SHIKSHAK SANCHALIT SHIKSHAN SANSTHA’S

DR.S.D.DEVSEY ARTS AND COMMERCE AND SCIENCE COLLEGE WADA

TAL-WADA DIST-PALGHAR

UNIVERSITY OF MUMBAI

“A STUDY ON THE EFFECT OF GST ON SERVICE”

A PROJECT SUBMITTED TO

UNIVERSITY OF MUMBAI FOR PARTIAL COMPLETION OF

THE DEGREE OF MASTER IN COMMERCE

UNDER THE FACULTY OF COMMERCE

BY

MISS. NIKITA SUNIL GUPTA

M.COM – II, SEMESTER – IV, YEAR 2021-22

APRIL - 2022

UNDER THE GUIDEANCE OF MRS. SUSHAMA HEMANT GUPTA,

ASSISTANT PROFESSOR

DEPT. OF COMMERCE

SHIKSHAK SANCHALIT SHIKSHAN SANSTHA’S

DR.S.D.DEVSEY ARTS AND COMMERCE AND SCIENCE COLLEGE

WADA.TAL.WADA DIST. PALGHAR

ACADEMIC YEAR 2021-22

 SHIKSHAK SANCHALIT SHIKSHAN SANTHA’S

DR. S. D. DEVSEY ARTS AND COMMERCE AND SCIENCE COLLEGE

WADA DIST. - PALGHAR

CERTIFICATE

This is to certify that MISS. NIKITA SUNIL GUPTA has worked and
duly completed her Project Work for the degree of Master in Commerce under the
Faculty of Commerce. her project is entitled, “A STUDY ON THE EFFECT OF
GST ON SERVICE” under my supervision. I further certify that the entire work
has been done by the learner under my guidance and that no part of it has been
submitted previously for any Degree or Diploma of any University.
It is her own work and facts reported by her personal findings and investigations.

MRS. SUSHAMA HEMANT GUPTA

(Name and signature of guide teacher)

DATE OF SUBMISSION:
 DECLARATION BY LEARNER

I the undersigned MISS NIKITA SUNIL GUPTA here by, declare

that the work embodied in this project work titled A STUDY ON THE EFFECT
OF GST ON SERVICE” forms my own contribution to the research work
carried out under the guidance of Mrs. SUSHAMA HEMANT GUPTA is a
result of my own research work and has not been previously submitted to any
other University for any other Degree/ Diploma to this or any other University.
Wherever reference has been made to previous works of others, it has
been clearly indicated as such and included in the bibliography.
I, here by further declare that all information of this document has been
obtained and Presented in accordance with academic rules and ethical conduct.

NIKITA SUNIL GUPTA

(Name and Signature of the Research Student)

Certified By

Dr. S. S. Khandekar

IC Principal of Shikshak Sanchalit Shikshan Sanstha's

Dr. S.D. Devsey Arts, Commerce & Science College Wada.

(Mrs. Shushama h. Gupta The Guide Teacher)

 ACKNOWLEDGMENT

To list who all have helped me is difficult because they are so numerous
and the depth is so enormous. I would like to acknowledge the following as being
idealistic channels and fresh dimensions in the completion of this project. I take
this opportunity to thank the University of Mumbai for giving me chance to do
this project. I would like to thank my IC Principal, Dr. S.S. Khandekar for
providing the necessary facilities required for completion of this project.

I take this opportunity to thank our Coordinator. Mrs. Sushama H. Gupta,

for her moral support and guidance. I would also like to express my sincere
gratitude towards my project guide in My College Teachers whose guidance and
care made the project successful. I would like to thank each and every person in
my College Library, for having provided various reference books and magazines
related to my project. Lastly, I would like to thank each and every person who
directly or indirectly helped me in the completion of the project especially my
Parents and Friends who support to me throughout my project.
 INDEX
Sr.No. Tital of the Chapter Page
No.

1 1.1 Introduction 9

1.2 History of GST 12

2 2.1 Introduction 14

2.2 Definition 14

2.3 Objective 14

2.4 Data Collection 15

2.5 Analysis And Findings 16

2.6 Methodology 17

2.7 Scop 18

3 3.1 Introduction 20

3.2 Goods and Services Tax-Literature Survey 20

3.3 Conceptual Framework 21

3.4 Presumptions prefer to Implementation of 23

GST

3.5 Electronic Appliances 24

3.6 Services 24

3.7 Take of Expert on New GST Rates in the 24

Industries

4 4.1 Introduction 27

4.2 Effect of GST on Restaurant Industries 28

4.3 Effect of GST on Health Care Services 29

5
 4.4 Effect of GST on Automobile Sector in 31
India

4.5 Effect of GST on Wholesaler and Retailer 31

4.6 Effect of GST on Agricultural Services 34

4.7 Effect of GST on Education Services 35

4.8 Effect of GST on Telecommunication 37

Services

4.9 Effect of GST on Real Estate Services 40

4.10 Effect of GST on Banking Services 43

4.11 Effect of GST on IT Services 45

4.12 Effect of GST on Entertainment Services 48

5 5.1 Introduction 52

5.2 Conclusion 53

5.3 Suggestion 55

6 6.1 References 58

6.2 Books 59

6.3 Online Recourses 59

6
 TABLE INDEX
Sr. Tital of Table Page
NO No.

1 Effect of GST on Restaurant Industries 25

2 Effect of GST on Education Services 32

3 Effect of GST on Real Estate Services 38

7
 CHAPTER – 1
INTRODUCTION

8
1.1 INTODUCTION
Introduction of the Value Added Tax (VAT) at the Central and the State level has
been considered to be a major step – an important step forward –in the globe of
indirect tax reforms in India. If the VAT is a major improvement over the pre-
existing Central excise duty at the national level and the sales tax system at the State
level, then the Goods and Services Tax (GST) will indeed be an additional important
perfection – the next logical step – towards a widespread indirect tax reforms in the
country. Initially, it was conceptualized that there would be a national level goods
and services tax, however, with the release of First Discussion Paper by the
Empowered Committee of the State Finance Ministers on 10.11.2009, it has been
made clear that there would be a “Dual GST” in India, taxation power countries– both
by the Centre and the State to levy the taxes on the Goods and Services. Almost 150
have introduced GST in some form. While countries such as Singapore and New
Zealand tax virtually everything at a single rate, Indonesia has five positive rates, a
zero rate and over 30 categories of exemptions. In China, GST applies only to goods
and the provision of repairs, replacement and processing services. GST rates of
some countries are given below.
GST is the most ambitious and remarkable indirect tax reform in India’s post-
Independence history. Its objective is to levy a single national uniform tax across
India on all goods and services. GST has replaced a number of Central and State
taxes, made India more of a national integrated market, and brought more producers
into the tax net. By improving efficiency, it can add substantially to growth as well as
government finances. Implementing a new tax, encompassing both goods and
services, by the Centre and the States in a large and complex federal system, is
perhaps unprecedented in modern global tax history. GST is a tax on goods and
services with comprehensive and continuous chain of set-off benefits up to the retailer
level. It is essentially a tax only on value addition at each stage, and a supplier at each
stage is permitted to set-off, through a tax credit mechanism, the GST paid on the
purchase of goods and services. Ultimately, the burden of GST is borne by the end-
user (i.e. final consumer) of the commodity/service. With the introduction of GST, a
continuous chain of set-off from the original producer’s point and service provider’s
point up to the retailer’s level has been established, eliminating the burden of all
cascading or pyramiding effects of an indirect tax system. This is the essence of GST.

9
GST taxes only the final consumer. Hence the cascading of taxes (tax-on-tax) is
avoided and production costs are cut down. As already noted, prior to the introduction
of GST, the indirect tax system of India suffered from various limitations. There was
a burden of tax-on-tax in the pre-GST system of Central excise duty and the sales tax
system of the States. GST has taken under its wings a profusion of indirect taxes of
the Centre and the States. It has integrated taxes on goods and services for set-off
relief. Further, it has also captured certain value additions in the distributive trade.
There is now a continuous chain of set-offs which would eliminate the burden of all
cascading effects. Presently, services sector in India constitutes a tax base with vast
potential which has not been exploited as yet. It is in this context that GST is justified
as it has subsumed under it almost all the services for the purpose of taxation. Since
major Central and State indirect taxes have got subsumed under GST, the multiplicity
of taxes has been substantially reduced which, in turn, would decrease the operating
costs of the country’s tax system. The uniformity in tax rates and procedures across
the country will go a long way in reducing compliance costs. In a nutshell, GST is a
comprehensive indirect tax levy on manufacture, sale and consumption of goods as
well as services at the national level. GST is an indirect tax for the whole of India to
make it one unified common market. GST is designed to give India a world class tax
system and improve tax collections. It would end the long-standing distortions of
differential treatment of manufacturing sector and services sector. GST will facilitate
seamless credit across the entire supply chain and across all States under a common
tax base.

Currently the service industry is heavily impacted with the onset of corona-virus in
India. The Covid 19 has taken a huge toll on the tourism industry along with the
aviation, hotel industry as the government has totally banned the arrival of tourist
from other countries.

Indirect taxes have always been contributing more than direct taxes to the
Government’s Revenue. Services solely contribute a major part of the whole Gross
Domestic Product (GDP), subsequently, it shows the major contribution of Services in
taxes also. Service sector does not only dominate the GDP contribution but attracts
the foreign investment towards the Indian Economy. Service Sector contributes
significantly in export as well as provide a large scale employment. India’s services

10
sector covers a wide variety of activities such as trade, hotel and restaurants, transport,
storage and communication, financing, insurance, real estate, business services,
community, social and personal services, and services associated with construction.

The GST council has decided in its 22nd meeting that Presently, anyone making inter-state
taxable supplies, except inter-State job worker, is compulsorily required to register,
irrespective of turnover. It has now been decided to exempt those service providers whose
annual aggregate turnover is less than Rs. 20 lacs (Rs. 10 lacs in special category states except
for J & K) from obtaining registration even if they are making inter-State taxable supplies of
services. This measure is expected to significantly reduce the compliance cost of small
service providers. World over in almost 150 countries there is GST or VAT, which
means tax on goods and services. Under the GST scheme, no distinction is made
between goods and services for levying of tax. In other words, goods and services
attract the same rate of tax. GST is a multi-tier tax where ultimate burden of tax fall
on the consumer of goods/ services. It is called as value added tax because at every
stage, tax is being paid on the value addition. Under the GST scheme, a person who
was liable to pay tax on his output, whether for provision of service or sale of goods,
is entitled to get input tax credit (ITC) on the tax paid on its inputs.

