INDIRECT TAXATION PROJECT

National Law University

Odisha
(Established by Govt. of Odisha Act IV of 2008)

INDIRECT TAXATION PROJECT

PROJECT ON

THE GOODS AND SERVICES TAX BILL, 2016

SUBMITTED BY:
Abhishek Das (2013/BA.LL.B/002)
Antim Amlan (2013/BA.LL.B/007)
Deepankar Dikshit (2013/BA.LL.B/012)
Kushagra Gupta (2013/BA.LL.B/022)
Vartika Chahal (2013/BA.LL.B/056)

INDIRECT TAXATION PROJECT

TABLE OF CONTENTS
Table of Contents-----------------------------------------------------------------------------------------2
Hypothesis-------------------------------------------------------------------------------------------------4
Research Questions--------------------------------------------------------------------------------------5
Scope-------------------------------------------------------------------------------------------------------6
Research methodology----------------------------------------------------------------------------------7
Objective-----------------------------------------------------------------------------------------------7
Sources--------------------------------------------------------------------------------------------------7
Non-doctrinal Research-----------------------------------------------------------------------------7
Mode of Citation--------------------------------------------------------------------------------------7
Introduction-----------------------------------------------------------------------------------------------8
Justification of GST--------------------------------------------------------------------------------9
CHAPTERS---------------------------------------------------------------------------------------------11
Benefits of GST--------------------------------------------------------------------------------------11
Flaws of GST-----------------------------------------------------------------------------------------12
Opportunities:---------------------------------------------------------------------------------------14
An end to cascading effects:---------------------------------------------------------------------14
Growth of Revenue in States and Union:------------------------------------------------------14
Reduces transaction costs and unnecessary wastages:---------------------------------------14
Eliminates the multiplicity of taxation:---------------------------------------------------------14
One Point Single Tax:-----------------------------------------------------------------------------15
Reduces average tax burdens:-------------------------------------------------------------------15
Reduces the Corruption:--------------------------------------------------------------------------15
Challenges--------------------------------------------------------------------------------------------15
With respect to tax threshold:--------------------------------------------------------------------15
With respect to nature of taxes:------------------------------------------------------------------16
With respect to number of enactments of statutes:--------------------------------------------16

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With respect to rates of taxation:----------------------------------------------------------------16
With respect to tax management and infrastructure:------------------------------------------16
IMPACT OF GST ON VARIOUS SECTORS, STAKEHOLDERS AND CLASSES-----------------16
How it is going to affect various Industries and Sectors-------------------------------------17
How it will affect different Financial activities------------------------------------------------24
How it affects various Stakeholders------------------------------------------------------------25
Critical Analysis of the GST Bill-----------------------------------------------------------------27
Recommendations by the Kelkar Committee--------------------------------------------------27
Complications in the Bill-------------------------------------------------------------------------28
Suggestions Recommended for the Bill---------------------------------------------------------30
Discharge of electricity from the GST bill will amount to increase in the cost of power in
the consumer end.---------------------------------------------------------------------------------30
Start-ups to be utilised as an interface to create an efficient work ecosystem.------------30
Hypothetical fears of pharmaceutical sectors--------------------------------------------------31
Pressure on the banking sector-------------------------------------------------------------------31
Incorporation of small traders in the GST bill-------------------------------------------------31
Concerns over manufacturing of solar power equipment------------------------------------32
Exclusion of domestic products from the GST------------------------------------------------32
Conclusion-----------------------------------------------------------------------------------------------33

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HYPOTHESIS
The paper throws light on different aspects of the proposed Goods and Services Tax (GST) in
India, its principles and objectives; its modus operandi, and its implications for governments,
industries and consumers. The papers also examines light on why the GST bill is still pending
in the parliament and throws light on genuine concerns of the state governments in this
government. The authors contend that flawless GST is one of the most important reform
agenda which can provide a new impetus to economy of the country and attain inclusive
growth.

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RESEARCH QUESTIONS

I.
II.
III.

What are the merits and demerits of the Goods and Services Tax Bill, 2016?
What are the impacts of GST Bill on various stakeholders and affected parties?
What are the probable suggestions that should be recommended for an efficacious

IV.

taxation regime?
What are the implications of the new bill on the indirect taxation policy in India?

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SCOPE
This paper focuses on the process of introducing the Goods and Services Tax (GST), bringing
out the perspectives of different stakeholders and the contentious issues. The GST was
expected to subsume a variety of taxes and simplify the indirect tax regime.

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RESEARCH METHODOLOGY
Objective
The object of the Research Article is to gain an in-depth insight into the Goods and Services
tax bill, 2016 and its implementation and effects.
Sources
The sources that have been put to use for this research article are mostly secondary. Some
primary sources have also been referred to for the research. Secondary sources comprise of
printed and non-printed sources. Printed sources include books, articles and journals whereas;
non-printed sources include material from research databases like JStor, SSRN, Manupatra
and Hein online
Non-doctrinal Research
This work does not consist of any kind of doctrinal research. There is no reference to any
doctrines in particular. The work consists of statutory interpretation and case studies among
other things.
Mode of Citation
An uniform citation method has been used in the following work.

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INTRODUCTION
Presently almost 150 countries in the world have introduced Goods and Services Tax (GST)
in one or the other form till now. France was the first country to introduce it. The idea of
launching GST in India was first initiated by Government of India in 2000 under the
leadership of Atal Bihari Vajpayee, the then Prime Minister of India.
However, the Bill lapsed with the dissolution of the 15th Lok Sabha. Later on, the
Constitution Amendment (122nd) Bill 2014 on GST was introduced in the Lok Sabha on
December 19, 2014 and it was passed in the Lok Sabha on May 6th 2015. The Constitution
Amendment (122nd) Bill 2014 (CAB) was referred to the Select committee of Rajya Sabha
on May 14, 2015. On July 22nd 2015, the Select Committee has submitted its report with
appropriate modifications and some recommendations for incorporation. Now the CAB
awaits the approval in the Rajya Sabha. GST is a value added tax levied across goods and
services.1
The GST regime intends to subsume most indirect taxes under single taxation regime. The
broad objectives of GST are to widen the tax base, eliminate cascading of taxes, increase
compliance through lowering of overall tax burden on the goods and services and reduce
economic distortions caused by inter-state variations in taxes. By doing away with latent or
embedded taxes, it would provide leeway for the competitiveness of domestic industry vis-avis imports and in international markets.2
Kelkar Committee Report and the events that followed.
A Task Force on the implementation of Fiscal Responsibility and Budget Management Act
was formed by the Central Government on February 18, 2004 under the chairmanship of
Vijay Kelkar in 2003. The report submitted to the Central Government on July 16, 2004,
strongly recommended the adoption of GST for the indirect taxation in India. The Kelkar
Task Force report stated that India has been moving slowly but steadily towards VAT since
1 Sury, M M (ed) (2006). Taxation in India 1925 to 2007: History, Policy, Trends and
Outlook, Indian Tax foundation, New Delhi
2
http://www.ficci.com/spdocument/20238/Towar
2013.pdf

