RBANMs Artha Magazine | Issue 1 | 2017-18

2017-2018 Artha house research journal Issue I | 2017-18 RBANM’S First Grade College Accredited by National Accreditation Council With A Grade (CGPA 3.01)

We invite suggestions from the readers and contributors for further quality enIhancement.wishallthe readers a productive engagement with this issue.

Dr. Jayappa M Principal

EditorialCommittee

Artha is an In house Research Journal of our institution and is engaged in multi disciplinary research. We have made a humble beginning by publishing research articles of our faculty and have also planned to accept and publish research articles contributed by academicians and researchers from other Educational and Research Institutions in the coming years. This issue encompasses areas such as literature, Economics, Gender, Political Science and Commerce. The dissemination of the emerging wealth of knowledge in this research publication gives usability to the ongoing research and creates an ambiance for scholars to pursue more research projects and explore new vistas.

Prof. Ravi H.V Dept.ofCommerce

Dr. C. S. Yatnalli Dept.ofCommerce&Management

2

Editorial

Dr. Prathap VicePrincipal

Artha | 2017-18

Prof. Mohammed Nawaz Dept.ofCommerce&Management

By Dr. C. S. YATNALLI, Associate Professor, Department of Commerce

25

The Impact of GST on the Prices, the Shifting and overshifting of Tax Rates

31

By Prof. PRATHAP, Vice-Principal, Department of Commerce

The Impact of GST on Different Sectors and sub-sectors of the Economy: A Concept Study

By Mr. MOHAMMED NAWAZ, Assistant Professor, Department of Commerce

By Dr. SHANKAR. R, Assistant Professor, Department of Commerce and Management

By Dr. M. JAYAPPA, Principal, Department of Commerce

2

13

Table of Contents

A Critical analysis of GST in India

By Prof. RAVI. H.V, Associate Professor, Department of Commerce

By Prof. RAVINDRA, Associate Professor, Department of Commerce

The Impact of GST on Supply Chain Strategy and its Effect onWarehousing and Transportation: A Concept Study

34 Artha | 2017-18 3

19

The Impact of GST on Supply Chain Management: A Concept Study

27

GST in India and its impact on Retail Sector: An analyticalstudy with special reference to the selected retailers ofCommercial Street of Bengaluru

GST on Education sector in India

07

“Research is seeing what everybody else has seen and thinking what nobody else has thought.”

~Albert Szent Györgyi

4

I proudly congratulate all faculties on releasing RBANMS FGC’s new initiative -ARTHA.

From the Principal’s desk

Editorial Committee

The journal provides a look at faculty members research in several fields including commerce, history, languages, and education.Across these pages, you will witness RBANM’s faculties’advanced knowledge and impact through their research.As teachers, their scholarly engagement enables exceptional student learning on our campus.Atrue illustration of the college's commitment to offering a broad educational experience, this publication showcases the work of our exceptional faculties, who guide the students towards meaningful lives and productive careers.

5 Artha | 2017-18

Our professors routinely publish top journals and other academic publications. -Principal

Sd/

A

AnalysisCriticalofGST in India

6

3. To know the advantages and challenges of GST in the Indian context.

Abstract

This concern becomes more serious with the indirect tax reform brought in India due to introduction of GST. Taxation structure of an economy functions like the pulse of economy, which states the condition of economy.Any change in this structure entertains numerous changes in the economic activities and impacts the lives of the people deeply.

Research methodology

2. To understand how GST works in India and to compare with the other nations.

Editorial Committee

GST has been a long term awaited reform, which has been recently introduced in the Indian taxation Street. This introduced of GST has introduction many changes in the indirect tax structure of the country without disturbing the direct taxes directly. It has subsumed many indirect taxes and has therefore introduced tax compliance and uniformity for the tax payers.

The GST bill has been a long time pending reform, which is brought into existence after several hurdles and obstacles. It is popularly known as122nd amendment of Indian Constitution.

Goods and Services Tax (GST) is the biggest tax reform in decades throughout the world, but India has been taking baby steps to meet its target of rolling out GST onApril 1, 2016. The research intends to focus on understanding concept of GST and its critical assessment with reference to the Indian economy.

GST would be applicable on ‘supply’of goods or services as against the present concept of tax on the manufacture of goods or on sale of goods or on provision of services. GST is based on the principle of destination based consumption taxation as against the present principle of origin based taxation. It would be a dual GST with the center and the states simultaneously levying it on a common base. GST to be levied by the center is called Central GST (CGST) and that to be levied by states [including union territories with legislature] is called state GST (SGST). Union territories without legislature would levy union territory GST (UTGST). An Integrated GST (IGST) would be levied on inter state supply (including stock transfers) of goods or services. This would be collected by the center so that the credit chain is not disrupted. Import of goods would be treated as inter state supplies and would be subject to IGST in addition to the applicable customs duties. CGST, SGST/UTGST& IGST would be levied at rates to be mutually agreed upon by the Centre and the States under the aegis of GSTC.

What is GST?

GST would replace the following taxes currently levied and collected by the center: Central Excise Duty; Duties of Excise (Medicinal and Toilet Preparations); additional Duties of Excise (Goods of Special Importance); additional Duties of

7

Research problem

The taxation structure includes two types of taxes. They are direct and indirect tax. Direct taxes are imposed on the income and wealth of an individual whereas indirect taxes are imposed on goods and services sold. Direct taxes may not impact every individual as some may not be covered under the direct tax net due to the lower limit ceiling, but in case of indirect taxes whether rich or poor, all are impacted.

Taxation structure includes two types of taxes they are direct and indirect tax, direct taxes are imposed on the income and wealth of an individual whereas indirect taxes are imposed on goods and services sold. Direct taxes may not impact every individual as some may not be covered under direct tax net due to the lower limit ceiling, but in case of indirect taxes whether rich or poor, all are impacted.

The study focuses on extensive study of secondary data collected from various books, national & international journals, government reports, publications from various websites which focused on various aspects.

By Dr. M. Jayappa Principal Department of Commerce

A critical analysis of GST inIndia

The GST model has been introduced in the categories of Central Goods and Services Tax, State Goods and Services Tax, Union Territory GST, Integrated Goods and Services Tax (IGST).AGoods and Services Tax Council (GSTC) shall be constituted comprising the Union Finance Minister, the Minister of State and the state Finance Ministers to recommend on the GST rate, exemption and thresholds, taxes to be subsumed and other features. One half of the total number of members of GSTC would form quorum in meetings of GSTC. This paper will detail out the impact of GST in India.

Objectives of the study

This concern becomes more serious with the indirect tax reform brought in India due to introduction of GST. The taxation structure of an economy functions as the pulse of economy, which states the condition of economy. GST is a comprehensive concept that plays a major role in improving and strengthening the tax structure of India.

Introduction

1. To study the concept of GST and its impact on Indian Economy.

InGST.India,

Review of literature

Decision making would be taken by a majority of not less than three fourth of weighted votes cast where in Central government and minimum of 20 states would be required for majority because central government would have one third weightage of the total votes cast and votes by all the states will be taken together and would be given two third of weightage of the total votes cast.

organising discounted sales. Due to implementation of GST lost of the Countries of European union faced problems pertaining to interpretation. But most of the Countries adopted this system to generate efficacy in taxation structure.

GST was firstly introduced in France in 1954, with the introduction of GST France became the first country ever to introduce GST. Now, India has adopted it.After its implementation in India, India will become the 166th nation to adopt it. In India before 16 years, in 2000 Shri AtalBihariVajpyee brought this system but no one paid attention to it and due to some reasons, it was not passed. On 28th February 2006, the finance minister P. Chidambaram, had announced the target date for implementation of GST on 1April 2010 4. The Constitution (122 ndAmendment) Bill was introduced in the Lok Sabha by Finance MinisterArun Jaitley, on 19th December 2014, and passed by the house on 6th May2015.ThebillwasfinallypassedinRajyaSabhaandLok SabhainAugust2016.Thebillreceivedthepresidentialassenton8th September2016andwasenactedandbroughtintoeffecton16th September2016.

Excise (Textiles and Textile Products); additional Duties of Customs (commonly known as CVD); special Additional Duty of Customs (SAD); service tax; cesses and surcharges insofar as they relate to supply of goods or services. State taxes that would be subsumed within the GST are: state VAT; central sales tax; purchase tax; luxury tax; entry tax; entertainment tax; taxes on advertisements; taxes on lotteries, betting and gambling; state cesses and surcharges insofar as they relate to supply of goods or services; GST would apply to all goods and services exceptAlcohol for human consumption; GST on five specified petroleum products (Crude, Petrol, Diesel,ATF & Natural gas) would be applicable from a date to be recommended by the GSTC; tobacco and tobacco products would be subject to GST. In addition, the central government would continue to levy Central excise duty(1).

• As analyzed by Kumar and Ramya, GST will bring forth more revenue for the State as well as Central

1. BeforetheintroductionofGST,therewassingleregistration acrossIndiaforservicesandthetaxrateimposedonserviceswas 15%.Thetaxeswereimposedandcollectedbythecentral government.Inthecaseofgoods,separateregistrationfor manufactureandsalegoods.Inthecaseofgoods,thesellingstate collectsandretainstaxesonthesaleandthecentralgovernment collectsandretainstaxesonmanufacturing.

GST in other countries

the current GST has six rates or slabs. They are: (1) exempted category (2) 3% tax slab (3) 5% tax slab (4) 12%tax slab (5) 18% tax slab, and (6) 28% tax slab. As most of the commodities and services, that is almost 60 to 70 percent, are taxed at 18%, the 18% GST is considered as the standard GST rate. In future, we may move towards this 18% single GST system (2).

InAustralia, every company whose turnover exceeds $75,000 is liable for registration under GST. In Canada GST is imposed at 5% in part IX of Excise TaxAct. GST is levied on goods and services made in Canada except items that are either exempted or zero rated. In New Zealand, the rate of GST is 12.5%. In Singapore, Canada and Malaysia, where GST or GST like indirect tax systems have been introduced, only one or two tax slabs are being put in place. In Singapore, there is a single GST rate of 7 percent, that means whichever things, good or service, you buy, only 7 percent GST will be levied. But, in India, GST comes with multiple tax slabs, and therefore this GST can hardly be considered as a true

2. InthecaseoftheGSTregime,thereshouldbestate wise registrationforstateGSTandcentralGST.Inthecaseofservices, thetaxrateimposedis18%.Inthiscase,taxesarecollectedand retainedbythecentralgovernmentandtheconsumingstate.Inthe caseofgoods,oneregistrationshouldbedoneforeachstate.The taxesapplicableinthecaseofgoodsareatthefollowingrates5%, 12%,18%,and28%.Thetaxesarecollectedandretainedbythe centralgovernmentandconsumingstatesincaseofgoodsunder theGSTregime.GSTisstructuredbasedonthedestination principlesothatthetaxbaseshiftsfromproductionto consumption.Bydoingsothebenefitofrevenuecollectionwill bederivedbythestatesinwhichconsumptiontakesplace.Inthis case,theimportswillbeliabletotaxandexportswillberelieved fromtheburdenofGST.

AGoods and Services Tax Council (GSTC) shall be constituted comprising the Union Finance Minister, the Minister of State and the state Finance Ministers to recommend on the GST rate, exemption and thresholds, taxes to be subsumed and other features. One half of the total number of members of GSTC would form quorum in meetings of GSTC.

Most of the authors have made several attempts to analyze the impact of GST. Some of the articles analyzed are as follows:

TheintroductionofGSTwouldintroducemanychangesinthe constitutionalstructureofIndia;hitwouldberequiredtoadopt certainchangestosuitthenewregime.TheGSTwillrequire legislatureandconstitutionalchanges.Thestateswillhavethepower tolevyservicetax,thecentralgovernmentwillhavetheauthorityto taxgoodsbeyondthefactorygates,lawsoftheCentralExcise Act,1944andFinanceAct,1994needtobereplaced,recordkeeping andITsoftwarewillhavetobeupdatedtocomplywithGST provisions.

According to a Crisil report, when GST was implemented in many countries, it caused a rise in inflation. Most of the nations experienced a pre GST spending rush; this was largely observed in Malaysia, Japan, Singapore and China. This kind of observation was also seen in Indian markets, where the traders in e commerce and non e commerce were active at

8 Artha | 2017-18

GST Council

TaxstructurebeforeandafterGST:GSTregimehasintroduced certainchangesintaxationstructure;fromthentonowwhatarethe changesinthestructurehavebeendiscussedinthecurrentsegment.

How GST was introduced?

9

governments. The first reason behind this is the increase in tax compliance, and the second is the widening tax base as more commodities and services which were untaxed will come under the ambit of taxation. For the economy as a whole, GST benefit occurs in the form of enhancing market efficiency. According to them another significant advantage of GST is its capability to tame inflationary pressures in the economy.As observed by them the foreign trade will also have a positive impact, because the burden of tax on exports will be negligible, whereas the imports will bear the tax burden by providing a better edge to the domestic manufacturers. Theoretically, GST is known to be a simplified indirect tax structure but, the existing GST rules that have been rolled out by the GST Councils do not seem to be offering any simplified solutions to the traders in complying with the taxation procedures. Multiple taxation and multiple filing have made the process more cumbersome than ever before.Another major drawback of GST has been its digitalization format, but in India, there are more than 45% of traders are yet no equipped with technology. Traders also incur high administrative expenses for the maintenance of GST filing. These are some of the highlights given about GST.

• No GST on the education and health sector has given some relief to the people.