Currently the service industry is heavily impacted with the onset of corona-virus in
India. The Covid 19 has taken a huge toll on the tourism industry along with the
aviation, hotel industry as the government has totally banned the arrival of tourist
from other countries.

Indirect taxes have always been contributing more than direct taxes to the
Government’s Revenue. Services solely contribute a major part of the whole Gross
Domestic Product (GDP), subsequently, it shows the major contribution of Services in
taxes also. Service sector does not only dominate the GDP contribution but attracts
the foreign investment towards the Indian Economy. Service Sector contributes
significantly in export as well as provide a large scale employment. India’s services
sector covers a wide variety of activities such as trade, hotel and restaurants, transport,
storage and communication, financing, insurance, real estate, business services,
community, social and personal services, and services associated with construction

11
1.2 HISTORY OF GST

The idea of moving towards GST was first mooted by the then Union Finance
Minister in his Budget speech for 2006-07. Initially, it was proposed that GST would
be introduced from 1st April 2010.The Empowered Committee of State Finance
Ministers (EC) which had formulated the design of State VAT was requested to come
up with a roadmap and structure for GST. Joint Working Groups of officials having
representatives of the States as well as the Centre were set up to examine various
aspects of GST and draw up reports specifically on exemptions and thresholds,
taxation of services and taxation of inter-State supplies. Based on discussions within
and between it and the Central Government, the EC released its First Discussion
Paper (FDP) on the GST in November, 2009. This spelt out features of the proposed
GST and has formed the basis for discussion between the Centre and the States so far.

The introduction of the Goods and Services Tax (GST) is a very significant step in the
field of indirect tax reforms in India. By amalgamating a large number of Central and
State taxes into a single tax, GST will mitigate ill effects of cascading or double
taxation in a major way and pave the way for a common national market. From the
consumers point of view, the biggest advantage would be in terms of reduction in the
overall tax burden on goods, which is currently estimated to be around 25%-30%. It
would also imply that the actual burden of indirect taxes on goods and services would
be much more transparent to the consumer. Introduction of GST would also make
Indian products competitive in the domestic and international markets owing to the
full neutralization of input taxes across the value chain of production and distribution.
Studies show that this would have a boosting impact on economic growth. Last but
not the least, this tax, because of its transparent and self-policing character, would be
easier to administer. It would also encourage a shift from the informal to formal
economy. The government proposes to introduce GST with effect from 1st July 2017.

12
 CHAPTER – 2
RESEARCH
METHODOLOGY

13
2.1 INTRODUCTION :-
Goods and Service Tax is a comprehensive tax levy on manufacture, sale and
consumption of goods and services. GST is termed as biggest tax reform In Indian
Tax Structure. It will not be an additional tax, it will include central excise
duty, service tax additional duties of customers at the central level, VAT, central
sales tax, entertainment tax, octroi, state surcharge, luxury tax, lottery tax and other
surcharge on supply of goods and services. The purpose of GST is to replace all
these taxes with single comprehensive tax, bringing it all under single umbrella. The
purpose is to eliminate tax on tax. This paper will throw light on GST its features and
also impact of GST on various sectors.

2.2 DEFINATION :-

GST means Goods and Services Tax charged on the supply of materials and services.
The term “GST” shall be construed to include the Integrated Goods and Services Tax
(hereinafter referred to as “IGST” or Central Goods and Services Tax (hereinafter
referred to as “CGST”) or State Goods and Services Tax (hereinafter referred to as
“SGST”) or Union Territory Goods and Services Tax (hereinafter referred to as
“UTGST”) depending upon the import / interstate or intrastate supplies, as the case
may be. It shall also mean GST compensation Cess, if applicable.

2.3 OBJECTIVE:-

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

It helps create a common market in India with a uniform taxation system and curb tax
evasion in the country. The laws for GST are far more stringent compared to the

14
erstwhile indirect tax laws. The aim is to have a nationwide surveillance system under
GST, making it easier to catch defaulters and tax evaders.

It removes the cascading effect of the indirect taxes on a single transaction. It also
allows the setting off for prior taxes that are related to the same transactions in the
form of the input tax credit. Under GST, the tax is applicable only on the net value
added during each stage of the supply chain.

The government aims to reduce the need for multiple documentation under the
previous taxation system by introducing a consolidated tax like GST. The idea is to
help companies with an uncomplicated tax filing procedure that will improve their
efficiency and cut down the overall costs associated with business processes.

2.4 DATA COLLETION :-

An item goes through multiple change-of-hands along its supply chain: Starting from
manufacture until the final sale to the consumer.

Let us consider the following stages:

• Purchase of raw materials

• Production or manufacture
• Warehousing of finished goods
• Selling to wholesalers
• Sale of the product to the retailers
• Selling to the end consumers

The Goods and Services Tax is levied on each of these stages making it a multi-stage
tax. A manufacturer who makes biscuits buys flour, sugar and other material. The
value of the inputs increases when the sugar and flour are mixed and baked into
biscuits.

The manufacturer then sells these biscuits to the warehousing agent who packs large
quantities of biscuits in cartons and labels it. This is another addition of value to the
biscuits. After this, the warehousing agent sells it to the retailer. The retailer packages

15
the biscuits in smaller quantities and invests in the marketing of the biscuits, thus
increasing its value. GST is levied on these value additions, i.e. the monetary value
added at each stage to achieve the final sale to the end customer.

Goods and Services Tax (GST) is an indirect tax (or consumption tax) used
in India on the supply of goods and services. It is a comprehensive, multistage,
destination-based tax: comprehensive because it has subsumed almost all the indirect
taxes except a few state taxes. Multi-staged as it is, the GST is imposed at every step
in the production process, but is meant to be refunded to all parties in the various
stages of production other than the final consumer and as a destination-based tax, it is
collected from point of consumption and not point of origin like previous taxes.

Goods and services are divided into five different tax slabs for collection of tax: 0%,
5%, 12%, 18% and 28%. However, petroleum products, alcoholic drinks,
and electricity are not taxed under GST and instead are taxed separately by the
individual state governments, as per the previous tax system.[citation needed] There is a
special rate of 0.25% on rough precious and semi-precious stones and 3%
on gold.[1] In addition a cess of 22% or other rates on top of 28% GST applies on few
items like aerated drinks, luxury cars and tobacco products.[2] Pre-GST, the statutory
tax rate for most goods was about 26.5%, Post-GST, most goods are expected to be in
the 18% tax range. The tax came into effect from 1 July 2017 through the
implementation of the One Hundred and First Amendment of the Constitution of
India by the Indian government. The GST replaced existing multiple taxes levied by
the central and state governments.

2.5 ANALYSIS AND FINDING :-

The tax rates, rules and regulations are governed by the GST Council which consists
of the finance ministers of the central government and all the states. The GST is
meant to replace a slew of indirect taxes with a federated tax and is therefore expected
to reshape the country's $2.4 trillion economy, but its implementation has received
criticism.[3] Positive outcomes of the GST includes the travel time in interstate
movement, which dropped by 20%, because of disbanding of interstate check posts.

16
The President of India approved the Constitution Amendment Bill for Goods and
Services Tax (GST) on 8 September 2016, following the bill's passage in the Indian
parliament and its ratification by more than 50% of state legislatures. This law will
replace all indirect taxes levied on goods and services by the central government and
state government and implement GST by April 2017. The implementation of GST
will have a far-reaching impact on almost all the aspects of the business operations in
India. With more than 140 countries now adopting some form of GST, India has long
been a stand-out exception.

2.6 METHODOLOGY :-

The power to make laws in respect of supplies in the course of inter-state trade or
commerce will remain with the central government. The states will have the right to
levy GST on intrastate transactions, including on services.

• The administration of GST will be the responsibility of the GST Council,

which will be the apex policy-making body for GST. Members of GST
Council will comprise central and state ministers in charge of the finance
portfolio.

• The threshold for levy of GST is a turnover of Rs. 1 million. For a taxpayer
who conducts business in a northeastern state of India the threshold is Rs.
500,000.

• The central government will levy IGST on inter-state supply of goods and
services. Import of goods will be subject to basic customs duty and IGST.

• GST is defined as any tax on supply of goods and services (other than on
alcohol for human consumption).

• Central taxes such as central excise duty, additional excise duty, service tax,
additional custom duty and special additional duty, as well as state-level taxes
such as VAT or sales tax, central sales tax, entertainment tax, entry tax,
purchase tax, luxury tax and octroi will be subsumed in GST.

17
2.7 SCOP :-

GST is a value-added tax levied at all points in the supply chain, with credit allowed
for any tax paid on input acquired for use in making the supply. It would apply to both
goods and services in a comprehensive manner, with exemptions restricted to a
minimum. In keeping with the federal structure of India, it is proposed that the GST
will be levied concurrently by the central government (CGST) and the state
government (SGST). It is expected that the base and other essential design features
would be common between CGST and SGSTs for individual states. The inter-state
supplies within India would attract an integrated GST (IGST), which is the aggregate
of CGST and the SGST of the destination state.

GST would be levied on the basis of the destination principle. Exports would be zero-
rated, and imports would attract tax in the same manner as domestic goods and
services. In addition to the IGST in respect of supply of goods, an additional tax of up
to 1% has been proposed to be levied by the central government. The revenue from
this tax is to be assigned to the origin states. This tax is proposed to be levied for the
first two years or a longer period, as recommended by the GST Council.