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ds-the-GST-Approach-Paper-Apri-

INDIRECT TAXATION PROJECT

1986 but the system still had many problems leading to a low tax GDP ratio. Giving solution
to the problems, they suggested the introduction of CGST.3
The report said, the tax on services should be fully integrated with the existing CENVAT on
goods by a modern VAT type levy on all goods and services to be imposed by the central
government (CGST). The report also gave the features to be included in the design of CGST.
The concept of GST was introduced in the Parliament for the first time on February 28, 2006
by P Chidambaram, the then Union FM in the Union Budget Speech of 2006-07. He
remarked, It is my sense that there is a large consensus that the country should move
towards a national level GST that should be shared between the Centre and the States. I
propose that we set April 1, 2010 as the date for introducing GST. The world over, goods and
services attract the same rate of tax. That is the foundation of a GST.4
Unifying the tax structure across States, the new scheme of tax regime would pave way for a
common national market for goods and services (Select Committee Report, 2015).
According to the Report of Task Force on GST, the GST should be structured on the
destination principle. As a result, the tax base will shift from production to consumption
whereby imports will be liable to tax and exports will be relieved of the burden of goods and
service tax. Given the above the present paper seeks to highlight the rationale of the GST in
India, gauge the real beneficiaries and pinpoint salient features of the Constitutional
Amendment (122nd) Bill, 2014 called CAB passed in Lok Sabha, draw out a comparison
between current indirect system and proposed GST and point out the bargaining issues that
still act as impasse for the passage of the CAB in the Rajya Sabha and its implementation in
the country. The present paper is based on the secondary sources mainly the published
Reports of Task force, first discussion paper of empowered committee of state finance
ministers, reports of finance commission, constitution amendment bill(s), working papers and
various articles published in esteemed newspapers etc.5

3 Sury, M M (ed) (2006). Taxation in India 1925 to 2007: History, Policy, Trends and
Outlook, Indian Tax foundation, New Delhi
4 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.
5 Supra 3.

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JUSTIFICATION OF GST
In the existing framework of Indian Constitution, the authority to levy both direct and indirect
taxes is divided between central government and state governments. Central government
levies indirect taxes such as custom duty on import on goods, excise duties on manufacture of
goods, central sales tax on interstate transactions and service tax on provision of specified
services, etc., while the state governments levy Value Added Tax (VAT), state excise, luxury
taxes on hotel, entry tax/octroi on the entry of goods in specified areas, ancillary taxes like
entertainment taxes etc.
Although indirect tax structure has gone through several reforms since 1991 like introduction
of service tax in 1994 and central value added tax (CENVAT) in 2001 by central government
and introduction of VAT in 2005-06 by state government replacing sales tax etc., emphasis on
moving towards a neutral or uniform tax structure is below par the desired level. A
fundamental flaw of the present indirect structure is the multiple taxes levied by central
government and state government at different levels of supply chain. This multiplicity of
taxes at the State and Central levels has resulted in a complex indirect tax structure in the
country. First, there is no uniformity of tax rates and structure across states.6
Second, 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 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. Present structure has cascading impact on cost of
indigenous manufacture of goods and services affecting the competitiveness of Indian
industry. For example VAT is levied on sale value of product, which includes excise duty
element. Thus VAT is also charged on excised duty element, and vice versa. Similarly, service
tax is levied on services and central sales tax is levied on inter-state sale of goods evincing
cascading of taxes at each stage in supply chain.7

6 Vasanthagopal, Dr. R. (2011). GST in India: A Big Leap in the Indirect Taxation System.
International Journal of Trade, Economics and Finance, 2(2), 144-146.
7 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.

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On the other hand, such multiple taxes with different rates and different tax bases not only
make tax structure highly complicated, but also make it difficult to comply and administer
resulting in high compliance cost, tax arbitrage, and wastage of time and efforts.
Complexity discourages tax compliance and retards investment and economic growth. In true
sense, multiple taxes provide incentives for tax evasion and undermine efficiency. Tax
inefficiencies in domestic tax structure compel government to continue policy of high custom
duty to protect domestic industries making India high cost economy and exports less
competitive. All these warrant replacing the present regime by efficient, rational Goods and
Services Tax structure, which would be buoyant too, without disturbing the countrys federal
structure.8

CHAPTERS
Benefits of GST
Three major benefits will flow from the GST. Firstly, as the Prime Minister outlined in an
interview, the GST will increase the resources available for poverty alleviation and
development. This will happen indirectly as the tax base becomes more buoyant and as the
overall resources of the Central and State governments increase. But it will also happen
directly because the resources of the poorest States for example, Uttar Pradesh, Bihar, and
Madhya Pradesh who happen to be large consumers, will increase substantially. Second,
the GST will facilitate Make in India by making one India.9
The current tax structure unmakes India, by fragmenting Indian markets along State lines.
Three features of the current system cause these distortions: the Central Sales Tax (CST) on
inter-State sales of goods; numerous intra-State taxes; and the extensive nature of
countervailing duty exemptions that favours imports over domestic production. In one fell
swoop, the GST would rectify all these distortions: the CST would be eliminated; most of the
other taxes would be subsumed into the GST; and because the GST would be applied on
8 Parkhi, Shilpa. Goods and Service Tax in India: the changing face of economy. Retrieved
from: http://www.parkhiassociates.org/kb/gstcfe.pdf.
9 Agrawal, Puneet (2016-07-11). "Analysis of 122nd Constitutional Amendment Bill".GST
LAW IN INDIA. Athena Law Associates.

