CHAPTER-01

INTRODUCTION
GST (Goods and Services Tax): A Comprehensive Overview

Goods and Services Tax (GST) is a comprehensive, multi-stage, destination-based indirect tax
that was implemented in India on 1st July 2017. The introduction of GST marked one of the
most significant reforms in India’s tax structure since independence. The idea was to
consolidate multiple indirect taxes into a single tax, making the process simpler and more
transparent.

Background Before GST

Before GST, India had a complex and fragmented taxation system. Both the Central
Government and the State Governments levied various taxes on goods and services. Some of
these taxes included:

Excise Duty – charged by the central government on manufacturing.

Service Tax – applicable on services provided.

VAT (Value Added Tax) – charged by state governments on the sale of goods within the state.

Entry Tax and Octroi – levied by local bodies for transporting goods across borders.

Entertainment Tax, Luxury Tax, Purchase Tax, and others.

Each of these taxes had separate rules, filing procedures, and compliance requirements. This
created a cumbersome system for businesses and often led to tax cascading, where tax was
charged on a tax-paid amount, increasing the overall burden on consumers.

Introduction and Evolution of GST

The idea of GST in India was first proposed in 2000. After several years of discussion, debates,
and legislative changes, the Constitution (101st Amendment) Act, 2016 paved the way for its
rollout. GST was officially launched at midnight on 30th June 2017 in a special session of the
Indian Parliament.

The main goal of GST was to create a "One Nation, One Tax" system by integrating various
state and central taxes into a single tax mechanism applicable throughout India.

Key Features of GST

1. One Nation, One Tax

GST replaces the earlier system of multiple indirect taxes with a single, uniform tax applicable
across the country. This means businesses no longer have to deal with different tax rules and
rates in different states. A uniform GST rate helps promote ease of doing business and creates
a common national market.

2. Destination-based Taxation

GST is a destination-based tax, meaning the tax is collected by the state where the goods or
services are consumed rather than the state of origin. For example, if a company in Gujarat
sells a product to a buyer in Maharashtra, the GST revenue will go to Maharashtra.

3. Types of GST

There are three main types of GST in India:

CGST (Central Goods and Services Tax): Collected by the Central Government on intra-
state transactions (i.e., within the same state).

SGST (State Goods and Services Tax): Collected by the State Government on the same intra-
state transactions.

IGST (Integrated Goods and Services Tax): Collected by the Central Government on inter-
state transactions (i.e., between two states) and on imports.

This dual GST structure allows both the Centre and the States to simultaneously levy tax on a
single transaction.
Objectives of Implementing GST

The Government introduced GST with the following key objectives:

• To eliminate the cascading effect of taxes by allowing seamless input tax credit across
the supply chain.
• To simplify and harmonize the indirect tax structure.
• To reduce tax evasion and corruption through an integrated digital system.
• To increase tax compliance by bringing more businesses under the formal economy.
• To promote a unified national market, improving the competitiveness of Indian
products and services.
• To enhance ease of doing business by reducing the number of tax filings and improving
transparency.

How GST Works: A Simple Example

Let’s say a manufacturer in Gujarat produces a product and sells it to a wholesaler in Rajasthan.
Since this is an inter-state transaction, IGST will be charged. Later, when the wholesaler sells
the same product to a retailer in Rajasthan, it becomes an intra-state transaction, and hence
CGST and SGST are applicable.

Before GST, the manufacturer and wholesaler would have paid separate taxes at every stage—
excise duty at manufacturing, VAT at sale, and service tax on logistics or warehousing. These
taxes weren’t always credited or refunded, resulting in increased final prices for the end
consumer.

Under GST, Input Tax Credit (ITC) allows each party in the supply chain to claim credit for
the tax paid at the earlier stage, thereby reducing the final cost burden on the customer.

Advantages of GST

1. Elimination of Cascading Taxes: The biggest benefit of GST is the removal of tax on tax,
reducing the overall burden on consumers.

2. Ease of Doing Business: With a uniform tax system across states and a common online
portal (GSTN), GST simplifies compliance and tax filing.

3. Boost to Government Revenue: Better compliance and digital tracking of transactions help
curb tax evasion and increase tax collections.
4. Improved Logistics and Supply Chains: Removal of entry taxes and interstate checkpoints
has improved the efficiency of transport and logistics.

5. Encouragement of a Formal Economy: With more businesses registered under GST, a

larger part of the economy has become formal and accountable.

6. Transparency and Automation: Most of the GST system is digital—return filing,

payments, refunds, and compliance are all done online, reducing manual errors and corruption.

Challenges and Criticism of GST

Despite its advantages, the implementation of GST was not without challenges:

Initial Confusion: Many small and medium businesses faced difficulties in understanding the
new system, especially with frequent changes in tax rates and filing deadlines.
Technical Glitches: The online GSTN portal initially struggled to handle the massive user
load, causing delays and frustration.

Complexity of Multiple Rates: Unlike many countries that have a single GST rate, India has
multiple rates (0%, 5%, 12%, 18%, 28%), which can sometimes lead to classification disputes.

Compliance Burden: Regular filing of returns (monthly, quarterly, annually) and

reconciliation of input credits requires significant administrative effort.

Exclusion of Key Sectors: Petroleum products, alcohol, and real estate are currently outside
the GST framework, reducing the full potential of the unified tax system.

How is GST Different from the Earlier Tax System?

The introduction of the Goods and Services Tax (GST) in India on July 1, 2017, marked a major
shift in the country's indirect taxation system. It replaced a complex and fragmented structure
of multiple taxes levied by the central and state governments with a unified system. Below is
a detailed look at how GST differs from the earlier tax system in India:

1. Multiple Taxes vs. One Unified Tax

Earlier Tax System:

Before GST, there were a number of indirect taxes levied at both the central and state levels.
The central government collected taxes like Central Excise Duty, Service Tax, and Additional
Customs Duty, while the states levied VAT (Value Added Tax), Entry Tax, Luxury Tax, and
Entertainment Tax, among others. These taxes were levied at different stages of the supply
chain, leading to overlapping and confusion for businesses and consumers alike.

Under GST:

GST replaces all these different taxes with a single, comprehensive tax structure. It is levied on
the supply of goods and services across the country and follows a dual model — Central GST
(CGST) and State GST (SGST) for intra-state transactions, and Integrated GST (IGST) for
inter-state transactions. This simplification has made it easier for businesses to understand and
comply with tax regulations, reducing the burden of dealing with multiple authorities.

