search Dimensions Original Article

Vol. VII (2) 35-38 (2017) ISSN 0976-8564

Study on Impact of GST in India
Simran R Kalyani
Asst Prof, H.R.College of Commerce & Economics, Churchgate, Mumbai.
Abstract: GST stands for "Goods and Services Tax", and is proposed to be a comprehensive indirect tax
levy on manufacture, sale and consumption of goods as well as services at the national level. It will
replace all indirect taxes levied on goods and services by the Indian Central and State governments.
France was the first country to introduce this system in 1954. Nearly 140 countries are following this tax
system. GST could be the next biggest tax reform in India. This reform could be a continuing process until
it is fully evolved. With GST the entire Indian market will be a unified market which may translate into
lower business costs. It can facilitate seamless movement of goods across states and reduce the
transaction costs of businesses. This research paper shows the impact of GST on different sectors.
Introduction: GST is one indirect tax for the whole nation, which will make India one unified
common market. GST is a single tax on the supply of goods and services, right from the
manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the
subsequent stage of value addition, which makes GST essentially a tax only on value addition
at each stage. The final consumer will thus bear only the GST charged by the last dealer in the
supply chain, with set-off benefits at all the previous stages.
Objective of the study:
The objectives of the paper are:
1. To study about Goods and Service Tax and its impact on the economy.
2. To examine benefits and opportunities of Goods and Service tax.
Background of GST: In India, GST was conceived in 2004 by the Task Force on
implementation of the Fiscal Responsibility and Budget Management Act (Kelkar Committee)
while analyzing prevailing indirect tax system both at Central and State level. The Kelkar
Committee observed that a tax reform of nationwide dual GST which would comprehensively
tax the consumption of almost all goods and services in the economy would be able to achieve
‘a common market, widen the tax base, improve the revenue productivity of domestic indirect
taxes and enhance welfare through efficient resource allocation’. But the First discussion Paper
on Goods and Services Tax in India was presented by the Empowered Committee of State
Finance Ministers in November 2009.
In 2011, the Constitution (115th Amendment) Bill, 2011 was introduced in Parliament to enable
the levy of GST. However, the Bill lapsed with the dissolution of the 15th LokSabha.
Subsequently, in December 2014, the Constitution (122nd Amendment) Bill, 2014 was
introduced in LokSabha. The Bill was passed by LokSabha in May 2015 and referred to a Select
Committee of RajyaSabha for examination. GST Bill Passed in RajyaSabha on 3rd August 2016
(03-08-2016)
Objectives of GST:
􀁸 One Country - One Tax
􀁸 Consumption based tax instead of Manufacturing
􀁸 Uniform registration, payment and Input Credit
􀁸 To eliminate the cascading effect of Indirect taxes on single transaction
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􀁸 Subsume all indirect taxes at Centre and State Level under
􀁸 Reduce tax evasion and corruption
􀁸 Increase productivity
􀁸 Increase Tax to GDP Ratio and revenue surplus
􀁸 Increase Compliance
Impact of GST in Indian Economy: Amidst economic crisis across the globe, India has posed
as a beacon of hope with ambitious growth targets, supported by slew of strategic missions like
‘Make in India’, ‘Digital India’, etc. Goods and Services Tax (GST) is expected to provide the
much needed stimulant for economic growth in India by transforming the existing basis of
indirect taxation towards free flow of goods and services within the economy and also
eliminating the cascading effect of tax on tax. In view of the important role that India is expected
to play in the world economy in the years to come, the expectation of GST being introduced is
high not only within the country, but also in neighboring countries and in developed economies
of the world.
Reduce tax burden on producers and foster growth through more production. This
double taxation prevents manufacturers from producing to their optimum capacity and
retards growth. GST would take care of this problem by providing tax credit to the
manufacturer.
􀁸 Various tax barriers such as check posts and toll plazas lead to a lot of wastage for perishable
items being transported, a loss that translated into major costs through higher need of buffer
stocks and warehousing costs as well. A single taxation system could eliminate this roadblock
for them.
􀁸 Also, there will be more transparency in the system as the customers would know exactly how
much taxes they are being charged and on what base.
􀁸 GST would add to government revenues by widening the tax base.
􀁸 GST provides credits for the taxes paid by producers earlier in the goods/services chain. This
would encourage these producers to buy raw material from different registered dealers and
would bring in more and more vendors and suppliers under the purview of taxation.
􀁸 GST also removes the custom duties applicable on exports. Our competitiveness in foreign
markets would increase on account of lower cost of transaction.
􀁸 The proposed GST regime, which will subsume most central and state-level taxes, is
expected to have a single unified list of concessions/exemptions as against the current
mammoth exemptions and concessions available across goods and services
􀁸 A Simple life for Indian Taxpayer: There are a total of 17 indirect taxes levied on the Goods
and Services sector of India and thus the tax collection system is also complex. GST Bill will
replace all those indirect taxes and thus will result in a fall in compliance costs.
􀁸 Opportunity for less and underdeveloped states: A current rate of 2% inter-state is levied for
all the production and thus, the produce is kept within the state itself. The levy of GST bill will
provide a national market and thus it can be dispersed. It will create opportunities for others as
well.
Increased Revenue Collection: The evasion of tax will decrease and the input tax credit will
encourage the suppliers to pay their fair share of taxes.
􀁸 Due to GST bill, the number of tax-exempt goods will decline and also, the center and state
will have a dual oversight over the payment and collection of taxes.
􀁸 The cascading effect of the tax on tax will diminish and the manufactured goods will become
cheaper with lower logistics and tax costs for the Indian consumers.
􀁸 Presently, input tax credit is not available for various capital goods. The introduction of GST
will result in full input tax credit on all goods resulting in a 12-14% drop in the cost of capital
goods.Hence, it is expected that the capital goods investment will rise at the rate of 6% and 2%
rise in the overall investment in the manufacturing sector.
􀁸 GST will push to “Make in India”: The GST applicability will invite more competition in the
manufacturing sector as it will address the issues of cascading effect, inter-state tax,
fragmented
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market and high logistics costs. Also, GST will imply appropriate countervailing duty providing
increased protection from imports.
􀁸 It will lift the GDP and experts are of the opinion of a rise in GDP over a period of 3-5 years.
HSBC estimates an 80 basis point rise whereas NCAER pegs this at 0.9- 1.7%.
􀁸 It will help to E-Commerce Industry: The several E-Commerce companies were not even able
to ship to some states due to state restrictions and levies. They have basically complicated the
ecommerce activity. Now, the levy of GST Bill will convert India into one uniform market.
GST and its possible impact on sectors: The stock market may have reacted in a lukewarm