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imports, the negative protection favoring imports and disfavoring domestic manufacturing
would be eliminated.10
Thirdly, the GST would improve even substantially tax governance in two ways. The
first relates to the self-policing incentive inherent to a valued-added tax. To claim input tax
credit, each dealer has an incentive to request documentation from the dealer behind him in
the value-added/tax chain. Provided the chain is not broken through wide-ranging
exemptions, especially on intermediate goods, this self-policing feature can work very
powerfully in the GST. The second relates to the dual monitoring structure of the GST one
by the States and one by the Centre. Critics and taxpayers have viewed the dual structure with
some anxiety, fearing two sources of interface with the tax department and hence two
potential sources of harassment. But dual monitoring should also be viewed as creating
desirable tax competition and cooperation between State and Central authorities. Even if one
set of tax authorities overlooks and/or fails to detect evasion, there is the possibility that the
other overseeing authority may not.11
Other benefits such as the boost to investment have been documented in the Report on the
Revenue Neutral Rate that was submitted in December last year. Of course, these benefits
will only flow through a well-designed GST. The GST should aim at tax rates that protect
revenue, simplify administration, encourage compliance, avoid adding to inflationary
pressures, and keep India in the range of countries with reasonable levels of indirect taxes.12
Flaws of GST
The report also urged that the GST be comprehensive in its coverage, that exemptions from
the GST be limited to a few commodities that catered to clear social benefits, and that most
commodities be taxed at the standard rate. There is no free lunch here. There is no escaping
the fact that the more the exemptions/exclusions, the higher will be the standard rate, which
could affect poorer consumers. Some have levelled the charge that the design of the GST is
flawed. But the flawed GST charge fails to appreciate how reforms actually occur. In no
10 Lavi, Mohan. "Renewed GST concerns". The Hindu Business Line. Kasturi & Sons Ltd.
11 "GST in India". businesssetup.in.
12 Albright Stonebridge Group (2016). "ASG Analysis: India's GST Explained". Washington,
DC: ASG.

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country is the GST even today after many years of implementation perfect, and was
therefore quite flawed at inception. In complex systems, change is introduced, learning from
implementation takes place, leading to further and better change. 13 That is what happened
with the implementation of the value-added tax by the States and that is what will happen
with the GST. It is far better to start and allow the process of endogenous change to unfold
over time than to wait Godot-like for the best time and the best design before it is
introduced.14
That said, we must also be realistic about the time frame for assessing the GST. The GST is
fiendishly, mind-bogglingly complex to administer. Such complexity and lags in GST
implementation require that any evaluation of the GST and any consequential decisions
should not be undertaken over short horizons (say months) but over longer periods, say onetwo years. In understanding GST systems around the world, we have been struck by how
ambitious and how under-flawed the Indian GST is. GST-type taxes in large federal systems
are either overly centralised, depriving the sub-federal levels of fiscal autonomy (Australia,
Germany, and Austria); or where there is a dual structure, they are either administered
independently creating too many differences in tax bases and rates that weaken
compliance and make inter-State transactions difficult to tax (Brazil, Russia and Argentina)
or administered with a modicum of coordination which minimizes these disadvantages
(Canada and India today) but does not do away with them.
The Indian GST will be a leap forward in creating a much cleaner dual VATS, which would
minimize the disadvantages of completely independent and completely centralized systems. A
common base and common rates (across goods and services) and very similar rates (across
States and between Centre and States) will facilitate administration and improve compliance
while also rendering manageable the collection of taxes on inter-State sales. At the same time,
the exceptions in the form of permissible additional excise taxes on special goods
(petroleum and tobacco for the Centre, petroleum and alcohol for the States) will provide
the requisite fiscal autonomy to the States. Indeed, even if they are brought within the scope
of the GST, the States will retain autonomy in being able to levy top-up taxes on these goods.
To have achieved this, in a large and complex federal system of multiparty democracy, with a
13 "GST Journey So Far, Know GST history - GST India- GSTSEVA.COM".gstseva.com.
14
http://www.prsindia.org/uploads/media/Constitution%20115/SCR%20summary%20GST.pdf

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Centre, 29 States and 2 Union Territories of widely divergent interests via a constitutional
amendment requiring broad political consensus, affecting potentially 7.5 million tax entities,
and marshalling the latest technology to use and improve tax implementation capability, is
perhaps breathtakingly unprecedented in modern global tax history.15
Sometimes, we are insufficiently appreciative of how much the country has achieved in
coming to this point with the GST. As the Prime Minister suggested, credit should go to all
stakeholders at the Centre and the States for having worked towards the GST. The time is ripe
to collectively seize this historic opportunity; not just because the GST will decisively alter
the Indian economy for the better but also because the GST symbolizes Indian politics and
democracy at its cooperative, consensual best.16

Opportunities:
AN END TO CASCADING EFFECTS:
This will be the major contribution of GST for the business and commerce. At present,
there are different state level and centre level indirect tax levies that are compulsory one
after another on the supply chain till the time of its utilization.
GROWTH OF REVENUE IN STATES AND UNION:
It is expected that the introduction of GST will increase the tax base but lowers down the
tax rates and also removes the multiple point This, will lead to higher amount of revenue
to both the states and the union.
REDUCES TRANSACTION COSTS AND UNNECESSARY WASTAGES:
If government works in an efficient mode, it may be also possible that a single
registration and single compliance will suffice for both SGST and CGST provided
government produces effective IT infrastructure and integration of such infrastructure of
states level with the union.
15 Empowered Committee of State Finance Ministers (2009). First Discussion Paper on GST,
Government of India, New Delhi.
16
http://www.ficci.com/spdocument/20238/Towards-the-GST-Approach-Paper-Apri2013.pdf

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ELIMINATES THE MULTIPLICITY OF TAXATION:
One of the great advantages that a taxpayer can expect from GST is elimination of
multiplicity of taxation. The reduction in the number of taxation applicable in a chain of
transaction will help to clean up the current mess that is brought by existing indirect tax
laws.
ONE POINT SINGLE TAX:
Another feature that GST must hold is it should be one point single taxation. This also
gives a lot of comforts and confidence to business community that they would focus on
business rather than worrying about other taxation that may crop at later stage. This will
help the business community to decide their supply chain, pricing modalities and in the
long run helps the consumers being goods competitive as price will no longer be the
function of tax components but function of sheer business intelligence and innovation.