2. Removal of the Cascading Effect (Tax-on-Tax)

Earlier Tax System:

One of the biggest drawbacks of the pre-GST system was the cascading effect of taxes. This
means that tax was charged on a value that already included a previous tax. For example,
manufacturers paid excise duty on goods and then VAT was levied on the total price, which
included the excise duty — leading to double taxation. Input tax credit was limited and
fragmented across different taxes, making it difficult to offset tax paid on purchases against tax
liability on sales.

Under GST:

GST addresses this issue by providing a seamless flow of input tax credit across the supply
chain. Businesses can now claim credit for the tax paid on purchases, regardless of whether the
purchase was of goods or services, as long as it is used for business purposes. This reduces the
overall tax burden and improves the efficiency of the taxation system.

3. Uniformity in Tax Laws and Rates

Earlier Tax System:

Under the old system, each state had the autonomy to decide its own tax rates and rules,
especially with regard to VAT. This meant that the same product could be taxed differently in
different states, leading to price variations, inefficiencies, and a lack of uniformity across the
country.

Under GST:

GST introduces a standardized tax regime throughout India. The GST Council, comprising
representatives from the central and state governments, decides on tax rates, exemptions, and

rules, ensuring uniformity. This helps create a common national market, making it easier for
businesses to operate across states and reducing tax-related barriers to trade.

4. Simplified Compliance and Filing Process

Earlier Tax System:

Businesses had to register under multiple tax laws and deal with various departments. They
were required to file separate returns for different taxes like service tax, VAT, and excise duty.
This increased administrative costs and compliance burdens, especially for small and medium-
sized enterprises.

Under GST:

GST introduces a centralized system for registration, returns, and tax payment through the
Goods and Services Tax Network (GSTN). Businesses are now required to file monthly,
quarterly, and annual returns using a single portal. This digitization simplifies the compliance
process and increases transparency.
5. Consumption-Based vs. Origin-Based Taxation

Earlier Tax System:

The previous system was primarily origin-based, meaning taxes were collected by the state
where the goods were produced or sold, not where they were consumed. This often led to
disputes between states and imbalances in revenue distribution.

Under GST:

GST is a destination-based tax, meaning it is levied in the state where the goods or services are
consumed, not where they originate. This ensures a fairer distribution of tax revenue and
promotes balanced economic development across regions.

Objective of the Study

The Goods and Services Tax (GST) represents one of the most significant reforms in the Indian
taxation system since independence. Implemented on July 1, 2017, GST has replaced a
multitude of indirect taxes previously levied by both the central and state governments. The
shift from a complex, multi-tax framework to a unified taxation system has had far-reaching
implications for businesses, consumers, and the overall economic environment of the country.

Given its importance and the scale of transformation it introduced, it becomes essential to study
GST not only in terms of its structural framework but also its real-world impact.

The primary objective of this study is to understand and critically analyse the impact and
effectiveness of the Goods and Services Tax (GST) in comparison to the earlier indirect tax
system in India. It aims to delve into how GST has altered the taxation landscape, its benefits
and challenges, and how well it aligns with the goals set at the time of its introduction.

To achieve this overarching aim, the study has been divided into the following specific
objectives:
1. Analyse the Structural Differences between the Pre-GST Tax Regime and
the GST Framework

The first objective of this study is to conduct a detailed comparative analysis of the old indirect
tax system and the new GST structure. Before GST, India had a fragmented tax regime with
numerous indirect taxes at both the state and central levels. Taxes like Central Excise, Service
Tax, Value Added Tax (VAT), Entry Tax, and Luxury Tax created a complicated system, leading
to inefficiencies and increased compliance costs.

This study aims to explore how GST has simplified the tax structure by consolidating multiple
taxes into a single framework. It examines the GST dual model, comprising Central GST
(CGST), State GST (SGST), and Integrated GST (IGST), and compares it with the functioning
of the earlier taxes to identify structural efficiencies and complexities.

2. Evaluate the Advantages and Challenges of GST Implementation

While GST was introduced with the promise of simplification and transparency, its
implementation has come with its own set of challenges. This objective is focused on
evaluating both the benefits and hurdles that have arisen post-implementation.

On the one hand, GST has eliminated the cascading effect of taxes, made inter-state trade easier,
and increased tax compliance due to its digital platform (GSTN). On the other hand, small
businesses have faced difficulties in adapting to frequent changes in tax rates, complex filing
procedures, and technical glitches in the GST portal.

The study seeks to explore these practical advantages and challenges, supported by case
studies, industry feedback, and government reports.

3. Understand the Impact of GST on Businesses, Consumers, and

Government Revenue

Another important objective is to assess how GST has affected different stakeholders:
Businesses: For businesses, GST has meant a significant shift in their accounting, billing, and
compliance practices. This study aims to analyse how GST has impacted business operations,
costs, supply chain logistics, and cash flow.

Consumers: For end-users, GST was expected to bring down prices by eliminating hidden
taxes. The study evaluates whether this expectation has been met in various sectors, such as
FMCG, automobiles, and services.

Government Revenue: A key goal of GST was to widen the tax base and increase overall tax
collections through better compliance and transparency. The study reviews trends in tax
revenue post-GST and examines whether the new system has improved fiscal health.

4. Examine How GST Has Simplified the Taxation System in Terms of

Compliance, Transparency, and Uniformity

One of the core motivations behind introducing GST was to create a uniform and transparent
tax system across the country. Earlier, businesses operating in multiple states had to register
separately under each state’s VAT laws and follow varying regulations.

Under GST, businesses enjoy a more streamlined process with a single registration for each
state and a standardized return-filing process. The study examines the ease of doing business
under GST and evaluates the role of technology (via the GSTN portal) in improving
transparency and reducing tax evasion.

This objective also includes understanding the effectiveness of features such as the e-way bill
system, invoice matching, and input tax credit claims.

5. Assess the Extent to Which GST Has Eliminated the Cascading Effect of
Taxes and Promoted a Unified National Market

The cascading effect (also known as "tax on tax") was one of the biggest flaws in the pre-GST
system. It occurred when a tax was levied on a product that already included tax from a previous
stage of the supply chain. This increased the cost of goods and services and discouraged inter-
state commerce.
GST was designed to solve this by allowing seamless input tax credits across goods and
services and eliminating barriers between states. This objective of the study investigates how
effectively GST has removed the cascading tax burden and whether it has successfully enabled
the vision of a "One Nation, One Tax, One Market".

