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[VOLUME 4 I ISSUE 4 I OCT.

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A Comparative Study of GST in India and Other Countries


Haiderkhan S. Pathan
Assistant Teacher
Bhavnagar , Gujar at.

Received Sept. 01, 2017 Accepted Oct. 5, 2017

ABSTRACT This paper gives meticulous understanding about GST in India and some other countries of
the world. The paper facilitates one with the thorough understanding of GST and various aspects concerned with it.
It also explains about HSN (Harmonised System of Nomenclature) codes used for different types of products under
the GST system of India. Implementation of GST in India was a very tough trade to be dealt with. The paper gives an
analysis of the GST system in India and some other developed as well as developing economies of the world. The
paper explains one about the cascading tax system that existed in India and the duel GST model. There is also a
description on HST (i.e. Harmonized Sales Tax). There are only two countries apart from India namely Canada and
Brazilto have implemented the duel GST model. In most of the other countries of the world there is a single unique
taxation system which is either VAT or a GST.
Key words: GST (Goods and Services Tax), Cascading tax, HST (Harmonized Sales Tax), HSN (Harmonised
System of Nomenclature) code.

Inception:
GST, The Goods and Ser vices Tax is one of the most discussed topics in the current scenario. Breaking down
this particular term is need of the hour.In simple words we can describe The Goods and Ser vices Tax (GST)
as a value-added tax levied on most goods and services sold for domestic consumption. The GST is paid by
consumers, but i t is remitted to the government by the businesses selling the goods and services. In effect,
the Goods and Ser vices Tax provides revenue for the government. The GST has created a lot of buzz since i ts
inception and has been discussed all over India by all the professionals. The impact of GST has been such
that each and every one all over the country, whether concerned with i t or not has been trying to
breakdown the said term. GST in India is implemented with the propaganda of “One nation one Tax”and i t
has been one of the very important factors all over the world as i t has made certain outstanding differences
in the economic structures of some countries. On the other hand i t has some limitations too, as there is
always the other side of everything GST too, is not an exception and has certain criticisms as well. So let us
have a better understanding of GST by having a discussion on various aspects like History, HSN
(Harmonised system of Nomenclature) codes, comparison of i t with other countries of the world, the
present situation of GST and some other important terminologies concerned with i t.Though in India the
GST roll-out is expected to boost the economy by at least 2 per cent in the coming years, some experts and
analysts believe that the short-term impact of GST can be neutral or i t may be negative even. In the long
run, the GST will be beneficial to all as i t is expected to help curtail tax evasion and check price r ises.
Moving on further, now we are about to crack the term GST (i.e. the goods and services tax). In India GST
has been implemented with a view to provide efficient tax collection, reducing corruption, easy movement
of goods, provide with meticulous tax calculation system while providing better economic functionality and
reducing tax evasion.
Breaking down the term GST:
In simple w or ds i t can be stated her e that the goods and ser vices tax (GST) is an indir ect feder al sales tax
that is applied to the cost of certain goods and services. The business adds the GST to the price of the
product anda customer who buys the product pays the sales price plus GST and the GST portion is collected
by the business or seller which later on is forwarded to the government.A total of 160 countries all over the
world have opted for GST so far. In most other countries of the world value added tax (VAT) is taken as a
substitute for GST.The Goods and Ser vices Tax (GST) isan indirect tax which was introduced in India on 1
July 2017 and w as applicable thr oughout India Except the State of J&K w hich r eplaced multiple cascading
taxes levied by the central and state governments.
GST in India is conceived with the motto of “one nation, one tax” and has subsumed 17 different types of
central and state level taxes. With the implementation of GST in India the movement of goods has become
comparatively cheaper and i t has eliminated various different sor t of taxes. GST is a single indirect tax for
the whole nation, one which is going to make India a single unified market. It’s a single tax on the supply of