These are some of the advantages the people and economy with the introduction of GST, but these reforms are parceled with the merits and demerits, some of the drawbacks of GST introduction are discussed in the following segment.

EndNotes 1Goods and Services Tax, http://www.empcom.gov.in/content/7_1_GoodsandServicesTax.aspx | Dr Kumar.B.Pradeep and Dr.RRamya, | 2 Goods and Services Tax and Kerala Economy.Online: https://mpra.ub.uni muenchen.de/80883/ MPRA Paper No. 80883, posted21 August 2017, 22:13 | 3Raj Ravishu, Goods and Services Tax in India. Imperial Journal of Interdiscipli-nary Research (IJIR) Vol 3, Issue 4, 2017 ISSN: 2454 1362. | 4G. Raghuram and K.S. Deepa, Goods and Services Tax: The Introduction Process. Indian Institute of Management Ahmeda-bad. W.P. No.2015 03 01 March 2015

• The Central Government will have the power to levy excise duty in addition to the GST on tobacco and tobacco products. The tax on the supply of five specified petroleum products namely crude high speed diesel, petrol,ATF, and natural gas would be levied from a later date on the recommendation of the GST Council.

Merits of GST

• With the widening of tax coverage, the government can generate sufficient tax revenues to help and support the BIMARU states.

GST has brought many changes in the indirect taxation structure, these changes have been implemented with the view to introducing certain benefits, some of the benefits of GST are as follows:

Critical appraisal of GST

| 2017-18

• According to Rao, the implementation of GST in India is in the form of a comprehensive value added tax.As mentioned one of the key issues that need to be resolved is the treatment of inter state transactions in goods and services. The existing consensus of zero rating by itself would not be adequate to address the potential concerns of evasion in such transactions. Zero rating with pre payment appears to be a superior alternative. The second concern relates to the need to integrate tax administration at the two levels to maximize the efficiency of administration.According to her, there are two alternative approaches used to estimate the revenue neutral rates of GST. The first approach works with overall GDP numbers.15 The GDP from taxable sectors as well as the value of exempt inputs used in these sectors constitute the base for the tax. Since even for the taxable activities, imports exceed exports, this provides an acceptable estimate of the domestic base provided one assumes that tax credit for capital goods is not provided upfront. The second approach is based on estimates for private final consumption expenditure. For these estimates, the consumption of taxable goods and services and the taxable inputs used by all the exempt goods and services are taken together to determine the tax base. Finally, the impact of the tax on different states would be different. Careful assignment of tax powers is crucial for the new regime to be acceptable.

• Coal will be taxed at 5% which was earlier11.69%, as result it would be beneficial for the power sector and heavy industries which rely on coal supply.

• GST is a single destination based consumption tax, which subsumes multiple indirect taxes. GST is not an additional or a new tax burden imposed on the people, rather it is a tax reform that will replace all other indirect taxes such as excise, VAT, CST, and Octroi. GST will positively impact a business by introducing a common and consistent tax structure. It will be levied at each stage of the production distribution chain with applicable set offs. Secondly, due to subsuming of various indirect taxes, the business enterprises will have certainty in cost benefit analysis.

• The proposed seamless credit regime will eliminate the cascading effect of taxes.Asystem of tax credits through the value chain and across boundaries of states would ensure that there is a minimal cascading of taxes and this would reduce the hidden cost of doing business.

• GST regime promises a reduction of multiple taxes but, in reality, according to article 246A, the central government has the power to levy tax as well as every state legislature has the power to levy tax on goods and services,

Artha

The authors have highlighted the crucial points related to the tax reform, which have played a crucial role in improving the efficiency of the taxation structure.

• India has a quasi federal structure and therefore GST in India has a dual structure, where the tax will be levied and collected by the union government and also by the respective state government. CGST will be levied by the central government and SGST will be levied by the state government as well as IGST, integrated goods, and services tax which will be levied in case of inter state trade and commerce which shall be collected by the union government.

• Acomprehensive IT system would provide ease of complaints by providing services such as registration, returns and payments would be available to the taxpayers online, making it transparent and easier and reducing physical interaction. 18% of GST on capital goods will have positive impaling domestic manufacturers as seamless input credit will be available for capital goods.

2

• High GST rates on durable goods and automobiles, reduce the motivation for the hard working people and also leads to a decline in the purchase of these goods causing a loss to the producers, affecting the manufacturing sector, and also impacting the standard of living of the state.

Conclusion

• There is no clarity on the basic threshold exemption and GST can be easily misused by multiple rates and numerous exemptions and concessions.

• Reduction in prices of goods and services is possible only where prices are determined by the cost plus method. In reality, the prices may tend to renew constantly or increase as business enterprises may take the profit for the sum which was saved due to less tax.

• Due to the destination principle of the levy of GST, the manufacturing states will suffer from the outflow of tax revenue along with the flow of goods and services.

6. Goods and Services Tax, Model GST Law www.empcom.gov.in/content/4834_1_ModelGSTLaw.aspxhttp://

• Due to the multiplicity of tax rates, the consumers can be manipulated by the sellers and billing at provision stores, food retail chains, and mega provision stores.

2. Benge, Matt., 1998,Taxes on Business Inputs and the Effects of a Goods and Services Tax. Agenda, v. 5, no. 4, p. 399 406.

1. Ahmad, Ehtisham and Poddar, Satya.,2009, GST Reforms and Intergovernmental Considerations in India. Asia Research Centre Working Paper 26. London School of Economics & Political Science, Houghton Street, London. HTTP:// eprints.lse.ac.uk/38346/1/ARCWP26 AhmadPoddar.pdf.

5. Raghuram, G. and Deepa, K.S., 2015, Goods and Services Tax: The Introduction Process. Indian Institute of Management Ahmedabad. W.P. No.2015 03 01.

3. Dr. Kumar, B.Pradeep and Dr.Ramya., R, 2017, Goods and Services Tax and Kerala Economyí. Online: https:// mpra.ub.uni muenchen.de/80883/ MPRA Paper No. 80883.

11.The Constitution (One Hundred and Twenty Second) Amendment Bill 2014, media/Constitution%20115/SCR%20summaryhttp://www.prsindia.org/uploads/%20GST.pdf

hence now there will be one parliamentary law and other 29 state laws along with 7 union territories in existence to a relationship with GST.

4. Dr.Shaik, Shakir., Dr.Sameera, S.A., and Mr.Firoz. Sk.C. 2015,Does GST lead to Indian Economic Development, IOSR Journal of Business and Management., v. 17 i. 12, p. 1 5

10 Artha | 2017-18

8. content/7_1_GoodsandServicesTax.aspxhttp://www.empcom.gov.in/

• The GST regime will make imports more competitive. By doing so the import of capital goods and raw materials will have a direct impact on manufacturing and it would be challenging for the manufacturer and would create a pessimistic atmosphere for the industrialist.

References

7. Mukherjee, Sachidananda., 2016, GST in India: Chasing a Mirage or Reality, National Institute of Public Finance and Public Policy, v. 3 i. 1,

• Merging of state taxes in GST will lead to the unavailability of the Input Tax credit of SGST of one state against SGST of another state, which will be one of the obstacles in terms of building up a common national market.

• GST has replaced multiple indirect taxes but, due to features of GST like no Input Tax credit of CGST can be settled with SGST Liability and vice versa, the new concept of TDS against GST, State wise registration, filing of various returns has made the process even more complex and complicated.

• GST distorts the basic structure of fiscal federalism provided in the constitution. The GST council may become another institution that acts as an opportunist, rather than a rational think tank for the nation's tax structure.

• There might be disputes between the central government and state government regarding the distribution of taxes and also for allocation of taxes for states incurring the loss of revenue due to GST.

9. Raj, Ravishu.,2017 Goods and Services Tax in India. Imperial Journal of Interdisciplinary Research (IJIR) v.3, i. 4, ISSN: 2454 1362.

10.Rao, R. Kavita., 2008,Goods and Services Tax for India. Working Paper 2008 57. National Institute of Public Finance and Policy, New Delhi.

GST has been a long waiting reform that has been introduced with a lot of the expectation of achieving efficiency in the taxation structure.As of now, GST has been 20 at the reforming stage, it will be able to achieve the said targets only after including certain appraisals. It has introduced certain changes in the economy, some of the changes are welcomed and some are objected to by the people. Many countries have adopted GST with a positive vision, India has also been expecting positive changes at large which will be achieved in a short period.

The Vijay Kelkar Committeerecommended that GST be implemented in India. The Goods and Services Tax (GST) was imposed in India on July 1, 2017.

Didknow?you

11

Didknow?you

Commercial vehicles that carry passen-gers or goods draw a GST rate ranging from 12 percent to 28 percent. The tractors with engine capacity exceeding 1,800cc attract a GST of 12

12

• Luxury Tax d. Entry Tax (all forms)

• State GST (SGST) is levied by states.

• SpecialAdditional Duty of Customs (SAD)

By Prof. Prathap Vice Principal, Department of Commerce

GST on the education sector in India

• Additional Duties of Excise (Textiles and Textile Products)

• Service Tax

Editorial Committee

Abstract

State taxes that are subsumed under GST

13

GST has two components: one levied by the center (referred to as Central GST or CGST), and the other levied by the States (referred to as State GST or SGST). Rates for Central GST and State GST has been approved appropriately, reflecting revenue considerations and Theacceptability.CGSTand the SGST apply to all transactions of

• Central Sales Tax

One of the main objectives of Goods & Service Tax (GST) would be to eliminate double taxation i.e., cascading effects of taxes on the production and distribution cost of goods and services. The exclusion of cascading effects i.e., tax on tax till the level of final consumers will significantly improve the competitiveness of original goods and services in the market which leads to a beneficial impact on the GDP growth of the country. The introduction of a GST to replace the multiple indirect tax structures of Centre and State taxes are not only desirable but imperative. Integration of various taxes into a GST system would make it possible to give full credit for input taxes collected. GST is a destination based consumption tax based on the VAT principle.

• Taxes on lotteries, betting, and gambling

• Purchase Tax

Education is one of the most important sectors in the Indian economy as it is directly relatable to the advancement of the country. Education is provided both by the public and private sectors.After the Right to Education has been recognized as a Fundamental Right, the Government must provide education to all children between the age of six to fourteen years. Thus, it is the primary duty of the country to provide education at a low cost and make it more accessible to the Indian citizens. At present, education is considered a service and only subject to the GST and no other indirect taxes. But only those services which the government has laid down within educational service will be exempted from GST.

GST which are as under Centre taxes that are subsumed under the GST are:

Cross utilization of ITC both in the case of Inputs and capital goods between the GST and the SGST is not permitted except in the case of inter State supply of goods and services (i.e.,

• Central Excise duty

In the case of Intra State transactions, the Seller collects both CGST & SGST from the buyer and CGST needs to be deposited with the central govt. and SGST with the state govt.

Intra-state transactions

Introduction

• Central GST (CGST) is levied by the center.

Goods and Service Tax (GST) is a comprehensive tax levy on the manufacture, sale, and consumption of goods and services at a national level under which no distinction is made between goods and services for levying of the tax. It substitutes for many indirect taxes levied on goods and services by the Central and State governments in India.

GST is a tax on goods and services under which every person is liable to pay tax on his output and is entitled to get an input tax credit (ITC) on the tax paid on its inputs (therefore a tax on value addition only) and ultimately the final consumer shall bear the tax.

• Integrated GST (IGST) is levied by the central government on the inter state supply of goods and services.

Indirect taxes has been subsumed under GST

• Additional Duties of Excise (Goods of Special Importance)

goods and services made for a consideration except the exempted goods and services.

• Entertainment and Amusement Tax

• Taxes on advertisements

| 2017-18

• Additional Duties of Customs (commonly known as CVD)

• Central Surcharges and Cesses so far as they relate to supply of goods and services

• State VAT

and the states have concurrent jurisdiction for the entire value chain and all taxpayers based on thresholds for goods and services prescribed for states and the center.

• State surcharges and cesses so far as they relate to the supply of goods and services.

Artha

• Duties of Excise (Medicinal and Toilet Preparations)

TheIGST).center

are still completely not aware of the new tax regime. Changing over to a completely new system of taxation requires an understanding of the minutiae, which businesses lack right now. Most of them are worried about filing timely returns, but it is important to note that even before businesses can reach the filing stage they have to issue GST compliant invoices. For a traditionally pen and paper economy like India, this change to digital record keeping is going to be massive. Invoices after 1 July will need to be GST compliant with all details such as GSTIN, place of supply, HSN code, etc. as mandated by the law.

• The main reason of implementation GST is to abolish the cascading effect on tax.Aproduct on which excise duty is paid can also be liable for VAT. Suppose productAis manufactured in a factory.As soon as it releases from the factory, excise duty has to be paid to the central government. When that product Ais sold in the same state then VAT has to be paid to the state government.Also, no credit on excise duty paid can be taken against output VAT. This is termed a cascading effect since double tax is levied on the same product.

GST is being referred to as a single taxation system but in reality, it is a dual tax in which the state and center both collects separate tax on a single transaction of sale and service

Setoff of IGST, CGST & SGST will be as follows in the below mentioned chronological order only.

• GST is structured to simplify the current indirect system. It is a long term strategy leading to a higher output, more employment opportunities, and an economic boom.

• The reduced tax burden on companies will reduce production costs making exporters more competitive.

14 Artha | 2017-18

• The credit of CGST is to be adjusted with IGST and CGST.

dealers were not covered with the central excise but we're only paying VAT in the state. Now all the Vat dealers will be required to pay the Central Goods and Service Tax.

• The credit of SGST is to be adjusted with IGST and SGST.