6. Identify Gaps and Suggest Improvements in the Current GST System

Based on Real-World Observations and Feedback

No system is perfect, and GST is no exception. Although it brought major reform, the
implementation has seen several changes and revisions. Multiple rate slabs, frequent
amendments, sector-specific issues, and technology glitches have been points of concern.

This study aims to gather real-world insights from taxpayers, tax professionals, and industry
experts to identify gaps in the current GST system. Based on these findings, it will suggest
possible improvements to make the system more robust, user-friendly, and aligned with its
original objectives.

Understanding the Concept of GST (Goods and Services Tax)

1. Definition of GST

Goods and Services Tax, popularly known as GST, is a comprehensive and destination-based
indirect tax system introduced in India on July 1, 2017. It is levied on the supply of goods and
services across the country and aims to replace a number of existing indirect taxes previously
imposed by the central and state governments. Before GST, India had a complex tax structure
that included various taxes such as Value Added Tax (VAT), service tax, excise duty, octroi,
and others. The GST regime has subsumed most of these taxes, thereby streamlining the tax
process and reducing complexity.

Being destination-based, GST is collected at the point of consumption rather than the point of
origin. This means that the tax revenue goes to the state where the goods or services are
consumed, not where they are produced.
2. Objectives of GST

The main purpose of introducing GST was to overhaul the previous indirect tax system to make
it more efficient, transparent, and business-friendly. Some of the key objectives include:

Eliminating the cascading effect of taxes: Under the old system, taxes were levied at multiple
stages without allowing full credit for tax already paid, leading to a "tax on tax" situation. GST
removes this by allowing seamless input tax credit across the supply chain.

Creating a unified national market: With the removal of state-specific taxes and entry
barriers, businesses can operate more smoothly across state borders, promoting interstate trade.

Improving compliance and transparency: GST uses technology-driven processes, like

electronic filing and digital record maintenance, which reduce corruption and tax evasion.

Enhancing the ease of doing business: A single tax system simplifies compliance and tax
planning for businesses of all sizes.
3. Key Features of GST

GST is characterized by several features that make it a modern and efficient tax system:

Dual GST Structure: GST in India follows a dual model, where both the central and state
governments levy tax on the same transaction. For intra-state supplies, Central GST (CGST)
and State GST (SGST) are applied. For inter-state transactions, Integrated GST (IGST) is
charged.

Destination-Based Taxation: Unlike earlier taxes that were collected at the origin of the
goods, GST is collected at the place where the goods or services are consumed.

Input Tax Credit (ITC): Businesses can claim a credit for the tax paid on inputs used to make
taxable goods and services. This prevents the cascading effect and lowers overall tax liability.

4. Components of GST

GST is composed of three key components:

Central Goods and Services Tax (CGST): Levied by the central government on intra-state
sales.

State Goods and Services Tax (SGST): Levied by the state government on the same intra-
state sale.

Integrated Goods and Services Tax (IGST): Levied by the central government on inter-state
sales and is later shared with the state where consumption occurs.

This system ensures that both the center and states receive their fair share of tax revenue.

5. GST Structure (Tax Slabs)

GST has a multi-tier tax rate structure to accommodate various types of goods and services
based on their nature and necessity:

0%: Essential items such as fresh fruits, vegetables, milk, and educational services.
5%: Items of mass consumption like packaged food, footwear, and basic necessities.

12% and 18%: Standard goods and services including mobile phones, restaurant services, etc.

28%: Luxury and sin goods such as cars, tobacco, and air conditioners.

In addition to the above, certain luxury items and harmful products attract a compensation cess
to fund the revenue loss of states.

6. GST Registration

GST registration is mandatory for:

Businesses with an annual turnover exceeding the prescribed threshold (Rs. 20 lakhs for
services and Rs. 40 lakhs for goods in most states).

E-commerce operators and interstate suppliers.

Casual taxable persons and non-resident taxable persons.

However, businesses can also opt for voluntary registration to avail of input tax credit and to
improve their business credibility.

7. GST Returns and Compliance

Compliance under GST involves regular and timely filing of returns and maintenance of proper
records. The key GST returns include:

GSTR-1: Details of outward supplies (sales) filed monthly or quarterly.

GSTR-3B: Summary return of inward and outward supplies along with tax payment.

GSTR-9: Annual return to summarize the financial year’s GST activities.

E-invoicing has also been introduced to standardize the format of invoices and ensure real-time
reporting to the GST system. The GST portal facilitates online return filing, payment, and
refund processes.
8. Benefits of GST

The implementation of GST has brought several advantages for the economy and businesses:

Simplified Tax Structure: A single tax system reduces confusion, paperwork, and tax disputes.

Improved Logistics: Removal of check posts and border taxes has enhanced the movement of
goods and reduced transportation time and cost.

Transparency and Accountability: Digital processes ensure better monitoring and

compliance.

Formalization of the Economy: Small and informal businesses are now entering the tax net,
increasing tax revenue and improving governance.

Boost to Exports and Manufacturing: Zero-rated exports and input credit benefits encourage
production and global trade competitiveness.

9. Challenges of GST

While GST has delivered several benefits, it also faced some initial and ongoing challenges:

Implementation Issues: In the early days, many businesses struggled with understanding the
new system and adapting to frequent changes in rules and rates.

Compliance Burden: Small businesses often find the compliance requirements, such as
frequent return filing and invoice matching, to be cumbersome.

Complex Filing System: Although efforts are being made to simplify processes, some users
still find the GST portal difficult to navigate.

Technical Glitches: Occasional issues on the GST portal affect return filing and other
compliance activities.

Despite these challenges, the GST system continues to evolve with the government's efforts to
simplify procedures and address stakeholder concerns.
Analysing the Impact of GST on Indian Consumers

1. Price Transparency and Consumer Awareness

One of the key benefits of GST for consumers is increased price transparency. Under the earlier
tax regime, multiple hidden taxes were levied at various stages of the supply chain, often
resulting in consumers paying more than they realized. With GST, the tax is clearly mentioned
on invoices, making it easier for consumers to know exactly how much tax they are paying.
This has not only made the pricing system more transparent but also improved consumer
awareness regarding taxation.

