy like India can achieve sustainable and balanced development. Slowly,
India shall move to join the world wide standards in taxation, corporate laws and managerial
practices andbe among the leaders in these fields.
 It can also be concluded from the above discussion that GST will provide relief to producers and
consumers by providing wide and comprehensive coverage of input tax credit set-off, service tax set
off and subsuming the several taxes. It can be further concluded that GST have a positive impact on
various sectors and industry.

68
 SUGGESTIONS

Some suggestions for better administrative machinery to handle the implementation of Goods and
Services Tax Act in India are:

 Standardization of systems and procedures.

 Well defined procedures in case of Job works
 Tax relief in case of branch transfer
 Uniform dispute settlement machinery.
 Building information technology backbone.
Uniform Implementation of GST should be ensured across all states (unlike the staggered implementation of
VAT) as many issues might arise in case of transactions between states who comply with GST and states who are
not complying with GST.

69
 CONCLUSION

Obviously, GST has led to increase in revenue generation of the sector which is also the biggest employment

Generation sector. Improvement in the quality of work by the contractors as there is a fixed time duration on cash

flow in a project.

Builders as well as the other agencies working in this sector have started a panel working on the untouched areas

of working on the principles of construction management & risk management of the projects having huge

significance in the construction society. An out of the box approach to the various technological option of

doing the work has emerged to counter act the cost effect of GST.

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ANNEXURES

71
1. Age

a. Below 18 years
b. 18-30

c. 31-50

d. Above 50

2. Gender

a. Male

b. Female

c. Prefer not to say

3. Annual income

a. Below 50,000

b. 50,000-1,00,000

c. Above 1,00,000

d. Prefer not to say

4. Are you a tax payer?

a. Yes

b. No

5. Since how many years are you paying tax?

a. 2 years

b. 3-5 years

c. More than 5 years

72
 d. Not a tax payer.

6. How did you get to know about GST?

a. Friends/ family

b. Mass media

c. Tax consultant

d. Other sources

7. Do you agree with implementation of GST in India ?

a. Yes

b. No

8. Does the land acquisition get affected?

a. Yes

b. No

c. Maybe

9. Do you think implementing GST will cause higher price of good and sercives?

a. Yes

b. No

c. Maybe

10. Do you think all businesses need to be registered under GST?

a. Yes

b. No

11. Do you think there is an increase in cost of construction of new buildings?

a. Yes

73
 b. No

c. Maybe

12. How was your experience using GST?

a. Poor

b. Satisfactory

c. Good

d. Excellent

13. “There is an increase in duplicate billing” what are your views on this?

a. Strongly agree

b. Agree

c. Neutral

d. Disagree

e. Strongly disagree

14. Do you think implementation of GST has increased tax burden on businessmen in construction
industry?

a. Agree

b. Neutral

c. Disagree

15. “GST affects Indian construction market negatively” what are your views on this statement?

a. Strongly disagree

b. Disagree

c. Neutral

74
 d. Agree

e. Strongly agree

16. GST has caused an increase in cost for material procurement

a. Strongly disagree

b. Disagree

c. Neutral

d. Agree

e. Strongly agree

17. Did the implementation of GST made construction projects slower?

a. Yes

b. No

18. Has GST made day to day purchases in construction industry more expensive?

a. Yes

b. No

c. Not aware about GST rates on construction industry

19. Is the average GST rate in construction industry preferable?

a. Yes

b. No

c. No idea.

75
BIBLIOGRAPHY

76
 https://www.gstindia.com/about/
 https://www.thequint.com/news/business/india-gst-most-complex-28-percent- slab-
second-highest-rate-in-world-world-bank
 https://www.bankbazaar.com/tax/gst.html
 https://en.wikipedia.org/wiki/Goods_and_Services_Tax_(India)
 https://housing.com/news/gst-real-estate-will-impact-home-buyers-industry/
 https://economictimes.indiatimes.com/gst
 https://cleartax.in/s/gst-real-estate-sector-
affect#:~:text=Under%20GST%2C%20developers'%20construction%20costs,may%20s
ee%20improvement%20in%20margins.

77