With GST, it is anticipated that the tax base will be comprehensive, as virtually all
goods and services will be taxable, with minimum exemptions. GST would bring in a
modern tax system to ensure efficient and effective tax administration. It will bring in
greater transparency and strengthen monitoring, thus making tax evasion difficult.
While the process of implementation of GST unfolds in the next few months, it is
important for industry to understand the impact and opportunities offered by this
reform. GST will affect all industries, irrespective of the sector. 1 | Sep’17

18
CHAPTER – 3
REVIEW OF
LITERATURE

19
3.1 INTRODUTION :-

The Taxation was born and shaped with civilization. The structure and complexity of
the tax system have been developed along with the development of civil society. The
sovereign authority of the Government to extract tax is the life of taxation,
Governments’ need for resources is its bargaining power and human instinct of
reluctance to sacrifice money is the reason for its mandatory imposition.1 Kautilya`s
in Arthasastra state that the taxes are often perceived to be a measure for raising
resources for the government. In the primitive barter economies of the medieval
period in Europe and even in ancient India, the primary objective of taxation was to
raise resource for the economy. Goods and Services Tax is basically destination based
consumption tax levied on goods and services. Simply, GST is a single tax on the
supply of goods and services, right from the manufacturer to the consumer. In the
nutshell, it’s a tax would be levied only on the value addition with transfer of input
tax credit on the subsequent stages of value addition which means that the final
burden of tax shall be borne by the final consumer of the goods or services. The
Goods and Services Tax is a combination of two words “Goods” & “Services”. Where
Goods means every kind of movable property other than money and securities but
includes actionable claim, growing crops, grass and things attached to or forming part
of the land which are agreed to be severed before supply or under a contract of
supply2 {Sec. 2(52)} and Services means anything other than goods, money and
securities but includes activities relating to the use of money or its conversion by cash
or by any other mode, from one form, currency or denomination, to another form,
currency or denomination for which a separate consideration is charged.

3.2 Goods and Service Tax: Literature Survey :-

G. Garg, 6 (2014) analysed the impact of GST on Indian tax scenario. He tried to
highlight the objectives of the proposed GST plan along with the possible challenges
and opportunity that GST brings. He concluded that 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 i.e the industry, business including 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,

20
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. Pinki et al., 7
(2014) the authors in the paper have explored the concept of GST, the need to
introduce it in India, the hurdles in introducing it in India and suggestions to
overcome the same. The paper also discusses the benefits of introducing GST at the
earliest. The authors have discussed the options to introduce the dual GST in India
which could be Concurrent Dual GST, National GST or State GST. Under the
concurrent dual GST the better option was the one where GST is applied on both
goods and services. The other option explored was whether the Central GST would be
on goods and services but state GST would be only on goods since state to collect
GST in services is difficult to determine. This option also recommended one single
return with both CGST and SGST details and PAN based registration. The authors
have also discussed the constitutional amendments required if GST is ever to be
introduced since without the amendment taxing both goods and services using one tax
is not possible. The paper also highlights the issues in the credit mechanism in the
CGST/SGST model since it is difficult to practically implement in terms of
determination of place where service is taxable. The other challenges to introduction
of GST in India highlighted are the availability of strong IT network, infrastructure
and programmes, agreement on other provisions like basic threshold, exemption to
goods/services, rates to be applied, etc.

3.3 CONCEPTUAL FRAMEWORK :-

Tax reform, a part of structural reform in India commenced its journey in 1991
headed by Raja Chelliah Commission with a specific objective to recommend a tax
system that would increase revenue productivity, to simplify and to rationalize the tax
structure and tax administration as well as for smooth transition to market driven

21
economy (Rao, 2016). The thrust of reform has focused to abolish higher rates of
taxes, widening the tax base and to simplify the tax structure, broadly in conformity
with the global standards. Based on M. Govinda Rao’s Report as recommended by
Chelliah, in 1993 with three services (telephone, non-life insurances and stock
brokerage) service tax was introduced and even Chelliah recommended replacing
state sales tax by VAT (Jain, 2016). The present indirect tax system has been
permitting restricted inter levy credits between excise and service tax with no cross
credits across the sales tax paid and the proposed GST regime shall extend adequate
quantum of credits to the members of the entire supply chain under a common tax
base (Sivasubramanian, 2016). But, the model GST has some anomalies like treating
securities-shares, bonds as goods which are an input to value addition but not the
reverse. Further, the proposal to levy tax on interfirm transfer of services without
fetching payments may lead to cumbersome valuation process and it needs to be
addressed properly (E.T. Editorial, 2016). The GST would abolish 17 different types
of taxes levied by central and state governments, neutralize cascading effect of
multiple taxes, boost up GDP by 1.5-2 percent and reduce the prices of a range of
goods and services (Naidu, 2016). The current list of benefits under state or central
VAT regime are likely to be converted into refund mechanism and state and central
VAT benefits would be confined to state GST (SGST) and central GST (CGST)
respectively (Khattar, 2016). The proposed GST would have a unique feature of
‘invoice-to-invoice’ matching, first of its kind in the world, would reduce hard cash
transactions and enhance the GST compliance for tax payers for their sustainability
(Raistrick, 2016), even the service sector can probably to mitigate the higher rate of
taxes by better procurement of input tax credit (Dimri, 2016). Four slab rates - 5, 12,
18 & 28 percent respectively have been argued as better than a single rate as the latter
may have a substantial price effect on few products; but beside these four rates other
rates like a zero rate for the food items, a cess on items of the highest rate category,
identified as sin or demerit goods like luxury items and tobacco products have been
finalized. The cess on demerit goods would raise funds to compensate the revenue
losses of states; while the rate on gold would be decided after getting the revenue
flexibility. The multiple rates have been proposed on different items used by different
segments of the society and to avoid regressive effects of taxation (Jaitley, 2016).
Moreover, with the standard rates of 18 percent and 12 percent the inflationary impact
in the proposed GST regime along with revenue neutral rate (RNR) of 15 percent
22
would be minimum (Pangaraya, 2016). The decisions of the GST council to exclude
businesses having yearly turnover below INR 0.20 and 0.10 million for general
category and north eastern states respectively and the proposed compounding tax for
businesses up to INR 0.50 million annual turnover would substantially reduce
administrative and compliance 42 Journal of Commerce & Accounting Research
Volume 7 Issue 1 January 2018 costs for the government exchequers. Besides, the
decision to keep the tax payers having annual turnover of less than INR 15 million
under the exclusive control of states and the services tax under central tax
administration to shun double taxation is commendable (Rao, 2016). The study has
attempted to survey the literature on tax reforms in global context with an exclusive
focus on GST in the transition period when India decided to implement GST from the
financial year 2017-18 after both the houses of Parliament gave their nod in August,
2016 by passing the Constitution Amendment Bill (CAB). The study has followed a
research paradigm as drawn in Fig. 1 to execute work systematically.

3.4 Presumptions Prior to Implementation of GST :-

investigated the effect of GST execution in India and repeats that GST would be
fruitful just if the nation has a solid IT arrange and presume that it's a weak endeavor
to excuse circuitous duty structure. The administration of India should examine the
GST system discovered by different nations and furthermore their aftermaths before
actualizing it. At an identical time, the govt should put forth an attempt to protect the
huge poor populace of India against the reasonable swelling because of execution of
GST. Presumably, GST will improve the common assessment framework and can
assist with disposing of wasteful aspects made by the predominant flow
heterogeneous tax collection framework as long as there's an a reasonable accord over
issues with edge limit, income rate, and consideration of oil based goods, power,
alcohol and land. Rishi Gupta (2017) contemplated the effect of GST in India and
reasons that the GST system will give alleviation to makers and buyers by giving
wide and far reaching inclusion of info charge credit set-off, administration charge set
off and subsuming the few assessments. Productive plan of GST will cause asset and
income gain for both Center and States significantly through enlarging of expense

23
base and improvement in charge consistence. It are frequently additionally inferred
that GST positively affect different divisions and industry.

3.5 ELECTRONIC APPLIANCES:-

The GST tax declared on various electronic products is high as compared to the
current tax. Appliances such as A/C, refrigerator, heaters, dish washers, printer,
copiers will be costlier. The current rate is 26% (average VAT rate on most of the
household appliances is charged around 11-12.5% in most of the states. Excise duty is
charged at the rate of 12.5%) but the GST tax is of 28% which will make the
appliances costly. Mobile phones will become costly as the tax has been levied of
18% as existing of 6%.

3.6 SERVICES :-

Certain services such as cinema and transport with railway and airlines will be
cheaper but on telecom and IT services will become expensive. The taxes on cinema
are capped to 28% as present of 15-100%. Tickets of railway and economy class will
become cheaper. Also hotel services will become cheaper.

3.7 Take of experts on new GST rates in the industries.

India says that the government’s decision of GST rates of 5 percent for identified life
saving drugs is welcoming and was expected for the pharma industry. The pharma
companies will ensure that the GST rate is effectively captured to negate the
increasing tax rate. The more relevance for the company’s is that whether APIs are
exempted. How the industry treats the exemption is essential to see.

CEO, OYO his opinion is that a lower tax rate for budget hotels sector will ensure that
the industry’s quality upgrade continues while delivering standardized
accommodation to millions of middle-class travelers. Also new jobs will be created

24
with the decrease in the tax rates. Hotels are the single biggest contributor to tourism
industry which accounts for 7.5 percent of the GDP. The move will boost revenue
from travel and tourism sector for the next many years. The industry is expected to
contribute 280 billion dollars to the GDP by 2026 and will pass on benefits of uniform
taxation across the country to travelers.

The new GST rates will bring stability to the changing and adding of new taxes. The
tax rates are such that they are beneficial to the common man to a certain extent. The
tax rates are a welcoming change by the government. The GST tax rates will make
goods and services cheaper. They will be for the benefit of the general public .