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goods and services, r ight from the manufacturer to the consumer. In Indian GST different types of codes are
provided which are known as HSN codes. From the above mentioned information i t can be concluded here
in that a GST is an indirect tax which is levied on final consumption of goods and services and i t only
attracts the term “Supply” of goods and services and i f there is no supply then ther e is absence of GST.
Indian GST and Some historical aspects of GST all over the world:
It would not be exaggerated to mention over here that the concept of GST is not new to the world as nearly
160 countries as on 2016, have opted this mode for bringing individually tax rates into a single tax. Though
in India i t is termed as a new system i t has i ts roots quite long back in some other countries of the world
which we would discuss here in the upcoming lines. France was the very first country to implement the
GST in the year 1954 and since then almost about 160 countries have adopted this tax system in one or the
other w ay all over the w or ld. To mention her e some of the countr ies w ith the GST system ar e Canada,
Vietnam, Australia, Singapore, UK, Spai n, Italy, Nigeria, Brazil, and South Korea.The USA does not have GST
as i t ensures high autonomy for the states and follows a unique VAT system of taxing.As stated earlier
France, the Western European country was the very first country to have implemented GST and as of now
the current rate of GST is 19.6 per cent. Most European countries introduced GST back in the 1970s-80s.
Now a days a single unified tax system is a global fiscal trend. The one big difference between the Indian
model of GST and similar taxes in other countries is the dual GST model. Many countries in the world have a
single unified GST system, countries like Brazil and Canada have a dual GST system whereby GST is levied
by both the federal and state or provincial governments. It is the Canadi an model of dual GST (central and
state) implemented in 1991 that the Indian model of the indirect tax reform finds similarities with. Canada
introduced GST in the year 1991 at a rate of 5 percent and the Canadi an GST model gives options to
provinces to go for state or central GST. In India, a dual GST is proposed whereby a Centr al Goods and
Ser vices Tax (CGST) and a State Goods and Ser vices Tax (SGST) w ill be levied on the taxable value of ever y
transaction of supply of goods and services. The government believes that the implementation of the new
indirect tax regime will be a key component in improving ease of doing business. The GST, country’s biggest
indirect tax reform since independence has replaced a slew of central and state levies, transforming the
nation of 125 crores people into a customs union. As of now, India ranks at 130th out of 190 countries in
the list of ease of doing business by the World Bank. The government has categorised 1211 i tems under tax
slabs of 0 per cent, 5 per cent, 12 per cent, 18 per cent and 28 per cent. While the implementation of the tax
reform in India may be historic for the scale of change that i t envisages, i t is not the first country to move to
unified indirect taxation system as mentioned earlier.
GST in India:
Goods and service tax has taken India by the storm as i tis believed that i t will bring in “One nation one
tax” to unite indirect taxes under one umbrella and facilitate Indian businesses to be globally competitive.
The Indian GST case is structured for efficient tax collection, reduction in corruption, easy inter-state
movement of goods, and betterment of the economy as well as demolition of the possibility of tax evasion
with some other important considerations. The Goods and Ser vices Tax has revolutionized the Indian
taxation system. In India the GST Act was passed in the Lok Sabha on 29th March, 2017 and came into effect
from 1st of July, 2017 however i t took drastically long enough for the act to be implemented. While having a
discussion on GST in India there are certain difficulties necessar y to be mentioned which states that Unlike
India, other countries have a much higher threshold for GST applicability which in turn helps them in
reducing the burden for small businesses while in India i t seems a bit difficult and i t will bring in challenges
for the Indian SMEs (i.e. Small and medium enterprises). The other thing to be taken care of is that India has
the highest rate of GST at 18% compared to some other emerging market economies of the world. India has
two types of GST hence i t called as duel GST model which includes CGST (Centr al Goods and Ser vices Tax)
and SGST (State Goods and Ser vices Tax).The GST in India was implemented after so many contr over sies, so
let us have a look at the timeline of the GST implementation in India.
Timeline of GST in India:
From the below mentioned artefact i t can be derived that in India GST came in to force on 1st of July,
2017.One India, One Tax became a reality on the 1st of July, 2017, when the Goods and Ser vices Tax came
into effect. This landmark moment in the history of modern India comes after nearly 20 years of debate and
negotiations among states and successive central governments from different parties, members of
Parliament and other inter ested stakeholders.

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Taxation system in India before GST:


As discussed earlier there were numerous taxes applicable at different levels in the old taxation system of
India but now after the implementation of GST the tables have turned. With the implementation of GST now
the tax is payable at the final point of consumption which means that the taxable event will be the ‘supply of
goods’ and the ‘supply of services’ only i f a good or service does not move at all i t is not termed as a supply
and hence i t is not taxable . Before GST the taxes were levied on various stages like on manufacturing of
goods, sale of goods and on rendition of services w hich from now on will not be relevant under the GST
system of Taxation. While discussing GST i t would be important to mention that there had been certain
central taxes (e.g. sales tax, excise duty tax, and service tax) In India with co-existence of some state level
taxes (e.g. entertainment tax, entry tax, transfer tax and luxury tax) which now are collected with a unique
taxation system called GST.

Research Paper IJRAR- Inter national Jour nal of Resear ch and Analytical Review s 3
Some historic trends of GST in various countries of the world:
Chi na had implemented GST in the year 1994 and later on in 2016 Beijing completed Value Added Tax
(VAT) reforms to replace i ts conflicting business tax system ceasing and doing away with business tax and