2. Change in Cost of Goods and Services

GST has had a mixed impact on the prices of goods and services:
Essential Goods: Products like fresh fruits, vegetables, grains, and milk fall under the 0% tax
slab, ensuring no additional cost burden on consumers.

Luxury and Sin Goods: Items such as luxury cars, tobacco, and high-end electronics are taxed
at 28%, making them more expensive for consumers.

Mid-Range Goods: Products like soaps, detergents, and packaged foods saw price reductions
due to the availability of input tax credit, while services such as telecom, insurance, and
banking initially became costlier due to the increased tax rate from 15% to 18%.

3. Impact on Service Sector Consumption

Services have become a larger part of household expenses in urban areas. With GST, most
services now attract an 18% tax, compared to the earlier 15% service tax. This increase in
service tax rate led to higher costs for telecom, banking, airline tickets, and insurance policies.
However, over time, service providers have passed on some of the benefits of input tax credits
to consumers, leading to stabilized or slightly reduced pricing in certain sectors.

4. Influence on Consumption Patterns

In the short term, the implementation of GST caused confusion and uncertainty, which led to a
dip in consumer spending. Small businesses, which struggled with compliance, temporarily
disrupted the supply of goods. However, as the system stabilized, prices of many FMCG (Fast-
Moving Consumer Goods) reduced, resulting in normalized or improved consumption trends
in the long run.

5. Advantages in E-Commerce and Online Shopping

GST helped streamline e-commerce operations by replacing different state-level taxes with a
single, uniform structure. This allowed consumers to shop online across state borders without
worrying about varying tax rates or additional entry taxes. Standardized pricing and easier
logistics have made online shopping more convenient and cost-effective.
6. Boost to Digital Payments and Tax Literacy

GST pushed for greater digitization in the form of electronic invoices, digital payments, and
online returns. As a result, consumers became more exposed to and comfortable with cashless
transactions, increasing overall financial literacy and promoting a more formalized economy.

7. Long-Term Consumer Benefits

While GST implementation came with initial challenges, including price fluctuations and
compliance issues, the long-term effects have been largely beneficial for consumers. A more
structured tax system has led to reduced inflation, improved supply chain efficiency, and more
competitive pricing due to input tax credits passed along the value chain.

Benefits and Challenges of GST for Indian Consumers

1. Enhanced Price Transparency

One of the most appreciated benefits of GST for consumers is the transparency in pricing.
Before GST, taxes like excise duty and VAT were embedded in the cost of goods, making it
difficult for buyers to distinguish the tax component. GST requires all registered businesses to
issue tax invoices clearly showing the GST charged, helping consumers understand exactly
what they are paying for and how much is tax.

This greater visibility has improved consumer trust and has empowered buyers to demand
correct billing, indirectly curbing the grey economy.

2. Standardized Tax Rates Across States

Before GST, the tax structure varied drastically from state to state. For example, a product
might be cheaper in Delhi but significantly more expensive in Maharashtra due to different
VAT or local taxes. This regional disparity in prices caused inconvenience and unfairness for
consumers.
GST has removed this variation by implementing uniform tax rates across the country. Whether
a consumer purchases a product in Tamil Nadu or Punjab, they are now likely to pay the same
tax, leading to a fairer and more predictable pricing structure.

3. Reduced Cost of Essential Goods

The GST Council has been conscious about not burdening consumers with additional costs on
basic necessities. Products such as fresh fruits, vegetables, milk, and food grains are taxed at
0%, making them more affordable. Additionally, many everyday-use items like toothpaste,
soaps, hair oils, and sanitary products have been placed in lower GST slabs (5% or 12%).

This has benefited especially low- and middle-income families, helping them manage
household budgets more effectively.

4. Lower Logistics and Transportation Costs

Earlier, transportation and distribution of goods were hampered by multiple checkposts, octroi,
and entry taxes at state borders. Trucks often faced long delays, resulting in higher logistics
costs, which were ultimately borne by consumers through increased product prices.

With GST eliminating these bottlenecks and replacing them with a nationwide system, the
supply chain has become more streamlined and cost-effective. Consumers now benefit from
faster delivery times and potentially lower prices on goods.

5. Boost to Digital Economy and Accountability

GST has pushed for greater digitalization of the tax system, encouraging businesses to use
electronic billing, online filing, and digital payments. This indirectly impacts consumers as
they are more likely to receive proper bills, reducing the chances of being overcharged or
deceived.

Moreover, with the rise of digital invoices, consumers are helping in building a transparent and
accountable tax ecosystem.
6. Improved Online Shopping Experience

E-commerce companies faced major hurdles earlier due to different state-level taxes. Post-
GST, online platforms can operate more efficiently with unified tax compliance, giving
consumers consistent pricing, easier returns, and better access to goods from across the country.
Online shoppers now benefit from a smoother and fairer digital retail experience.

Challenges Faced by Consumers Under GST

1. Increased Cost of Services

While goods in many cases became cheaper, services saw a rise in tax rates. Under the old
system, most services attracted a 15% tax. Under GST, this was increased to 18% for a majority
of services. As a result, consumers experienced price hikes in telecom services, insurance,
credit card bills, banking, movie tickets, and air travel.

For middle-class families and urban consumers who rely heavily on services, this was a
significant downside of the GST regime.

2. Initial Confusion and Transition Issues

When GST was introduced, the public faced a lot of confusion regarding tax slabs, bill formats,
and applicable rates. Even small vendors were unsure about how much tax to charge, and
frequent changes by the GST Council in the early months created further misunderstandings.

Many consumers were overcharged or incorrectly billed, especially during the transition
period. It took time for both buyers and sellers to adjust to the new norms.

3. Price Benefits Not Always Passed On

Although businesses gained access to input tax credits under GST—allowing them to claim tax
paid on raw materials—many did not pass on these savings to consumers. This meant that in
several sectors, consumers expected lower prices but saw no real reduction. For example,
restaurants initially continued charging higher rates even though their tax burden had gone
down, leading to government intervention.

4. Higher Burden from SMEs

Small and medium enterprises (SMEs), which form the backbone of the Indian market, initially
struggled to comply with GST due to digital filing requirements and frequent return
submissions. In trying to recover their increased compliance and operational costs, many of
these businesses raised their prices, which directly impacted the end consumer.

Consumers shopping in local markets or relying on small service providers experienced price
hikes and inconsistent billing during the adjustment period.