manner to the amendment of the Constitution (in RajyaSabha) to introduce GST as a bill. This is
because GST implementation can have a mixed impact across sectors. A direct impact would of
course be an increase or decrease in the rate of tax compared with what each sector is
currently paying. But a bigger, although more indirect impact would be the economies coming
from a more efficient supply chain management. The latter would be the game changer in terms
of which sectors make the most of such efficiencies.Let’s look at the possible impact of GST in
some sectors.
Auto: In the case of two wheelers, if the current taxes at 24% fall to 18%, manufacturers will
likely pass on at least a part of such reduction to customers. This could spur demand for two
wheelers and entry level passenger vehicles thus increasing sales volume for companies.
However, there could be a marginally negative impact on the commercial vehicle space. Since
GST is expected to ease movement of goods within the country and remove logistical bottle
necks it may increase commercial vehicle fleet productivity thereby reducing the need for adding
too many vehicles in the fleet.
Consumer goods: A big positive that the consumer segment will experience is the input credit
on services that will now be available. This can aid margin expansion for companies. Currently
retailers incur about 10% to 15% of their operating expenditure on rent on which service tax is
levied. The retailers do not currently avail input credit on such service tax as they collect only
VAT. Tobacco and precious metals will be impacted negatively; as an expected increase in
price of the final product will be borne by the consumer, which can result in lower demand.
Logistics: GST is expected to create a single market for the whole nation. All the logistic
companies can now focus on creating regional hubs rather than maintaining warehouses in
each state. The logistics industry can therefore be expected to become more efficient with better
usage of warehouses whilst bringing in higher level of automation. Transit time of goods
between states is expected to reduce significantly as interstate check points where the freights
are stalled to apply appropriate duty will be removed. This will also help bring down the cost of
logistics companies. Here again, it will be the organised players who will be one up in terms of
gaining from the efficiencies arising from GST implementation.
Capital goods: Lower taxes of 18% from the current 29-30% will help in the reduction of prices
of the final output in the light electrical sector, leading to volume growth. In the industrial capital
goods segment, lower cost of capex (as engineering goods become cheaper) can be a driving
factor to revive investments by companies, provided a low interest rate scenario prevails when
GST is implemented.
Cement: A reduction in the tax rate from the current 23-25% to 18% can lead to a benefit of
Rs.300-500/ton. The cement sector currently operates on a carry and forward mechanism
through agents to save on central sales tax to establish reach. Carry and forward agents store
the final inventory in their warehouses and transport it to the required location. With the
implementation of GST, CST will be subsumed and the entire distribution will happen only on
actual business requirement resulting in savings through lower inventory carrying and
distribution cost.
Media: Multiplexes pay a multitude of taxes in the form of entertainment tax, service tax and
VAT. All these will now be subsumed if GST is implemented. Overall, this could work positively
for the sector despite an increase in tax on advertising revenue. DTH operators can benefit from
lower effective tax rates as state levied entertainment tax and service tax will get subsumed.
Metals: The demand for metal products is slightly price inelastic; meaning an increase or
decrease in prices of metal may not adversely affect the demand. Demand in this space is more
driven by capex
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38
plan and production capacity levels in various sectors. The tax burden for this sector can raise
from the current 16% to 18%, but may not have much impact. The benefit for this sector will
accrue from the various taxes such as entry tax, octroi and CST on their inputs getting
subsumed.
Telecom: increasing tax rates from 15% to 18% will be mildly negative for the sector. This
would be passed on fully to the post paid subscribers. While in the case of pre-paid, if the
impact is not passed on immediately, it may affect the realization per minute in the medium term
for companies. Also, it is noteworthy that the government wants to ensure that the end
consumer is not overwhelmingly burdened with tax hikes. To this extent, sectors that have
higher rates may find it hard to pass it on to the consumer immediately.
Banking and financial services: Fee based services will now attract tax at 18% instead of
15% currently. This will result in increase in loan processing cost, insurance premium, and credit
card charges as the banks pass it on to the consumers. Hence while it may be neutral for the
sector, consumers may feel the pinch here.
Information technology: The Indian IT industry derives 74% of its revenues from exports
which is currently exempt from service tax. This will continue under GST as well. Of the total
revenue negligible amount of it is derived from hardware sales and hence its impact will be
neutral.
Infrastructure sector: The Indian infrastructure sector largely comprises power, road, port,
railways and mining. And the indirect tax levy is different and unique for each of them, and this
is complex in nature. Although this sector enjoys different exemptions and concessions as it is
important on national front. With the implication of GST the multiplicity of taxes will be removed
and it would increase the tax base with continuation of exemptions and concessions for national
interest and growth.
Conclusion: It can 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. The introduction of GST is thus
likely to improve the tax collections and boost India’s economic development by breaking the tax
barriers between the states and integrating India through a uniform tax rate. Efficient formulation
of GST will lead to resource and revenue gain for both Centre and States majorly through
widening of tax base and improvement in tax compliance. It can be further concluded that GST
have a positive impact on various sectors and industry. Although implementation of GST
requires concentrated efforts of all stake holders namely,Central and State Government, trade
and industry.
References:
􀁸 Bird, Richard M. (2012). The GST/HST: Creating an integrated Sales Tax in a Federal
Country. The School of Public Policy, SPP Research Papers, 5(12), 1-38
􀁸 Empowered Committee of Finance Ministers (2009). First Discussion Paper on Goods and
Services Tax in India, The Empowered Committee of State Finance Ministers, New Delhi
􀁸 Garg, Girish (2014). Basic Concepts and Features of Good and Services Tax in India.
International Journal of scientific research and Management, 2(2), 542-549
􀁸 Indirect Taxes Committee, Institute of Chartered Accountants of India (ICAI) (2015). Goods
and Serice Tax (GST). Retrieved from: http://idtc.icai.org/download/Final-PPT-on-GSTICAI.
pdf
􀁸 Kumar, Nitin (2014). Goods and Services Tax in India: A Way Forward. Global Journal of
Multidisciplinary Studies, 3(6), 216-225
􀁸 Seventy Third Report of Standing Committee on Finance (2012-2013), The Constitution (One
Hundred Fifteenth Amendment) Bill, 2011, pp.
􀁸 7.The Institute of Companies Secretaries of India (ICSI) (2015). Referencer on Goods and
Service Tax. Retrieved from: https://www.icsi.edu/Docs/Website/GST_Referencer.pdf
􀁸 Various Websites:
www.wikipedia.com
www.google.com