REDUCES AVERAGE TAX BURDENS:

Under GST mechanism, the cost of tax that consumers have to bear will be certain, and
GST would reduce the average tax burdens on the consumers.
REDUCES THE CORRUPTION:
It is one of the major problems that India is overwhelmed with. We cannot expect
anything substantial unless there exists a political will to root it out. This will be a step
towards corruption free Indian Revenue Service.
Challenges
WITH RESPECT TO TAX THRESHOLD:
The threshold limit for turnover above which GST would be levied will be one area,
which would have to be strictly looked at. First of all, the threshold limit should not be so
low to bother small-scale traders and service providers. It also increases the allocation of
government resources for such a petty amount of revenue which may be much more
costly than the amount of revenue collected. The first impact of setting higher tax
threshold would naturally lead to less revenue to the government as the margin of tax base

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shrinks; second it may have on such small and not so developed states which have set low
threshold limit under current VAT regime.
WITH RESPECT TO NATURE OF TAXES:
The taxes that are generally included in GST would be excise duty, countervailing duty,
cess, service tax, and state level VATs among others. Interestingly, there are numerous
other states and union taxes that would be still out of GST.
WITH RESPECT TO NUMBER OF ENACTMENTS OF STATUTES:
There will two types of GST laws, one at a centre level called Central GST (CGST) and
the other one at the state level - State GST (SGST). As there seems to have different tax
rates for goods and services at the Central Level and at the State Level, and further
division based on necessary and other property based on the need, location, geography
and resources of each state.
WITH RESPECT TO RATES OF TAXATION:
It is true that a tax rate should be devised in accordance with the states necessity of
funds. Whenever states feel that they need to raise greater revenues to fund the increased
expenditure, then, ideally, they should have power to decide how to increase the revenue.
WITH RESPECT TO TAX MANAGEMENT AND INFRASTRUCTURE:
It depends on the states and the union how they are going to make GST a simple one.
Success of any tax reform policy or managerial measures depends on the inherent
simplifications of the system, which leads to the high conformity with the administrative
measures and policies.

IMPACT OF GST ON VARIOUS SECTORS, STAKEHOLDERS AND CLASSES

The GST bill as of now, has passed the last stages of clearing the Rajya Sabha hurdle. Most
analysts suggest that from a macro-economic perspective, while the short-term impact of
GST could be mixed, the long-term impact will be positive. The bill is yet to be enacted
which is tentatively from the first day of the year 2017.

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Besides simplifying the indirect tax structure, GST should also help to create 'One India'
with a unified tax regime by eliminating geographical fragmentation. It will remove the
current cascading of taxes by ensuring the seamless flow of input credit across the value
chain of both goods and services as suggested by various multi-national analysis report.17
It is believed by many economists and financial advisors that while in the long-run GST will
have a positive impact on inflation and government finances, in the near-term, inflation is
likely to go up and government finances are likely to be strained due to compensation to
states.18
HOW IT IS GOING TO AFFECT VARIOUS INDUSTRIES AND SECTORS
Automobiles
Largely positive for demand, as it will lead to a 10-17 per cent fall in prices, assuming an 18
per cent GST rate. Margin benefits to accrue for tractors, as these can claim set-off against
taxes paid on input. Organised battery and other spares would become more cost competitive
and gain market share.19
Stock impact: Positive for Maruti Suzuki, Hero MotoCorp, Exide, Amara Raja, Eicher
Motor, Mahindra & Mahindra, Bajaj Auto. Negative for Ashok Leyland
FMCG
Despite of the economic slowdown, India's Fast Moving Consumer Goods (FMCG) has
grown consistently during the past three four years reaching to $25 billion at retail sales in
2008. Implementation of proposed GST and opening of Foreign Direct Investment (F.D.I.)
are expected to fuel the growth and raise industry's size to $95 Billion by 201835.
GST will be positive for household and personal care space, as the effective tax rate reduces
by 200-500 basis points (bps), apart from reducing warehousing and logistical requirements.
17 Dr. Prakash M. Herekar. (2012). Evaluation of impact of Goods and Service Tax (GST).
Indian Streams Research Journal.
18 Bandyopadhyay, S. N. (n.d.). A Primer on Goods and Services Tax in India. SSRN
Electronic Journal. doi:10.2139/ssrn.2102603
19 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

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However, working capital for retailers, and additional tax rates for jewellery and cigarette
manufacturers are negatives.20
Stock impact: Positive for Hindustan Unilever, Emami, Godrej Consumer. Negative for
Titan, Bata, ITC
Logistics
Passage of GST will lead to elimination of central sales tax and inter-state value-added tax
arbitrage possibilities. This will lead to consolidation of warehouses and increased
efficiencies in the logistics chain.
Stock impact: Positive for Container Corporation of India, Adani SEZ, Gujarat Pipav Port
(longer term)
Infrastructure
Clarity on works contract taxation is the key benefit for the sector. This could reduce
litigation, as it eliminates the difference between sales and services.
Stock impact: Positive for Larsen & Toubro (L&T)
Consumer durables
Consumer durables will benefit from improved logistics. Direct benefits up to 200-300 bps in
cost savings may accrue. A significant portion of direct benefits will be passed on to end
consumers because of a highly competitive market.
Stock impact: Positive for Voltas, Havells, Crompton Greaves
Oil & gas
Key petroleum products like crude, natural gas, high speed diesel and ATF have been kept out
of GST. Clarity is awaited for others. Compliance costs are likely to rise because of dual
indirect tax mechanism.
Stock impact: Neutral. Do not foresee any meaningful change on oil & gas companies
Cement
20 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-onGST-ICAI.pdf.