25
CHAPTER – 4

DATA COLLECTION
&
DATA ANALYSIS

26
4.1 INTRODUCTION :-
GST is a tax on consumption which is levied on the basis of Principle of destination at
the final consumption point. It avoids the cascading effect or a tax on tax which
increases the tax burden on the end consumer. It is something like a merchant pays to
procure goods or services can be set off later against the tax applicable on supply of
goods and services. In other words, GST replaces multiplicity of taxes imposed by
central and state governments, which subsumes all indirect taxes like Central Excise
duty, commercial tax, Octroi tax/charges, VAT (Value added tax) and service tax.
Therefore, manufacturers, wholesalers and retail merchants can avail tax credit
mechanism under GST régime. It is conceptualized as „One Nation and One tax‟ and
expected to eliminate the existing cascading tax structure, ease compliances and
create uniform tax rates and structure and may help in reducing additional tax burdens
on consumers. As a part of Major taxation reform post-independence and to increase
the Tax to GDP ratio the Govt. of India had rolled out GST from 1st July, 2017,
Where in his Budget speech the then Finance Minister said India is a non-compliant
tax society as 36% of employees only fill tax returns in organized sector and 33% in
informal sector and 43% of the registered companies. Indian Tax to GDP ratio is at
16.6% which is well below the emerging market economies and OECD average about
21% and 34% respectively. Under this system of taxation, the end consumer pays the
final tax but an efficient input tax credit system ensures that there is no cascading of
taxes- a tax on tax paid on inputs that enter the manufacture of Products. In order to
avoid the payment of multiple taxes like central sales tax, service tax and excise duty
at the Central level and VAT at the State ISSN GST would unify these taxes and
make a consistent market throughout the country. The integration of varied taxes into
a GST system will cause an efficient cross-utilization of credits. The data on GST
revels that the tax collection has dropped below ₹1 lakh crore mark to ₹ 91,916 crores
for September 2019 which is declined to 2.67% in comparison to the revenue during
September 2018(Paisa Bazar.com). The National Restaurant Association of India‟s in
the year 2013 in its foodservice report discloses that the Indian food service industry
is ₹2,47,680 crores and is predicted to increase by 2018 to ₹4,08,040 crores which is
at the rate of 11%. This growth is due to the growth of the good Indian bourgeoisie,
rapid urbanization, growing awareness of western life style.

27
4.2 Effect of Gst on Food and Restaurant Industry :-

Since food constitutes an oversized portion of the consumer expense of lower income
households, any tax on food would be regressive in nature i.e. it could impact the
consumption pattern of the society. Therefore, extending GST to food processing
sector will cause difficulty visible of the very fact that production and distribution of
food is essentially unorganized in India. On global front, most of the countries tax
food at a lower rate keeping in sight the considerations of fairness and equity. Even in
few countries like Canada, UK and Australia where food constitute a comparatively
small portion of the consumer basket, food is taxed at zero rates. While in some
countries, food is taxed at a typical rate which is as low as 3% in Singapore and Japan
at the inception of the GST. Even in international jurisdictions, no distinction is drawn
on the degree of processing of food. Hence, the advantage of lower or zero tax rates
should even be extended to any or all food items in India regardless to degree of
processing. Whereas India thinks about GST on food services is 5%, 12% or 18%
depending on the verity of things including but not limited to form of establishment
and place of restaurant or food service provider. GST on food services replaced the
former VAT and service tax regime. However, the service fee which is implemented
by restaurants is separate from GST. GST on food is applicable to food items
purchased by the individual which is currently at 18%.

Pre and Post GST Tariff on Restaurants Pre-GST taxation was found to be with
Service Tax, Service fee, and VAT being added over and above the food value.

The components of the bill were:

• VAT: This is often the tax charged on the food portion of your bill was wont
to be 14.5%
• Service tax: This is often the tax charged on the services provided by the
restaurant. Service tax is not an income and merely a tax collected from you
and submitted to the govt. To avoid unnecessary complications government
had already divided the service portion and food portion and charge taxes
accordingly. The Service tax used to be 14%.
• Service Charge: This is a charge applied by the restaurants and not by the
government. The service fee wont to be 10%.

28
 • Krishi Kalyan Cess of 0.5% and Swach Bharat Cess of 0.5% wont to be
levied additionally.

Sr. No. Type of Restaurants GST Rate

1 Railways/IRCTC 5% without ITC

2 Standalone restaurants 5% without ITC

3 Standalone outdoor catering services 5% without ITC

4 Restaurants within hotels (Where room tariff is less 5% without ITC

than ₹ 7,500)
5 Normal/composite outdoor catering within hotels 5% without ITC
(Where room tariff is less than ₹ 7,500)
6 Restaurants within hotels* (Where room tariff is 18% with ITC
more than or equal to ₹ 7,500)
7 Normal/composite outdoor catering within hotels* 18% with ITC
(Where room tariff is more than or equal to ₹ 7,500)
• This covers individuals supplying catering or other services in hotels (having room
tariff of ₹7,500 or more) and not any hotel accommodation services.

• In the GST regime, the Service Tax and VAT amount will be subsumed into one
single rate, but you may still find service charge doing rounds on your food bill.

• Below we have provided a high-level comparison of how your food bill will look pre
and post-GST.

4.3 Effect of GST on Health Care Service :-

Journal of Management Research and Anlysis (JMRA)- January-March 2019 55
S&P CNX Nifty from 1st January 1996 to 31st December 2012, using
Autocorrelation, Variance ratio test, Kolmogrov-Smirnov and Runs Test. The results
evidenced that Indian Stock Market was not weak form efficient during all periods
of study. Fatih Konak and Yasin Seker (2014), analyzed the weak form efficiency
of Financial Times Stock Exchange 100 (FTSE 100) for the period from January
2001 to November 2009. The presence of unit root was examined using
Augmented Dickey Fuller and Phillips Perron Test. GARCH (1,1) was used to
examine the market efficiency. The results supported the weak form market
efficiency of FTSE 100. Mohammad Shafi (2014) examined the weak form

29
efficiency in Indian Capital Market, using the daily return of Nifty stocks. The
tools used for the analysis were Runs test and Autocorrelation test. The results
revealed that Indian Capital Markets were inefficient in the weak form. Priyanshu
Sharma and Manojsain (2015) analysed the impact of GST implementation, on
banking sector index of Indian stock market, during before and after GST
implementation. The study concluded that there was positive effect of GST
implementation on the banking sector. Milandeeep Kour (2016) theoretically
analysed the difference between past indirect taxes and GST. It was concluded that
GST did play a dynamic role in the growth and development of country. The results
of the study, by Pandey, D. K., & Jaiswal, A. K. (2017), showed that demonetization
exercised by highly negative impact on the performance of stock markets. Alice
Mani, concluded that the GST implementation influenced the automobile and
banking sectoral indices of Indian stock markets. The study, by Lourdunathan F.
and Xavier P (2017), examined the background, prospects and challenges in the
implementation of goods and service tax in India. It was concluded that GST had
a positive impact on various sectors of Indian economy. Mohan Kumar and Yogesh
Kumar (2017) responded to the questions, whether the GST influenced
the FMCG Sector of Indian economy. The results of the study revealed that the
GST had a positive effect on FMCG Companies‘ performance. Using descriptive
statistics, Rashi Gupta (2017) discussed the benefits and opportunity of goods and
services tax and its impact on Indian economy. It was found that GST
implementation influenced the Indian economy in a positive manner. Meenakshi
Bindal (2018) tested the working mechanism of GST to evaluate the advantages and
challenges of GST and found that GST mechanism has been designed in such a
way that it is expected to generate good amount of revenue, for both Central and
State Government.
Many researchers have analyzed the impact of GST on various sectors and came up
with different conclusions. It is quite natural that when any reform is introduced by
the Government, it will lead to many consequences. The results of some of the
major studies were highlighted in the above paragraph. It is to be noted that all the
earlier studies, either at national or international level provided different views
on market efficiency. Hence that market efficiency had to be reviewed and analysed,
based on the time-to-time information flow, which has its effects on the markets.
Hence the present study attempts to fill the gap by examining the price movements
30
of health care and pharma sectoral indices of BSE and NSE, which can help
investors to understand the dynamics of market movements with respect to health
care companies and diversify their portfolio in health care stocks. The results of
the present study would contribute to the stock of knowledge, which can be added
to the extant literature on the theme under study.

4.4 Effect of GST on Automobile Sector in India :-

The progress pattern of India is very high and by 2030 it moving forward to convert
the 3rdmajor economy of the world. Government is taking significant initiatives to
increase the overall economic growth of the county. The Automobile sector in India is
one of the major in the world. The industry role to country’s Gross Domestic Product
(GDP) for 7.1%. India turn into the fourth largest auto market in 2018 with sales
increasing 8.3 %every year to 3.99 million units. India is one of the largest tractor
manufacturers in the world, second largest two-wheeler manufacturers, second largest
bus manufacturers, fifth largest heavy truck manufacturers, sixth largest car
manufacturers, and eight largest commercial vehicle manufacturers. Under
automotive mission plan 2026, the goal is to make Indian automotive industry
between topmost three in the manufacturing, engineering and exportation of vehicles
and components in the world and anticipated to accounts for 12% of India GDP
during the next decade. The automobile sector is mainly encompassed of commercial
and non-commercial vehicles, with the earlier comprising of vehicles like three-
wheelers, minibuses, and the final containing of personal vehicles like two wheelers,
small and luxury cars, SUVs etc. Rational of the Study GST has mixed impact on the
Indian economy. Some sectors are positively impacted by it whereas some sectors are
negatively affected by it. Main sectors that were adversely affected by GST were
agriculture and textile sector, the reason being outside the tax regime before GST. As
government has narrowed down the exempted items list, the sectors coming under
GST area are showing slight resistance. However certain rules and regulation
regarding return filling and input tax credits are still unclear and these should be
properly analyzed so that the tax area can be enhanced.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

31
of returns for both central and state government. As per above discussion it is
important to study that weather this implementation of GST can solve various
problems of different sectors of India Economy.

4.5 Effect of GST on Wholesalers and Retailer Service :-

The administration has altered the prices of most major FMCG and retail products
since its inception. In May 2017, the GST rate plan for goods and services was
released for the first time. As a result, wholesalers and retailers have encountered
several problems, as listed below:

• Technical difficulties: Because the pace of change in items was so significant,

wholesalers and retailers had very little time to study product classification
and update IT systems to reflect GST rates on invoices. As a result, the
magnitude of the rate structure change may be seen in the conclusions of the
23rd and 28th GST Council sessions, held in November 2017 and July 2018,
which saw the 28 percent band items cut from 228 to 37 percent.While the
government's rate reduction was a welcome step, the re-classification of
commodities and restructuring IT systems created a challenge for wholesalers
and retailers.
• The difficulty with reprinting pricing:Retailers have to update their ERPs
every time a rate change is announced. The impact of such frequent rate
changes on pricing decisions is likewise a function of such rate adjustments.
Price adjustments and reprinting of Maximum Retail Prices (MRP) on
remaining items caused issues such as overnight reprinting of MRPs on
inventory stored at several locations or in transit.
• Problems with product categorisation:As a result of the present four-tier GST
rate scheme, there have been categorisation disputes. The merchants' issues
have been worsened by-product categorisation ambiguity. Some objects are
capable of dual classification in the absence of a specific explanation or
precedent. Product classification is a difficulty for the FMCG business under
GST. Furthermore, rate structure descriptions do not always match HSN
descriptions, causing product categorisation confusion.