SMEsit.

No Clarity on Tax Holidays Many manufacturers (textile, pharmaceutical, and FMCG industries) enjoy tax holidays and state benefit schemes. There is still no notification regarding these benefits. This will mean increased costs for these industries, which will probably be passed on to the end Majorityconsumers.of

GST on education sector in India Education is not defined in the CGSTAct but as per theApex Court decision in Loka Shikshana Trust v/s CIT, education is the process of training and developing the knowledge, skill, and character of students through normal schooling.

• The credit of IGST is to be adjusted with IGST, CGST, and SGST.

Adjustment of input tax credit

Increase in Operating Costs: Most small businesses in India do not employ tax professionals and have traditionally preferred to pay taxes and file returns on their own to save costs. However, they will require professional assistance to become GST compliant as it is a completely new system. While this will benefit the professionals, small businesses will have to bear the additional cost of hiring experts.Also, businesses will need to train their employees in GST compliance, further increasing their overhead expenses.

Indian government's foremost priority is to provide low cost education to one and all. That is why the education sector enjoys lots of tax exemptions as they are not taxed or come on the negative list.

Inter-state transactions

• GST is beneficial for both economy and corporations.

Benefits of GST

• GST will lead to a more transparent and neutral manner to raise revenue.

Editorial Committee

• Asimplified and cost saving system as procedural costs reduces due to uniform accounting for all types of taxes. Only three accounts; CGST, SGST, and IGST have to be maintained.

• GST is being introduced to create a common market across states, not only to avoid the enfeebled effect of indirect tax but also to improve tax compliance.

Online procedure GST compliance, return filing, and payments all have to be done online. Many small businesses are not tech savvy and do not have the resources for fully computerized compliance. Even as the rest of the nation gets ready to go digital, businesses in small cities across India face a huge technology problem in the days ahead.

Difficulties in GST

Change in Business Software: Most businesses use accounting software or ERPs for filing tax returns that have excise, VAT, and service tax already incorporated in them. The transition to GST will require businesses to change their ERPs, too; either by upgrading the software or by purchasing new GST compliant software. This will lead to increased costs of new software and training employees on how to use

Integrated Goods and Service Tax (IGST) shall be levied on inter state transactions of goods and services which are based on the destination principle. Tax gets transferred to Importing state. More it is proposed to levy an additional tax on the supply of goods, not exceeding one percent, in the course of inter state trade or commerce, to be collected by the central govt. for two years and assigned to the states where the supply originates. Valuation of stock transfers to be determined. Exports and supplies to SEZ units will be zero rated.

Education is one of the major sectors of any economy. The education of a country's youth decides how the economy of that country will flourish. Education promotes understanding, vision, creativity, and productivity of people which helps in the 25 advancements of a country. In India, Education is provided both by the public as well as the private sector.

• Price reduction as credit of input tax is available against output tax.

• National Skill Development Corporation (NDSC) set up by Indian government approved sector skill councils

Artha | 2017-18 15

• Assessment and examination fees,

• Catering, including any mid day meals scheme sponsored by the Government

• Education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force; or

• Services provided by educational institutions to students, faculty, and staff

• Student administrative services such as registration, the printing of academic transcripts, issuing or replacement of student cards, late fee payments, administration of the library, etc.

• Education as a part of an approved vocational education course

• Excursion and field trips related to the course of study or part of curriculum requirement, except for food and accommodation supplied on those trips

• Security or cleaning or house keeping services performed in a such educational institution; Services relating to admission to, or conduct of examination by, such institution; up to higher secondary

be a case of bundled services if the charges for education and lodging and boarding are inseparable. Their taxability will be determined in terms of the principles laid down in section 2(30) read with section 8 of the CGSTAct, 2017. Such services in the case of boarding schools are naturally bundled and supplied in the ordinary course of business. Therefore, the bundle of services will be treated as consisting entirely of the principal supply, which means the service which forms the predominant element of such a bundle. In this case, since the predominant nature is determined by the service of education, the other service of providing residential dwelling will not be considered for determining the tax liability and in this case, the entire consideration for the supply will be exempt.

The Central Government issued a concept note on the applicability of Goods and Services Tax (GST) on educational services. Education Services are taxable under forwarding charge which means, tax shall be paid by the supplier of services. Education is not defined in the CGSTAct but as per theApex Court decision in Loka Shikshana Trust v/s CIT, education is the process of training and developing knowledge, skill, and character of students through normal schooling. Under the new tax regime, Education Services are classified in heading 9992 (as per Notification No. 11/2017 Central Tax (Rate)) and are further sub divided into six groups (as per theAnnexure to the same notification) comprising Pre primary, primary, secondary, higher, specialized and other educational & support services. Only such educational services are on the negative list as are related to the delivery of education area part of the curriculum that has been prescribed for obtaining a qualification prescribed by law.

• Transportation of students, faculty, and staff;

The education provided by below are also exempted under GST

• After school activities offered directly by third parties,

• Avocational skill development program approved under national skill certification and monetary reward scheme

• Any scheme implemented by NSDC with training partners

The concept note clarified that the services provided by way of education as a part of a prescribed curriculum for obtaining a qualification recognized by a law of a foreign country are not covered in the negative list entry. It said that to be covered in the negative list a course should be recognized by Indian law.About the composite and mixed supply under the education sector such as boarding schools, it was said that boarding schools provide service of education coupled with other services like providing dwelling units for residence and

Apart from the above, the educational training and coaching provided by coaching centers are not exempted under GST.

• Supplies provided by third parties like Musical Instruments, computers, sports equipment,

Thisfood.may

The exemption has also been granted to the services provided by the IIM

Following is education related services that are exempted under GST

• Fellowship programs in management 5 Year Integrated Programs in management studies (but excludes the Executive Development Program).

Concept note on education services under GST

• The national skill development programs approved by NSDC

Implementation of GST, a similar situation continued with the tax exemptions for the sector being retained and the most important thing is that educational services and services related to the education/higher education provided to the students are covered under the GST exempt list.

According to the GST law, services provided by educational institutions have been kept outside of the Goods and Services Tax (GST). Here educational institutions mean any of the institutions providing services by way of:

• Atwo year full time residential PG program in Management for Post Graduate Diploma in Management, an admission granted through CAT

• Curriculum related or course materials,

• NDSC approved assessment agencies

• Pre school education and education up to higher secondary school or equivalent or

Following are not exempt from GST

Place of supply of educational services where the location of the supplier of services and the location of the recipient of services is in India?

b. services ancillary to the organization of any of the events or services referred to in clause (a), or assigning of sponsorship to such events

Education provided by higher and private institutions

All such educational events organized by the foreign entity in India to increase awareness or education are obliged to pay taxes under GST.

GST impact on JEE Entrance Exam

Coaching institutes are playing a very important role in today's competitive world. Most of the students are enrolling in coaching institutes and want to crack the competitive exams. Previously, the government charged a 14% tax on all such education, and now it is increased to 18% which will be disappointing for the students preparing for government exams, IITs, banking, and other professional courses.

After seeing the impact of GST on different Goods and services, now is time to consider the impact of GST on the entrance exams. JEEAdvanced exam which is

16 Artha | 2017-18

As per section 12(6) of the IGSTAct, 2017, the place of supply of services provided by way of admission to an educational or any other place and services ancillary thereto, shall be the place where the event is held or such other place is

a. organization of a cultural, artistic, sporting, scientific, educational, or entertainment event including supply of services concerning a conference, fair, exhibition, celebration, or similar events; or

• Food and accommodation supplied for the excursion as described above,

Charitable trusts running institutions conforming to the definition of educational institution as specified in the notification would be entitled to the exemptions discussed above.Apart from the general exemption available to all educational institutions, charitable activities of entities registered under Section 12AAof the Income TaxAct are also exempt. The term charitable activities are also defined in the notification. Thus, if trusts are running schools, colleges, or any other educational institutions or performing activities related to the advancement of educational programs specifically for abandoned, orphans, homeless children, physically or mentally abused persons, prisoners, or persons over the age of 65 years residing in a rural area, activities will be considered as charitable and income from such services

Thesuppliesschoolwill not impose GST on the taxable supplies immediately but there might be some adjustment to the prices of school taxable supplies in the event the cost is higher to procure those supplies.

As institutions and universities are not mentioned in the exempted list, it is expected that 18% of GST to be levied on them.All the other cases of charity or giving poor education assistance still counted as exemption but still, the Indians consider private education most preferred and would pay an extra penny to claim it for their children.

The education provided by the private school from preschool to higher secondary is exempted under GST. Apart from the exemption, one should also divert towards the fact that the education provided by the private institutions currently grabbing the nation at a fast pace will likely get expensive up to 3 or 5 percent after the rollout of the new goods and services tax in India.

Aslocated.persection

(i) To a registered person, shall be the location of such (ii)personToa person other than a registered person, shall be the place where the event is held and if the event is held outside India, the place of supply shall be the location of the recipient.

Place of supply of educational services where the location of the supplier of services or the location of the recipient of services is outside India

Education by coaching institutes

Educational events organized by foreign entity

need to register and start to impose the GST charges on the taxable supplies at a future date. In order to provide real benefit to the education sector taxes to be paid on inputs must be done away with so that even after GST implementation, the total cost of education will be lower in the coming future.

destined for an entrance exam to enroll in IIT graduate courses, integrated masters, and dual degree education courses. The candidates who are going to enroll for the IIT JEE exam on 20 May 2018, have to pay an updated fee.

As per section 13(5) of the IGSTAct, 2017, the place of supply of services supplied by way of admission to, or organization of a cultural, artistic, sporting, scientific, educational, or entertainment event, or a celebration, conference, fair, exhibition or similar events, and of services ancillary to such admission or organization, shall be the place where the event is held.

12(7) of the IGSTAct, 2017, the place of supply of services provided by way of,

The organizing institute has also notified about the detailed information about the eligibility criteria.Atotal of 2,24,000 candidates will be able to take the exam in the 2018 JEE advanced exam. In 2017, a total of 2,20,000 candidates were eligible for the entrance exam.

Educational institutions run by charitable organizations

• Uniform, stationery, and other non academic related

Overall, in the role of the government, the GST slab rate of 5 percent is considered as lowest, and also accommodating the input tax, the emerging tax rate would then sum up at a lower rate. Thus, the government is requested to frame the laws in such a manner that the tax rate and input tax credit allowed in the education industry can share a load of taxation further improving the Theconditions.schoolmay

2. https://blog.ipleaders.in/gst impact education sector/

References

3. http://lawnn.com/gst impact of goods and service tax on education sector/

Boarding schools provide service of education coupled with other services like providing dwelling units for residence and food. This may be a case of bundled services if the charges for education and lodging and boarding are inseparable. Their taxability will be determined in terms of the principles laid down in section 2(30) read with section 8 of the CGSTAct, 2017. Such services in the case of boarding schools are naturally bundled and supplied in the ordinary course of business. Therefore, the bundle of services will be treated as consisting entirely of the principal supply, which means the service which forms the predominant element of such a bundle. In this case, since the predominant nature is determined by the service of education, the other service of providing residential dwelling will not be considered for determining the tax liability and in this case, the entire consideration for the supply will be exempt.

17 Artha | 2017-18

6. GST with examples GST India Goods and Services Tax in India

Given the important character of education in the role of building a nation, the service is rightly exempted from the tax and it thus eliminates the extra financial burden on the parents of students. The objective of providing such tax exemption is to push for maximum literacy with maximum coverage in India.

5. GST; impact on education: how it will strike this sector: News

1. GST ready reckoner by Taxmann

The Government did not have any desire to radicalize the whole framework in the principal period of imposing GST and needed to have a smooth arrival. In any case, there may be plans for adjustments or changes in the offing. We can trust that given the significance of instruction in our general public, the Government will actualize proper measures to make education and training at all levels the minimum troubled scenario.As of now, the Indian government spends about four percent of its GDP on education, of which 50% is allocated to primary education, including educational institutions for higher education, private players as well as coaching institutions under the lower tax slabs, which will help improve the quality of education in the country, as well as ensure proximity and, hence, access. Moreover, seamless credit on input tax should be implemented across the supply chain, to bring down the total cost of education upon India’s journey into the GST era.

Conclusion

4. GST on education: GST won’t make a difference to education: Finance Ministry The Economic Times

will be wholly exempt from GST in terms of Notification No.12/2017 Central Tax (Rate) dated 28th June 2017.

Composite and mixed supply in so far as education is concerned

18

By Prof. Ravi H.V Associate Prof., Department of Commerce

A study in the light of tax incidence theory

• GST is easy to administer. It decreases the rate of tax evasion. People cannot manipulate their incomes in the case of income taxes to decrease their taxes.

According to Tran Nam(2000), there will be compliance costs for the implementation of GST. The cost falls as Initial Compliance Costs and Recurrent Compliance Costs. There will be several costs of changing to another tax regime. It includes even changing the compliant software packages. There will be also administration costs. It is substantial.

Literature review

collect more taxes.

Another compliance tax is imposed on them. This is also difficult since the costs associated are difficult to calculate. They move from one project structure into another simultaneously which will also make the implementation difficult.

Introduction

The implementation of the GST has got several impacts on the economy. But at the same time, the GST can lead to the price rises of several articles. This is explained by the tax incidence theory and the resultant tax shifting and tax over shifting phenomenon. So the GST may lead to a situation where the consumer has to pay more. Also, different categories of items are covered under different slab rates. This also makes a comparison of the GST rates and the items covered. Also, the consumption patterns that might emerge due to the GST implementation are explored. The difficulties for the manufacturers due to comparatively higher composition levies are also explored. This also addresses the question of whether the impact of the GST on the prices is temporary or permanent. Also, the disparities that might result due to the differences in the accounting practices are explored.