5. Tiered Tax Structure Still Causes Complexity

While GST replaced many taxes, it introduced a multi-tier tax system with five main slabs—
0%, 5%, 12%, 18%, and 28%. This leads to confusion among consumers when comparing
products or evaluating pricing. Two very similar products might fall under different slabs,
creating ambiguity and, at times, distrust.
 CHAPTER-02
LITERATURE REVIEW
What is a Literature Review?

A literature review is a comprehensive overview of existing research on a specific topic. It

involves identifying, evaluating, and summarizing the scholarly articles, books, and other
relevant sources that have already been written on the subject. The goal of a literature review
is not just to list what has been published, but to critically assess and synthesize the findings,
recognize patterns, highlight disagreements, and identify gaps in the research. Ultimately, it
helps to set the stage for your own research by demonstrating what is already known and what
still needs to be explored.

Think of a literature review as your opportunity to answer three key questions:

• What have others said about your topic?

• What do we know so far from existing research?
• What still needs to be studied to deepen understanding or resolve conflicting findings?

Rather than simply summarizing articles, a good literature review brings together the ideas and
results from different studies to tell a cohesive story. This allows researchers and readers to
understand how current knowledge has evolved, where there is consensus or debate, and how
your own work fits into the bigger picture.

Main Purposes of a Literature Review

A literature review serves several important purposes in the research process:

1. Providing Background or Context for Your Research:

Before conducting original research, it is essential to understand the broader context. A

literature review helps explain the history, development, and current state of your topic. It gives
readers the necessary background to understand why your research question matters and how
it fits within the academic conversation.

2. Demonstrating Your Understanding of the Field:

A well-crafted literature review shows that you are familiar with major theories,
methodologies, findings, and debates in your area of study. It establishes your credibility as a
researcher and positions you as someone who is well-informed and capable of contributing
new insights.

3. Identifying Gaps and Inconsistencies in Existing Research:

One of the key roles of a literature review is to uncover what previous research has not
addressed. This might include unanswered questions, under-researched populations, outdated
methods, or conflicting results. By identifying these gaps, you can justify the need for your
own study and show how it will add value to the field.

4. Supporting Your Research Question or Hypothesis:

The literature review helps you build a logical foundation for your own research. It shows how
your study is based on, or reacts to, previous work and explains why your specific question or
hypothesis is worth exploring. Your literature review lays the groundwork for your theoretical
framework and methodology.

Typical Structure of a Literature Review

While literature reviews may vary depending on discipline and purpose, most follow a general
structure that includes an introduction, body, and conclusion. Here is a more detailed
breakdown:

1. Introduction:

The introduction outlines the purpose of the literature review and defines the topic or research
question being explored. It may also briefly explain the criteria used to select sources and how
the review is organized (e.g., thematically or chronologically). The introduction sets the stage
and helps the reader understand the scope of the review.

2. Body – Thematic or Chronological Review:

The main body is where you present and synthesize the findings from existing research. This
section can be organized in different ways:

Thematic Organization:
This is the most common approach and involves grouping studies by key themes, concepts, or
issues. For example, if your topic is about the effects of social media on mental health, you
might organize your review into themes like "Social Media and Anxiety," "Social Media and
Depression," and "Age Differences in Social Media Impact."

Chronological Organization:

This method arranges studies in the order they were published to show how understanding of
the topic has evolved over time. It’s useful when your goal is to show historical progression or
development of a concept.

Methodological Organization:

Sometimes, it’s useful to group research by methods used (qualitative, quantitative, or mixed
methods) or by research design. This can highlight how different approaches have shaped
findings.

Regardless of how you organize it, the body of the literature review should not just summarize
individual studies. Instead, you should compare, contrast, and critique the studies—
highlighting trends, agreements, disagreements, and gaps.

3. Critical Evaluation:

This is an essential part of the literature review process. Rather than accepting all studies at
face value, you should evaluate their strengths and limitations. Consider the quality of the
research design, the reliability of data, the relevance of findings, and any biases or assumptions
that may affect the conclusions. This helps you and your readers understand which findings are
most trustworthy and which areas require caution or further exploration.

Importance of a Good Literature Review

A well-written literature review is essential for academic and professional research. It prevents
duplication of effort, reveals opportunities for further investigation, and helps ensure that your
research is relevant and well-grounded. Whether you're writing a thesis, dissertation, research
article, or grant proposal, a strong literature review shows that your work is informed, focused,
and likely to contribute something meaningful to your field.
r, N. (2017) – In "GST: A Game Changer for the Indian Economy", Kumar examined how
GST simplified indirect taxation. He observed initial confusion among consumers but noted
potential long-term benefits such as reduced tax burden and price uniformity.
2. Sharma, P. & Singh, R. (2018) – Their paper "Impact of GST on Common Man" used
survey data to reveal that although GST promised transparency, rural and lower-income
consumers experienced limited understanding and found prices unpredictable.

3. Mehta, A. (2019) – In "GST and the Changing Consumption Patterns in India", Mehta
explored urban consumer behaviour post-GST and noted shifts in demand, especially in fast-
moving consumer goods (FMCG), due to price restructuring.

4. Patel, D. & Trivedi, M. (2020) – In their study "GST and Its Pricing Effect on End
Consumers in India", they found mixed impacts: while luxury items became cheaper, essential
commodities often saw increased costs, affecting low-income groups.

5. Rao, G. & Mukherjee, S. (2021) – Their research "GST in India: Consumer Awareness and
Economic Implications" emphasized the lack of public awareness about GST slabs and its real
impact, suggesting the need for better consumer education.

6. Joshi, K. (2020) – In "GST Implementation and Its Effect on Consumer Confidence", Joshi
observed that consumer trust dipped briefly after GST rollout but gradually recovered as market
prices stabilized.

7. Desai, R. (2019) – Her article "GST and Household Spending in India" analyzed spending
habits across income levels, showing that middle-class households adjusted spending more
drastically compared to upper-class households.

8. Bhatia, N. (2018) – In "GST: Impact on Retail Sector and End Consumer", Bhatia identified
that small retailers faced challenges in adapting, which indirectly influenced product pricing
and availability for end consumers.

9. Iyer, S. (2021) – Iyer’s work "Consumer Perspective on Post-GST Pricing in India" found
that consumers were often unsure whether price changes were due to GST or business practices,
indicating poor transparency.