A study on implementation of goods and services tax

(GST) in India: Prospectus and challenges
Lourdunathan F and Xavier P
Abstract
There are mixed response, inexplicit, arguments and opinions among the Manufactures, traders and
society about the Goods and Services Tax (GST) to be implemented by Government of India from 1st
April 2017 this year. Various news organizations from all around the world focused on the bill unifying
the country and it being an achievement of the government. As the Goods and Services Tax Bill was
passed in the Rajya Sabha, it also brought India at the center of the global economy. With the passing
of the bill, many international newspapers published their views on how the GST Bill brings a new
wave of economic reform in the country. The paper highlights the background, Prospectus and
challenges in Implementation of Goods and services Tax (GST) in India. Finally, the paper examines
and draws out a conclusion.
Keywords: Rajya Sabha, global economy, goods and services tax
1. Introduction
The ‘Book of Genesis’ in The Bible suggests that a fifth of all crops should be given to the
Pharaoh. The city states of Ancient Greece imposed eishpora to pay for wars, which were
numerous; but once a war was over any surplus had to be refunded. Athens imposed a
monthly poll tax on foreigners. Imperial Rome used tribute extracted from colonized peoples
to multiply the bounty of empire. Julius Caesar imposed a one-per-cent sales tax; Augustus
instituted an inheritance tax to provide retirement funds for the military. However, human
bondage remained the most lucrative form of tribute for both Greece and Rome. (Courtesy
New Internationalist Magazine).
1.1 Indian Taxation System
India has got a well-structured and simplified taxation system, wherein an authoritative
segregation has been done among the Central Government, the different State Governments
as well as the Local Bodies. The Department of Revenue under the Government of India's
Ministry of Finance is solely responsible for the computation of tax. This department levy
taxes on individuals or organizations for income, customs duties, service tax and central
excise. However, the agriculture based income taxes are levied by the respective State
Governments. Local bodies have got the power to compute and levy taxes on properties and
other utility services like drainage, water supply and many others. The past 15 years have
witnessed tremendous reformations of the taxation system in India. Apart from the
rationalization of the rates of tax, simplification of the different laws of taxation has even
been done during this period. However, the process of tax rationalization is still in progress
in the Republic of India. Courtesy New Business Maps of India)
1.2 Constitutional amendment act. For GST
The One Hundred and First Amendment of the Constitution of India, officially known as The
Constitution (One Hundred and First Amendment) Act, 2016, introduced a national Goods
and Services Tax in India from 1 April 2017. The GST is a Value added Tax (VAT) and is
proposed to be a comprehensive indirect tax levy on manufacture, sale and consumption of
goods as well as services at the national level. It will replace all indirect taxes levied on
goods and services by the IGST is a single tax on the supply of goods and services, right
from the manufacturer to the consumer. Credits of input taxes paid at each stage will be
International Journal of Applied Research 2017; 3(1): 626-629
~ 627 ~
International Journal of Applied Research
available in the subsequent stage of value addition, which
makes GST essentially a tax only on value addition at each
stage. The final consumer will thus bear only the GST
charged by the last dealer in the supply chain, with set-off
benefits at all the previous stages Indian Central and State
governments. It is aimed at being comprehensive for most
goods and services. The GST implementation in India is
„Dual‟ in nature, i.e. it would consist of two components:
one levied by Centre (CGST) and another levied by States
and Union Territories (SGST).

ABSTRACT
India is a federal country where Indirect Tax is levied by Federal and State Government. Value
Added Tax is levied by State Governments. Every State has authority to decide the Tax rate and to
control the Tax system as per their convenient. The Taxation power has been well defined in Indian
Constitution. The Constitution (122nd Amendment) Bill that seeks to usher in a Goods and Services
Tax (GST) regime in the country will finally be taken up for discussion in Parliament. Finance
Minister Arun Jaitley has been affirming that India will implement GST from 1st April 2016. It can
be looked as simplification of Taxes in country and avoiding unnecessary complexities. India is a
federal country which has various Tax regimes and structure, where Tax is levied by both
Governments. After the implementation of GST all the Indirect Taxes will be subsumed under an
umbrella, it will be a milestone in the history of Indirect Tax reform. In this paper, an attempt has
been made to examine the major features of GST. This paper has also focused on the problems likely
to be faced by Central and State Governments.
Keywords: Central government, goods and service tax, indirect tax, state government and value
added tax.
1. Introduction
Value Added Tax (VAT) was proposed for the first time by Wilhelm Von Siemens in Germany 1919,
as an improved turnover Tax. In 1921, Sales Tax was recommended by Prof. Thomas S. Adams of
United State of America. In 1949, the Shoup mission (A group of American Tax experts, under the
leadership of Carl S. Shoup) has suggested VAT for the reconstruction of the Japanese economy.
Then, France was the first country to implement VAT in 1954.
At present Value Added Tax (VAT) has been implemented by more than 160 countries in the world,
even our neighbor country Pakistan is also implementing GST. However, GST is known as “General
Sales Tax” in Pakistan. In one of the countries of Africa, it is known as “General Consumption Tax
(GCT)”. In various countries (Table-1), all over the world, it is also known by the name of Goods and
Service Tax (GST). Where in Australia, Canada, Singapore and New Zealand it is also famous as
“GST”. After Brazil (1960) and Canada (1991), India will be the 3rd country which is going to
introduce dual GST (levied by both Federal and State Government) structure. There is no difference
between GST and VAT except a minor difference that VAT is levied on goods and GST will impose on
goods plus services. Again, GST is not an additional Tax; it is subsumed of all Indirect Taxes. This
means all Indirect Taxes will come under one umbrella. India is a federal country where Tax is levied
by Federal and State Government. The Taxation power has been well defined in Indian Constitution.
At present, there are 37 Governments along with (a Central Government, 29 State Governments
and 7 Union territories who levy Tax at the different-different Tax rate on the same product. Where
Central Government collects Direct Tax as well as Indirect Taxes and State Government collects only
Indirect Taxes.
3.2 GST in India
In India, GST was first time introduced on 28th February 2006 in the Budget Speech of the year
2006-07 by Finance Minister Sh. P. Chidambaram. A message was left by the Finance Minister in the
Union Budget 2007-08 that GST will be introduced with effect from 1st April 2010. Central and State
Governments will be work together to prepare a roadmap for the introduction of GST in India. They
planned to introduce GST or “replacing the previous VAT and Service Tax” on 1st April 2010, but
some of the States were not ready to implement the GST. After that on 1st April 2012, again
Government was going to introduce GST, but due to some management and infrastructure
problems it was not introduced. Finance Minister Arun Jaitley introduced the 122 nd Constitution
Amendment Bill in Parliament and intends to implement GST reform by 1st April 2016 (Table-2). The
advantage of GST is that it will replace Indirect Taxes which are levied by Central and State
Government. The GST structure will present a transparent system which will be helpful to reduce
the burden of cascading effect and it will also improve the Tax compliances and Tax collection. GST
will prove the uniformity of Taxes in all over the country.