32
 • Concerns over adherence procedure:Due to the limited timeline, various
wholesalers and retailers failed to upgrade their ERP systems to comply with
GST. Furthermore, the ERP experts could not incorporate the three tax
structures (CGST, SGST, and IGST) into the Global ERP system due to their
complexity. As a result, to comply with GST, several wholesalers and
retailers were forced to quit the Global Platform(s).Furthermore, challenges
such as credit notes not linked to the original invoice, limitations on setting
off credits, and the lack of a facility to file an amended return made it
challenging to comply with GST fully.
• The Anti-Profiteering Rules are not well understood:The rules describe the
anti-profiteering procedures in detail, including processing techniques, panel
establishment, and the roles of each authority in the Anti-Profiteering
organisation. However, it provides no direction on how a company can
identify and analyse the potential benefits of a reduced tax rate or higher input
credit availability.Furthermore, there are no guidelines for making pricing
modifications at the business, product, or SKU level. Thus, if profiteering is
controlled at the entity level or for a group of consumers, it may not ensure
that the price of a particular product is reduced proportionally for all
customers, as the goal of such laws may be.
• Challenges in E-commerce:The idea of Tax Collected at Source (TCS) was
developed under GST. E-commerce operators are required to deposit TCS on
online transactions done via their site, which would be available to sellers as a
set-off against their tax liability. Different TCS returns, timing discrepancies
in deductions, and TCS set-off are just a few of the issues that might arise.The
adoption of the GST has been a watershed moment in India's economic
history.

Despite some teething difficulties, the GST is projected to help Indian industry
(including retail) achieve its objective of a rating of less than 50 on the World Bank's
Ease of Doing Business index. The free flow of GST input credits, supply chain
rearrangement, import facilitation measures, and rate reductions have already begun
to benefit the wholesale and retail industries.

33
4.6 Effect of GST On Agricultural Service :-

The overall impact of GST is foreseen to be positive for almost all of the sectors
including the agriculture sector. The agriculture sector contributes more than 15 per
cent of Indian Gross Domestic Product. This is among the largest contributing sectors
of India’s economy.

• Resolving the issue of transportation: Implementation of GST is supposed

to improve the mobility of goods and services from one state to the other. This
would, in turn, improve the transportation of agricultural products between
states and different parts of the country. This would further improve the
overall revenue generation for the sectors and the individuals involved in the
sector particularly.

• Creation of a National Market for Agricultural products: This free flow of

agricultural produce within states and from one state to the other would help in
creating a national market for agricultural produce. This National Agricultural
Market (NAM) proposed by the central government would involve the farmers
and the traders of the agricultural produce market. The purpose of this
National Agricultural Market is to create a centralized regulated marketplace
and a common e-commerce platform for conducting impartial, transparent,
and free trade of agricultural products. Creation of NAM would help in
subsuming all the different indirect taxes implemented in the agriculture
sector, thus creating a hassle-free and transparent supply chain by providing
due input credit for the taxes paid for each value addition in the supply chain.
This would further enable the free flow of agricultural commodities across
India. Further, this free flow of agricultural commodities due to an improved
supply chain would help in reducing the waste of agricultural produce which
usually enjoys a lower shelf life. This reduction in the waste of produce and
time of supply would, in turn, benefit the farmers and the traders involved in
the sector. Thus, the agricultural sector is bound to become more efficient and
effective under the GST regime.
• Gains for the Farmers: Farmers or those who are involved in the creation of
all the agricultural products have always been at the lagging end of the supply
chain. This lagging end has always been neglected and poverty has almost
been synonymous with this end of the supply chain. Implementation of GST

34
 would reduce the time of the supply chain which is bound to reduce waste of
agricultural produce. This clearly indicates that more products would reach the
market and reap benefits for the farmers. Further, the farmers would also be
benefited by the creation of National Agricultural Market by selling their
produce at the best price directly.
• Efficient Supply Chain: While GST is bound to create shorter, efficient and
effective supply chains for the agricultural market, implementation of GST
would also ensure an increase in transparency, increase reliability, increase in
the effective sale and purchase, and reduce in the supply chain timeline by
ensuring smooth flow of agricultural produce from the farms to the
marketplace.

Changes are often resisted and such resistance arises because of the challenges faced
while implementing the change or the struggle of coming out of the comfort zone
during the process of change. Some of the changes, which are being pre-empted while
implementing GST specifically in the Agricultural Sector include:

4.7 Effect of GST on Education Service :-

Education is the primary requirement of a nation acts as weapon in itself for any
country and its growth and development of economy. Since education is a service, so
it attracts service tax as per old laws. As per service tax laws, education sector was
kept out of service tax net as mentioned in negative list. Education and Training
industry is important place in Indian economy.GST law will also impact on Education
and Training industry. Now check GST Impact on Education Sector and GST Rates
on Education Industry…

For coaching fees, instead of 15%, 18% tax will be charged – the education is out
of GST to say. But only in case of school-college fees. There was a 15% service tax
on non-conventional courses and coaching classes. Now 18% tax will be charged.
Eating and drinking services in the hostel will also be expensive. There seems to be
concerns in valuation of coaching services in opinion of the industry practice of
discounts / concessions / scholarship. The proposed valuation rules are different from
the existing ones and as such coaching institutes need to frame an appropriate policy
for such discounts in advance making it a part of documentation.

35
Children’s Color book 0 0 0

Stapler, pencil, sharpener 18.68 12 -6.68

School Bag 12.5 18 +5.5

Fountain pen, Nib 18.13 18 -.13

Refill 18.69 18 -.69

Exercise Book 18.68 12 -6.68

Ball pen 18.68 12 -6.68

▪ Education is more a social activity rather than a business one.

▪ The government has a constitutional obligation to provide free and
compulsory elementary education to every child.
▪ Thus, to promote education, it would be beneficial if educational services are
exempted from tax
▪ GST Act tries to maintain a fine balance whereby core educational services
provided and received by educational institutions are exempt and other
services are sought to be taxed at the standard rate of 18%
Services provided by The Indian Institute of Management, as per the guidelines of the
Central Government, to their students, by way of the following educational
programmes, except Executive Development Programme:

▪ (i) A two-year full time residential Post Graduate Programmes in

Management for the Post Graduate Diploma in Management, to which
admissions are made on the basis of Common Aptitude Test (CAT), conducted
by the Indian Institute of Management;
▪ (ii) Fellow Program in Management;
▪ (iii) five-year integrated program in Management;
Further, any service provided by–

(i) The national Skill Development Corporation set up by the Government of

India;

36
 ▪ (ii) A Sector Skill Council approved by National Skill Development
Corporation;
▪ (iii) An assessment agency approved by Sector Skill or National Skill
Development Corporation;
▪ (iv) A training partner approved by National Skill Development Corporation
or sector skill services. However GST will only be exempt from services
related to catering to pre-school till higher secondary education. As colleges
and other higher educational institutes are not mentioned in the exemption list,
so they are likely to be levied at 18%.
Post GST implementation no tax would be levied on services provided by educational
institutions from preschools to higher secondary level. Although services provided by
higher educational institutions are not taxed, services to those institutions are liable to
tax under GST.As school education, from preschool to higher secondary has been
kept out from GST, governmet will still keep tuition fees, stationary & text books cost
low.

Thus, the exemption may be restricted to activities or transactions done by Central

Government, State Government or any Local Authority. It, consequently, appears that
education services provided by Government will not be taxable. There are no specific
provisions for inclusions or exclusions of coaching and training services or any other
activity allied to education elsewhere in the proposed law.

There seems to be concerns in valuation of coaching services in opinion of the

industry practice of discounts / concessions / scholarship. The proposed valuation
rules are different from the existing ones and as such coaching institutes need to frame
an appropriate policy for such discounts in advance making it a part of
documentation.

4.8 Effect of GST on Telecommunications Service:-

GST – possibly one of India’s greatest indirect tax reforms – proposes to unify the
multitude of indirect taxes in India and bring all goods and services under a single

37
GST. The telecommunications sector has become one of India’s core economic
drivers, India is only second to china in term of the number of connections and
subscribers, the sector is also among the top five employment generation in india.
Telecom sector of India can basically be divided into three parts, the telecom service
providers, infrastructure providers and equipment manufacturers. Now check more
details for “Impact of GST on Telecommunication Sector” from below

• Present Taxation for Telecommunication Sector:- In the present scenario,

this sector could be broadly divided into three segments: telecom service
providers, infrastructure providers, and equipment manufacturers. Although
the emergence of the latter two is thanks to the former, their importance in
terms of the telecom sector as a whole is crucial. Given the mammoth volume
of subscriber connections and the revenue generated from this sector, it is
evident that the telecom industry is due for a serious overhaul with the
evolving indirect tax scenario i.e. the introduction of Goods and Services Tax
(GST).

• Place of supply for telecommunication: Currently, in cases where both the

telecom service provider and service receiver are in India, services would
accrue at the place of service receiver through Rule 3 of the Place of Provision
of Service Rules; but given its central nature, the complications of
chargeability were not pondered upon in depth. However, under GST, it would
be pertinent to determine the state that will receive the revenue of the SGST so
paid and hence, the telecom companies will require a detailed explanation as
to what could be perceived as the Place of Supply of Service. Subscribing to
the Destination Principle, we believe that there are two major possibilities for
recognising place of supply, one being the Place of Service Receiver
(permanent registered address) or the Location of Service Receiver (tracked
per second by the telecom tower the receiver is utilising). However, based on
feasibility, the former (Place of Service Receiver) could be a likely favourite
among lawmakers.