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Overall tax incidence on the sector could decline. The sector will also benefit from expected
decline in logistic costs. Firms can be expected to pass on the benefits, given that demand and
plant utilisation levels are picking up.
Stock impact: Positive for most companies
Wind power
GST will be negative for wind, turbine generator manufactures like Suzlon and InoxWind,
as pressure on developer margins and internal rates of return could eventually force reduction
in prices and realisations, up to 10-13 per cent. However, if components are included in the
exemption list, the impact of GST will be nullified.21
Stock impact: Negative for Suzlon, Inox Wind
Utilities
Exclusion of sale of electricity from GST could potentially raise the cost of coal-fired and
renewable energy for Discoms. Profitability of independent power producers selling via
medium/long-term PPAs is unlikely to be dented as cost escalation would likely be passed
on.22
Stock impact: Positive for CESC, negative for JSW Energy
Pharmaceuticals
GST rollout could be negative for the sector, as it is likely to increase indirect tax. Analysts
say indirect taxes paid by pharma companies could increase by 60 per cent and MRP by four
per cent.
Stock impact: Negative for Alkem, Glaxo Pharma
The GST, which is expected to be implemented from April 1, 2017, aims to replace multiple
state and central levies with a single tax. Since the central and state taxes are likely to be
subsumed under GST, it may result in fungibility of tax credits across intra- and inter-state
21 How the GST Bill will impact various sectors and stocks | Business Standard News.
(2016, July 6). Retrieved from http://www.business-standard.com/article/markets/how-thegst-bill-will-impact-various-sectors-and-stocks-116080200159_1.html
22 Ibid.

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transactions. Consequently, different industries may need to conduct a cost-benefit analysis in
terms of applicable input and output taxes.23
Real estate
Transfer of (completed) properties may continue to be outside the purview of GST and be
liable only to applicable stamp duties.
In case this sector is brought within the ambit of GST, it is likely to result in transparency,
which will significantly reduce tax evasion through more efficient transaction-tracking
methods, and improved enforcement and compliance. Since GST may be levied on a single
value, the current issue of levying tax on tax (VAT on central excise duty) is likely to be
removed.
At present, developers pay various non-creditable taxes on supplies. GST may replace these
multiple taxes with a single tax; credit on supplies may also be available, thus reducing costs
for all players. However, if real estate output is exempted, then input GST credit could be a
substantial cost for the sector, resulting in blockage of credit and higher costs to end
consumers.24
Financial services
In India, most of the banking and financial services are exposed to service tax, at the rate of
14.5 percent, while GST is expected to be 18 percent to 20 percent. Thus, services are likely
to get costlier.
GST may make things cumbersome as financial service providers may be required to adhere
to compliances across multiple states instead of the current single, centralised registration
compliances.
Also, as GST is a destination-based tax, it might be a challenge to determine the destination
of certain services (at present, services are taxed at the place of rendering the service). This

23 India. Implementation of Value Added Tax in India: Lessons for Transition to Goods and
Services Tax : a Study Report. New Delhi: Comptroller and Auditor General of India, 2010.
24 India. Implementation of Value Added Tax in India: Lessons for Transition to Goods and
Services Tax : a Study Report. New Delhi: Comptroller and Auditor General of India, 2010.

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may lead to a difficulty in determining state GST, central GST or inter-state GST on B2B and
B2C transactions.
Interest on loans, trading in securities, foreign currency and retail services are also expected
to fall within the ambit of GST. Recommendations by the banking industry suggest that such
services and income should not come under GST. It is still to be seen whether these
recommendations will be accepted.25
Overall, it appears that imposing GST on banking and financial services may become a
challenge and India, if successful, will chart a new course, which could well become a model
for the rest of the world.
In most of the countries GST is not charged on the financial services. Example, In New
Zealand most of the services covered except financial services as GST. Under the service tax,
India has followed the approach of bringing virtually all financial services within the ambit of
tax where consideration for them is in the form of an explicit fee. GST also include financial
services on the above grounds only.26
Travel, Tourism and Hospitality
Indias travel, tourism and hospitality industries have multiple taxes, levied by both the
centre and the states. It is expected that under GST, supplies of hotels and restaurants will be
subjected to a single tax.
At present, no credit is available on input services related to renovation or construction of
hotels and resorts. This is expected to change under GST. R&D cess, payable on franchise
fees and technical know-how, is likely to be subsumed under GST, thus simplifying
compliance procedures and reducing multiple taxes.
However, it is unclear whether various benefits available under the existing Foreign Trade
Policy will continue under GST. If such benefits are provided, input credit may not be
available, resulting in higher costs.

25 Mathur, Vibha. Foreign Trade of India, 1947-2007, Trends, Policies, and Prospects. New
Delhi: New Century Publications, 2006.
26 Viswanathan, B. (2016). Goods and services tax (GST) in India.

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On the whole, GST is likely to eliminate multiplicity of taxes and lack of credits. However, it
may also lead to increase in tax rates.27
Healthcare & Medical facilities
One of the major concerns of this industry is the current inverted duty structure that
adversely affects domestic manufacturers, cost of inputs being higher than output. This
discourages investment in this industry. GST may either remove the inverted duty structure or
allow refund of accumulated credit. This would be a boon for this industry and can act as its
growth catalyst.
The current cascading tax structure on import duty makes it expensive for the industry to
import machinery. GST is likely to reduce this cost.
This sector enjoys several tax exemptions and benefits. It is still not clear whether these
benefits will continue under GST. Health insurance and diagnostic centres, which are mainly
service-oriented, may fall under higher tax rates, thereby making such services more
expensive for consumers.28
Alcoholic beverages
Alcohol for human consumption is proposed to be kept outside the GST regime, and will
hence continue to attract state excise and VAT; however, inputs are likely to fall under the
ambit of GST.
Consequently, there may be blockage of input credit, leading to increased production cost and
inefficiency in production and distribution. Higher input costs and its cascading effect on
taxes may push prices upwards, and may also hit exports. Restaurants and bars serving
alcohol, and selling both GST and non-GST products, may be required to undertake dual
compliance (for GST and non-GST products).29
27 Mathur, Vibha. Foreign Trade of India, 1947-2007, Trends, Policies, and Prospects. New
Delhi: New Century Publications, 2006.
28 Rao, R. Kavita. Goods and Services Tax for India. New Delhi: National Institute of Public
Finance and Policy, 2008.
29 Vora, Aditya. Last modified August 13, 2016. www.thestatesman.com/news/opinion/gstimpact-on-energy-sector/159870.html.