10. Verma, T. (2022) – In "GST and Its Social Impact on Indian Consumers", Verma
highlighted that GST affected not just purchasing behaviour but also created anxiety and
confusion among elderly and less-educated consumers.
 CHAPTER-03
METHOD OF STUDY
MEANING OF RESEARCH:

Research in common parlance refers to a search for knowledge. Once can also define

research as a scientific and systematic search for pertinent information on a specific topic. In

fact, research Is an art of scientific investigation Study of business research methods is

required to know about the process and tools, needed to reduce risk in managerial decision

making.

• Business Research Concept:

Business Research is a systematic inquiry that provides information to guide managerial

decision. It is a planning, acquiring, analysing and disseminating relevant data, information

and insights to decision makers in ways that mobilize the organization to take appropriate

actions that, in turn maximize business performance. So much attention is placed on

measuring and enhancing Return on Investment. For this we calculate financial return for all

expenditure. Organizational managers want to know what strategies & tactics capture the

highest return. In last few years, as technology has improved our measurement and tracking

capabilities, managers have realized they need a better understanding of employee,

stakeholder and customer behaviour in order to influence the desired metrics. Business

Research plays an important role in this new measurement environment. It helps managers to

choose better strategies and tactics. Research in a layman language means a search for

acknowledges. One can also define research as a Scientific and systematic search for

potential information on a specific topic. In facts research is an art of scientific investigation.

The dictionary meaning of research is “a careful investigation or inquiry especially through

search for new facts in any branch of knowledge”. Redman and Mary define research as a

“systematized effort to gain new knowledge”. Some people consider research as a movement

from known to unknown. Research is an academic activity and as such the term must be used
in a technical sense. Research is an original contribution to the existing stock of the

knowledge making for its advancement. It is pursuit of truth with the help of study,

observation, and experiment. The purpose of research is to discover answers to questions

through the application of systematic procedure. The main aim of research is to find out the

truth, which has not been discovered yet.

OBJECTIVES OF RESEARCH

1. The purpose of research is to discover answers through the application of scientific

procedures. The main aim of research is to find out the truth which is hidden and which

has not yet been discovered as yet.

2. To gain familiarity with a phenomenon or to achieve new insights into it.

3. To portray accurately the characteristics of a particular individual, situation or a group.

4. To determine the frequency with which something occurs or with which is associated

with something else

5. To test a hypothesis of casual relationship between variables.

RESEARCH DESIGN

A research design is the arrangement of conditions for collection and analysis of data in a

manner that aims to combine relevance to the research purpose with economy in procedure.

The research design used in my study is basically descriptive in nature.

DESCRIPTIVE RESEARCH:

The research design in my study is descriptive. Its studies are concern with describing the

characteristics of a particular group or individual. Studies concerned with

specific prediction with narration of facts and characteristics concerning individual, group or
situations are examples of descriptive research .it is also known as social research.

SAMPLE DESIGN
A sample design is a definite plan for obtaining a sample from a given population. It refers to

the technique or the procedure the researcher would adopt in selecting items for the sample

i.e. the size of the sample. Stratified sample method is adopted to select the sample.

SAMPLE UNIT

Sample is made on the basis of the stratified sampling, in this type of sampling simple random

and sub sample are drawn from different data which are equal o some characteristics the first

step in stratified sampling choosing a strata on the basis of existing information.

SAMPLE SIZE

25% of 100 employees of different departments.

DATA COLLECTION

The study made in use of both primary and secondary sources.

• PRIMARY DATA COLLECTION:

The survey has been undertaken on the lines of interaction with employees of different plants

and managers of the company with the help of structured questionnaires.

• SECONDARY DATA COLLECTION

secondary data have been collected from various sources involving induction manual, internet

etc that were of considerable help to me.

ANALYSIS OF DATA

The data after collection has to be processed and analysed with the outline laid for the

purpose at the time of developing the research plan. This is essential for a scientific study and

for insuring that we have all relevant data for making contemplated comparison and analysis

Technically speaking processing implies editing, coding, classification and tabulation of

collection data so that they are amenable to analysis. The term analysis refer to the

computation of certain measures along with searching for patterns of relationship that exist
among data groups. To analyse the data percentage, piecharts, graphs etc are used.

LIMITATIONS OF THE STUDY

On the basis of my study following are the major recommendations.

Sample size, which I have taken, is very small, on the basis of which efficient decisions

cannot be taken.

Co-operation of respondents: this has been a major problem. Employees were reluctant to fill

the questionnaire the interview

Another constraint has been regarding cost since study involves the collection of primary and

secondary data. Therefor the cost incurred was much more. Due to constraints the coverage

of the study could not be extended to more customers.

METHOD OF STUDY ON GST AND IT’S IMPACT ON THE INDIAN

CONSUMER:

The objective of this research is to examine the implementation of the Goods and Services Tax
(GST) in India and its impact on the Indian consumer. GST, introduced in July 2017, aimed to
simplify the indirect tax structure by integrating various state and central taxes into a single
unified tax system. While much has been discussed about its implications on the economy, this
study focuses specifically on how GST has affected individual consumers in terms of pricing,
consumption patterns, awareness, and overall satisfaction.

To address these aims, a mixed-methods approach is adopted, combining both qualitative and
quantitative methodologies. This approach ensures a robust understanding of the topic by
integrating numerical data with personal insights and perspectives.

1. Research Design

The study follows a descriptive and exploratory research design. A descriptive design helps in
identifying patterns and trends among consumer behaviours post-GST, while the exploratory
aspect seeks to delve deeper into consumer perceptions and the factors influencing their
opinions.
Descriptive Research: Helps quantify changes in spending habits and consumer sentiment.

Exploratory Research: Gathers qualitative insights into consumer attitudes, awareness levels,
and firsthand experiences related to GST.

This dual design aids in developing a comprehensive overview of the impact of GST from both
a macroeconomic and microeconomic perspective.

2. Data Collection Methods

To ensure a wide and inclusive understanding of the topic, the study uses both primary and
secondary sources of data.

a) Primary Data Collection

Primary data is essential for understanding current consumer attitudes and real-time effects.
Two main methods are used:

i) Surveys

A structured questionnaire is developed to collect quantitative data. The survey consists of both
closed and open-ended questions, focusing on the following key areas:

• Awareness and understanding of GST among consumers.