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other taxes and switching to VAT contributed to bursting of the Chi nese real estate bubble.Russia did the
same in the year 1991 wher eas Saudi Arabia plans to implement a single unified taxation in the year
2018.Despite being a major economy in the world The United States of America does not have GST states
however, enjoy high autonomy in taxation. Japan introduced consumption tax in 1989 at a rate of 3 percent
which later on in the year 1997 w as increased to 5 percent and the Asian country had to face the recession. In
2012 i t doubled the tax to 10 percent but had to delay the tax increase to October 2019.In Malaysia too, after
the 26 years of debate implementation of GST was possible in 2015 at 6 percent. Australia introduced GST in
2000 where the implementation was quite smooth compared to other countries. The rate was fixed at 10
percent but now i t plans to increase GST rate to 15 percent. New Zealand introduced GST in 1986 at a rate of
10 per cent and had to change the rates twice, 12.5 percent in 1989 and 15 percent in 2010.Si ngapore
introduced GST in 1994 at a rate of 7 percent. Austria introduced GST at a rate of 20 percent, Sw eden at
25 percent and Pakistan at 17 percent. It can be observed from the above trend that the GST has always been
on a constant hike wherever and in whichever country i t was implemented. The question here to worry
about is that in India i t is 18% in the initial stage and the highest applicable rate is 28% and what would be
the situation i f i t keeps on increasing?
Breaking down 'harmonized sales tax (HST)'
The HST is applicable in Canada i t is good to be infor med about i t as the Indian GST model is inspir ed fr om
the Canadi an model of Duel GST. The Har monized Sales Tax (HST) w as implemented by sever al pr ovinces
in Canada to build a more efficient tax system that would improve the competitiveness of businesses in the
participating provinces. The Harmonized Sales Tax (HST) is a combination of the Canadian Goods and
Ser vices Tax (GST) and Pr ovincial Sales Tax (PST) that is applied to taxable goods and ser vices. By fusing
sales tax at the federal level with sales tax at the provincial level, the participating provinces harmonized
both taxes into a single federal-provincial sales tax. HST is a consumption tax that is paid by the consumer
at the point of sale. The vendor or seller collects the tax proceeds from consumers by adding the HST rate to
the cost of goods and services, and then remits the total collected tax to the government at the end of the
year.
GST in other countries of the world:
Most countries with a GST have a single unified GST system, which means that a single tax rate is applied
throughout the country. These countries tax virtually everything at a single rate. The bar diagram depicted
here in as under gives vital information about the current state of GST in various nations of the world. It can
be observed that in India the GST rate is at 18%. The highest rate of GST is observed in Nether lands while
the lowest one can be found in countries like Canada and Jer sey. So far there has been various positive as
well as critical changes in all these countries after implementation of GST.

What are HSN codes?


As we have discussed a lot as of now about GST in India, Cascadi ng taxes and GST all over the world i t is
really important to know about HSN codes. Various states in India presently have their own systems for
classifying goods for tax r ate deter mination but w ith the coming Goods and Ser vices Tax (GST) r egime,
there is a desire for mor e uniform classification, not only at a national level but internationally. Hence there
w as a r equir ement of the Har monised System of Nomenclatur e (HSN) for goods. So w e w ill now discuss
HSN codes as they relate to the GST.

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HSN is a multipurpose international product nomenclature developed by the World Customs Organization
(WCO). WCO has 181 members, three quarters of which are developing countries that are r esponsible for
managing more than 98 percent of world trade. HSN standardizes the classification of merchandise under
sections, chapters, headings, and subheadings which in turn results in a six-digit code for a commodity (two
digits each representing the chapter, heading, and subheading). India is a member of WCO since 1971 and
has been using HSN codes since 1986 to classify commodities for Customs and Centr al Excise. Customs and
Centr al Excise added two more digits to make the codes more precise, resulting in an eight-digit
classification. Under GST, the majority of dealers will need to adopt two, four, or an eight digit HSN codes
for their commodities depending on their tur nover.
As the GST is now implemented in India under the HSN codes system dealers with turnover of less than Rs.
1.5 crores will not be r equired to adopt HSN codes for their commodities while the dealers with turnover
between Rs. 1.5 crores and Rs. 5 crores shall be required to use two-digit HSN codes for their commodities.
Dealers with turnover equal to Rs. 5 cror es and above shall be required to use four-digit HSN codes for their
commodities and In the case of imports and exports, HSN codes of eight digits shall be compulsory, as GST
has to be compatible with international standards and practices.
What is Cascading Tax?
There were numerous taxes applicable on goods and ser vices in the old taxation system of India at central
as w ell as state levels. These taxes were Excise duty, VAT, Ser vice Tax, Sales Tax, entertainment tax, entry
tax, transfer tax, luxury tax etc. in addition to this ther e were ever education cess, higher education cess,
taxes relating to agriculture and cleanliness too. Thus, i t can be understood that there were end number of
taxes levied on goods and services at different level like sales tax at central level and at the state level too
and this application of applying a tax on tax repeatedly is termed as a cascading tax.
Conclusion:
There has been some very good motives behind the implementation of GST in India and i t probably will
attain the desired results in the coming years. We had a discussion on various and almost all the important
aspects concerned with the GST in this particular paper. Let us hope that the Indian GST turns out to be a
blessing for the people of India and betterment of the economy. GST has faced certain limitations also in
various country wherever i t has come into force and India too does not seem to be an option. The paper has
given a thorough understanding about GST in India and some other countries of the world with a view to
provide the global trend of GST all over the world. Sti ll the question remains the same will India too have to
increase the rates of GST? well let us hope for the betterment of people of India and the economic
development as well.