GST in Indian Economy: It’s Benefits and

Impact
Abstract: The Goods and Services Tax (GST) is a value added tax implemented in India.GST is the only indirect tax that
directly affects all sectors and sections of our economy. The goods and services tax (GST) is aimed at creating a single,
unified market that will benefit both corporate and the economy Business is undergoing rapid transformation due to the
globalization. Tax regime and policies of any country are gaining high importance due to growing foreign trade between
various countries. In the competitive world of business, GST is a significant topic which requires lot of deliberations from
academia and industry. GST is expected to create a business friendly environment, as price levels and hence inflation rates
would come down overtime as a uniform tax rate is applied. It willpower government's fiscal health as the tax gathering
system would become clearer, making tax evasion difficult. An attempt is made in this paper to study the concept of goods and
service tax and its impact on Indian economy. The study also aims to know the advantages and disadvantages of GST in
Indian scenario.
Keywords: Value Added Tax, Central Value Added Tax, government, Economy, globalization

Introduction
The Goods and Services Tax (GST) is a value-added tax imposed on most goods and services sold for domestic
intake. The GST is paid by consumers, but it is remitted to the government by the businesses selling the goods and
services. In effect, GST offers revenue for the government. The goods and services tax (GST) is an indirect sales tax
that is applied to the cost of certain goods and services. The business adds the GST to the price of the product, a
customer who buys the product pays the sales price plus GST; and the GST share is collected by the business or
seller and furthered to the government. Initially France implemented GST to decrease tax-evasion. Now, more than
140 nations have initiated GST with some nations having Dual-GST, for example Brazil and Canada. India has
preferred the Canadian model of dual GST as it has a federal structure where the Centre and states have the powers
to charge and collect taxes. India joins the GST group on July 1, 2017.

On Sectors:
• IT sector:
Today, most IT service providers have a multi-locational presence with the
preferred mode of service tax compliance being on a centralized basis from a
single location and IT service provider also enjoys the input service credits as
well as enjoys the refunds. But under GST, service provider may be required to
pay State GST or Central GST or Integrated and GST across multiple states,
which is not clear yet.
• E-Commerce:
Supply chain decisions are vital for e-commerce industry. With the
implementation of GST it will resolve the supply chain issues, as the shipment
and returns across the country will be done more efficiently and with lesser
paperwork.As the tax standardized across all the state boarders, companies will
be able to execute logistics strategies in a better way. In turn, this all will benefit
with quicker deliverables and make entry easy for the new entrants.
• Tourism, Hospitality and Restaurant:
Presently, the rates in these industries are higher due to existing multiple taxes.
With the implementation of RNR (Revenue Neutrality Rate)which is more than
the present tax rate, this would definitely discourage tourists and users of services
and adversely affects the growth of sector.
• Transport sector:
GST is a positive for transportation sector in two ways, as it reduces the logistics
cost and increases the efficiency both within India and exports.
• Land, Real Estate, Renting:
Currently, real estates are taxed in the form of stamp duty and rental
transactions are covered under service tax. Construction activities and works
contracts are liable to service tax. So this sector is currently under multiple tax
burdens. As of now, it is not clear whether real estate/land activities are covered
under GST net or not as this is a cash cow for both state and central.
• Tobacco Products:
As per the provisions of constitution (115th amendment), states can impose
only VAT and central can impose both VAT and excise duty (States have made a
request to impose both Vat and state excise). Tobacco manufacturing companies
presently pay VAT of about 25 percent plus excise duty. It is feared that there
products may be taxed at about 40 percent in GST regime, which is definitely a
huge tax burden.
Conclusion
In simple, GST would definitely a positive for manufacturing sector and negative for
service sectors, as the present tax rate for manufacturing is way higher then proposed
GST tax rate and for services, proposed GST will be a higher rate of tax. GST is
definitely a good move to reform indirect taxation in India and has positive effects on
GDP growth, Tax revenue, exports, employment and so many. But even after a decade
Government have failed to implement it, due to variety of reasons like, compensation
mechanism for the states, GST rates, and issues relating to food products, petroleum,
and tobacco and many political issues as well. With lots of flaws in the present tax
structure which is affecting the growth of economy, there is a need to implement GST
and to streamline our growth with global economy. The implementation of GST would
pave way for a simple and understandable tax structure, and also help in avoiding any
evasion taking place at any level. Thus, lot being said and done, an appropriate
implementation would lead to actually understand whether “GST is a boon or bane”.
56 Introducing GST and Its Impact on Indian Economy
Bibliography and Reference
1. GirishGarg (2014). “Basic Concepts and Features of Good and Service Tax In India”, International
Journal of scientific research and management (IJSRM), Vol. 2, Issue 2, ISSN (e): 2321-3418
2. Nitin Kumar (May 2014). “Goods and Services Tax in India: A Way Forward”, Global Journal
of Multidisciplinary Studies, Volume 3, Issue 6,ISSN: - 2348-0459
3. G. Raghuram and K.S. Deepa, (March 2015). “Goods and Services Tax: The Introduction
Process”, Indian Institute of Management, Ahmedabad, India, W.P. No.2015-03-01
4. “An Insight of GST in India”. The Institute of Cost Accountants of India (Oct. 2015), Volume 1
5. R. KavitaRao and PinakiChakraborty, (January 2013). “Revenue Implications of GST and
Estimation of Revenue Neutral Rate: A State Wise Analysis”, National Institute of Public Finance
and Policy, New Delhi.
6. http://www.relakhs.com/gst-goods-services-tax-in-india/#
7. www.goodsandservicestax.com
8. http://timesofindia.indiatimes.com