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Education
The education sector currently enjoys various tax exemptions and benefits; services
provided by schools and colleges are either not taxed or are covered in the negative list.
The situation is likely to continue even after the implementation of GST. In case it doesnt,
the sector may be able to avail of input credit or CENVAT credit on the duty paid on purchase
of inputs and services. These are likely to bring down the final cost for the industry.30
Food Industry
The application of GST to food items will have a significant impact on those who are living
under subsistence level. But at the same time, a complete exemption for food items would
drastically shrink the tax base. Food includes grains and cereals, meat, fish and poultry, milk
and dairy products, fruits and vegetables, candy and confectionary, snacks, prepared meals
for home consumption, restaurant meals and beverages. Even if the food is within the scope
of GST, such sales would largely remain exempt due to small business registration threshold.
Given the exemption of food from CENVAT and 4% VAT on food item, the GST under a
single rate would lead to a doubling of tax burden on food.31
Housing and Construction Industry
In India, construction and Housing sector need to be included in the GST tax base because
construction sector is a significant contributor to the national economy.
Rail Sector
There have been suggestions for including the rail sector under the GST umbrella to bring
about significant tax gains and widen the tax net so as to keep overall GST rate low. This will
have the added benefit of ensuring that all inter state transportation of goods can be tracked
through the proposed Information technology (IT) network.32
30 Sapra, Bipin. "Education Sector GST India-Goods and Services Tax in India." GST
India-Goods and Services Tax in India Your Free-tax Site. Last modified January 27, 2016.
http://www.gstindia.com/tag/education-sector/.
31 Supra note 26.
32 Sector impact: GST's effect on roads, railways and ports - Infracircle. (2016, September
17). Retrieved from http://www.vccircle.com/infracircle/sector-impact-gst-will-affect-roadsrailways-ports/. Last seen on, 18 Aug 2016.

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Information Technology enabled services
To be in sync with the best International practices, domestic supply of software should also
attract G.S.T. on the basis of mode of transaction. Hence if the software is transferred through
electronic form, it should be considered as Intellectual Property and regarded as a service.
And if the software is transmitted on media or any other tangible property, then it should be
treated as goods and subject to G.S.T.33
Impact on Small Enterprises
There will be three categories of Small Enterprises in the GST regime. Those below
threshold need not register for the GST. Those between the threshold and composition
turnovers will have the option to pay a turnover based tax or opt to join the GST regime.
Those above threshold limit will need to be within framework of GST Possible downward
changes in the threshold in some States consequent to the introduction of GST may result in
obligation being created for some dealers. In this case considerable assistance is desired.
In respect of Central GST, the position is slightly more complex. Small scale units
manufacturing specified goods are allowed exemptions of excise upto Rs. 1.5 Crores. These
units may be required to register for payment of GST, may see this as an additional cost.34
HOW IT WILL AFFECT DIFFERENT FINANCIAL ACTIVITIES
Sourcing

Inter-State procurement could prove viable

This may open opportunities to consolidate
suppliers/vendors
Additional duty/CVD and Special Additional duty
components of customs duty to be replaced.

Distribution

Changes in tax system could warrant changes in both

procurement and distribution arrangements
Current arrangements for distribution of finished goods may

33 An overview of the recently passed Goods and Services Tax (GST) Bill - The Hindu.
(2016, August 12). Retrieved from http://www.thehindu.com/features/homes-and-gardens/anoverview-of-the-recently-passed-goods-and-services-tax-gst-bill/article8979679.ece
34 Due, J. F. (1970). Indirect taxation in developing economies: The role and structure of
customs duties, excises, and sales taxes. Baltimore: Johns Hopkins Press.

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no longer be optimal with the removal of the concept of excise duty
on manufacturing
Current network structure and product flows may need
review and possible alteration
Pricing

and

profitability

Tax savings resulting from the GST structure would require

repricing of products
Margins or price mark-ups would also need to be reexamined

Cash flow

Removal of the concept of excise duty on manufacturing can

result in improvement in cash flow and inventory costs as GST
would now be paid at the time of sale/supply rather than at the time
or removal of goods from the factory.

System changes and

transaction

Potential changes to accounting and IT systems in areas of

master data, supply chain transactions, system design

management

Existing open transactions and balances as on the cut-off

date need to be migrated out to ensure smooth transition to GST
Changes to supply chain reports (e.g., purchase register,
sales register, services register), other tax reports and forms (e.g.,
invoices, purchase orders) need review
Appropriate measures such as training of employees,
compliance under GST, customer education, and tracking of
inventory credit are needed to ensure smooth transition to the GST
regime

The above figures are a courtesy of Delloitte India.35

HOW IT AFFECTS VARIOUS STAKEHOLDERS
Corporations and other functionaries

35 Rawat D, 'Goods and Services Tax in India: Taking Stock and Setting Expectations' (2016)
<http://www2.deloitte.com/content/dam/Deloitte/in/Documents/tax/in-tax-gst-in-indiataking-stock-noexp.pdf> accessed 24 August 2016.

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The minister began his speech by emphasizing the need to revive growth and investment to
ensure job creation for the youth. As expected he mentioned his intent on implementation of
GST from the next year.
However the most important announcement was in relation to tax rates, the finance minister
proposed to reduce the rate of corporate tax from 30% to 25% over the next year 4 years. It is
a welcome decision and must have made the companies happy, however in his speech the
minister also mentioned that this process of reduction has to be necessarily accompanied by
rationalization and removal of various kinds of tax exemptions and incentives for corporate
tax payers, which account for large number of tax disputes. What would be important to see
is what exemptions and incentives does the government will do away with.36
It could be a classic case of giving something from one hand and taking it back from the
other. Further owing to the investor sentiments and the governments intent to enhance
investments, applicability of GAAR has been deferred by two years and it was mentioned
that when implemented, GAAR would apply prospectively.
We also see a proposal to reduce the rate of income tax on royalty and fees for technical
services from 25% to 10% with intent to encourage new ventures in India. The threshold limit
for domestic transfer pricing is also increased from 5 Cr to 20 Cr.
Abolition of wealth tax is a welcome move, but now details of wealth have to be reported in
income tax returns. Have to wait and see whether the return filing becomes complex or not.37
What it means for the common man
The common man was expecting a rise in the tax exemption limits, so it was a
disappointment to see the limits remain unchanged. The minister in his speech mentioned
benefits to middle class taxpayers as one of the broad themes, and have made certain
proposals which are very welcome. Among them are

Increase in deduction limit under Sec 80D to Rs 25,000 and for senior citizens to Rs
30,000.

36 Kumar, Nitin (2014). Goods and Services Tax in India: A Way Forward. Global Journal of
Multidisciplinary Studies, 3(6), 216-225
37 Dhanabhakyam, M., & Geetha, S. (2008). Indirect taxation. New Delhi: Serials
Publications.