References:
1. "GST, Meet the men behi nd India's biggest tax 4. "GST draft makes it must for compani es to pass
reform that's been in making for 17 years", India tax benefit to consumers", The Times of India, 27
Today, June 29, 2017. November 2016.
2. Nair, Remya ( 8 June 2015), "Rajya Sabha panel to 5. "GST Rollout Attendees", Financial Expr ess, June
hear GST concer ns on 16 June", Live Mint. 30, 2017.
3. "GST rollout: All except J-K pass St ate GST 6. "GST launch: Times when the Par liament
legislation", The Indian Express, 22 June 2017. convened for a session at midnight", The
Hindustan Times, 30 June 2017.
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SSRG International Journal of Electrical and Electronics Engineering (SSRG-IJEEE) – Volume 4 Issue 8 – August 2017

Impact of GST in India and Comparisions


with Other Countries
G.Aruna Kumari1, C.Y.Naga Jyothi2
Assistant Professors, Department of business administration, Rajeev Gandhi Memorial College of Engineering
& Technology, Nandyal. India.
ABSTRACT It is burdened with multiple taxation on the same
GST is intended to include all the taxes into one object with no way to redeem the taxes already
tax with seamless ITC and charged on both goods paid at each stage of production-retailing-
and services. Thus the tax is expected to reduce the consumption. If Cenvat and service tax are paid at
concept of ‘tax on tax’, increase the gross domestic the manufacturing level, these can be redeem
product of the economy and reduce prices. An against future payments, but none of the other taxes
analysis of what the impact of GST (Goods and paid at any stage can be reclaimed.
Services Tax) will be on Indian Tax Scenario.Then In order to eliminate double charging in the
the need arose for the change in tax structure from current system and increase the number of
traditional to GST model. The impact of GST in the taxpayers, the government of India introduced
present tax scenario in India. GST. GST implemented in India from July 2017.

Key Words: GST (Goods and Services Tax), What is GST?


Indian Tax Scenario, two-tiered One-Country-One- GST stands for Goods and Service Tax. Goods
Tax regime, tax structure, Cascading Effect and Service Tax is applied on services and goods at
a national level with a purpose of achieving overall
Introduction economic growth. GST is particularly designed to
There are so many types of taxes that are levied replace the indirect taxes imposed on goods and
by the Central and State Governments on Goods & services by the Centre and States.GST will be an
Services in India. Indian consumers have to pay indirect tax at all the stages of production to bring
indirect tax on goods and services such as Value about uniformity in the system. Under this system,
Added Tax, Service Tax, Excise Duty, Customs the consumer pays the final tax.
Duty, etc.. Each State levies their own tax on the
goods coming into their control for sale and How is GST applied?
consumption, while the Centre levies taxes on the GST consider the country as a single whole
manufacture of the goods. All these direct taxes organism. The Indian Government is opting for
levied on the traders are passed down to the dual system GST.This system will have two
consumer. components which will be known as.
Let us take an example of a dress manufactured in Central Goods and Service Tax(CGST)
Surat, Gujarat. At the spot of manufacture, an State Goods and Service Tax(SGST)
excise duty/Cenvat has to be paid to the Central What a trader will essentially be able to do is claim
Government. If the stain for the dress are bought a refund on the taxes already paid at different
from Madhya Pradesh, then the manufacturer has stages of value addition. The consumer who buys
to pay the state taxes applicable for the stain in the product will have to pay only the GST charged
Madhya Pradesh while buying it, and also pay by the last dealer in the supply chain, as everyone
Gujarat’s ―import duty‖ on the product. Similarly, else would have the opportunity to compensate the
if the buttons for the dress are bought from taxes paid at the previous stages. If we take the
Rajasthan, then another set of taxes is added to the above example, under the GST system, the Cenvat
manufacturing cost. At the end of this chain, when on manufacturing the dress and the taxes paid on
the product reaches the market for sale, VAT is stains and buttons can be redeemed at each level,
added to it. So all the taxes paid for the production thereby considerably reducing the total taxes paid.
of the dress so far get added to the cost of the dress, The manufacturer or wholesaler or retailer will pay
which rises considerably from its actual the applicable GST rate, but will claim back
manufacturing cost. through tax credit mechanism. But being the last
person in supply the chain, the end consumer has to
Of these, excise duty/CENVAT, customs duty, bear this tax and so, in many respects, GST is like a
service tax, central and state sales tax, VAT, last-point retail tax. GST is going to be collected at
octroy, entry tax, road toll, the luxury tax and point of sale.
entertainment tax are applicable to goods and
services.