https://blog.saginfotech.com/gst-impact-on-gdp-india

The biggest tax reform i.e. Goods and Services Tax is now a part of Indian Economy. A new and unified tax structure is followed for indirect
taxation on the place of various tax laws like Excise duty, Service Tax, VAT, CST etc. and for sure the new tax regime is determined to eliminate
the cascading effect of tax on transaction of products and services, and it will result in availability of product and services to consumers at lower
price.

https://www.omicsonline.org/open-access/a-research-paper-on-an-impact-of-goods-and-service-tax-gst-on-
indianeconomy-2151-6219-1000264.php?aid=82626

Abstract
GST also known as the Goods and Services Tax is defined as the giant indirect tax structure designed to support and enhance the
economic growth of a country. More than 150 countries have implemented GST so far. However, the idea of GST in India was
mooted by Vajpayee government in 2000 and the constitutional amendment for the same was passed by the Loksabha on 6th May
2015 but is yet to be ratified by the Rajyasabha. However, there is a huge hue and cry against its implementation. It would be
interesting to understand why this proposed GST regime may hamper the growth and development of the country.

Keywords
Goods and service tax; Indian economy

Introduction
The Goods and Services Tax (GST) is a vast concept that simplifies the giant tax structure by supporting and enhancing
the economic growth of a country. GST is a comprehensive tax levy on manufacturing, sale and consumption of goods and
services at a national level [1]. The Goods and Services Tax Bill or GST Bill, also referred to as The Constitution (One Hundred and
Twenty-Second Amendment) Bill, 2014, initiates a Value added Tax to be implemented on a national level in India. GST will be an
indirect tax at all the stages of production to bring about uniformity in the system.
On bringing GST into practice, there would be amalgamation of Central and State taxes into a single tax payment. It would also
enhance the position of India in both, domestic as well as international market. At the consumer level, GST would reduce the
overall tax burden, which is currently estimated at 25-30%.
Under this system, the consumer pays the final tax but an efficient input tax credit system ensures that there is no cascading of
taxes- tax on tax paid on inputs that go into manufacture of goods [2].
In order to avoid the payment of multiple taxes such as excise duty and service tax at Central level and VAT at the State level, GST
would unify these taxes and create a uniform market throughout the country. Integration of various taxes into a GST system will
bring about an effective cross-utilization of credits. The current system taxes production, whereas the GST will aim to tax
consumption.

http://www.jctindia.org/oct2016/v11i2-14.pdf
The Goods and Services Tax is considered as a biggest tax reform since 1947. The GST bill facilitate
"Make In India" by bringing India on single tax platform.

INTRODUCTION GST was Ist introduced by France in 1954 and now it is followed by more than 150
countries. Most of the countries followed unified GST while some countries like Brazil, Canada follow a
dual GST system where tax is imposed by central and state both. In Indian idea of GST was mooted by
"Vajpayee Govt. in 2000 and constitution amendment for same was passed by the "Lok Sabha" on 6th
May,2015. The constitution amendment bill for Goods and Services Tax (GST) has been approved by the
President of India (Rajya Sabha on 3rd August 2016 and Lok Sabha on 8th August, 2016). The
Government on India is committed to replace on the indirect taxes levied on goods and services by
centre and states and implement GST by 1st April,2017. Since India is now 3rd largest economy so GST is
most significant tax reform since Independence. It will increase revenues and growth stimulate
investment and make investment doing business in India easier. GST bill have a far reaching impact on
all almost all the aspects in the business organization in the country for example pricing of products and
services, supply chain optimization, IT, accounting and tax compliance system. That's why GST bill has
been described as a reform measure of unparalleled importance in independent India. In India presently
tax rates differ from state to state. GST will bring uniformity, reduce the cascading effect of these taxes
by giving input tax credit , will help industry, which will be able to reap benefits of common procedures
an claim credit for taxes paid. This is expected to reduce the cost for

Conclusion GST is at the infant stage in Indian economy. It will take some time to experience its effects
on Indian economy. GST mechanism is designed in such a way that it is expected to generate good
amount of revenue for both central and state government. Regarding corporate, businessmen and
service providers it will be beneficial in long run. It will bring transparency in collection of indirect taxes
benefiting both the Government and the people of India.

OBJECTIVES OF THE STUDY

This study is based on the following objectives.

1. To study about the concepts of GST.

2. To study about the impact of GST on Various sectors in Indian economy.

https://www.exportgenius.in/blog/how-gst-impacts-on-various-industries-in-india-87.php

TEXTILES The textile industry in India brings employment opportunities to a large number of
skilled and unskilled workers. It contributes about 10% of the total annual exports of India. And
this figure is likely to increase in current fiscal. GST impact on readymade garments such as
trousers, saree, shoes, apparel and other clothing materials is experienced due to cotton value
chain on these products. In a recent decision taken by the GST Council members, the tax rate
on job work for textiles and textile products has been reduced to 5% from 18%. Other impact of
GST on textile industry is input tax credit, which is not allowed if a registered taxpayer procures
the inputs from composition scheme taxpayers or the unorganized sector. It is available for the
tax paid on capital goods.
Iron and steel Iron and steel are primary requirements of the construction industry and
commonly used in the manufacturing of machine parts. After GST implementation, special
additional duty (SAD) on iron and steel has been abolished. The other major impact of GST on
iron & steel industry in India includes – reduction of cost & time in logistics, bringing more
employment opportunities in undeveloped states, utilizing natural resources and protection to
domestic industry. What is GST rate on iron and steel in India? The tax rates on iron and steel
range from 12% to 28%.