The impact of GST on the prices, the shifting and overshifting of tax rates

Abstract

Editorial Committee

The implementation of the GST has led to price rises. Consumers are feeling that they are paying more for the same item after the GST.Also different sectors have got different worries regarding the sector. So there is a need to explore the different aspects of the impact of the GST on the different consumers and manufacturers.Also, the question arises whether it is more efficient than the previous tax system. The study explores it further and provides insight into the GST tax system.

• GST covers a wider range of goods. So it will help to

• GST is not an investment and export. Therefore entrepreneurship in a country will be encouraged.Also, there is a provision to give rebates to export oriented businesses.

The difficulties in Singapore associated with the implementation of the GST construction sector posed many problems. In the case of the manufacturing sector since the same accounting procedures are employed from supplier to supplier, it will simplify their tasks only. But in the case of the construction sector which is a complex structure that will create more difficulties for GST compliance.

(Pheng & Loi,1994)

• GST is not affected by business cycles like corporate and income taxes. The property taxes are affected by the fluctuations in the property market.

Musgrave (1959) and Bishop (1968) proposed the tax incidence theory. This states that the effect of the taxes will be directly reflected in the prices. This is because the firms will never be ready to compromise their taxes. So if their tax burden is increased it will be directly shifted to the prices of the articles. This is called tax shifting. When there is unhealthy competition in the market it will also lead to tax over shifting. This is the phenomenon where taxes increases lead to price increases more than their effect on the prices. This is due to the manipulation of the firms making use of the change. They not only shift their tax burden to the prices of the articles but also manipulate the prices to take advantage

Goods and Services Tax is the tax employed for the domestic consumption of any goods and services including imports. It is not charged for the investment in any production activities. It is a domestic consumption tax. In Singapore, the rate is 3 %.To make the tax assessment easier companies with more than $ 1 million in turnover are made to pay GST taxes in Singapore. There are different types of taxes to be paid like wholesale tax, turnover tax, etc. at every stage of the production. This will lead to a cascading effect of the taxes.And this could lead to taxation on people. To avoid this GST was introduced in Singapore. The reasons for introducing it were

19 Artha | 2017-18

• 6 % of materials are under the 0 % tax

cereal grains Tobacco Egg buying of flat Milk Movie tickets above Rs. 100 Butter (unpacked) Bikes above 350cc Samosas at multiplex below Rs. 20 Contraceptives

2% Goods with composition levy

• Integrated Goods and Services Tax

(Source: icmai.org)

Methodology

• Unified tax system

Valadkhani & Leyton (2004) have researched the effect of GST on inflation. He found that the effect of GST on prices was just only temporary. The effect was found to be just 2.8%.And the effect on the prices also was not for a long term. Its effect was found significant only in the third quarter. It didn't has any significant impact before or after this.

The research conducted by Huang,A, Freuendenberg, B, and Liu, B(2014) stated that the mortgage prices after the implementation of GST inAustralia have led to an increase in mortgage costs to a greater extent. The rise in the GST was shifted to these prices. Not only that they also increased the prices beyond this level which led to more than the effect of the GST taxes on the mortgage prices. This led to the phenomenon of over shifting.

• Union Goods and Services Tax

• Simplified taxation

Findings

• 26 % is under the 28 % rate

• State Goods and Services Tax

(Young & Belinska Kwapsiz, 2002)

20 Artha | 2017-18

In Malaysia where GST was implemented, government officials claim that the prices of around 1396 items have decreased after the implementation of the GST. This constitutes around 16 26% of the total number of items under the tax.Also, the government is claiming that GST is not the only factor that contributes to the increase in prices. It would be supply and demand, exchange rate, wages, weather, fuel prices, etc.Altogether 600 services and 1211 items are put under the tax bracket of the GST.GST replaced consumption tax, services tax, and sales tax in Malaysia. The proposed benefits in Malaysia are the following:

The percentage of the materials under GST:

To rectify the problems with the present tax system 1) to get rid of the cascading effect of the taxes 2) to get rid of tax erosion 3) to get rid of the double tax, pyramiding tax, etc. 4) to get rid of the leakages of tax due to transfer pricing:

• 39 % is under the 18 % rate

• Transparent and a wider tax net (nbc.com)

GST Rates Items

Different items & their respective GST rates

5% Frozen food, tea, coffee, etc., readymade clothes below Rs. 1,000 rupees, cotton restaurants without alcohol, AC coaches

of the change.

The tax system in India

• 16 % are under the 12 % rate

So the majority of the articles are under the 18 % rate. There is a nil GST on the export. The number of items covered under the Goods category is 149 items. Whereas the items covered under the services category are 87 items. The following are the GST categories:

The increase in the GST prices has drastically increased the mortgage prices inAustralia. This made house prices lesser affordable inAustralia. (Liu et al,2014).

Fresh Fruits and Vegetables Hotel tariffs above Rs. 7,500 Footwear Salt luxury goods unbranded food items

This is exploratory research that leads to further insights into the impact of the GST implementation in India. It is mainly based on secondary data. It applies the grounded theory which applies the method of cross comparison. The collected data is analyzed based on the previously proven theories on GST taxation.

1% Traders with composition levy 0.25% Uncut diamonds, precious stones, etc.

Source: (financial express.com)

12% Meat, lottery, dried food, dining in a non AC restaurant, stay more than Rs. 1,000 up to 2, 500, readymade clothes above Rs. 1,000 rupees

18% Hair oil, toothpaste cement, movie tickets below 100 hotel stays with more than Rs. 2,500, dining in an AC restaurant

Tax free under GST Items costlier under GST Items cheaper under GST Hotels with tariffs below Rs.1,000 Five star hotel food Pressure cooker, pans Education and healthcare services Business class airfare Hair oil, soaps Khadi, yarn Shampoos, deodorants Airfare for economy class Handlooms MachineTV/AC/Washing bikes below 350 cc

• 13 % are under the 5 % tax

3% Gold, silver jewelry, etc.

• Central Goods and Services Tax

28% Chewing gum, pan masala, chocolates, detergents room rent more than Rs. 7,500, tickets, movie tickets costing more than Rs.100

The Vijay Kelkar Committee formed in 2005 proposed the unified tax system of Goods and Services Taxes. Then it was again mooted in 2010 by Chidambaram the then Finance Minister. It was finally passed by the 16th Lok Sabha with the approval of the 18 states and approved by the President of India. GST replaces the service tax, the customs tax, the state level octroi taxes, excise taxes, and the other ad Valorem taxes. For the transaction between the states, Integrated GST is imposed. For others, the GST amount is shared equally between the states and the center. It is only charged for consumption and not for production. It was introduced in India on 1st July 2017 (business line.com).

Toothpaste 2% 2.88%

Biscuits 0.90% 0.10%

• 5 % pharmaceutical products, fuel, and power for domestic consumption

Sweden

• 0% aids for disabled people, food articles, articles for charity purposes, newspapers.

There is a cry to ban GST on higher education. This is mooted by the Education Promotion Society for India. In India, it is said that more than 14 crore children are between the eligible age for higher education, i.e. from 18 23 years of age. But out of these only 2.5 crore, children are enrolled in higher education.

Shampoo 1.90% 1%

GST on different items in different countries

Cheese 11.30% 9.80%

Item Pre GST Growth Post GrowthGST

But amidst the claims of Infosys, several glitches were found in the website. It cannot handle the peak loads at all times. The GSTR 1 and GSTR 2, which are the annual return registrations of the GST are still delayed. The country is still struggling to migrate into the new tax system.

| 2017-18

The suggestions proposed

• 0% ships & aircraft, refining of gold, silver, and oil, international roaming services.

• 0 % air crafts, ships, medicine

The roller of the GST portal Infosys claims that 70 lakh people have transferred themselves to the new GST regime.Also, there is a registration of 25 lakh of new taxpayers. 50% of the filings were done on the website. The website is capable enough to handle a peak load of 1 lakh registrations. This also has been integrated with other online services of government like Aadhar, Suvidha, and the Central Board of Excise and Customs.

UK

21

The inflationary pressures due to these factors are also be studied. There could be a separate study of whether GST implementation will lead to inflation or not. Only after controlling these variables; the shifting of the tax system and the overstating of the tax system can be found.Also, there should be a comparative study on the effect of the tax on different sectors.As stated in the case of Pheng and Loi (1994) the effect of the Singapore GST on the construction and the manufacturing sector were entirely different. Since it aims at a uniform tax system, it should also be universally applicable, and the benefits should be the same for all sectors. The disparities should be equalized. In the case of the SME manufacturers in India, the traders are more

Artha

Countervailing Duty and SpecialAdditional Duty are banned under the new GST. Whereas the basic Customs Duty will prevail. The imports will be considered from one state to another state which will attract the Integrated GST. The GST is based on the transaction value of the services rather than on the Maximum Retail Price. This might require working capital restructuring.

SMEs are more affected by the new GST tax regime. They opine that the new tax system is suited for the retailers than the manufacturers. For the traders, it is just 1% and for the manufacturers, it is 2 %. Those who are allowed the input tax credit are not allowed to collect tax from the consumers. The composition levy is only allowed for those SMEs with a turnover of 1 crore (10 million) or less than 1 crore annually.

Analysis and interpretations

• 12% restaurants and services, import of antiques, etc., 6% passenger transport, newspaper, magazines, etc.

Predicted differences in consumption patterns after GST in India

This creates transparency on the margin of the service provider. So the several exemptions under India’s Foreign Trade Policy will be banned. The exemptions will be limited to Basic Customs Duty and not to the Integrated Customs Duty. This will affect the Software Technology Parks, Export Oriented Unit, Electronic Hardware, Technology Parks, etc.

The Jaguar company MD Rohit Suri opines that the growth of Jaguar Land Rover from January till September was about 45 %. GST has helped the company to bring down the prices of the products which would have accelerated the growth. But the cess for the luxury car segment was raised which increased the overall GST of the car. It dampened the growth a Thelittle.manufacturing

Turkey • 8%e books, educational services, ambulance, textiles, confectioneries

The Finance Minister of India stated that he kept the GST prices of the gold ornaments in India at 3% considering the high demand for gold. The GST of processed diamonds is the same. The previous rate of tax for gold ornaments was 2.5 %. So there is only a nominal increase in the tax rates of the gold ornaments. But with the added Customs duty on the gold prices, there is not much variation in the gold prices.

Impact of GST on imports

The distinction between theAC and NonAC restaurants will vanish. The traders which have opted for the composition levy scheme which had a tax of 1% may be reduced to 0.5 %. The interstate GST may be reduced. Higher GST rates applied for the non luxury items would also be removed. Over 15 lakh enterprises with less than one crore turnover have opted for the composition levy India(Indiatoday.co.in).imports82% of crude oil from outside. So crude oil prices have got a direct impact on the prices of items in India. The proposed reduction of GST from 18 % to 12 % without input tax credits will increase the rates by about 7 10 %. This is mainly due to the increase in prices due to the operational (economictimes.indiatimes.com)costs.

The items which are costlier under GST are shampoos, deodorants, business class airfare, movie tickets above 100 rupees, etc. But whether this is due to tax shifting or over shifting can only be understood by another research that analyses the dependent and independent variables in the determination of the prices. The implementation of the GST and the related price rises can only be correlated with sufficient background knowledge. This is also substantiated from the viewpoint of the Malaysian government that the supply and the demand, exchange rates, the fuel prices. wages, weather, etc. have got a profound effect on the prices of the articles.

Noodles 23.80% 25.30%

Edible oils 14.60% 15.60%

The GST exempts the basic everyday items. This may decrease the impact of GST on inflation in the economy. The increase in the level of the prices may be due to tax shifting and tax over shifting. The higher GST for articles for everyday usage may affect the standard of living. It may lead to Inflation. So this leads to the condition where consumers have to pay more money than before which will neutralize the gains which are proposed to be the elimination of the cascading effects of the taxes and the consequent reduction of the prices. The impact of the costs due to GST on different sectors is to be equalized. The accounting practices are to be made more uniform. Though the unbranded items are not taxed, there are several nonluxury items needed for everyday life which fall under the 28% and 18% tax net of the GST.

benefited than the manufacturers from the new GST.

The indirect impact of the crude oil prices on the prices of other articles is to be studied. They are subjected to a 12% GST without input tax credit which will lead to increased operational costs.And this will increase their prices. Those items which appear cheaper under GST should be explored in long term to learn the effects of GST soaps, pressure cookers, unbranded items, etc. The basic items for everyday living such as eggs, milk, cereals, etc. are exempted from GST. This will curb the inflationary pressures on everyday items and altogether help to curb the inflation in the economy. So the consumers are the ones who have to bear the brunt of the change since the firms are shifting the burden to them through tax shifting and tax over shifting. So it is to be prevented in the long run.