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SSRG International Journal of Electrical and Electronics Engineering (SSRG-IJEEE) – Volume 4 Issue 8 – August 2017

Let us understand the above supply chain of Here’s a list of taxes that the GST will likely
GST with an example: replace:
When the wholesaler buys from the manufacturer,
he pays a 10% tax on his cost price because the  Service Tax
liability has been passed on to him. Then he adds  Cesses and surcharges related to supply of goods
value of Rs. 40 on his cost price of Rs. 100 and this or services
brings up his cost to Rs. 140. Now he has to pay  Central Excise Duty
10% of this price to the government as tax. But he  Excise Duties on medicinal and toilet
has already paid one tax to the manufacturer. So, preparations
this time what he does is, instead of paying Rs  Additional Excise Duties on textiles and textile
(10% of 140=) 14 to the government as tax, he products
subtracts the amount he has paid already. So, he  Additional Excise Duties on goods of special
deducts the Rs. 10 he paid on his purchase from his importance
new liability of Rs. 14, and pays only Rs. 4 to the  Additional Customs Duties (CVD)
government. So, the Rs. 10 becomes his input  Special Additional Duty of Customs (SAD) These
credit. are the taxes that could be absorbed into the GST
regime:
When he pays Rs. 4 to the government, he can pass
on its liability to the retailer. So, the retailer pays  Central Sales Tax
Rs. (140+14=) 154 for him to buy the shirt. At the  State VAT
next stage, the retailer adds value of Rs. 30 to his  Entry Tax
cost price and has to pay a 10% tax on it to the  Purchase Tax
government. When he adds value, his price  Entertainment Tax (not levied by local bodies)
becomes Rs. 170. Now, if he had to pay 10% tax  Luxury Tax
on it, he would pass on the liability to the customer.  Taxes on advertisements
But he already has input credit because he has paid  State cesses and surcharges
Rs.14 to the wholesaler as the latter’s tax. So, now  Taxes on lotteries, betting and gambling
he reduces Rs. 14 from his tax liability of Rs. (10%
of 170=) 17 and has to pay only Rs. 3 to the Advantages of GST:
government. And therefore, he can now sell the
shirt for Rs. (140+30+17) 187 to the customer.  It simplifies the tax system and makes it easier
to understand as well as cheaper to implement at
10% Actual various levels.
Action Cost Total  Tax evasion at various stages will be eliminated
Tax Liability
as tax offsets can be collected only if taxes have
Buys Raw Material 100 10 10 110 been paid originally. You will also be able to
Manufactures @ 40 140 14 4 154 buy raw materials or constituent materials for
Adds Value @ 30 170 17 3 187 production only from those who have paid taxes,
in order to claim benefits.
Total 170 17 187  It will be cheaper to buy input goods and
In the end, every time an individual was able to services for production from other states.
claim input tax credit, the sale price for him  The current supply and distribution chain may
reduced and the cost price for the person buying his undergo a change with a change in taxation
product reduced because of a lower tax liability. system that does away with excise and customs
The final value of the shirt Rs. 187, thus reducing duties.
the tax burden on the final customer.  The consumer will get the end-product at
cheaper rates because of elimination of multiple
So essentially, Goods & Services Tax is going to taxes and the tax cascade.
have a two-pronged benefit. One, it will reduce the  As of now, petroleum and petroleum products
cascading effect of taxes, and second, by allowing have been kept out of the GST regime until
input tax credit, it will reduce the burden of taxes further notice.
and, hopefully, prices.  The Sale of newspapers and advertisements are
GST will ensure transparency with regards to the also likely to fall under the GST regime,
rate of taxation and the total amount that goes to allowing the government to increase its revenue
the government as taxes on a product. Currently, a considerably.
consumer is not aware of the total amount of taxes  While there will be central GST and State GST,
s/he pays for a product, apart from VAT which is the tax applicable on goods and services being
mentioned on the bill. exported and imported between states in India
would fall under an Integrated GST (GST)
system in order to avoid conflict of dominion.

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SSRG International Journal of Electrical and Electronics Engineering (SSRG-IJEEE) – Volume 4 Issue 8 – August 2017