• Perceived changes in prices before and after GST implementation.
• Impact of GST on different categories of goods and services (e.g., FMCG, electronics,
healthcare, dining).
• Changes in consumption behaviour or purchasing decisions post-GST.
• Overall satisfaction or dissatisfaction with the tax regime.
• The survey is administered both online and offline, targeting a sample of 300
respondents from diverse demographic backgrounds, including:
• Urban and semi-urban populations.
• Various income levels (low, middle, high).
• Different age groups and educational backgrounds.
ii) Interviews

To complement the survey, semi-structured interviews are conducted with:

15 consumers from different socio-economic backgrounds.

5 small and medium retail business owners.

Interview questions aim to explore:

Personal experiences with GST when purchasing goods and services.

Perceptions of fairness and transparency of the GST system.

Challenges in understanding and adapting to GST-related changes.

Business owners’ insights into how GST has affected pricing, supply chains, and consumer
demand.

b) Secondary Data Collection

Secondary data provides the historical and contextual backdrop for the study. Sources include:

Government Publications: Reports by the Ministry of Finance, GST Council updates, and
white papers.

Academic Research: Peer-reviewed journals and studies focusing on GST’s economic

implications.

Media Reports: Newspaper articles, magazine features, and digital publications discussing
public response to GST.

Consumer Market Studies: Reports from consumer advocacy groups and market research
firms.

These sources help validate the primary data and offer additional insights that enhance the
reliability and depth of the study.
3. Sampling Method

To ensure representativeness and minimize bias, the study adopts a stratified random sampling
method. The population is divided into strata based on key variables such as:

• Geographic location (urban vs. semi-urban)

• Income group
• Age bracket
• Educational qualification

From each stratum, random samples are drawn to ensure a balanced and diverse sample. This
helps in capturing a broad spectrum of consumer experiences and opinions, reflecting the
heterogeneity of the Indian market.

4. Data Analysis Tools and Techniques

The data collected through both surveys and interviews is analysed using a combination of
statistical and qualitative techniques.

a) Quantitative Analysis

Quantitative data from the surveys is coded and entered into statistical software tools such as
SPSS and Microsoft Excel. Analytical methods used include:

Descriptive Statistics: To summarize the central tendencies and distribution of responses (e.g.,
mean, median, mode).

Cross-tabulation: To explore relationships between variables (e.g., awareness levels by age

group).

Chi-square tests: To examine associations between categorical variables.

Bar and Pie Charts: For graphical representation of trends and patterns.

b) Qualitative Analysis

Interview transcripts are analysed using thematic analysis. This involves:

 • Identifying recurring themes and keywords.
• Categorizing responses into meaningful clusters (e.g., confusion about GST rates,
perceived benefits, economic burden).
• Interpreting the underlying sentiments and reasoning behind consumer opinions.
• Triangulation of qualitative and quantitative findings allows for a more nuanced and
validated understanding of the subject.

5. Ethical Considerations

Ethical guidelines are strictly followed throughout the study:

Informed Consent: All participants are informed about the purpose of the study and their
consent is obtained.

Anonymity and Confidentiality: Personal data is anonymized to protect the identity of

participants.

Voluntary Participation: Participants are free to withdraw at any time without any obligation.

Data Security: All collected data is securely stored and used solely for academic purposes.

6. Limitations of the Study

While every effort is made to ensure the reliability and accuracy of the study, certain limitations
are acknowledged:

Sample Size: Though 300 respondents provide a reasonable base, it may not fully represent
the diversity of over 1.4 billion Indian consumers.

Urban Bias: Due to logistical constraints, rural populations are underrepresented.

Recall Bias: Respondents may not accurately remember price levels before GST
implementation, affecting comparative analysis.
Awareness Gap: Many consumers may lack a full understanding of GST, which could
influence the validity of their responses.

Temporal Limitations: The study is cross-sectional and does not track changes over time.

7. Expected Outcomes

Based on the chosen methodology, the study expects to uncover:

• Levels of awareness and understanding of GST among consumers.

• Perceived changes in pricing and cost of living post-GST.
• Shifts in consumption behaviour influenced by the new tax structure.
• Disparities in impact based on income, education, and location.
• Consumer sentiment regarding the efficiency, fairness, and complexity of GST.

These findings will contribute to the broader discourse on GST's effectiveness and its real-
world implications, offering insights for policymakers, economists, and consumer rights
advocates.

8. Relevance and Contribution

This methodological framework ensures that the study is both empirically grounded and
contextually rich. It contributes to the ongoing policy evaluation of GST by shedding light on
how it affects the day-to-day lives of Indian consumers. Furthermore, the dual approach of
combining hard data with personal experiences bridges the gap between macroeconomic policy
and micro-level impact.

The research will also serve as a foundation for further academic inquiries and policy revisions
by identifying areas where GST implementation may require better communication, education,
or reform.
 CHAPTER-04
DATA ANALYSIS
1. Introduction

GST was implemented on July 1, 2017, aiming to simplify and unify India’s indirect tax system.

The analysis is based on secondary survey data from approximately 72–74 participants.

Focus: Consumer awareness, perceptions, and cost impact of GST.

2. Respondent Demographics

Age Group:

• 41.9% aged 21–25

• 31.1% aged 26–35

Gender:

• 52.7% Female, 43.2% Male

Occupation:

• 48.6% Students, 27% Employed

Monthly Income:

• 41.7% earned below ₹20,000/month

Insight: Primarily young, cost-sensitive individuals participated.

3. GST Awareness and Understanding

Familiarity:

• 48.6% “Somewhat familiar”, 44.4% “Very familiar”, only 6.9% unfamiliar.

Source of Information:

• 42% via news media, 20.3% via internet

Understanding of GST Impact:

• 52.8% understood how GST affects prices.

• 27.8% were unsure – indicates need for better consumer education.

4. Consumer Perceptions and Behaviour.

Price Impact:

• 48.6% noticed price increases

• Only 14.3% noticed price decreases

Behavioural Change:

• 34.8% changed shopping habits (e.g., preferred online shopping)

Perceived Benefits:

• 41.3% - Lower prices

• 23.8% - Transparency
• 18.7% - Simplified tax system

Challenges Faced:

• 61.1% - Confusion about pricing

• 37.5% - Lack of awareness of GST benefits

5. Transparency and Satisfaction

Transparency Perception:

• 47.2% believe GST improved pricing transparency

• 33.3% are unsure

Satisfaction Level:

• 16.7% Satisfied
• 58.3% Neutral
 • 25% Dissatisfied

Perception of Quality:

• 47.2% said quality improved

• 30.6% were unsure

6.Recommendations:

• Conduct awareness campaigns

• Promote transparent billing
• Review GST rates on essentials
• Encourage digital literacy to improve understanding

Correlation Matrix:
Interpretation:

1. Demographics (Age)

• Majority of respondents are young adults.