The composition levy on those articles which are traded is just 1%, whereas those who are manufacturing it have a tax of 2%. Similar categories of items are taxed differently. Detergents are having a tax of 18 % whereas soaps are having a tax rate of 2 %. The discrimination between the movie tickets above 100 and below 100 is not justifiable. The impact of the GST on consumption patterns is also to be studied. Whether GST will alter the consumption patterns of consumers in India can be studied.At the same time, the consumption pattern impact study of GST should be devoid of confounding variables or should limit the influence of extraneous variables like the effect of advertisements, etc. But Valadkhani and Leyton (2004) point out that the effect of the GST on prices is just temporary. But if noticed from this point of view and interlinking it with the tax shifting theory of Musgrave (1959) and Bishop (1968) and the over tax shifting of Young and Belinska (2002) it could be inferred that the over tax shifting and tax shifting is just temporary phenomena. There should be further research to prove this assumption that the over tax shifting and tax shifting are temporary phenomena. There must be a proper study on the tax amount lost by the states and the compensation given by the new GST scheme are the same. There should be a proper study of the cascading effects of the taxes before GST and after the GST and how much the cascading effects are reduced.Also, whether GST leads to a greater amount of tax collection than that of the previous tax system is to be studied. Though Infosys claims that 25 new lakh registrations are new taxpayers, the number of new taxpayers is to be explored further. Since GST is a uniform tax system a comparative study on the impact on the costs and profitability across different sectors is to be studied and how the differences are to be removed are to be further explored. For that, the accounting bookkeeping practices are also to be studied along.

22 Artha | 2017-18

Conclusion

These costs in each sector can be collected and they can be compared to make the levy more uniform. The costs associated with the implementation and the benefits arising out of the implementation can be compared. The payback period for the investment in compliance and the recurrent costs can be calculated. The return on investment can be calculated. The 18 % tax slab is covering most items.After that, it is the 5 % slab. Even the nonluxury items are included in the 28 % slab.

It can be interconnected with Valadkhani and Leyton's (2004) proposition tells that the impact of the GST on the increase in price levels is temporary. So, in another respect, the impact of GST on the decrease of prices is also temporary. So, the gains due to GST on the growth or profitability of LandRover is a temporary or permanent phenomenon that is to be studied.Also, which are the stabilizing factors that take back the prices to equilibrium levels can be studied. The social impact of the GST on different sectors is also studied. Education, health, etc. are decisive factors in a welfare economy. Though some health care services are exempted from GST, the higher education sector is subjected to GST. So, its sociological impacts are to be studied and concessions are to be allowed accordingly.Also, according to Tran Nam (2000), there are two costs associated with the

The Integrated GST may lead to tax loss to the states since it is collected by the center. Gold and silver are provided a lower GST under the scheme which is 3 % whereas the articles for everyday usage like toothpaste, cement, etc. are with a GST of 18 %. The balancing effect of the reduction in the prices due to avoidance of the cascading effects of the taxes and the price level rise due to the shifting and over shifting phenomenon, which is higher, and whether the consumer is benefited should be carefully studied. There are different GST rates in different countries. These are not comparable to India. This may be dependent on their specific economic structure and Industrial needs and the presence of other taxes.

This was previously stated by Pheng and Loi (1994) that the difficulties for the construction sector and advantages for the manufacturing sector were due to their accounting practices. There could be also another exploratory research on whether the 1 crore limit turnover for the traders and manufacturers could be relaxed further.Also, the ambiguity of the lower tax rate of composition levy for the traders (1%) should be studied. Though in the case of Jaguar Land Rover it is said that the lowering of the costs of the products due to the new GST system is beneficiary to the sector, the impact could only be studied in a span of 2 or 3 years.

This might lead to revenue loss for the states and affect their development. The reduction in the prices due to the avoidance of the cascading effect of the taxes may be lesser or higher than the price level rises due to the tax shifting and over shifting phenomenon. So if the cascading effect is lesser, the consumer has to pay more and the benefits will only be for traders and manufacturers.

implementation of GST. They are compliance costs and recurrent costs.

7. Valadkhani, A and Layton, A.P. (2004). Quantifying the effect of GST on inflation in Australia. S Capital Cities: An Intervention Analysis. Australian Economic Review.Vol. 37. No2. pp125 138

3. Pheng, L.S. Loi, C.P.W (1994).Implementation of the Goods and Services Tax in the Singapore Construction Industry. Journal of Property Finance. Vol 5. Issue pp41 58

14.13.12.11.council/1/1078073.html[Accessedgst31/10/2017]https://economictimes.indiatimes.com/industry/consproducts/durables/4reasonswhyitcouldturnouttobeacostlierNovemberforconsumers/articleshow/61339450.cms[Accessed30/10/2017]https://economictimes.indiatimes.com/industry/consproducts/fmcg/gsttofuelgrowthofgroceryproductsincrementallyeuromonitor/articleshow/61264543.cms[Accessed:1/11/2017]8https://economictimes.indiatimes.com/industry/consproducts/fmcg/gsttofuelgrowthofgroceryproductsincrementallyeuromonitor/articleshow/61264543.cmshttp://www.nbc.com.my/gst/faqsmalaysiagoodsandservicestaxgst/[Accessed2/11/2017]

2. OECD (2016).Consumption Tax Trends 2016 VAT GST & Excise rates, trends, and policy issues

5. Musgrave R.A (1959). The theory of Public Finance. New York: Mc Graw Hill

8. Young, D.J and Bielinska Kwapsiz, A (2002). .Alcohol Taxes and Beverage Prices. National Tax Journal, Vol. 55. No.1, pp 57 72

10.http://indiatoday.intoday.in/story/gst rates eating out ac and non ac restaurantsgom

16.15.www.businesline.com[Accessed:3/11/2017]http://www.businessstandard.com/article/economy policy/all you should knowabout 3 gst on gold silver and processed diamonds 117060300850_1.html [Accesed 4/11/2017

9. http://www.financialexpress.com/industry/gst impact and effect on all items andtransactions cheaper costlier or same/742938/[Accessed 12/10/2017]

References

1. Bishop, R.L (1968), .The effects of Specific and ad Valorem taxes. Quarterly Journal of Economics. Vol. 82. No 2 pp 198 2182

4. Liu, B. Huang, A. Fruenderberg, B (2014) .The impact of the GST on mortgage pricing of Australian credit unions. Accounting Research Journal. Vol. 27. Issue 1, pp37 51

6. Tran Nam B (2000).The Implementation Costs of the GST in Australia: concepts, preliminary estimates, and implications. Journal of Australian Taxation. Vol. 3. No.5. pp 331 333

17.http://www.eouindia.gov.in/dta1.htm

23 Artha | 2017-18

24

Did know?you

The GST is levied only on value addition at each stage because credits of input taxes paid at procurement of inputs will be available. The consumer will bear only GST charged by the last dealer and be benefitted in the supply chain.

With the introduction of GST, there is likely to be major consolidation in the industry. It could see the emergence of major large players who can span the entire logistics chain.

By Prof. AssociateRavindraProf.,Department of Commerce

In recent years, the business processes and business management have gone through a phenomenal change as a result of revolutions in two areas enterprise planning and supply chain management while the concepts in these two areas have been around for a while in theory and practice. In practice supply chain plays a significant role for developing countries like India. Supply chain management consists of various dimensions like the flow of goods service movement and storage of raw materials and works in progress etc.

Limitations of the Study

Introduction

Data methodology

25

Explanatory research and a conceptual study are conducted based on secondary sources ns analyze according to the objective of the study, and the source is published research articles, published company reports, newspapers, magazines, and relevant websites.Asimple percentage and tabular method are employed to analyze the data.

Artha

A conceptual study

Review of literature

Logistics time Due to trade barriers such as entry taxes, local body taxes, octroi, and other hurdles, trucks lie idle for 30% to 40% as per industry estimates during their delivery schedule

Not applicable. Uniform taxation and no varying tax across their borders at structures would be allowed across the states.

• Business line July, 03 2016: The passage of the GST bill, when it happens, can spur large warehouse related investors by l.

Cost The existing interstate taxation system has forced the companies to create and maintain warehouses in each state. Currently, there are around 20 30 warehouses per company one in every state, in addition to this 20 30 carry and forwarding agents per state make the supply chain longer and inefficient.

The impact of GST on supplychain management

on around 60% of the share of the logistics industry and the rest of 40% is contributed by warehousing freight forwarding and value added logistics. Logistics is to be considered a backbone of manufacturing and trading activities. The Indian logistics industry has gained immense contributions to the Indian GDP. Implementation of goods and service tax w.e.f. 01, July 2017 is drastic changes in the business activities.

Improvement in the logistics time after phasing out the border check posts resulting in improvement in operational efficiency through quicker and increased number of deliveries along with the reduction in logistic cost during the transit. As per world bank estimates Indian Corporates can save up to 30% to 40% of logistics costs incurred due to stoppages at various tolls and check posts.

Prior GST After GST

Nature of the industry Current interstate taxation has resulted in a large number of unorganized players in this industry resulting in a fragmented industry

2. The present study is based on secondary data only.

• R. Swathi, Siranjeevi, Oct 2017: This study reveals analyzing the impact of GST on logistics and specifically on warehouses satiated in India.

Editorial Committee

In overview, India's logistics sector is primarily categorized into four major segments comprising transportation warehousing, freight forwarding, and value added Transportationlogistics.aloneholds

| 2017-18

The following table illustrates the expected benefits that logistics industry:

Pradeep, Sep-2017: The proposed reform .make in India. scheme initiative taken by the government is aligning with the implementation of the GST. Level of taxation would be charged on specific product or service across the entire country irrespective of being manufactured and sold in different states and focusing on the analysis of the impact of GST on the logistics sector in India primary in transportation, warehousing, and logistics in India, primarily in transportation, warehousing, and logistics service providers.

Study objective

To study the concept of GST and its implications on the supply chain management sector.

1. The present study concentrates on the Indian logistics sector only.

• V. Jothi Francina. Dr. Selvavinagam, & R. K.

• Hindustan Times, July 06-2017: GST is India’s biggest tax reform GST sets to transform the face of the Indian logistics industry.

Interstate tax burden Currently, each of India’s 29 states taxes goods that move across their borders at different rates apart from that corporate state tax of 2% is levied for inter state goods transfer.

GST will be levied on the transportation of goods and full credit will be available on interstate transactions logistic costs are expected to be decreased by 1.5% to 2% of sales on account of optimization of warehouses leading to lower inventory costs which are set up across the states to avoid paying 2% corporate sales tax and phasing out of interstate sales tax. It is immense scope for optimization of costs.

3. No statistical information supports to conclude of the study

• GST would lead to lower transaction and distribution costs

• Maximum utilization of multi model and multi tier.

Impact of GST on supply chain complexity

• In lower lead times the service level will experience a little impact.

• Capacity realignment

• Reduced variation in demand at warehouses.

• Truckload utilization will reduce in secondary distribution.

• Plan for order management and handling Manufacturing sector

2. GST: An opportunity to re assess your supply chain, Siddarth Varadkar

• Secondary freight costs will increase.

• Contract renegotiation

• Flexible manufacturing

• Route planning becomes a challenge as warehouses have to deal with dealers in bigger geography.

• Reduced cost for improving service level.

• The trade off between customer serviceability and cost associated.

References

• Process redesign

1. Goods and Service Tax, Impact analysis on various sectors, Ash. LLP, May 2017

The role of GST in India would dissolve the existing indirect tax structure i.e., multiple taxes that is being split between center and state governments leading to a reduction of about 20% of current logistic costs.

• Redesigning of the manufacturing process

• Factory hub clearing and forwarding agent combinations

• Bigger consolidation of demand at warehouses.

• Re model supply flows (intra state and interstate vice versa, supplier/plant combination).

• Reduced production complexity (fewer changeovers)

• Role finalization

• Improve forecasting process.

Conclusion

• Improve pricing and promotion strategy.

Sourcing/planning

4. Impact of GST on Indian logistics sectors, R. K. Pradeep, V. Jothi, Dr. K. Selvavinayagam, IJIRMS< Volume 2, Issue 8, September 2017, pp 18 23

• Price renegotiation

• Improved inventory management

3. Role of e commerce in supply chain management to minimize the costs, David Nikatar, yangjianzheng, 28 12 2011

• Capacity expansion/ closing

Negative impacts

• Inter v/s Intra state sourcing options

• Reduction in numbers of echelons in the supply chain.

Logistics/distribution

• Warehousing and logistics decisions would be based on economic efficiency.

Supply chain restructuring highlights

• Reliability and quality consideration

• Improved demand planning

• Create policy change to benefit from indirect cost vendors.

• Additional 1% of origin tax, increased cash flow issues on account of GST payable on stock transfers.

• GST provides an ideal platform to increase the manufacturing share of GDP from the current 17.4% to 25% by 2025.

We look forward to enjoying the benefits of economies of scale and aligning their objectives to take the advantage of operational efficiency in different areas:

• Increase in truckload utilization (especially in primary freighting)

Other areas

• Shared roles of warehouse with manufacturing unit.

• Increase responsiveness by reducing the number of echelons.

• Remodel cost of supplies with revised credit and tax fact based negotiation with suppliers.

5. Impact of GST on logistics sector in India, Dr. Aniotha M. N., SSRG IJEMS Volume 3, issue 5, sep oct 2016

• Warehouse opening/closing.

6. Impact of GST on warehousing industry in India, R. Swathi, Siranjeevi, IAEME Publication, pp115 115, volume 8, issue 5, sep oct 2017

Positive impacts

Suppliers

• Drive compliance to improve costs.

26 Artha | 2017-18

• Improve inventory management.

Goods and service tax has the potential to accelerate growth in the supply chain sector. However, its complete impact can only be understood after the announcement of the draft GST law and rules supply chain management through warehouse engineering, credit allowances during the transition phase, classification of goods and services under GST, etc. Consideration of these issues must be sought at the earliest with GSTs imminent implementations, the supply chain industry should start exploring different supply chain models with their clients and at the same time develop a completely synchronized ERP accounting system to support inventory supply management as required under the GST regime. Nevertheless, GST is still the change the logistics industry is eagerly awaiting as overall; the positive impact of GST far outweighs the disadvantages.