Disadvantages of GST: department officers would come down to a


minimum. This would reduce corruption and
 GST is not good news for all sectors, though. In increase ethics gradually.
the current system, many products are exempted (e) Compensation for loss of revenues to the
from taxation. The GST proposes to have States: The compensation of loss of tax revenues
minimal exemption list. Currently, higher taxes to the States on account of implementation of GST
are levied on fewer items, but with GST, lower would be an outgo. In reality, there may be
taxes will be levied on almost all items. minimal outgo except for the weaker States. All
 GST is not applicable on liquor for human expected to gain due to increased compliance.
consumption. So alcohol rates will not get any
advantage of GST. GST Impact on State Government
 Stamp duty will not fall under the GST regime (a) Proliferation of computerization leading to
and will continue to be imposed by states. fall in transaction costs: Due to increase in
computerization due to GSTN, the tax
The Impact: administration would be easier and cost of
It is expected that the creation of the Goods and collection would be less.
Service Tax act and its implementation will have (b) The Destination Principle: States, which are
a great impact on various aspects of business in net consumers would benefit due to the accrual on
India by changing the traditional pattern of destination. The producing States may have a
pricing the products and services. comparative disadvantage.
The Goods and Service Act will also have a (i) A unified common national market to boost
great impact on the tax system in India by Foreign Investment and ―Make in India‖ campaign
reducing the unfavorable effect of tax on the (ii) Boost to export/manufacturing activity,
cost of goods and services. GST is expected to generation of more employment, leading to
change the whole indirect tax system by reduced poverty and increased GDP growth
impacting the tax structure, tax computation, (iii) Improving the overall investment climate in
credit utilization and tax frequency. It will also the country which will benefit the development of
help in supply chain optimization. states
The originators of the Goods and Service Tax iv) Uniform SGST and IGST rates reduce the
believe that the implementation of this act would incentive for tax evasion
make the tax procedure more transparent, fair (v) Reduction in compliance costs as no
and efficient. It will help in creating a single requirement of multiple record keeping
national market by merging several Central and GST impact on economy
State taxes under a one single tax procedure. No The need for GST has been felt because under the
doubt, the implementation of GST will take current indirect tax structure:-
time, but it is likely to create more employment 1) Tax barriers have fragmented the Indian market,
opportunities and economic inclusion. 2) The Cascading effects of taxes on cost have
made indigenous manufacture less attractive,
GST Impact on Central Government
3) Complex multiple taxes have raised the cost of
(a) Increased collection of CGST and IGST: The
compliance.
collection of taxes-CGST and IGST would increase
when more and more assesses register and pay New
Current
Slabs GST Products
taxes due to simplified tax laws under the GST rates
regime. rates
(b) Loss of CST revenues: The CST which was 2 Edible oil,
% accruing to the State of the collection has been 1 5% Upto 9% spices, tea,
subsumed into GST. This revenue would not be coffee
available to the States. Computers,
(c) Refunds under GST: The refunds under 2 12% 9%-15% processed
Central excise and service tax laws take a long food
time. However, in GST Regime, refunds are Soaps, oil,
expected to be processed faster with 90% of the 3 18% 15%-21% shaving
total refund amount being available on submission sticks
of proper documents. Luxury
(d) Reduced corruption: When the laws are goods(luxury
simplified, then the chances of multiple 4 28% 21% cars, tobacco,
interpretations would get reduced, leading to aerated
reduction in disputes and consequent litigation. drinks)
Also, the automation of the payments/returns filing
and other compliances could mean that the
interaction between the assessee and the

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SSRG International Journal of Electrical and Electronics Engineering (SSRG-IJEEE) – Volume 4 Issue 8 – August 2017