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Deduction of Rs 50,000 for contribution to New Pension scheme under Sc 80CCD.

Increase in limit on deduction on account of pension fund and new pension scheme to

Rs 1, 50,000.
Increase in transport allowance exemption to Rs 1,600 per month.

Although the above changes will help an individual reduce his tax liability, but it doesnt
increase his disposable income.38
Further we also see a rise in service tax rates to 14%.Further an enabling provision is made to
empower the Central Government to impose a Swatch Bharat cess on all or certain taxable
services at a rate of 2%. Which mean that the effective rate of service tax will increase to
16%.
Needless to say it will impact the middle class as essential services will become costlier. Not
good for the middle class people, since exemption limits remain same no increase in
disposable income but expenses on movies, hotels, travel, legal, banking , restaurants etc all
will increase.39
What it means for the economy:
The intent of the budget is very clear, the government wants to encourage setting up of
business in India and wants to facilitate the ease of doing business also. Growth of industries
in India is necessary for job creation and as expected the focus is on encouragement to
corporate.
The government by giving benefits in the form of deductions rather than increasing the
exemption limits to individuals had shown that its intent is to increase the amount available
for investments and not to increase short term demands. This is in line with its strategy of
enhancing investments.40
38 India Makes Progress on GST Implementation - India Briefing News. (n.d.). Retrieved
from http://www.india-briefing.com/news/indian-gst-deal-paves-tax-reforms-8938.html
39GST Bill: States to get relief - The Hindu.
Retrieved from
http://www.thehindu.com/business/Economy/gst-bill-states-to-get-relief/article6698377.ece
40 Tax Reform Commission to submit first report in six months: Parthasarathi Shome - The
Hindu. (n.d.). Retrieved from http://www.thehindu.com/business/Economy/tax-reformcommission-to-submit-first-report-in-six-months-parthasarathi-shome/article5258159.ece

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Critical Analysis of the GST Bill
RECOMMENDATIONS BY THE KELKAR COMMITTEE
GST has been conceived in India on implementation of Fiscal Responsibility and Budget
Management Act, 2013 (Kelkar Committee) by the Task Force during the analyzing of the
existing tax systems at both, the Central as well as the State level. 41 Kelkar Committee came
up with the observation that introducing the nationwide tax reform of dual GST, as per which
all goods and services present in the economy would be taxed, might be of help in achieving
a common market, with a wide tax base, and in improving the domestic indirect taxes
revenue productivity and also in enhancing the welfare by way of efficient resource
allocation.
An Empowered Committee42 which comprised of State Finance Ministers was constituted by
the Government on the basis of the Kelkar Committees recommendations for the preparation
of Design and Road Map so as to implement GST.
There are multiple taxable events due to multiple levies both at Central as well as State level
under the prevailing tax structure. The taxable event occurring in different laws is: in case of
Central Excise laws, on manufacturing of goods, for State VAT laws on sale of goods, and
for Service tax laws on supply/provision of services.
On the other hand in case of State levies taxable event like Entry Tax is on the entry of
goods into a particular jurisdiction. Thus under the prevailing tax structure the taxable event
depends on the levying and has been defined independently without making any harmonious
reference to any other tax legislations. GST was proposed to be applied on same taxable
event on all supplies of goods and services, by the both Central as well as the state
governments.43

41 Kelkar,Vijay (2009). GST Reduces Manufacturing Cost and Increases Employment, Times
of India.
42 Empowered Committee of Finance Ministers, 2013
43 Nitin Kumar (2014), Goods and Service Tax in India-A Way Forward, Global Journal
of Multidisciplinary Studies, Vol 3, Issue6, May 2014

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COMPLICATIONS IN THE BILL
The governments attempt to implement the GST bill was noble as its aim was to reduce the
complexity in Indias existent tax regime. The passage of the bill has led to abolishment of
unnecessary complications by creating a well-defined and uniform tax regime. The GST will
have many lasting impacts. It will create a buoyant source of revenue and place the fiscal
position on a permanently solid footing.
It will help tax administration and reduce corruption in indirect tax collection. And it will
serve to make India more of a common market. The elimination of the internal barriers to
trade should be seen as a positive trade and productivity shock for the Indian economy. And
less recognized is the fact that the GST will also be a redistributive exercise, transferring
resources to the poorer states.44
GST Bill promised a reduction of multiple taxes as one of its main benefits. But this has led
to creation of another problem. Due to this now power has been conferred on both the
Parliament as well as on every state legislature by Article 246A 45 for levying of goods and
services tax. This is leading to a situation where there is one parliamentary law and 28 states
having power to levy taxes. Also no constitutional requirement is there to be uniform for the
state laws. GST Council have power to only recommend a model law and therefore states
are not prevented from making and following their own laws. Having so many levies by
Parliament and the states might lead to disastrous consequences if they will not be in
harmony.
A seamless system of taxation is the basic feature of any GST, in which all duties, whether
goods or services, are set off against the duties payable on the final product. Most of the
countries are having single GST, only few have a dual GST. The implementation of the
Indian version might turn out to be the most complex 46, as different states are having powers
to enact their own laws, thereby introducing concepts of that of importing and exporting.
44
wwww.thehindu.com/bussiness/industry/ten-things-to-know-aboutgstbill/article7137615.ece
45 Article 246A, Indian Constitution 1950.
46 Girish Garg, (2014),Basic Concepts and Features of Good and Service Tax in India

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Excluding of the petroleum products, electricity and real estate might lead to a grotesque,
mangled and mutilated version of Indian GST.
Further its impact on the service sector might turn out to be costly and inflationary, though its
impact on the manufacturing sector is expected to be cost saving because of a leaner supply
chain and the eliminating of the cascading taxes.
Though many countries are having GST, but it might turn out to be unsuitable for vast and
heterogeneous country like India. In Indian federalism, the Union and States are having
powers to levy different kinds of taxes suiting their requirements, is an essential feature. This
is because different states have different needs, like the requirements of states like
Maharashtra and Gujarat might be completely different from that of Jharkhand and Assam.
Because of this, GST might lead to serious difficulties, and might turn out to be a failure as it
is treating unequal states equally. It is practically impossible for the Centre to compensate
states which might be losing tax revenue for the next few years.
Further GST is a merger of Central and State levies being administered by Central and State
governmental officials. This leads to plethora of questions as to how many assesses will be
there state wise, or who will responsible for administering combined GST, will each state will
insist on having the power to administer GST as per its territory.
Further if this will be the case, then no role will be left for the Central excise or the Service
tax departments, excepting the inter-state transactions. Also which will be the appellate
authorities and will there be a single or multiple tribunals, are other of the few question
arising.
Also the GST will lead to situation making imports more competitive. This complex structure
of regulatory tax laws and widespread corruption at every stage makes the manufacturing
activity in India less appealing. If GST on imports is available as a credit to a trader, as
against the existing system, which does not allow countervailing duty and special additional
duty credits, imported goods will get a competitive advantage seriously sabotaging the Make
in India initiative. It is best that the taxing powers of the state are not curbed.