• To know the impact on transportation.

• To know the impact on warehousing.

The impact of GST on supplychain strategy and its effecton warehousing &transportation

GST is an indirect tax. This tax is levied on the manufacture, sale, and consumption of goods and services in India. This tax will replace the tax collected by the central and state governments. GST collected during the purchase or sale of goods is independent of the state where the purchase or sale takes place. This tax structure is proposed by The GST Bill or The

Introduction

GST is considered an indirect tax for the whole nation that would make India one unified common market. It is a tax that is imposed on the sale, manufacturing, and usage of goods and services. It is a single tax that is imposed on the supply of the goods and services, right from the manufacturer to the customer. The credits of the input taxes that are paid at each stage will be available in the subsequent stage of value addition which makes GST essentially a tax only on the value addition at each stage. The final consumers will bear only the tax charged by the last dealer in the supply chain with the set of benefits that are at all the previous stages.

GST is charged at the national and state level at similar rates for the same products and it also replaces almost all the current indirect taxes that are imposed separately by the Centre and the States. GST is a destination based tax which means that the tax is paid at the place of supply.

GST before & after

Objectives of the study

To understand the concept of goods and services tax on transportation and warehousing.

Constitution (One Hundred and Twenty SecondAmendment)

best GST systems across the world such as Singapore and New Zealand use single GST, but India has opted for a dual GST model. The change in tax structure is expected to have a huge impact on the supply chain in India. Acomparison of GST rates of some countries with the proposed India GST rate is given in the table.

Let us consider the example of a manufacturing company in Chennai, which moves its goods to New Delhi. The actual sale happens in New Delhi and the finished goods have to be transported from Chennai to New Delhi across different states.As per the current taxation norms, one has to pay Central Sales Tax (CST) when moving a good to another state and selling it in the other state. However, if the good is moved for stocking and not for sale, then CST need not be paid. So many companies avoid paying CST, they show this movement as moving to stock and not moving to sell. To do this, companies have warehouses in every state where the finished goods are stored and then the goods are transported for sale from the warehouse in each state. Let us consider another example of a city called Hosur in Tamil Nadu which

By Dr. C. S. Yatnalli Associate Prof., Department of Commerce

• To know the impact on supply chain management.

Country Rate of GST Australia 10% Canada 5% New Zealand 15% Singapore 7% Malaysia 6% Sweden 25% India 28%

The logistics sector plays a very significant role in the development of our nation. The Indian logistics industry is expected to grow steadily. But the logistics costs in India are high when compared to developed countries. This is primarily due to the complex tax structure and poor infrastructure. Currently, the freight that moves across the country is taxed multiple times. So, this paper is an analysis of the impact of Goods and Service Tax (GST) will be on Logistics Sector in India primarily in Transportation, Warehousing, and Logistics Service Providers. The advantages of warehousing concerning GST are that companies can consolidate stock at their warehouses. Demand variation at a particular warehouse can also be reduced. This in turn improves demand planning and improved inventory management. The structure of the supply chain is influenced by differential taxes based on geographical location. After GST implementation, the design of the supply chain will be based on customer service and logistics costs. It also offers flexibility in demand and supply matching.

Editorial Committee

rate under GST would be lower, however, there would be an increase in the number of assesses. The increased number of assesses is expected to make up for the reduced tax and the overall tax collection is expected to Someincrease.ofthe

27 Artha | 2017-18

TheBill.tax

Abstract

Methodology of the Study

1 Goods goodstransportcerningAgencyportationTrans-con-theof

• Capacity expansion Greater flexibility in manufacturing

The location of the warehouse is generally chosen to minimize the cost of delivery for both the company and the customer. Other factors considered are access to arterial highways, access to highways, ports, etc. for shipment and labor availability. The local state taxes are also a factor considered by companies before locating a warehouse. Some companies prefer to have warehouses in every state of the country to avoid local taxation while transporting from one location to another. With the implementation of GST, logistics companies can restructure their warehouse locations and can have one central warehouse or can go for warehouses at specific locations, or can adopt a hub and spoke model. With GST the local state taxes are eliminated and there will be only one Goods and Services Tax across the entire country. This enables the companies to achieve cost efficiency in their operations and thereby transferring this cost benefit to the end consumer in the supply chain.

The advantage of warehousing concerning GST is that companies can consolidate stock at their warehouses. Demand variation at a particular warehouse can also be reduced. This in turn improves demand planning and improved inventory management.

State Excise

CVD

• Price negotiation Improvement in quality

VAT

Impact on Transportation

Being explanatory research, the methodology is based on secondary data which includes a compilation of research articles of the experts in the field published in journals, articles, newspapers, and magazines.

The structure of the supply chain is influenced by differential taxes based on geographical location. By eliminating multiple state taxes, the logistics companies are encouraged to consolidate their warehouses instead of maintaining one in each state to avoid central tax. This in effect brings the overall cost of the product down as the inventory cost and inventory carrying cost down. This directly affects the final cost of the product and brings the selling price down. The cost saved by the companies as a result of GST can be used to invest further to improve serviceability.After GST implementation, the design of the supply chain will be based on customer service and logistics costs. It also offers flexibility in demand and supply matching. GST would also enable firms to increase the accuracy of the forecast. Smaller warehouses can also be merged into one bigger warehouse and space optimization will be achieved.

Excise Duty State VAT

Base Price and the Change Therein

Impact on supply chain management

Additional Customs Duty

Total 113.5 112

• Interstate sourcing of raw materials

• Better forecasting Improved inventory management

cascading tax by providing a seamless transfer of input tax credit to all levels of distribution of goods and services. Therefore, the base price on which the tax would apply would undergo change necessitating the reworking of pricing with both supply/vendor as also customer/client.

Excise

100 GST

The following are the benefits enjoyed by companies after the implementation of GST:

Sl. No Service Present Effective Service Tax Rate Proposed GST Rate

87.5

The disadvantage of GST concerning warehousing is that companies face challenges during route planning while having to deal with deliveries across bigger geography. In the case of services or deliveries which require lower lead times, the service level might be impacted.

Pre GST Post GST Price Base Price 87.5 12.5 @13.5 28% 24.5

Asimple example will make this regard will be helpful. It can be seen that the base price on which the excise duty was levied would become the base price on which the levy of GST would arise. This is because the entire element of the duty/tax is now eligible for input tax credit leaving no burden of tax on the onward distribution. The base price has to change because; excise duty, cess, service tax, etc. levied/ charged by his vendors are now available as ITC.

• The better trade off between cost and customer service

Impact on warehousing

Editorial Committee

4.5% [no input tax credit and capital goods allowed] 5% (with ITC of input services)

Base

28 Artha | 2017-18

Central Taxes State Taxes

is approximately 30km from Bangalore. Shipping the goods from the Bangalore warehouse to Hosur requires the company to pay CST as Hosur is in Tamil Nadu and Bangalore is in Karnataka. So, the companies ship goods from the Chennai warehouse, which is approximately 250km to Hosur to avoid CST. With the implementation of GST, the companies will be free to set up their warehouses to optimize costs and improve customer Theservice.following

4.5% [no input tax credit (ITC) of inputs, allowed]capitalservices,inputandgoods

3 Other services not specifically forprovided 15% 18%

Luxury Tax

Service Tax

Various Cess Entry Tax

2 bytionTransporta-ofgoodsVessels

5% (no ITC)

central and state taxes are integrated into GST:

CST Entertainment Tax

Under the GST, the main objective is to do away with

5. http://www.sclc.in/pdf/india after gst presentation/ DIESL.pdf \

GST rates

4. http://w www.mo 30189_bn_opportunity_by_2020_in_innews/3pl_logisticsneycontrol.com/sme_st_epu_p/_a_dia1396206.html

6. http://www.business standard.com/article/news ians/ petroleumproducts alcohol excluded from gst regime 115050600638_1.html 7. KPMG GST Report 2011

As the next level of logistics is evolving in India and the corresponding regulatory policies have to be taken care of well ahead of the GST introduction to have a positive and expected impact. Further, on account of the delay in the implementation of GST, it is critical to gauge the opportunity loss for the various stakeholders. The following are the critical business implications post GST implementation. The implications are segregated based on Process, People, and Technology.

Artha

29

Currently, transportation is based on the Central Sales Tax and varied state value added taxes. However, after the introduction of GST, the tax will be levied at the central level and the state value added taxes does not have any impact. The tax rates are uniform across the borders and state boundaries will no longer be the parameter in deciding the routes. With a lesser number of warehouses, the location of warehouses and their transportation networks would eventually turn out to be critical. This demands the fulfillment of prerequisites such as road/rail/ multimodal connectivity. This requires well in planning to build an agile, efficient, and futuristic supply chain model. With larger warehouses (in terms of capacity), the transportation lot sizes automatically increase, which results in larger and more efficient trucks. The optimization and rationalization of these options provide a competitive advantage to the business.

IMPACT OF EXCLUSION FROM GST: With the introduction of GST, states have to forgo their state authority levied taxes and have an impact on the state revenue. Hence, the reason why some the goods such as Petroleum products, alcohol for human consumption and tobacco has been kept out of the purview of GST. Keeping petroleum products out of the GST would have serious implications on the transportation sector and would not help achieve the actual goal of GST. The motor spirit consists of the larger part (close to 60%) of the transportation business. Hence, exclusion of petroleum products from GST would add up to the additional costs and breaks the chain of credits of GST. However, instead of excluding petroleum products, they can be included with a higher tax rate and there can be a sharing basis between the central and states. This would allow a level playing field for transportation providers.

2. http://www.ctrpfp.ac.in/GST Supply Chain Management.pdf

| 2017-18

1. https://brandalyzer.wordpress.com/2011/12/02/impact of gst onsupply chain/

Conclusion

The GST Council, in its 14th meeting held recently finalized the following rates for various categories of services, specifically applicable to the logistics sector: As may be observed, tax incidence concerning specific services shall not vary significantly in the new regime.

References

3. knowledgecentre/GST_WPhttp://www.itcinfotech.com/Uploads/GUI/_Revised1.pdf

The indirect tax rates applicable to the logistics and shipping sector have increased under GST i.e. from the earlier 4.5% to 5% on import ocean freight, and from 15% to 18% on handling and other services. GST rate on bunker fuel was reduced to 5% from 18%, thereby reducing costs.

Did you know?

Table 1: Rate of GST

World over in almost 150 countries there is GST or VAT, which means a tax on goods and services. Under the GST scheme, no distinction is made between goods and services for levying of the tax. This means that goods and services attract the same rate of tax. GST is a multi tier tax where the ultimate burden of tax fall on the consumer of goods/services. It is called 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 output tax, whether for provision of service or sale of goods, is entitled to get an input tax credit (ITC) on the tax paid on its inputs. Since VAT was beneficial for the taxation system but with certain shortcomings which are expected to be overcome by the Goods and Service Tax. Thus, it would a positive reform for the Indirect tax system in India.

Introduction

Introduction of GST

GST is proposed to fulfill the following objectives: GST would help to eliminate the cascading effects of production and distribution cost of goods and services. This would help to increase GDP and then the economic condition of the country. GST would eliminate the multiplicity of indirect taxation and streamline all the indirect taxes which would be beneficial for manufacturers and the ultimate consumer. GST

Objectives of GST

31

Good and services tax (GST) is the biggest and most substantial indirect tax reform since 1947. The main idea of GST is to replace existing taxes like value added tax, excise duty, service tax, and sales tax. It will be levied on the manufacture sale and consumption of goods and services. GST is expected to address the cascading effect of the existing tax structure and result in uniting the country economically. The paper highlights the background, objectives of the proposed GST, and the impact of GST in the present tax scenario in India. The paper further explores various benefits and opportunities of GST.

Abstract

Artha

| 2017-18

The word tax is derived from the Latin word taxare which means to estimate.Atax is an enforced contribution, exacted according to legislative authority.

Country Rate of GST Australia 10% Canada 5% France 19.6% Japan 5% Sweden 25% Singapore 7%

The impact of GST ondifferent sectors & subsectors of the economy

Service tax bill officially known as the constitution (one hundred and twenty second amendment) bill, 2014 proposes a national value added tax to be implemented in India from June 2016. The GST implementation in India is Dual in nature, i.e. it would consist of two components: one levied by the Centre (CGST) and another levied by States and Union Territories (SGST). However, the base of the tax levy would be identical.

Indian Taxation System comprises Direct and Indirect Tax. Goods and Services Tax (GST) is one of the most discussed Indirect Taxation reforms. It is a comprehensive tax regime levied on the manufacture, sales, and consumption of goods and services. It is expected to bring about 2% incremental GDP growth in the country. So, GST is the need of the hour.

implemented in Haryana in 2003 and later on 1stApril 2005, it was introduced in the remaining states as an Indirect Tax in the Indian taxation system. VAT replaced central excise duty at the national level and the sales tax system at the state level. Thus, it improved the indirect taxation system of the country the idea was that there would be a national level Goods and Services tax. But as the release of the first discussion by the empowered committee of the state Finance Ministers on 10.11.2009, it has been made certain that there would be a Dual GST in the country. Centre and state governments are entitled to charge taxes on goods and services.Almost 150 countries 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 in the table.

By Dr. Assist.ShankarProf.,Department of Commerce & Management

• Section 1 of the article introduces the GST, its objectives, and the present Indirect Tax structure as well as its major reforms.