Pharma & Healthcare India’s pharmaceutical industry ranks 14th in terms of value and is
3rd largest in the world. GST impact on healthcare industry is constructive. It has helped
industries to streamline the taxation structure as eight types of taxes were levied on
pharmaceutical industry before GST. The GST impact on pharma companies reveals that they
can now rationalize their supply chain and they need to review their distribution networks and
strategies. The GST rates on pharma & healthcare industry range from 5% to 12%. So, like
other sectors, there is a impact of GST on healthcare industry.

Cement India is the 2nd largest cement producer in the world right after China. Under GST
regime, effect of GST on cement industry will not be significant particularly on GST rate on
cement. Earlier tax rates on cement products were between 27% and 32%, however now GST
rates of 5% to 28% are levied on cement articles. Many market experts believe that there is a
positive impact of GST on cement industry in India on certain parameters. For example, GST
gives a boost to supply chain management of cement. So, cement manufacturers can maintain
multiple warehouses across states to avoid state entry taxes and CST. Moreover, as vehicles
transporting cement from one state to another are spending lesser time at checkpoints, so
transit time gets declined. Certainly, cement industry can enjoy savings on transportation costs.

Telecom Telecom industry of India can basically be divided into three parts namely equipment
manufacturers, infrastructure providers and telecom service providers. After launch of Reliance
Jio, the sector is facing severe pressure in the form of intense competition. Now Goods and
Services Tax or GST has been implemented, the GST on telecommunication services is taxed
at 18%, which is higher than rates charged earlier. GST rates are also applicable in different
range on other products and services in the telecom industry. Certainly, like other industries,
there is an impact of GST on telecom sector in India.

It may be too early to make any proper analysis on impact of GST on various sectors in India as
GST has been implemented recently. We all have to wait for at least a year to have complete
and correct outlook of GST impact on various industries in India.

Entertainment services Entertainment is one of those industries that are liable for more than one taxes in
India. In addition to the central taxes, states as well as local authorities used to charge taxes on entertainment
services such as movie theatres. However, all these taxes have now been replaced with a single tax after the
implementation of the Goods & Services Tax (GST) in India. The GST rate varies between 18% and
28% depending on the type of entertainment service and/or products. Take a look below.
Items under 18% GST: Circus, TV and DTH services, theatre and classic dance performances (including drama
and folk dance) fall into this category of tax.
Items under 28% GST: Movie tickets, casinos, racing, movie festivals and events, amusement parks, and any
sporting event will be charged at this rate.
Before the implementation of GST in India, there was an entertainment tax on the various entertainment related
services. The tax rate varied from 0 to 110 percent depending on the service type, location, and other benefits.
There was also a service tax + VAT charged on all types of entertainment related services, including the food
offered at movie theatres. The VAT was charged at the rate of 14.5% and service tax at 15% rate. However, the
industry used to get a subsidy of 60% on service tax. So, the total tax amounted to 20.5% (6% service tax + 14.5%
VAT) in addition to the entertainment tax mentioned above. To conclude, GST will decrease the entertainment
services cost in most of the states in which entertainment tax was higher than 28%. However, the states which
already had low or no tax on entertainment services will see a rise in the cost of these services.
http://www.gsthelplineindia.com/blog/2018/01/22/gst-on-entertainment/

Hotel and Tourism

Tourism and hotel industry play an import part to grow India’s GDP.
GST rates for hotels are different according to their tariffs
 Less than Rs. 1000 = 0% (GST free)
 Rs. 1000 to 2500 = 12%
 Rs. 2500 to 7500 = 18%
 Above Rs. 7500 = 28%

It is expected that the cost of tour packages may come down due to the relief to tour
operators under GST regime. 5% tax is liable on tour operators currently. If properly
implemented the GST can prove to be a major benefit for the tourism and hospitality industry. The
process to claim and avail ITC (input tax credit) is simple and clear. Earlier, adjusting the tax paid on
inputs against the output was complex and error-prone. This is believed to have become easy with
GST. Also, under GST, tourists have a clearer idea about the tax they are paying. This meant more
revenue for the government and assist in the growth of the industry.

http://www.gsthelplineindia.com/blog/2017/07/06/gst-impact-on-gold/

Gold industry The gold industry is the biggest market in the world. GST on the gold industry hits to
consumers. The yellow metal much-loved by Indians has been levied three per cent under the new
tax regime, around one per cent higher than what it was before. Before GST, one percent excise
duty was slapped on gold and around one percent was levied by most of the states as Value Added
Tax (VAT). Only Kerala used to tax gold at five per cent. The buyers in Kerala now have to spend
less for gold than they have been, the state government is looking up to the Centre to cover the
losses in revenue it will see once the new rates are effective. 3% GST rate that is applicable to 10%
import duty and 5%, making charges which lead to rising the jewellery prices in India. The demand
for Gold may fall 50 to 70 percent. But there is more transparency in the gold industry due to the
GST implementation. It will definitely turn in a positive impact on a long term.

A Brighter Economy
The introduction of the Goods and Services Tax will be a very noteworthy step in the field of indirect tax reforms in India. By merging a large
number of Central and State taxes into a single tax, GST is expected to significantly ease double taxation and make taxation overall easy for
the industries. For the end customer, the most beneficial will be in terms of reduction in the overall tax burden on goods and services.
Introduction of GST will also make Indian products competitive in the domestic and international markets. Last but not least, the GST,
because of its transparent character, will be easier to administer. Once implemented, the proposed taxation system holds great promise in
terms of sustaining growth for the Indian economy.

CONCLUSION

GST is the most logical steps towards the comprehensive indirect tax reform in our

country since independence. GST is leviable on all supply of goods and provision of services
as well combination thereof. All sectors of economy whether the industry, business including

69

Journal of Management and Science ISSN: 2249-1260 | e-ISSN: 2250-1819 | Special Issue. No.1 | Sep’17

Govt. departments and service sector shall have to bear impact of GST. All sections of

economy viz., big, medium, small scale units, intermediaries, importers, exporters, traders,

professionals and consumers shall be directly affected by GST... One of the biggest taxation

reforms in India – the Goods and Service Tax (GST) -- is all set to integrate State economies

and boost overall growth. GST will create a single, unified Indian market to make the

economy stronger. Experts say that GST is likely to improve tax collections and Boost

India’s economic development by breaking tax barriers between States and integrating India

through a uniform tax rate. Under GST, the taxation burden will be divided equitably

between manufacturing and services, through a lower tax rate by increasing the tax base and

minimizing exemptions.