38
 • Sale of SIM cards: sale of goods or provision of service? The crux of the
various judicial rulings is that the amount received by the cellular telephone
company from its subscribers towards SIM cards will form part of the taxable
value for levy of service tax as the SIM cards on their own, without the
services, would hardly have any value. However, there is a contradiction,
wherein certain state VAT legislations (e.g. Andhra Pradesh, Goa, Gujarat,
etc.) have specifically included SIM cards in the VAT schedules. So it is not
clear whether sale of SIM cards is a sale of goods or provision of service.

Under GST, it would be critical to understand how the same would be treated – as
goods or services or a comprehensive definition of goods and services would be
introduced to eliminate this problem of double taxation faced by the sector.
Furthermore, other points for consideration are where SIM cards shall be taxed i.e.
what shall be the place of supply – when telecom companies sell the SIM card to
distributors, when the distributor sells the SIM card to the customer, or when it is
activated by the customer? Would tax be levied on each point of sale and would the
tax revenue be distributed among the states accordingly or would tax be levied on the
initial sale transaction exempting the subsequent sale transaction? Furthermore, under
GST legislation, it would also be vital to evaluate the state that shall be eligible for
revenue of SGST.

• Change in the system of taxation: Currently, selling of recharge vouchers to

agents/distributors is exempt from service tax as per Mega exemption
notification no.25/2012 dated 20 June 2012. The liability to pay Service tax on
the Maximum Retail Price (MRP) (which includes the agent’s/ distributor’s
margin) is on the telecom industry. As the GST law currently reads, in the
absence of MRP-based valuation for the telecom and specific exemption to the
distributors, it appears that each leg of the sale of SIMs would be subject to
GST. This would mean that the distributors and all retailers in the supply chain
would get taxed.
• Mobile Wallets: There are several diversities that exist among the telecom
companies that engage in a number of telecom services which includes mobile
wallets. These need to analyze and each of its nature needs to be evaluated to
gain knowledge of the impact of such transactions. This is, however, a very

39
 complicated process because the telecom companies make payments that
include bank license by which they start their operations. Top telecom services
providers including Airtel and Vodafone have already launched their mobile
wallets, airtel money and Vodafone M-pasa. Most mobile wallets in India
follow either the closed model or the semi-closed model, which restricts the
utilization of credit to a specified set of services. The indirect taxes
implication on mobile wallet services remains clouded as several councils
across India have different opinions regarding its point of taxation under GST
regime.

4.9 Effect of GST on Real Estate service :-

It will reduce the cost of buying houses for buyers as in the previous tax regime, they
had to pay Service Tax and VAT on purchase of residential unit when booked prior to
their completion, developers had to pay excise duty, custom duty, CST, Entry tax
which is non-creditable tax cost, on their professional side, which is included in the
price of units. With the uniform tax rate, developers will have input credits on GST
paid for services and goods purchased by them which will reduce the cost for them
and can be passed on to the buyers.

Now coming to the point of Value added tax (VAT), after the implementation of GST,
the tax structure is under the simplification process. After GST implementation, the
government has not included the stamp duties under it.

All under-construction properties will invite a GST of 5 per cent with no input tax
credit. However, GST will not be applicable to ready-to-move-in properties. In this
category, the actual GST rate is 18 per cent. But one-third of this 18 per cent is
deemed as the value of land or undivided share of land supplied to the buyer of the
property. Hence, GST rate lowers down to 5 per cent on under-construction flats,
properties or commercial properties with the full input tax credit.

The carpet area of a property in the metro city up to 60 square metres (around 650
square feet) and in the non-metro i.e. 90 square metres (970 square feet) condition is
included in the affordable housing scheme. While the affordable house will be

40
considered if the value of the property is less than 45 lakhs and would accrue 1
percent GST and more than that would levy the 5 percent GST rate.

The GST regime has replaced multiplication of taxes and the builders now have to
pay a higher amount in the 4-tier taxation but would get input credits eventually.
Now, the burden of the higher taxes will be passed over to the home buyers. The
home buyers will end up paying GST apart from those who are linked under the
CLSS scheme.

• Applicable GST Rate on Affordable Housing Units:- Towards the aim to

address the housing necessities of the lower and middle-class people the
government of India (GOI) has provided the affordable housing policy in June
2015. With respect to the common residential housing which shall be cost-
effective are subjected towards lower goods and Service Tax (GST), which
gives relief to the affordable people who buy home during the period of
purchasing the home. As per the tax and investment experts, the home buyers
are required to furnish GST during the time of purchasing, besides that they
just have to understand what an affordable house means as per the GST.
• 12% GST on Construction Services Low-cost Housing Units Flood-
affected Individuals in Kerala:- The state Kerala has seen the damage due to
the flood comes in the year 2018. The Habitat Technology Group is the non-
governmental organization that provides shelter in developing the solutions.
The society gives services for the construction of houses and advisory services
for the architecture. M/s. Sri Sathya Sai Trust, Kerala a charitable organisation
engaged in providing the shelter who has affected from the flood.
• GST Rates on Purchase of Flats, Property & Home Under CLSS:-For
Resale Flats or Property: According to para 5(b) of Schedule II of CGST Act,
2017, there will be no GST on resale, completed property or flats.
• Real Estate Ranking Affected After GST & Demonetisation:- The GST
along with demonetisation has hit the real estate ranking due to its liquidity
crunch and compliance addition. The effects have also reached the boundaries
of developments prospects and investments in the cities. All these factors lead
to the ranking impact towards lower than before according to the reports by
Urban Land Institute and consultancy PwC.

41
The report is based upon the comments and actual siting of 600 professionals from
real estate in the report named ‘Emerging trends in real estate–Asia Pacific 2018’.
According to the reports, Mumbai has fallen to 12th rank in front of it’s earlier 2nd
ranking while Bangalore and Delhi met the same fate as drowned from 1 and 13 to
direct 15th and 20th respectively in the investment destination graph. There is an
average increase in the rentals which is around 8 to 10 percent per annum while the
office segment is near to 5 to 7 percent growth per annum. The issues are raised due
to the luxury residential extra supply which is taking away the foreign investors from
the sector.

• GST Rate on Construction Material:- The following table lists the GST
effect on real estate with GST applicable to different construction
materials:

Note :- These rates are suggestive. These are appropriate as of 27 December 2018.
These rates may be different from the actual rates as they are subject to periodic
change. You can check the correct rates online in case of any doubts.

42
 • Registration and Stamp Duties

The collection of registration and stamp duties is the responsibility of the State. The
rates of registration and stamp may be different in different states and may be
different in different circles of the states too. The registration and stamp duties are
applicable in case of every infrastructure-related transactions whether sale/resale of
property or construction of new properties while GST is applicable to supplied Goods
or Services of under-construction buildings.

4.10 Effect of GST on Baking Service :-

• Difficult Registration Structure:- Before the implementation of GST, all the

banks and NBFCs maintained their service tax compliance via a centralised
process of registering. Even when these banks had different branches in
various states and union territories, the compliance registration was not done
separately. With GST, banks and NBFCs need to carry out tax registration
separately for every branch they have. Since GST is a destination-based
regime, it has formed a multi-stage system. The tax is received at every stage
and the tax already paid in the last stage is reduced in the next stage. No doubt,
it has streamlined the tax structure and helped the industry with enhanced cash
flow, but GST compliance is still a challenge.
• Hassle of Input Tax Credit :-Before GST, banks and NBFCs were able to
opt 50% reversal of CENVAT (Central Value Added Tax) credit that was
acquired from input services and inputs. The credit for CENVAT on capital
goods was reversed without applying any conditions. Now, the terms for this
reversal have been changed and for input services, inputs, as well as capital
goods, only 50% of availed CENVAT credit is reversed.In this reference,
the impact of GST on banks is great as they are left with 50% reduced credit
on capital goods and the cost of capital is overall raised. However, this can be
considered as a benefit as well because with a unified tax regime, the
production costs are reduced, which automatically increases profitability.

43
• Assessment and Adjudication:- GST and its impact on the financial
sector is seen in the form of assessment and adjudication changes. Previously,
banks and NBFCs had to resort to a particular state regulator, in which that
branch was registered, for assessment of service tax. With GST, every branch
of banks and NBFCs has to justify its chargeability position in the respective
state and provide a reason for input credit tax usage in different
states.Additionally, under GST, multiple adjudication authorities are involved.
This leads to delay in adjudication as there may be different opinions on one
underlying issue. Pre-GST only one adjudication authority was to be contacted
for an underlying issue, which was obviously feasible, fast, and convenient for
banks.

• Separate registration for each state where they operate:- Before

implementation of GST all banks in India have a centralized registration
for all its branches. The banks having branches in more than one state
will required to obtain registration in each state in the GST regime. It
creates compliance burden about filling of multiple returns state wise,
multiple audits and assessments. Under service tax filling two returns annually
now under GST 61 returns per year i.e.. 5 returns per month plus one annual
return.
• Determining place of supply could be critical:- The place of supply of
services for banking shall be the location of recipient of services on the
records of the supplier of services. If the location of the recipient of services is
not on the records of the supplier, then the place of supply shall be the location
of the supplier of services. However what constitutes the “records of the
supplier” is not defined in the law leading to multiple interpretations as
to whether it is to be understood as accounting records or customer records,
vendor records so on.
• Interstate transaction between the same banks at two branches is taxable.
Under service tax rules the transactions between two branches of the same
bank was not subject to any tax .but under GST this will attract integrated
goods and services tax (IGST).
• Assessment and adjudication made rigid:- Under service tax rules the
assessment was made by state regulators where specific bank is registered.

44
 Currently under GST every registered branch of banks must justify its position
each one may have different opinion on the same underlying issue. This will
lead to more time to solve an issue.
• Actionable claims:- Before implementation of GST Actionable claims does
not attract any tax and hence no tax is payable. After implementation of
GST actionable claims now included in the meaning of supply of goods.
Services provided from bills discounted to securitization will now be taxed as
an effect B2C and B2B majorly.
• Interest is taxable:- Pre GST implementation interest income and
discount provide by the banks are under negative list, so no tax can be
payable under service tax. But now under GST service is defined in wide
manner to cover anything other than goods which may also cover interest. In
other parts of the world does not levy GST on interest, India is only the
country levy tax on interest.