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Suggestions Recommended for the Bill
Despite the change in tax laws and regulation, the government has to collect the same amount
of revenue that was earlier generated. In the GST regime, the structure of taxation is being
affected and cannot generate the similar amount of revenue if compared with the previous
model of taxation due to tax credit mechanism, removal of cascading effect or otherwise. An
adjustment in the tax rate which avoid the difference or loss in the revenue collection is called
Revenue Neutral rate (RNR). The National Institute of public Finance and Policy
recommends that GST rate will be same as the combined central and state taxes on Goods at
present but it should be lower than the combined central and state taxes on services. 47 The
proposed rate by the experts are said to be 13.91% for the state GST component and 12.77%
on the central GST component.
DISCHARGE OF ELECTRICITY FROM THE GST BILL WILL AMOUNT TO INCREASE IN THE COST
OF POWER IN THE CONSUMER END.

In the present scenario the inputs which help the industries to generate power are taxed but
the companies are self-enabled in neutralising the input taxes against liabilities on outputs
other than power. However electricity and power are subjected to the tax duties levied by the
respective state government and are paid by the consumer.
On being discharged from the GST bill, the cost of power will increase from 6-18% for the
consumers as the industries will continue to pay taxes on the inputs but will not generate any
credit on the output. With reference to the renewable energy sector, the input of the
machinery and equipment will be taxed and the companies will suffer losses due to high input
costs and can lead the economy towards inflation.
The solution or the consent is the inclusion of the power sector in GST bill and bringing a
compensation policy on the taxes imposed on input with zero rated output.
START-UPS TO BE UTILISED AS AN INTERFACE TO CREATE AN EFFICIENT WORK ECOSYSTEM.
With the change in the new policies with respect to the taxation, the government needs to
train and transmit the GST policies and aspects. To help the new trade to adapt and flourish in

47 Report of the 14th Finance Commission, Chapter 13, Goods and Services Tax, February
24, 2015.

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the new regime the government has to link up with start-ups to connect the small and medium
size enterprises with the GST and the Goods and Service network.
Government should aim to help start-ups in connecting their Application Programming
Interfaces (API) to the GST system. APIs are nothing but tools and protocols used for
creating software applications. Further, it should emphasize upon the need of building
ecosystem around these APIs. It should also educate them about the kind of data that will be
made available to them post-GST implementation and how to manage the scale of it.48
HYPOTHETICAL FEARS OF PHARMACEUTICAL SECTORS
After analysing a recent report of GST, the pharmaceutical industries are expecting an
average of 80 percent more taxes on day to day medicines. The supply chain includes the
pharmaceutical ingredient supplier, the developer of ingredient, and manufacture with
wholesaler and retailer as well.
The speculation is that the medicine prices will rise about 4% in the GST regime. The work
should be done by the pharmaceutical industry to seek parity for the consumer end price for
the medicines. Representation in the form of best case studies can be made to the concerned
authorities by the pharmaceutical industry to attain the required concessions and quell
speculative fears.49
PRESSURE ON THE BANKING SECTOR
The banking sector is also pressurised with the start of the GST regime due to the destination
based model of functioning. Loans granted by the branch in a metro city may be utilised by
any industry in the market for expansion of work in another town across the country. Banks
have to maintain the state wise accounts to ensure its compliance with the new GST
provisions. Banks have to be switched on to the GST regime faster as they are taxation norm
based institution.

48 Towards GST Regime In India, Shruti Garg, International Journal of Scientific Research
and Management, 2015.
49 GST in India: A Big Leap in the Indirect Taxation System, R. Vasanthagopal, International
Journal of Trade, Economics and Finance 2011

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INCORPORATION OF SMALL TRADERS IN THE GST BILL
The new GST system has not offered the traders the minimum clarity on stock management
for the remaining goods and rates. The important question is, whether the traders will be
availed with input credits or the remaining stock will get costlier and will be an extra
financial expense to them. There has to be provisions for the tax payment that will be paid by
the manufacture each time goods are being transferred. Under GST provisions a trader must
easily get input credit, as under GST provisions in the chain of trading if one trader fails to
file incorrect returns in GST then the entire chain of traders will fail to receive the benefit of
input credit.50
CONCERNS OVER MANUFACTURING OF SOLAR POWER EQUIPMENT
The fundamental problem is the increase n the burden of prices on the consumer end after the
implementation of GST. This sector has been enjoying the zero tax provision in most of the
states of the country by the getting reimbursement from the government. The government has
to make sure the Indian manufacturers should not fall into a disadvantageous position with
respect to foreign contenders, which will eventually raise the cost of the project and result in
burdening the consumers. Mindset of the private banks has to be changed towards the solar
power project and financial asset lending policies towards the sector.
EXCLUSION OF DOMESTIC PRODUCTS FROM THE GST
The gross domestic product like alcohol and tobacco have been discharged from the GST
regime and his has led to price distortions. Petroleum products, electricity duty, alcohol for
human consumption and stamp duty on immoveable property make 5o percent of the GDP
which has been kept out of GST. Government has to keep a third of the power and share the
two third with the states who are implementing GST with strong monitoring cell with field
officers.

50 Preparing the way for a modern GST in India, Sijbren Cnossen, International Tax and
Public Finance 2013

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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 Govt.
departments and service sector shall have to bear impact of GST.51
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 Indias 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.52

51http://www.thehindu.com/business/Economy/gst-will-remove-cascading-effect-of-leviespranab/article3446952.ece
52 Thirteenth Finance Commission (2009). Report of Task Force on Goods & Service Tax.

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