• Section 2 of the article examines the impact of GST on the economy and studies the effect of GST on certain sectors. Section 3 of the article discusses various benefits and opportunities of GST. Section 4 laid down the key suggestions and conclusion of the

Section 1, India is one of the 123 countries across the world that is following the VAT mode. White Paper with the basic design for VAT was released on January 17, 2005, by Finance Minister P.Chidambaram. VAT was introduced both at the center and state levels. It was

Goodsarticle.and

Editorial Committee

• Infrastructure sector: The Indian infrastructure sector largely comprises power, road, port, railways, and mining. And the indirect tax levy is different and unique for each of them, and this is complex.Although this sector enjoys different exemptions and concessions as it is important on the national front. With the implication of GST, the multiplicity of taxes will be removed and it would increase the tax base with the continuation of exemptions and concessions for national interest and growth.

• Easy compliance

• Reduction of prices

Section 4, GST has the following implications

The fast-moving consumer goods sector

Food Industry

Party tax no.84Entry List I, uleSched-VII 1,97,tryaryResidu-En-no.List Schedule VII andIIofNo.Entry54List(VAT)92A of List 1 (CST) uleSched-UnitNo.Enter831,VII

• Removal of cascading

• Ensures uniformity of the tax system across the states. It will integrate the tax base and allow a seamless flow of Input Tax Credit (ITC) resulting in reduced cost of goods and services.

would be able to cover all the shortcomings of the existing VAT system and hopefully serve the economy's health.

Present Indirect Tax structure in India is very complicated and complex. It consists of cascading effects of the tax. These add to the cost of goods and services through a tax on tax which the final consumer has to bear. There are manifolds in the indirect taxation structure.

Review of literature

dutyExcise taxService CSTVAT/tax/Sales dutytomCus-

• Higher revenue efficiency

• The ICAI (2015) Published a reference on goods and service tax to provide information on the concept of GST in detail.

Editorial Committee

tax food at a lower rate keeping in view the considerations of fairness and equity. Even in countries such as Canada, the UK, and Australia where food constitutes a relatively small portion of the consumer basket, food is taxed at zero rates. While in some countries, food is taxed at a standard 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 benefit of lower or zero tax rates should also be extended to all food items in India regardless of the degree of Sectionprocessing.2,GST has a positive impact on the economy and on various sectors which are as follows:

32 Artha | 2017-18

• The efficiency and equity of the system are optimized

Benefits and opportunities of GST

• Better controls on leakage

• Empowered Committee of Finance Ministers (2009) introduced their First Discussion Paper on Goods and Services Tax in India which analyzed the structure and loopholes if any in GST

Since food constitutes a large portion of the consumer expense of lower income households, any tax on food would be regressive. Therefore, extending GST to the food processing sector will also cause difficulty because the production and distribution of food are largely unorganized in India. On the global front, most countries

Table 2: Five major types of Indirect Taxes in the country

• Indirect tax committee of ICAI (2015) submitted a ppt naming GST which stated in brief

Enter No. 52 & 62 List VIIScheduleII, turemanufac-eventTaxableis viceofvisiontheeventTaxableispro-ser- saleseventTaxableis portandimporteventTaxableisex- eventTaxableis ofandtertainmenten-entrygoods

With the implementation of Goods and Service Tax, the FMCG sector would change. FMCG sector consists of 50% Food and Beverage sector and 30% is Household and Personal care. The FMCG sector is the major taxation contributor both direct and indirect to the economy. The multiplicity of the taxation influences the company s decision on manufacturing location and distribution of Goods. FMCG companies set their manufacturing units and warehouses where they can avail of tax benefits. To transfer the stock from the warehouses among the states they have to pay taxes. So, GST would surely impact on FMCG sector as taxes affect the cost to the company.

• Incidence of the tax falls on domestic consumption

Section 3: The Goods and Services Tax has many benefits and will create various opportunities for various stakeholders like business, industry, government, and consumers which are being discussed below:

• Information Technology enabled services: The proposed GST rate under the IT industry is not yet decided. While the discussed combined rate of GST for the product is 27%.According to the proposed GST if the software is transferred through the electronic form it would be regarded as a service (intellectual property) and if it is transferred through media or any other tangible property then it should be treated as goods. Implementation of GST will help in uniform simplified and single point taxation and thereby reduced price.

For business and industry

• Consolidation on tax base

For the consumers

GST widens the tax base, improve tax compliance, and will remove unhealthy competition among states. It will redistribute the burden of taxation equitably among manufacturing and services.

• Single and transparent tax proportionate to the value of goods services

• Improved competitiveness

For state and government

• Mitigates cascading and double taxation thus enabling better compliance.

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

The suggestions which are being drawn out from the study are as follows:

Conclusion

• Improves the disclosure of economic transactions.

It can be concluded from the above discussion that GST will provide relief to producers and consumers by providing wide and comprehensive coverage of input tax credit set off, service tax set off, and subsuming several taxes. Efficient formulation of GST will lead to resource and revenue gain for both Centre and States majorly through widening of tax base and improvement in tax compliance. It can be further concluded that GST has a positive impact on various sectors and industries. Although the implementation of GST requires concentrated efforts of all stakeholders namely, Central & State governments, trade, and industry. Thus, necessary steps should be taken.

• Empowered Committee of Finance Ministers (2009). First Discussion Paper on Goods and Services Tax in India, The Empowered Committee of State Finance Ministers, New Delhi

33 Artha | 2017-18

• Tax payer education or public awareness campaign needs to be provisioned by Central Government. Public Workshops, training, and various seminars on GST must be conducted in all states by their respective State Governments.

References

• Leads to transparency in the tax system resulting in difficulty of tax evasion.

Key findings & suggestions

Editorial Committee

• Government should construct a proper monitoring system for monitoring the dummy registrations and refunds problems.

• The Institute of Companies Secretaries of India (ICSI) (2015)

• Parkhi, Shilpa. Goods and Service Tax in India: the changing face of the economy. Retrieved from: http:// www.parkhiassociates.org/kb/gstc

• States must analyze and deduce their revenue neutral rates, revenue implications as well as compensation packages.

The economic development of every nation is dependent on its trade and commerce and any change in the taxation law and structure brings up a change in trade and business which directly brings a major impact on the economy. To ensure the development of business and the economy the Government always introduces various taxation reforms, laws, procedures, and structures, and the Goods and Services Tax is one such which has brought a major change in the economy. Tax is a compulsory payment that must be paid by every citizen directly or indirectly. Every economy has two methods of collecting taxes i.e., Direct Taxes and Indirect Taxes. The structure of Indirect has a wider scope as its revenue is more than Direct Taxes.

Abstract

Cascading tax revenues have differential impacts on firms in the economy with a relatively high burden on those not getting full offsets.Analysis of the tax levy can be extended to the international competitiveness of the adversely affected sectors of production in the economy. Such domestic and international factors lead to inefficient allocation of productive resources in the economy. This results in loss of income and welfare of the affected economy. Even though the country has moved on the path of tax reforms since mid 1980syet various issues need to be restructured to boost productivity and international competitiveness of the Indian Indiaexporters.haswitnessed

• International Competitiveness will increase by about 5%

• Lower transaction cost (multiples returns on different events at different rates in different States.

Introduction

• Increased Foreign Direct Investments due to improving ease of doing business and serious reform measures.

• Common Market Tax distortions due to differential tax structures and entry tax impositions. Further check post delays would not be there.

By Mr. Mohammed Nawaz Assist. Prof., Department of Commerce & Management

This paper through light on the Impact of GST on the Retail sector concerning the selected retailers of Commercial Street and the challenges faced by these retailers with the implementation of GST.

The earlier system of indirect taxation had a multiplicity of taxes levied by the Centre and State. This had led to complex and conflicting principles in indirect tax structure, adding to the multiple compliance and administrative costs. There was no uniformity in tax rates and structure across States. There was cascading of taxes due to .tax on tax. There were too many restrictions on seamless credit available, i.e., credit of excise duty and service tax paid at the stage of manufacture was not available to the traders while paying the State level sales tax or VAT, and vice versa. Further, no credit for State taxes paid in one State can be availed in other States. (CST) Goods and Services Tax, which has subsumed many Central and State taxes into a single tax, is meant to mitigate the cascading effect of taxes, provide near seamless credit and make way for a common market. The GST has changed the structure of Indirect taxes and it has impacted various sectors of the economy. GST has made a positive impact on a few sectors and it hurts other sectors and impact on the retail sector needs to be understood and evaluated as Retail is the last channel of distribution in the supply chain.

monumental tax reform with the introduction of GST. The moment that the Indian government was waiting for a decade, finally arrived and the single biggest indirect tax regime has come into force on 1st July 2017 dismantling all the interstate barriers concerning trade one country, one tax, and one market slogan has brought the whole country under one tax policy. The GST is a real benefit to the consumers, the manufacturers, the trade and industry, and ultimately the government with the introduction of GST, there is no cascading of taxes, consumers need not have to pay tax on tax, and the manufacturers will be able to take rational decisions and the trade and industry will be benefited by uniform single indirect tax throughout the country. GST will provide the much needed stimulant for economic growth in India by transforming the existing base of indirect taxation toward the free flow of goods and services. The GST is going to have a far reaching impact on India’s internal as well as global business scenario. In the gamut of this one unified taxes umbrella, there is no longer any need to work with a fragmented and complex 17 distinct types of taxes. However, the change from the previous tax regime and carrying forward the input credits into GST is the biggest challenge that business is facing today. Proper training of the government officials as well as adequate awareness among the stakeholders is required to turn the big dream envisioned by the Government of India.

• Reduced corruption due to the use of information

Why GST is necessary for India?

Editorial Committee

34 Artha | 2017-18

• GDP Growth will go up by about 1 2 % after the new law stabilizes (2018 19)

GST in India and its impact onretail sector

An analytical study with special reference to theselected retailers of Commercial Street, Bengaluru

Tax policies play an important role in the economy through their impact on both efficiency and equity.A good tax system should keep in view issues of income distribution and, at the same time, also endeavor to generate tax revenues to support government expenditure on public services and infrastructure development.

2015 122nd constitutional amendment bill passed in Lok Sabha the Bill was introduced in the Lok Sabha on December 19, 2014 and was passed by the Lok Sabha on May 6, 2015. Since then, the bill has been stuck in a holdup as the government lacked majority in the Rajya Sabha and at the same time failed to reach a consensus on it with the major political parties, especially the Congress.

GST is a destination based tax levied at a single point at the time of consumption of goods or services by the ultimate consumer. GST is based on the principle of value added tax. GST law emphasizes voluntary compliance and an accounts based reporting and monitoring system. It is a comprehensive levy and envisages tax collection on both goods and services at the same Internationally,rate.

Sale Tax on petroleum products (for the time being). Petroleum Crude, Motor Spirit (Petrol), High Speed and Diesel, Natural Gas andAviation Turbine Fuel.

Taxes subsumed and taxes not subsumed under GST

Excise on Medicinal and Toiletry PreparationAct Research and Development cess

2004 Significant progress towards CENVAT 2005 06 VAT implemented in 26 more states

GST was first introduced in France and now more than 160 countries have introduced GST. Most

Export duty SpecialAdditional Duty is Supposed to be equal to CST which was earlier 4%. Not changed despite drop in CST rate to Central2% Sales Tax Surcharges and Cesses

Year Tasks

State

GST meaning & definition

2003

countries, depending on their own socio economic the formation, have introduced National level GST or Dual GST.

Additional Customs Duty (CVD . Countervailing Duty) . equal to central excise on like goods manufactured in India

Artha | 2017-18

The GST regime will subsume the majority of the indirect taxes that are levied by the state and central government. The list of levies subsumed and not subsumed are as follows:

2013 73rd report of standing committee on Finance

2000

The genesis of GST in India

In terms of Section 2 (52) of the CGSTAct. Goods. means every kind of movable property other than money and securities but includes actionable claims, growing crops, grass and other things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply.

2008 EC finalizes the view on GST structure in April 2008

2016 122nd constitutional amendment bill passed by Rajya Sabha. More than 50% of state governments ratifies GST bill in its state legislature. President has given his assent to the bill’s council is informed and is yet to decide about the threshold limit, rate of tax, and revenue neutral rate

Taxes subsumed Taxes not subsumed Central Excise Duty Basic Customs Duty. Additional Duties of Excise Anti Dumping Duty

1974 Report of LK Jha Committee suggested VAT 1986 Introduction of a restricted VAT called MODVAT

1994 Introduction of Service Tax 1999 Formation of Empowered Committee on State VAT

2006 Aproposal to introduce a national GST by April 1, 2010, was first mooted in the Budget Speech for the financial year 2006 07.

Editorial Committee

Implementation of uniform floor Sales tax ratesAbolition of tax related incentives granted by States

2007 First GST stuffy released By Mr. P. Shome in January 2007 F.M.Announces for GST in budget Speech 2007 CST phase out starts in April 2007. l Joint Working Group formed and report submitted.

35

In terms of Section 2(102) of the CGSTAct. Services. means anything other than goods, money, and securities but includes activity 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. Thus, all supply of goods or services or both would attract CGST (to be levied by Centre) and SGST (to be levied by State) unless kept out of the purview of GST.

Centraltaxestaxes

2009 Afirst discussion paper released by the Empowered committee of state finance ministers 2011 115th constitutional amendment bill presented in the parliament. l The 115th Constitutional (Amendment) Bill, 2011, for the introduction of GST introduced in the Lok Sabha in March 2011 lapsed with the dissolution of the 15th Lok Sabha.