4.11 Effect of GST on IT Service :-

The Goods and Services Tax (GST) has been launched in India, and it has, as
expected, affected almost every major and minor business industry in the country.
This also includes the well-reputed Information Technology (IT) sector of India
which is the source of the various IT revolutions and developments that take place
here. However, as proposed, GST has simplified the tax system in India by replacing
the various indirect taxes with a single GST tax system to remove the cascading of
taxes. So, how does GST impact the IT sector of the country? Let’s find out.

The association of Indian economy with Information technology (IT) is very well
aware of all the changes upcoming along with the GST and has also issued a warning
that serves not to take the information technology in an easy way as it contributes to
the economy in a very heavy proportion. While the National Association of Software
and Services Companies (Nasscom) president R. Chandrashekhar mentioned that
upcoming GST regime can create a difficult scenario for the industry as with GST,
there are lot many complex invoicing and billing coming ahead which can further
strangle the taxation of IT industry making a tough growth

45
 GST Impact on the IT Products & Services

The following major changes have been reported in the tax rates of the IT products
and services.

• As per the GST law, many items used in the IT industry like Printer, photo copying,
fax machines, and ink cartridges will now attract GST at the rate of 28% as opposed
to the previous 18% tax rate
• The software services will be charged at 18% under GST as compared to 15% service
tax of the previous system. The tax rate on software CD’s (and other electronic
packaged software) will also be 18% under GST
• The IT companies will have to arrange the hardware and software to make their
systems in compliance with GST. This will increase the infrastructure cost and affect
business capability, especially for small businesses and startups
• One of the good impacts of GST is in the form of Input Tax Credits (ITC) which will
be available to IT traders selling goods and services
• Another major change is for the ERP and accounting service providers who now have
to upgrade their existing ERP systems according to GST or create a complete new
GST software like Gen GST. This increases the cost of operation
• In the previous taxation system in the IT industry, there was a single point of taxation,
i.e. the central service tax, and also one point of registration. However, in the GST
regime, there are now 111 points of taxation. So, now the companies will have to deal
with the States as well as the Centre separately, which is likely to increase the
compliance cost. Read the explanation below
• Under the previous system, the implementation of ERP used to be a long-term
contract which was spread over the years, and the service tax was charged
accordingly. Under GST, the supply of ERP will be continuous or periodic, and the
tax will be levied accordingly
• GST also brings a great positive thing for the accounting software developer
companies in India. Many companies have already launched their dedicated GST
software to help businesses and CAs get compliant with the new tax system
• GST effectively removes the cascading effects of taxes on all the supplies of IT goods
and services. Thus, the consumers will now have to pay only the actual tax amount.

46
 This will not only decrease the cost but also will improve the investment capability of
the IT companies in the country
• Export of various IT related services, such as software development, consultancy, and
BPO services will be zero-rated under GST and companies will be allowed to claim
credits on the input tax paid
• The tax rate for freelancers selling various IT services has been increased to 18%
from the earlier 15% service tax. Bloggers with annual earning of less than 20 lakh
need not register for GST and/or pay tax
• Under GST, all the e-commerce sellers are required to register and pay taxes,
irrespective of their annual turnover. E-commerce companies are also not eligible to
get the benefits of the GST composition scheme. The online marketplaces will have to
collect TCS from their sellers and pay it to the government; the ITC will be available
on such TCS paid.

• Place of Supply

Earlier the taxation of the IT service providers was carried out only from one location,
the head office of the company. Under GST, however, a ‘place of supply’ provision
has been introduced, which brings the need of various billing and invoice in the case
of single contract services where the delivery is happening from multiple offices of
the same activity. For that, the IT companies will have to register in those states as
well where there customers and clients reside.

• GST Rate on IT services/products

The tax rates of the IT services and goods have experienced a little hike after the
implementation of GST. However, the cascading of taxes and multiple tax system has
been completely removed. So, instead of a service tax + VAT + excise duty on the
purchase of IT software services, consumers will now only pay a single GST tax
which will be more or less the same in amount.

The E-commerce marketplace, which is a very big part of the Indian IT industry, is
also facing major changes in the new GST tax regime. The GST provision requires
online marketplaces to deduct ‘tax collection at source’, i.e. tax from the sellers, and
deposit the same to the government. So, each of the sellers will have to register and

47
file returns online if they wish to claim the credits on TCS paid. This affects their
investment and cash flow capability. This is likely to hamper the industry growth thus
making the situation worse and can also create a situation in which the seller could
even draw their hands from such online platforms to sell their commodities, but that is
highly unlikely.

4.12 Effect of GST on Entertainment Service :-

There are two sorts of taxes imposed by the Indian government to get revenue- tax,
and tax. tax refers to those taxes that are imposed on the individuals, companies, firms
etc. whose burden can’t be transferred to the other person like tax. Another tax is a tax
that is imposed on manufacturing and consumption of products and services like
VAT, central excise duty, central sales tax etc. Both the taxes form a main part of
revenue for the govt. Around 49% of revenue from the tax is thanks to indirect taxes.
But the most disadvantage of indirect taxes is that the cascading effect of tax on goods
and services. for instance, the Central government charges the central excise duty at
the factory gate for manufacturing the products and therefore the government also
imposes several other taxes on the consumption of such product. As a result, the tax
has got to be paid on the tax already paid. To avoid this and to unify India into one
common market, economic reforms within the sort of GST happened on 1st July
2017.
Impact of GST on the show business is positive also as negative counting on the
states. the most reason behind this is often the various rates of service tax in several
states starting from 0 to 110%. the speed of GST is eighteen to twenty-eight. Hence
the states where the entertainment tax and vat were lesser than the 28% rate has
negatively impacted whereas the states where the speed was above 30%, has
positively affected through GST. Also, the entertainment service providers can claim
ITC under GST. Thus, we will say that GST has positively impacted the show
business.

• IMPACT ON ENTERTAINMENT INDUSTRY OWNERS

As the end consumers, even the entertainment industry will see a varied impact of
GST implementation. Movie theatres and amusement parks may even see either a
positive or a negative impact counting on the state they're in.

48
Business owners within the show business are paying GST on entertainment services.
The amusement parks and movie theatres also are liable under State GST. this might
be positive or negative depending upon the states that they're doing business in.
According to an analysis, conducted by the Multiplex Association of India, the impact
of GST is negative in 12 States where the GST rate is 28%, Positive in 7 States and
Neutral in 1 State.
• IMPACT ON END CONSUMERS
GST has given an overall profit to the entertainment sector. The tax on the movie
ticket was 30% and there was 20.5% of the VAT alongside the service on the foods
which an individual buys from the theatre. But, after GST, a tax imposed on the ticket
was 28% and tax on the foods within the cinemas was changed at 18%. But here we
use different results concerning the impact of GST on the enter attainment sector.
Reasons for various consequences are:
• Low tax on entertainment service in some states
• No tax on entertainment services in some states
When GST was imposed in these states, they suffer an increase within the tax on the
entertainment sector. However, it had been low for those where the tax on
entertainment services was high. But, if we compare, GST was quite low as compared
to the legal system i.e., VAT and service Tax, which was prevailing before GST. State
also has the facility to incorporate or charge Local Body Tax (LBT) additionally to
the tax which was discussed above under GST. Local bodies even have the facility to
impose an extra change, under GST, on the entertainment services in their respective
area.
• ADDITIONAL TAX PAID BY MUNICIPLAITIES
While the entertainment industry feels that these rates are very high, it's even more
concerned that the GST Council will allow individual states to levy a further local
body tax (LBT). this is able to make movies the sole products and services with dual
taxation.Levying an LBT would be at the discretion of individual states, and LBT tax
rates could vary across the country.According to several media industry executives
and tax experts, some states, including Maharashtra, Madhya Pradesh, Gujarat, and
Rajasthan have already said they're going to levy this LBT on cinema, cable, and
DTH services. Other states, including Kerala, have decided against the thought.
If local taxes become applicable, then the operating margins and profits, as calculated
above, are going to be affected.
49
 • AVAILABALITY OF INPUT TAX CREDIT
The key challenges from a tax perspective faced by the industry were effective rate,
implications for cross-border transactions, managing tax risks, cash-blockage due to
high withholding rate and multiple indirect taxes. Many input taxes paid in many
transactions were considered tax cost hence not available as credit. Even dual taxes
were levied on many operations as a result of the federal structure of tax structure.
- Production houses aren't ready to claim the input decrease on the value incurred at
outdoor shooting locations where it doesn't have a GST registration. as an example,
renting of immovable properties (shooting locations)
- ITC in respect of F&B, outdoor catering, etc. is specifically restricted under GST
which ends up in significant cost for production houses
- another important issue is that within the case of a movie producer or a television
content producer, the GST rate for films or television content is 12%. the main portion
of input during a film or a TV serial is services given by artists, technicians, and other
persons and various rentals paid which magnetize 18% GST. So major inputs are
received with 18% GST credit but the output is charged at a 12% GST rate. just in
case a movie doesn't fair well or couldn't be exploited to the extent of a breakeven
level, the ITC of GST paid will remain unutilized and should need to be written off.
Similarly, within the case of TV serials, which can't be sold at a remunerative price,
ITC may remain unutilized.