GST AND ITS IMPACT ON VARIOUS SECTOR (PDF Download Available). Available from:
https://www.researchgate.net/publication/320892175_GST_AND_ITS_IMPACT_ON_VARIOU
S_SECTOR [accessed Apr 01 2018].
The word tax is derived from the Latin word “taxare” meaning “to estimate”. “A tax is not a voluntary
payment or donation, but an enforced contribution, exacted pursuant to legislative authority" and is any
contribution imposed by government.

India is a federal country where Indirect Tax is levied by Federal and State Government. It can be looked
as simplification of Taxes in country and avoiding unnecessary complexities. After the implementation of
GST all the Indirect Taxes will be subsumed under an umbrella, it will be a milestone in the history of
Indirect Tax reform. The GST is a Value added Tax (VAT) and is proposed to be a comprehensive
indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level.
It will replace all indirect taxes levied on goods and services by the IGST is a single tax on the supply of
goods and services, right from the manufacturer to the consumer. The Goods and Services Tax (GST) is a
value added tax implemented in India.GST is the only indirect tax that directly affects all sectors and
sections of our economy. The goods and services tax (GST) is aimed at creating a single, unified market
that will benefit both corporate and the economy Business is undergoing rapid transformation due to the
globalization. Tax regime and policies of any country are gaining high importance due to growing foreign
trade between various countries
GST also known as the Goods and Services Tax is defined as the giant indirect tax structure designed to
support and enhance the economic growth of a country. More than 150 countries have implemented GST
so far. The Goods and Services Tax (GST) is a vast concept that simplifies the giant tax structure by
supporting and enhancing the economic growth of a country. GST is a comprehensive tax levy on
manufacturing, sale and consumption of goods and services at a national level [1]. The Goods and
Services Tax Bill or GST Bill, also referred to as The Constitution (One Hundred and Twenty-Second
Amendment) Bill, 2014, initiates a Value added Tax to be implemented on a national level in India. GST
will be an indirect tax at all the stages of production to bring about uniformity in the system. The Goods
and Services Tax is considered as a biggest tax reform since 1947. The GST bill facilitate "Make In India"
by bringing India on single tax platform.

Abstract: The biggest tax reform i.e. Goods and Services Tax is now a part of Indian Economy. A new and
unified tax structure is followed for indirect taxation on the place of various taxes like Excise duty, Service Tax,
VAT, CST etc. and new tax regime is determined to eliminate the cascading effect of tax on transaction of products
and services, and it will result in availability of product and services to consumers at lower price. GST is the giant
indirect tax structure designed to support and enhances the economic growth of a country. More than 150 countries
have implemented GST so far. GST also known as the Goods and Services Tax is defined as a comprehensive tax
levy on manufacturing, sale and consumption of goods and services at a national level. GST is a single tax on the
supply of goods and services, right from the manufacturer to the consumer. After the implementation of GST all the
Indirect Taxes are subsumed under an umbrella and it creates a unified market. So GST is the only indirect tax that
directly affects all sectors and sections of our economy. This paper brings out about the overview of the concepts of
GST and its impact on the various sectors in the Indian Economy.
Keywords: Goods and service tax, impact, various sectors, Indian economy.
Introduction: The word tax is derived from the Latin word “taxare” meaning “to estimate”. “A
tax is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to
legislative authority" and is any contribution imposed by government. Article 246 of constitution
of India gives the respective authority to union and state governments for levying taxes. Under
previous taxation system in India, there was lot of indirect taxes such as Excise duty, Service
Tax, VAT, CST etc. The Goods and Services Tax (GST) is considered as a biggest tax reform
since 1947. Goods and Service Tax (GST) is an indirect tax levied in India on the sale of goods
and services. GST came into effect from July 1, 2017 through the implementation of One
Hundred and First Amendment of the Constitution of India by the Modi government. Goods and
Services Tax is defined as a comprehensive tax levy on manufacturing, sale and consumption of
goods and services at a national level. GST is a single tax on the supply of goods and services,
right from the manufacturer to the consumer. The tax replaced existing multiple cascading taxes
levied by the central and state governments. Goods and services are divided into five tax slabs
for collection of tax - 0%, 5%, 12%, 18% and 28%. Petroleum products and alcoholic drinks are
taxed separately by the individual state governments. There is a special rate of 0.25% on rough
precious and semi-precious stones and 3% on gold. The tax rates, rules and regulations are
governed by the Goods and Services Tax Council which comprises finance ministers of centre
and all the states. GST simplified a slew of indirect taxes with a unified tax and is therefore
expected to dramatically reshape the country's 2.4 trillion dollar economy.
Objectives of the study
This study is based on the following objectives.

1) To study about the concepts of GST.

2) To study about the impact of GST on Various sectors in Indian economy.

Research methodology
This paper is based on secondary sources of data, which have been collected from the various
national and inter-national journals, research papers, websites and various articles published
related to GST.
Impact of GST on various sectors
Goods and Services Tax is now a part of Indian Economy. GST is the giant indirect tax structure
designed to support and enhances the economic growth of a country. All indirect taxes of
previous taxation system are subsumed under GST. GST is the only indirect tax that directly
affects the various sectors of Indian economy.
Iron and steel Iron and steel are primary requirements of the construction industry and
commonly used in the manufacturing of machine parts. After GST implementation, special
additional duty (SAD) on iron and steel has been abolished. The other major impact of GST on
iron & steel industry in India includes – reduction of cost & time in logistics, bringing more
employment opportunities in undeveloped states, utilizing natural resources and protection to
domestic industry. The tax rates on iron and steel range from 12% to 28%.

Pharma & Healthcare India’s pharmaceutical industry ranks 14th in terms of value and is 3rd largest
in the world. GST impact on healthcare industry is constructive. It has helped industries to
streamline the taxation structure as eight types of taxes were levied on pharmaceutical industry
before GST. The GST impact on pharma companies reveals that they can now rationalize their
supply chain and they need to review their distribution networks and strategies. The GST rates
on pharma & healthcare industry range from 5% to 12%. So, like other sectors, there is a impact
of GST on healthcare industry.