• 41.9% fall within the 26–35 age group.
• 37.8% are aged 18–25.
• Reflects opinions of a digitally active, economically engaged demographic.
• Low representation from older age groups may limit senior citizen perspectives.

2. Gender Representation

• Female respondents form the majority at 52.7%.

• Males represent 43.2%, while 4.1% identified as other.
• Ensures inclusive and diverse perspectives in survey responses.

3. Student Status

• Only 27% are students.

• Majority are working individuals or regular consumers, making their feedback more
reflective of market realities.

4. Familiarity with GST

• 46.6% are very familiar, and 38.4% are somewhat familiar with GST.
• Only 15.1% have no familiarity.
• High awareness suggests reliable and informed responses.

5. Perception of GST’s Impact on Prices

• 48.6% believe prices have increased post-GST.

 • 14.3% observed a decrease, while 17.1% noticed no change.
• 20% are unsure, indicating some uncertainty.
• General sentiment leans towards GST causing price hikes.

Descripted Analysis:

Interpretation:
Interpretation of GST Survey Descriptive Statistics

1. Age Demographics:

• Majority of respondents (41.9%) are in the 26–35 age group, followed by 18–25
(37.8%).
• This suggests most responses reflect views of economically active young adults.
2. Gender Distribution:

• 52.7% of respondents are female and 43.2% are male.

• A balanced gender representation enhances the credibility of consumer perception.

3. Student Status:

• 68.9% of respondents are not students.

• This indicates the feedback is largely from working or purchasing individuals.

4. Income Range:

• Most participants earn between ₹20,000–₹50,000 (41.7%).

• This group is likely to be sensitive to pricing and tax impacts.

5. GST Awareness:

• 46.6% are very familiar with GST; 38.4% somewhat familiar.

• High awareness improves the reliability of opinions on GST.

6. Source of GST Knowledge:

• 42% learned about GST via news media, while 24.6% through the internet.
• Media and digital platforms are key for GST-related education.

7. Understanding Price Effects:

• 52.4% believe they understand how GST affects pricing.
• Indicates a moderate level of tax literacy.

8. Perceived Price Changes:

• 48.6% feel prices increased post-GST, while only 14.3% saw a decrease.
• Suggests concern over inflation due to GST.

9. Price Transparency:
• 48.6% think GST improved transparency in pricing.
• Reflects a partially positive view of its implementation.
10. Shopping Behaviour Change:
• 42% did not change shopping habits, but 36.2% did.
• GST had limited but noticeable effect on consumer behaviour.

11. GST Benefits:

• 41.7% cited “lower prices” as a key benefit, though this contrasts with the perceived
price rise.
• There’s a perception gap in expected vs actual outcomes.

12. Challenges Faced:

• 41.7% cited lack of GST awareness as a challenge.
• Suggests need for more consumer education.

13. Satisfaction:
• 38.4% are neutral about GST implementation; only 16.7% satisfied.
• Indicates room for policy improvement.
 CHAPTER-05
FINDING, SUGGESTION
AND CONCLUSION
FINDINGS:

1. Demographics

• Age Group: Majority (57.8%) are aged 18-25 years.

• Gender: 52.7% female, 45.9% male, 1.4% other.
• Occupation: 48.6% are students; 27% are employed.
• Income Range: 41.7% earn less than ₹20,000 monthly.

2. Awareness and Understanding of GST

• 48.6% are very familiar with GST.

• 51.4% are either somewhat familiar or not familiar.
• 52.8% understand how GST affects prices.

3. Behavioural Impact

• 34.9% changed their shopping habits post-GST.

• 42% did not change their shopping behaviour.
• 42% learned about GST via news media.
• 28.8% learned through social media.

4. Perceived Benefits

• 41.7% believe GST led to lower prices.

• 20.8% see transparency as a key benefit.

5. Challenges Faced

• 41.1% face confusion about pricing.

• 27.9% cite lack of awareness.
• 19.4% observed price increases in specific goods.
 • 11.6% mention other issues.

6. Price Change Perception

• 48.6% noticed a price increase.

• 14.6% observed price decreases.

7. Satisfaction with GST

• 58.6% are neutral.

• 16.9% are satisfied.
• 24.6% are dissatisfied.

8. Transparency and Quality

• 41.7% believe GST improved pricing transparency.

• 43.1% feel it improved product/service quality.

SUGGESTIONS:

1. Strengthen GST Awareness Campaigns

• Use social media and news platforms.

• Develop simplified and vernacular content.
• Conduct awareness workshops in colleges and communities.

2. Improve Consumer Communication

• Encourage itemized billing with GST breakdown.

• Train retailers to explain GST charges.
 • Launch a mobile app and helpline for GST queries.

3. Address Misconceptions and Challenges

• Run myth-busting campaigns.

• Tailor regional campaigns based on consumption patterns.
• Partner with NGOs and educational institutions.

4. Feedback Mechanism

• Introduce a consumer feedback portal.

• Organize webinars with stakeholders.
• Publish monthly feedback and action reports.

5. Monitoring Impact on Prices

• Establish sector-wise price tracking index.

• Conduct third-party audits on GST impact.
• Share audit findings through public dashboards.
CONCLUSION:

Comprehensive Study of GST Cost Impact on the Indian Consumer

The implementation of GST in India marked a significant shift in the country’s indirect taxation
system, aimed at streamlining tax processes and bringing uniformity. This comprehensive study
reveals that while a considerable portion of consumers, especially the younger demographic,
are aware of GST, a substantial gap remains in fully understanding its cost impact on goods
and services.

The findings indicate that although many consumers have noticed increased transparency and
simplification, a notable percentage still experience confusion about pricing and feel burdened
by perceived price hikes. The neutral stance of the majority in terms of satisfaction further
suggests that the benefits of GST have not been fully realized or effectively communicated to
the average consumer.

To enhance public trust and maximize the benefits of GST, there is a clear need for targeted
awareness initiatives, improved consumer education, and transparent pricing mechanisms.
With continued efforts in education, outreach, and policy feedback loops, GST has the potential
to evolve into a more consumer-friendly and economically efficient system in the long run.