Food grains will have a 0% tax to provide relief to tax structure assesses is not able to take the input
consumers. tax credit benefit of goods & services, whereas in
The Goods and Services Tax (GST) will be levied proposed GST system assesses will be able to take
at multiple rates ranging from 0 per cent to 28 per credit of supply of both goods & services which
cent. GST Council finalized a four-tier GST tax will cover differing of additional 3 % GST up to a
structure of 5%, 12%, 18% and 28%, with lower level. Thus, on many service Tax Sector there is no
rates for essential items and the highest for luxury huge benefit or loss, but any industry sector, which
and de-merits goods that would also attract an only provide pure services and does not use goods
additional cess. or services so not having input tax credit than to
Service Tax will go up from 15% to 18%. The those service sector tax burdens will be increased
services being taxed at lower rates, owing to the by 3% like in telecom or insurance sector, there are
provision of abatement, such as train tickets, will no many goods or services consumed so this sector
fall in the lower slabs. could face marginally negative impact from the
In order to control inflation, essential items higher service tax rate of 18 per cent (likely) versus
including food, which presently constitute roughly 15 per cent currently.
half of the consumer inflation basket, will be taxed 2. Organised and unorganised: – Important
at zero rate. fallout of GST could be shifted from unorganised
The lowest rate of 5% would be for common usable to organised segment. The unorganised sector will
items. There would be two standard rates of 12 per come into the tax net and will lose the benefits
cent and 18 per cent, which would fall on the bulk arising from non-payment of taxes and levies.
of the goods and services. This includes fast- Thus, companies which are operating in an
moving consumer goods. organised manner will get the benefit of high
Highest tax slab will be applicable to items which unorganised component in terms of increased
are currently taxed at 30-31% (excise duty plus demand. Companies in sectors like plywood,
VAT). ceramic tiles, batteries, etc. will stand to benefit.
Ultra luxuries, demerit and sin goods (like tobacco 3. Distribution Channel –Large or Short :- The
and aerated drinks), will attract a cess for a period sectors which have long value chain from basic
of five years on top of the 28 per cent GST. goods to the final consumption stage by the end
user with an operation spread in multiple states
states. GST is expected to have a favourable [FMCG, pharmacy, consumer durables, etc] should
outcome for the economy as per my opinion. benefit. FMCG companies could generate
Basically we can take 2 segments substantial savings in logistics and distribution
1. Organised Segment :- GST impact will be costs as the need for multiple sales depots will be
minor and for a very short period eliminated. FMCG companies pay nearly 30%,
2. Unorganised Segment:- GST impact will be for including excise duty, VAT and entry tax and a
short duration lower rate of 18% or 12 % could yield a significant
After time on gap market will recover and target reduction in taxes. But a higher GST rate of 28 per
GDP growth @ 2 % can be achieved. cent for consumer durables and some FMCG
Major Favourable outcomes:- products may disappoint the market. Warehouse
1) Input Tax Credit: –Removal of tax barriers rationalisation and reduction of overall tax rates, is
with seamless credit will make India a common expected to generate saving.
market, leading to economies of scale in production 4. Impact on Automobile companies:-
and efficiency in the supply chain. Automobile companies could gain from GST
2) Cascading Effect: –Removal of cascading implementation if the GST rate on their products is
effect of taxes embedded the cost of production of 18 % [Bike, Hatchback, and Sedan] and they are
goods and services, significantly reducing cost of able to retain the benefits of lower rates. However,
supply. the higher rate of 28 % on luxury cars & on SUV
As part of GST implementation, service would not have a negative impact as there are so
tax is expected to go up [expected 18%] from the many taxes charged as per current system and
current levels of 15 %, but which may not be credit input is not available for all taxes.
negative for service companies in airlines, telecom, According to experts, these items could
insurance, etc., because in existing system they are
become costlier:
not able to take input on Goods & services (upto a
 Cigarette prices likely to go up as the GST rate
level) but in the proposed GST they will get the
for tobacco will be higher than current duties
benefit of Input credit on many goods & services
 Commercial vehicles such as trucks will
which are related to furtherance of business.
become costlier
Impact of GST on Segment wise
1. Services Sector Segment: As per existing Tax  Mobile phone calls may get costlier as service
structure currently service tax is charged @ 15%, tax will go up
whereas as per proposed GST @18 % will be  Textile and branded jewellry may become
charged on the Supply of Services but in existing costlier

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SSRG International Journal of Electrical and Electronics Engineering (SSRG-IJEEE) – Volume 4 Issue 8 – August 2017

And these could become cheaper: 5.Economic growth may not jump immediately
 Auto: Prices of entry-level cars, two-wheelers, The immediate impact of GST, it slow growth in
SUVs may fall the short term as big companies reorganize their
 Car batteries likely to get cheaper businesses and as small firms lose revenue.―the tax
 Paint, cement prices likely to fall reform will be beneficial to the economy in the
 Movie ticket prices likely to fall as medium to long term.
entertainment tax will come down How Indian GST model compares with GST in
 Electronics items like fans, lighting, water other countries
heaters, air coolers, etc. will get cheaper It is a known fact that more than 160 nations have
brought up GST and as a matter of fact European
tax economy has conceived the GST more than 50
years ago. But in its current form, India’s GST is
complicated and very different from the global
variety. A multi-tier tax rate structure and complex
rules make execution of this mammoth indirect tax
a herculean task.
Unlike other nations, goods and services in India
will be charged at different rates depending on the
categories they belong to. For services like hotels,
restaurants and transportation, tax rates have been
fixed based on room tariff, turnover of business,
etc. This, say tax experts, is not in line with the
international practice, where a uniform rate is
applicable on a service irrespective of the value or
Here are five impacts GST will have in the near status of the business.
term: In the Asia Pacific geography, there are above 40
1.Shaking up corporate operations models of GST applications which are currently
The new tax regime will force many companies to running through the system of various economies
restructure their operations. Companies will now in the world which includes a diverse set of rules
insist vendors and suppliers to furnish invoices as and regulations.
GST will make it impossible for firms to evade As again watching over the difference in Indian
taxes. Big companies stand to benefit as they have GST vs Foreign GST, countries like New Zealand
a supply chain in order and can redeem taxes paid and Singapore have been applying the taxes on
on inputs. Smaller firms may end up spending everything at a single and consistent rate. While
more as a compliance cost will rise. Indonesia has a total of five possible accepted rates
2.Passing on the benefit of lower tax with zero rates included and also bearing above 30
The benefits of the reduction in the tax rate and exemptions within it. After the European and Asia
input credit shall be passed on by a commensurate Pacific market, the China has maintained the GST
reduction in prices—such measures are difficult to applications over the goods and the conditioned
implement and would be a retrograde step, similar provision of repairs, processing and replacement
to price controls, if implemented in haste, Nomura assisted services, which also means that it is
added. Companies may use the savings from tax restrictedly collected on goods which are consumed
outgo under the GST regime to improve profit in the manufacturing process as the fixed asset
margin to some extent and invest the rest in goods and service tax in foreign countries like
building new capacities. China is not under recoverable terms.
3. Inflation may remain low. Going to the far shores, in Australia, the GST is a
Most of the services are not accounted in the federal tax, which is collected by the supreme
consumer price CPI inflation basket and, authority and thus divided further among the states
hence the higher GST rates may not get without any conflict arising through the process.
reflected in the retail price movement as Now looking to Canada model of GST, the country
measured by the government data. governs the taxation regime under 3 schemes, i.e.
There are services like health, education, Federal GST, Joint federal and separate federal.
miscellaneous segment, transportation are Federal tax is generally accepted tax system while
outside the scope of GST. ―Hence, GST joint federal is run on the basis of synchronized
implementation of CPI impact will be minimal. behavior of the economy and states and the last one
We estimate that GST will have a neutral separate federal which only applies to the Quebec
impact on headline CPI,forecasting the average as it is deemed as a quasi-independent province.
inflation at 4-4.5% during 2017-18. Talking about the Brazil model of GST, it is much
independent and carefree in comparison to other
nations and has a dividing rule of taxes between the