Cement India is the 2nd largest cement producer in the world right after China. Under GST
regime, effect of GST on cement industry will not be significant particularly on GST rate on
cement. Earlier tax rates on cement products were between 27% and 32%, however now GST
rates of 5% to 28% are levied on cement articles. Many market experts believe that there is a
positive impact of GST on cement industry in India on certain parameters. For example, GST
gives a boost to supply chain management of cement. So, cement manufacturers can maintain
multiple warehouses across states to avoid state entry taxes and CST. Moreover, as vehicles
transporting cement from one state to another are spending lesser time at checkpoints, so transit
time gets declined. Certainly, cement industry can enjoy savings on transportation costs.

Telecom Telecom industry of India can basically be divided into three parts namely equipment
manufacturers, infrastructure providers and telecom service providers. After launch of Reliance
Jio, the sector is facing severe pressure in the form of intense competition. Now Goods and
Services Tax or GST has been implemented, the GST on telecommunication services is taxed at
18%, which is higher than rates charged earlier. GST rates are also applicable in different range
on other products and services in the telecom industry. Certainly, like other industries, there is an
impact of GST on telecom sector in India.

Textiles The textile industry in India brings employment opportunities to a large number of
skilled and unskilled workers. It contributes about 10% of the total annual exports of India which
is likely to increase under GST. GST impact on readymade garments such as trousers, sari,
shoes, apparel and other clothing materials is experienced due to cotton value chain on these
products. In a recent decision taken by the GST Council members, the tax rate on job work for
textiles and textile products has been reduced to 5% from 18%. Other impact of GST on textile
industry is input tax credit, which is not allowed if a registered taxpayer procures the inputs from
composition scheme taxpayers or the unorganized sector. It is available for the tax paid on
capital goods.
Entertainment services Entertainment is one of those industries that are liable for more than
one taxes in India. In addition to the central taxes, states as well as local authorities used to
charge taxes on entertainment services such as movie theatres. However, all these taxes have
now been replaced with a single tax after the implementation of the Goods & Services Tax
(GST) in India. The GST rate varies between 18% and 28% depending on the type of
entertainment service and/or products. Take a look below.
Items under 18% GST: Circus, TV and DTH services, theatre and classic dance performances
(including drama and folk dance) fall into this category of tax.
Items under 28% GST: Movie tickets, casinos, racing, movie festivals and events, amusement
parks, and any sporting event will be charged at this rate.
Before the implementation of GST in India, there was an entertainment tax on the various
entertainment related services. The tax rate varied from 0 to 110 percent depending on the
service type, location, and other benefits.
There was also a service tax + VAT charged on all types of entertainment related services,
including the food offered at movie theatres. The VAT was charged at the rate of 14.5% and
service tax at 15% rate. However, the industry used to get a subsidy of 60% on service tax. So,
the total tax amounted to 20.5% (6% service tax + 14.5% VAT) in addition to the entertainment
tax mentioned above. To conclude, GST will decrease the entertainment services cost in most of
the states in which entertainment tax was higher than 28%. However, the states which already
had low or no tax on entertainment services will see a rise in the cost of these services.

Hotel and Tourism

The Indian Tourism industry which was valued at US$ 136.2 in 2016 has also faced the impact
of GST. Tourism and hotel industry play an import part to grow India’s GDP.GST rates for
hotels are different according to their tariffs;
 Less than Rs. 1000 = 0% (GST free)
 Rs. 1000 to 2500 = 12%
 Rs. 2500 to 7500 = 18%
 Above Rs. 7500 = 28%
Further, restaurants that have an annual turnover below Rs. 50 lakhs will be charged the lowest
rate at 5% GST. One of the major benefits of GST to the hospitality and tourism sector is that it
eliminates multiple taxation by subsuming all taxes previously levied under one single entity.
The cost of tour packages came down due to the relief to tour operators under GST regime. 5%
tax is liable on tour operators currently. The process to claim and avail ITC (input tax credit) is
simple and clear. Under GST, tourists have a clearer idea about the tax they are paying. This
meant more revenue for the government and assist in the growth of the industry.
Gold industry The gold industry is the biggest market in the world. GST on the gold industry
hits to consumers. The yellow metal much-loved by Indians has been levied 3% under the new
tax regime, around 1% higher than what it was before. Before GST, one percent excise duty was
slapped on gold and around one percent was levied by most of the states as Value Added Tax
(VAT). Only Kerala used to tax gold at five per cent. The buyers in Kerala now have to spend
less for gold as compared to earlier .3% GST rate that is applicable to 10% import duty and
making charges which lead to raising the jewellery prices in India. The demand for Gold may
fall 50 to 70 percent. But there is more transparency in the gold industry due to the GST
implementation. It will definitely turn in a positive impact on a long term.

Conclusion It can be concluded from the above discussion that GST provides relief to producers and consumers
by providing wide and comprehensive coverage of input tax credit set-off and subsuming the several taxes. GST
mechanism is designed in such a way that it is expected to generate good amount of revenue for both central and
state government. It will bring transparency in collection of indirect taxes benefiting both the Government and the
people of India. GST is at the infant stage in Indian economy. It will take some time to experience its effects on
Indian economy. Regarding corporate, businessmen and service providers it will be beneficial in long run. In simple,
GST would definitely a positive for manufacturing sector and negative for service sectors, as the present tax rate for
manufacturing is way higher then proposed GST tax rate and for services, proposed GST will be a higher rate of tax.
GST is definitely a good move to reform indirect taxation in India and has positive effects on GDP growth, Tax
revenue, exports, employment and so many. But even after a decade Government have failed to implement it, due to
variety of reasons like, compensation mechanism for the states, GST rates, and issues relating to food products,
petroleum, and tobacco and many political issues as well. With lots of flaws in the present tax structure which is
affecting the growth of economy, there is a need to implement GST and to streamline our growth with global
economy. The implementation of GST would pave way for a simple and understandable tax structure, and also help
in avoiding any evasion taking place at any level. Thus, lot being said and done, an appropriate implementation
would lead to actually understand whether “GST is a boon or bane”. It can 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. The introduction of GST is thus likely to
improve the tax collections and boost India’s economic development by breaking the tax barriers between the states
and integrating India through a uniform tax rate. Efficient formulation of GST will lead to resource and revenue gain
for both Centre and States majorly through widening of tax base and improvement in tax compliance. It can be
further concluded that GST have a positive impact on various sectors and industry. Although implementation of
GST requires concentrated efforts of all stake holders namely, Central and State Government, trade and industry.