Taxes subsumed Taxes not subsumed ValueAdded Tax State Excise Duty Purchase Tax Stamp Duty Entry Tax, Octroi, Local Body Tax Profession Tax Sales Tax partially Motor Vehicle Tax Entertainment Tax Electricity Duty Luxury andTaxbling,Betting,TaxGam-andLotterySurchargesStateCesses

The Kelkar Task Force on indirect tax had suggested a comprehensive Goods and Services Tax (GST) based on VAT principle. | VAT implemented in Haryana inApril 2003

1991 Report of the Chelliah Committee recommends VAT/GST and recommendations accepted by the Government

The term GST is defined inArticle 366 (12A) to mean .any tax on supply of goods or services or both except taxes on supply of the alcoholic liquor for human consumption.

7. Increase productivity:Amajor concern in the older system was the multiplicity of taxes, which resulted in multiple records, multiple compliances, multiple forms, multiple due dates, and multiple tax offices. The cost of compliance under the GST regime is indeed lower than the one in the past. The savings in

6. Zero rating of exports and inter State sales of goods and supply of services.

4. To eliminate the cascading effect of indirect taxes on a single transaction: The cascading effect of taxes in the older regime was mainly attributable to the rigid nature of excise duty and hence claiming credit for excise duty paid was cumbersome. However, GST has simplified this problem by introducing a unified tax.

3. Uniform GST registration, payment, and Input Tax Credit: The registration process under GST is streamlined in a manner that the taxpayers can register themselves by a simple electronic process. Under the GST regime, entry tax or Central Sales tax is also eligible for claiming the tax credit.

4. No scope for levy of cess, re sale tax, additional tax, special tax, turnover tax, etc.

Salient features of GST

1. One Country; One Tax: The main objective of the GST regime is to have one uniform indirect tax for the whole economy.At present, there are 29 states and 7 union territories in the Indian Political System. Each of these states and union territories has been authorized by the constitution to levy taxes on goods and services from the citizens. GST aims to abolish this multiplicity of taxes, by replacing it with a uniform tax regime.

5. No scope for multiple levies of tax on goods and services, such as sales tax, entry tax, octroi, entertainment tax, luxury tax, etc.

As of 2003, India’s retailing industry was essentially owner staffed small shops. In 2010, larger format convenience stores and supermarkets accounted for about 4 percent of the industry, and these were present only in large urban centers. India’s retail and logistics industry employs about 40 million Indians (3.3% of the Indian population)

10.Reducing economic distortions: Under the old system, the provision of wrongful information for claiming input tax credit was rampant. The GST system provides for a huge database of all the sales transactions occurring in the economy. This will prevent the taxpayers from providing wrongful details and claiming faulty input tax credits.

9. Increase compliance:Although the GST system incorporates seamless input credit, it has made it more scientific. In this sense, a person who has not purchased goods or services cannot claim input credit. The regime requires all the taxpayers to upload details of every sales invoice. This will ensure better compliance in terms of an input tax credit.

36 Artha | 2017-18

compliance costs can be diverted to enhance productivity.

8. GST is a destination based tax levied at a single point at the time of consumption of goods or services by the ultimate consumer.

2. Consumption based tax instead of manufacturing: The taxation system, before the implementation of GST, levied excise duty on manufacturing. In other words, the taxable event for levy of excise duty was the manufacture and not transfers. Under GST, the taxable event supplies.

2. It is a comprehensive levy and collection on both goods and services at the same rate with the benefit of input tax credit or subtraction of the value of penultimate transaction value.

Objectives of GST

Editorial Committee

1. GST is based on the principle of value added tax and either .input tax method or .subtraction. method, with emphasis on voluntary compliance and accounts based system.

6. Reduce tax evasion and corruption: GST regime demands extensive reporting of invoices and details of input and output invoices. Extensive reporting and strict compliance ensure that the taxpayers can claim only input credits on the purchases that they have made. GST system has also made payment of taxes easier than earlier. The regime calls for all GST related payments to be made online. This indicates that the taxpayers need not visit GST Local/Regional Offices. This in itself is a discouraging factor for corrupt officials.

8. Increase tax to GDPratio and revenue surplus: GST has made tax evasion difficult.Also, to be noted is that the bureaucracy required to manage the new regime is less costly than the old one. This will result in savings for the government, increased tax to GDP ratio, and surplus revenue.

3. the Minimum number of floor rates of tax, generally, does not exceed two rates.

The diagrammatic presentation of GST is as under.

7. Taxing of capital goods and inputs whether goods or services relatable to manufacture at a lower rate, to reduce inventory carrying costs and the cost of productionA common law and procedure throughout the country under a single administration.

Retail sector in India

The Indian retail industry has emerged as one of the most dynamic and fast paced industries due to the entry of several new players. Retailing in India is one of the pillars of its economy. It accounts for over 10 percent of the country’s Gross Domestic Product (GDP) and around 8 percent of the employment. India is the world’s fifth largest global destination in the retail space. Indian Retail Industry has immense potential as India has the second largest population with an affluent middle class, rapid urbanization, and solid growth of the internet. The Indian retail market is estimated to be US$ 600 billion and India is one of the fastest growing retail markets in the world, with 1.2 billion people.

5. Subsume all indirect taxes at the center and state Level:As discussed earlier, GST has abolished the multiplicity of taxes. The majority of the indirect taxes imposed and collected by both central and state governments have now been replaced by GST.

• Primary Data: Primary data has been collected from 100 respondents of Commercial street of Bengaluru through questionnaires.And the direct interview of respondents is also made to have more observation.

Analysis of impact of GST on retail sector

1. To understand GST in India and the Retail sector.

2. To study the impact of GST on the Retail sector.

Until 2011, the Indian central government denied foreign direct investment (FDI) in multi brand retail, forbidding foreign groups from any ownership in supermarkets, convenience stores, or any retail outlets. Even single brand retail was limited to 51% ownership and a bureaucratic process.

37 Artha | 2017-18

Scope of the study

Sample size

2. Dr. R. Vasanthagopal, (2011).GST in India:ABig Leap in the Indirect Taxation System. found that the positive impacts are dependent on a neutral and rational design of the GST. Balancing the conflicting interests of various stakeholders, complete political commitment for fundamental tax reform with a constitutional amendment, and the method of valuation for levying the tax is to be required.

In November 2011, India’s central government announced retail reforms for both multi brand stores and single brand stores. These market reforms paved the way for retail innovation and competition with multi brand retailers such as Walmart, Carrefour, and Tesco, as well single brand majors such as IKEA, Nike, andApple. The announcement sparked intense activism, both in opposition and in support of the reforms.

Objectives of the study

This study is Descriptive andAnalytical. The study is based on both primary and secondary data. The primary data is collected through a structured questionnaire from selected Retailers on the commercial street of Bangalore and secondary data is extracted from Journals, Newspapers, and Articles. This study examines the positive and negative impact on the Retail sector of India with the implementation of the GST:

1. Pinki, Suraya Kaman & Richa Verma (2014) Goods, and Service Tax Panacea for Indirect Tax System in India. it is found that the GST is India’s most ambitious indirect tax reform plan, which aims at removing the cascading effect of tax. The movement of GST was declared in 2008 and was supposed to be in force by 2010. Due to various reasons, it could not be in force. GST has been implemented in more than 150 countries which will lead to the economic growth of the country.

Editorial Committee

Literature review

Statement of problem

Methodology

For the study, the sample size selected is 100. The respondents are the retailers of Commercial street of Bengaluru who belongs to the different nature of business such as Textiles, Garments, Lather, Consumable goods, and other businesses.

Though efforts were made to make this study more accurate and reliable, this study is not free from limitations. Few respondents were found unsupportive during the interaction & few respondents failed to make proper replay and as it is related to Tax, and they felt insecure.And this study is limited only to the retailers on commercial streets.

• Secondary Data: Secondary data is collected from journals, books, newspapers, and magazines to make the study more reliable.

Limitation of the study

GST is one of the biggest tax reforms since independence. GST will subsume almost all the indirect taxes levied by state and central governments and will make a significant impact across industries. The government has proposed four tax slabs at 5%, 12%, 18% & 28 % for different types of items and services. The impact of GST on the retail sector is going to be positive as it will bring down total indirect taxes, increase supply chain efficiency and facilitate seamless input tax credit.After the implementation of GST, state boundaries will be irrelevant from a taxation and documentation point of view. Vanishing state boundaries will reduce the complexity for retailers and increase the distribution reach as well as efficiency.

Goods and services tax is the biggest taxation reform post Indian independence. The Indian Government has implemented GST with the hope of boosting the economy and its sectors. But after the implementation, few sectors had a positive impact and a few have a negative impact as well.And the Retail sector is the fastest growing sector of India and India are the 5th largest retail destination in the world and it is expected to grow at a higher rate over the next 3 years any reform in the economy shall have a huge impact on the retail sector.And GST is no ordinary tax reform that is poised to change the scenario of taxation in the country and legitimately its effects on the retail sector must be considered. Hence this study is undertaken to understand the impact of Goods and Services Tax on various selected Retail enterprises of Commercial street, Bengaluru.

The scope of the study is limited only to 100 respondents and the geographical scope is confined only to the retailers of Commercial Street of Bengaluru. The study covers only the aspects of understanding GST, its implementation in India, the Retail sector, and the Impact of GST on retail sectors.

• It is found that the majority of respondents think that GST has made a very positive impact on Sales, Selling price, and Profit.

• It is found that under GST there can be a chance for expansion of their business beyond the state boundaries.

Graph 3: Impact of GST on customer satisfaction and customer retention

References

• A Practical Approach to GST Taxman.

• Goods and Service Tax A detailed explanation with examples. Retrieved May 18, 2015 fromhttp:// www.gstindia.com/goods and service tax a detailedexplanation with examples 2 (xi). List of issues for consideration under the draft GST legislation. Retrieved from The Associated Chambers of Commerce & Industry of India (ASSOCHAM), India

• A Study on Goods and Services Tax in India, Research journal article on Bangalore university website.

• It is found that many of the respondents are finding it difficult to understand the procedure and levy under GST.

Editorial Committee

finding it quite difficult.

Conclusion

Graph 2: Impact of GST on Liquidity and Working Capital and stock in Trade

• It is found that the GST has increased the efficiency in the supply chain as the retail business can be carried out in every state upon single registration, the Retailers will not have to maintain warehouses in every state and this ultimately reduces the Cost to retailers.

• The majority of respondents are of opinion that GST has made a positive impact on Liquidity.

• It is found that many of the respondents are not satisfied with theAssessment and Returns under GST as it is the beginning phase of GST and retailers are

• It is found that GST can benefit and inspire the starts ups as there will be only one registration and provides seamless input tax credit.

• GST manual Taxman

• It is found that the Retailers are not satisfied with the rates on a few goods notified by GST Council.

Findings of the study

The retail sector is one of the fastest growing business sectors of India whose contribution to the economy is huge in the form of GDP. Employment, the implementation of any economic and tax reform, shall have a direct impact on the retail sector and GST is one such. From the above study and research, it can be concluded and it is safe to say that GST has made quite a positive impact on the retail sector as it has reduced the complexities of multiple registrations, paying multiple taxes, cascading effect, nonavailability of the tax credit, easy compliance, single levy and procedure, and trade restriction on interstate supply of goods and services. It has made a positive impact in the form of seamless credit, single registration, increase efficiency, and reduction in cost. GST is ensuring the unification of markets as it has merged state and central taxes and eliminates the confusion of taxation in a different market. GST has set a platform for the retailers to expand their business beyond the boundaries as there is a single levy and returns in all the states and this will contribute to the growth of the retail market and help to boost the Indian economy.

• www.cbec.gov.in

• It is found that the GST has reduced complications to carry out the Retail business with easy compliance and with a single registration.

• It is found that the GST has reduced cascading effect by providing seamless input tax credit and this has reduced the burden of tax on the retail sectors as it will set off tax starting from the producers' point to the consumer.

38 Artha | 2017-18

• It is found that many of the respondents are quite dissatisfied with the digitalization of GST Returns.

39

At RBANM’s institution, we strongly believe that all children are born equal. We also believe that each one is blessed with a special talent. Students' attitudes and habits at home and in institution environments combine in unique ways to shape your personality and enable you to realize your full potential. Parents, the institution and you will have to work in harmony to make you the best that you can become.

In all RBANM Institutions, we want a partnership between the institution and the parents to make sure that all children can realize their true potential. The system in our institutions enables our teachers to take children under their wing and through our curricular and extra curricular programs transform them into capable and responsible citizens of our country.

About RBANMS FirstCollegeGrade

#12,AnnaSwamyMudaliarRoad(OppositeUlsoorLake)Bengaluru 560042 080 48533572 | principal.fgc@rbanmscharities.in multiAindisciplinaryjournalresearchhouseIIssue

A student’s achievement is largely due to the culture at home. Respect, humility, honesty, sincerity, loyalty, and citizenship to our institution, family, and country is fundamental. Students’ pride in their institution is correlated to their attitude towards their teachers.

RBANM’s First Grade College (FGC) was established by RBANM’s Educational Charities in 1983 to cater to the educational needs of the fast growing modern and tech city of Bengaluru. RBANM’s FGC is one of the institutions established under the umbrella of RBANM’s Educational Charities founded 148 years ago in 1873 by Dharmarathnakara Rai Bahadur Arcot Narrainswamy Mudaliar.

Artha | 2017-18

Our founder embarked on his vision of social regeneration, providing for all classes and castes in education, social welfare, and religion. The college is the fulfillment of our founder's vision. In its three decades of service, the FGC has made significant progress in education.

Turn static files into dynamic content formats.

Create a flipbook