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CHAPTER – 5
CONCLUSIONS
AND
SUGGESTION

51
5.1 INTRODUCTION :-
GST is the most ambitious and remarkable indirect tax reform in India’s post-
Independence history. Its objective is to levy a single national uniform tax across
India on all goods and services. GST has replaced a number of Central and State
taxes, made India more of a national integrated market, and brought more producers
into the tax net. By improving efficiency, it can add substantially to growth as well as
government finances. Implementing a new tax, encompassing both goods and
services, by the Centre and the States in a large and complex federal system, is
perhaps unprecedented in modern global tax history. GST is a tax on goods and
services with comprehensive and continuous chain of set-off benefits up to the retailer
level. It is essentially a tax only on value addition at each stage, and a supplier at each
stage is permitted to set-off, through a tax credit mechanism, the GST paid on the
purchase of goods and services. Ultimately, the burden of GST is borne by the end-
user (i.e. final consumer) of the commodity/service. With the introduction of GST, a
continuous chain of set-off from the original producer’s point and service provider’s
point up to the retailer’s level has been established, eliminating the burden of all
cascading or pyramiding effects of an indirect tax system. This is the essence of GST.
GST taxes only the final consumer. Hence the cascading of taxes (tax-on-tax) is
avoided and production costs are cut down. As already noted, prior to the introduction
of GST, the indirect tax system of India suffered from various limitations. There was
a burden of tax-on-tax in the pre-GST system of Central excise duty and the sales tax
system of the States. GST has taken under its wings a profusion of indirect taxes of
the Centre and the States. It has integrated taxes on goods and services for set-off
relief. Further, it has also captured certain value additions in the distributive trade.
There is now a continuous chain of set-offs which would eliminate the burden of all
cascading effects. Presently, services sector in India constitutes a tax base with vast
potential which has not been exploited as yet. It is in this context that GST is justified
as it has subsumed under it almost all the services for the purpose of taxation. Since
major Central and State indirect taxes have got subsumed under GST, the multiplicity
of taxes has been substantially reduced which, in turn, would decrease the operating
costs of the country’s tax system. The uniformity in tax rates and procedures across
the country will go a long way in reducing compliance costs. In a nutshell, GST is a
comprehensive indirect tax levy on manufacture, sale and consumption of goods as

52
well as services at the national level. GST is an indirect tax for the whole of India to
make it one unified common market. GST is designed to give India a world class tax
system and improve tax collections. It would end the long-standing distortions of
differential treatment of manufacturing sector and services sector. GST will facilitate
seamless credit across the entire supply chain and across all States under a common
tax base.

5.2 CONCLUTION :-

The goods and services tax (GST) has been presented as the major tax reform for the
Indian economy. It is therefore of importance to examine the impact it has had on the
economy, as well as on the citizens of the economy. There are three broad categories
of evidence to look at:

▪ The economy
▪ Tax administration/compliance
▪ Revenues of various governments

The impact on revenues of various governments has been examined at some length in.
Hence this chapter will look into some of the remaining aspects and present some
concluding observations.

One of the long-term objectives of introducing GST is that it will reduce the extent of
hidden and embedded taxes in the system and thereby create opportunities for
investment in order to capitalise on the altered tax regime. The change to GST as a
predominant indirect tax was expected to increase gross domestic product (GDP) and
reduce inflation. International experience shows that GDP growth falls after
introduction of GST but it recovers after two—three quarters and, conversely,
inflation rises in the initial quarters before it declines (The Treasury, Australian
Government 2003). While it is barely four quarters since the introduction of GST in
India and hence the evidence of the reversal of the initial trends might not be visible
yet, it would be interesting to identify the trends so far.

Year-to-year growth rate of gross value added (GVA) at basic prices (2011–12 series,
at constant prices) shows

53
that growth rate was falling since Q4 of 2015–16 and it was 5.6 per cent at Q1 of
2017–18. The introduction of GST on 1 July 2017 lifts the growth rate of GVA as
evident in Figure C.1. However, the average growth rate during 2017–18 (6.4 per
cent) is lower than that achieved in 2015–16 (8.1 per cent) and 2016–17 (7.1 per
cent). In drawing conclusions about the impact of GST on GVA from these numbers,
it should be borne in mind that seven months prior to the introduction of GST, the
economy received a shock in the form of withdrawal of high denomination notes.

Implementation of GST is one of the best decision taken by the Indian government.
For the same reason, July 1 was celebrated as Financial Independence day in India
when all the Members of Parliament attended the function in Parliament House. The
transition to the GST regime which is accepted by 159 countries would not be easy.
Confusions and complexities were expected and will happen. India, at some point,
had to comply with such regime. Though the structure might not be a perfect one but
once in place, such a tax structure will make India a better economy favorable for
foreign investments. Until now India was a union of 29 small tax economies and 7
union territories with different levies unique to each state. It is a much accepted and
appreciated regime because it does away with multiple tax rates by Centre and States.
And if you are doing any kind of business then you should register for GST as it is not
only going to help Indian government but will help you also to track your business
weekly as in GST you have to make your business activity statement each week.

The GST registration is mandatory after the enforcement of the act of 2017. If the
person wants to carry its business needs the compulsory registration. The procedures,
importance and penalty are mentions above. The Corpbiz has the team of lawyers who
deals in the procedure of the GST registration as well as also deals if the person has
any problems or penalty imposed in case of the GST. The teams have trained experts
and respectively are ready to help and solve the issue regarding GST registration
process and queries.

To conclude, it may be said that though the present GST system sounds flawless on
paper, but in reality, it is not. It has irrational differential tax rates and procedural
bottlenecks. Also, a major fear with the current GST structure is that it would allow
local municipalities to decide the tax rate on movies. A key exemption has been taken

54
away, namely on transfer of IP relating to original literary, dramatic, musical or
artistic works or cinematograph films which as available earlier. Moreover, the
recipient of certain services now would face working capital crunch due to services
being subject to tax under reverse charge basis in the recipient‟s hand. But on a
general note, the GST regime does much good than harm, as it empowers both the
centre and the states to levy GST. This could not be done previously, as the centre did
not have the power to impose any sort of tax on goods beyond the manufacturing
process, while the state could not tax services. GST has not only amalgamated several
types of indirect taxes into one in order to remove cascading effect, but also has
reduced the overall tax burden on consumers. It is considered to be a much simple tax
regime in terms of compliance and administration as compared to its predecessor.
Moreover, now tax paid on procurement of goods can be used as credit for payment of
output tax liability on providing services and vice versa. Thus, GST in every way is a
better solution than the previous tax regime. However, the existing tax rates and its
procedure of implementation including the compliance system attract certain
controversies. Keeping in mind that GST is at its nascent stage, if necessary,
modifications are made in the regulations, it can provide Media and Entertainment
sector an edge in growth over the previous system of taxation.

5.3 SUGGETION:-

(i) LBET, a levy imposed by some of the municipal bodies, should come under GST
just like other municipal levies such as octroi which is already subsumed to promote
seamless credit. (ii) An option should be given to restaurants, including eating joints
and food outlets in theatres, to use input tax credit, which they are not allowed to use
at present. (iii) The 28% GST rate on tickets above Rs. 100 should be rationalised, as
done for amusement parks. (iv) There should be further pruning of tax rates.
Currently, there are almost half a dozen rates on goods and services. A consolidation
of the rate structure should be considered. (v) Simplification of GST compliance
related requirements, including tax payments and returns. (vi) Simplification and
integration of e-way bill (a document required for movement of goods). (vii)
Presently, GST suffers from different ambiguities and loopholes to an extent.
Moreover, certain provisions of GST seem to contradict the objective with which they
were brought into existence. These need to be addressed at the earliest. (viii) The

55
concept and availability of input tax credit have been liberalised as compared to
earlier provisions; however, there are still certain restrictions. There needs to be free
availability of input tax credit without any restriction or conditions. (ix) The common
portal (www.gst.gov.in) should be further simplified, made more user-friendly and
offer added flexibility for common people‟s understanding. Journal of University of
Shanghai for Science and Technology.

56
CHAPTER – 6
Bibliography

57
6.1 REFERENCES:-
▪ Saeeda, F. A. (2019). GST: Impact of GST on Various Aspects of Restaurants
and Hotel Business in Anand and Nadiad District. Journal of Information and
Computational Science, 352-358.
▪ dani, s. (2016). A Research Paper on an Impact of Goods and Service Tax
(GST) on Indian. Business and Economics.
▪ Gupta, D. R. (2017). Goods and Service Tax- A Positive Reform In Indian
Taxation. International Journal of Management Research & Review, 674-680.
▪ Patra, D. P. (2017). Impact of Goods and Services Tax on Restaurants and
food service Businesses in India. International Journal of Applied Business
and Economic Research, 203-213.
▪ Bhat, S. a. (2018). A study on the problems of Goods and Services Tax on
Hotel Industry in Mysore District. Journal of Business and Management-
IOSR, 49-52.
▪ Bhushan, R. (2019, june 10). m.economictimes.com. Retrieved from
www.economictimes.com
▪ Deepa, D. G. (2017). A Case Study on GST In Service Sector Particularly In
Reference to Hotel Industry. Journal of Management and Science, 33-41. A.
K. (2018). A study on GST and its effects on hotel industry. Journal of
Business and Management-IOSR, 4-5.
▪ Mathew, A. A. (2019). A Study on the Impact of Goods and Services Tax
Reform on Hotels in Kerala. International Journal of Management Studies, 54-
61.
▪ Patra, D. P. (2017). Impact of Goods and Services Tax on the Restaurants and
Food service Businesses in India. Internaitonal Journal of Applied Business
and Economic Research, 203-213. Times, T. R. (2019, october 15).
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▪ Sehrawat M, Dhanda U (2015) GST In India: A key tax reform. International
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▪ Khurana A, Sharma A (2016) Goods and Services Tax in India-A Positive
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 ▪ Gritish G (2014) Basic concepts and features of Goods and Service Tax in
India. International Journal of Scientific Research and Management.
▪ Nitin K (2014) Goods and Services Tax in India: A way forward. Global
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▪ Indirect Taxes Committee (2015) Goods and Service Tax (GST). Institute of
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▪ Sinha A (2016) Impact of GST on various sectors in India. Business world.
▪ Bureau ET (2016) GST impact across sectors: Take a look at winners and
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▪ Forbes India (2016) Rajya Sabha passes GST Bill: How it will impact various
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6.2 BOOKS :-
▪ Impact of GST (Good And Services Tax) In India
▪ Goods of Services Tax (GST)
▪ Indirect tax
6.3 Online Resources :-
https://gstcouncil.gov.in/brief-history-gst
https://www.mastersindia.co/blog/impact-gst-manufacturers/
https://corpbiz.io/learning/impact-of-gst-on-restaurants-or-food-service-business/
http://www.gstcounsellor.com/PDF/507923.pdf
https://caknowledge.com/impact-gst-education-sector/
https://blog.saginfotech.com/gst-impact-on-indian-it-industry
https://www.legalserviceindia.com/legal/article-7861-impact-of-gst-on-banking-
sector.html
https://www.legalserviceindia.com/legal/article-7861-impact-of-gst-on-banking-
sector.html
https://gstcouncil.gov.in/brief-history-gst
https://byjus.com/commerce/top-5-objectives-of-gst/
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3851580

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