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SSRG International Journal of Electrical and Electronics Engineering (SSRG-IJEEE) – Volume 4 Issue 8 – August 2017

states and the center. In all cases, GST rates are As the accompanying chart shows, barring
prefixed between 16 to 20 percent and India has Canada, the threshold for GST applicability in
somehow taken the cues from this and jotted down other countries is higher than in India. A higher
the similar pattern. Finally, the great beginning is threshold was desirable as it would have reduced
about to flash in the Indian economy because the the tax burden on small businesses.
speculated taxpaying community is likely to get a
growth of 5 to 6 times than the current figure.

GST in other Countries compared to GST in India - Cleartax's Analysis


India
Particulars Canada UK Singapore Malaysia
(proposed)

Name of Federal Goods


Goods and Value Added Goods and Goods and
GST in the and Service Tax
ervice tax Tax Service tax Service tax
country & Harmonized

0% (for food
20%Reduced
staples), 5%, GST 5% and 7% Reduced
Standard rates- 5 %,
12%, 18% and HST varies from rates- Zero 6%
Rate exempt, zero
28% (+cess for 0% to 15% rated, exempt
rated
luxury items)
Canadian $
Threshold 20 lakhs (10 £ Singapore $ 1 MYR 500,000
30,000 (Approx
exemption lakhs for NE 73,000(Approx million (Approx (Approx Rs. 75
Rs. 15.6 lakhs in
Limit states) Rs. 61.32 lakhs) Rs. 4.8 crore) lakhs)
INR
Accrual Basis:
Accrual Basis: Issue of invoice
Accrual basis: Accrual Basis:
Accrual basis: Invoice OR OR Receipt of
The date of issue Delivery of
Issue of invoice Payment OR payment OR
Liability of invoice goods OR Issue
OR Receipt of Supply -earliest Supply - earliest
arises on ORthe date of of invoice OR
payment - Cash basis (T/O Cash basis:(T/O
receipt of Receipt of
earlier upto 1.35 mn): upto
payment- earlier. payment
Payment SGD$1mn):
Payment
Usually
Monthly, Usually quarterly
Large
Returns and Monthly and 1 quarterly or quarterly. Small Business
organsations-
payments annual return annually based business option- option-
Monthly
on turnover annual Monthly
returns.
Apply on Reverse charge
goods (new) as applies to Reverse charge Reverse charge
Reverse
well as services importation of applies to applies to
charge Applicable
(currently services and supply of imported
Mechanism
under Service intangible services services
tax) properties.
Manufacture Real estate, Basic
ofexempted Financial Medical, Real estate, food,Health
goods or Services, Rent Education, Financial Transportation,
Exempt
Provision of (Residence), Finance, services, Residential
services
exempted Charities, Insurance,Postal Residential property,
services (to be Health, services rental Agricultural
notified) Education land

The exemptions list too is limited in other nations, However, the anti-profiteering clause, as it has
In India’s case, most services-related exemptions been unsuccessful in yielding the desired results in
have been retained for now. The fate of item-wise countries were tested. The clause requires
and area-wise exemptions are yet to be known. businesses to pass on the tax reduction to the end

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SSRG International Journal of Electrical and Electronics Engineering (SSRG-IJEEE) – Volume 4 Issue 8 – August 2017

consumer by way of a commensurate reduction in [4] http://www.hindustantimes.com/business-news/how-


prices. It remains to be seen whether its outcome india-s-gst-in-its-current-avatar-deviates-from-global-
practices/story-zTe3r S3PDBtf8LAtjgbYKO.html
will be any different in India. [5] http://blog.saginfotech.com/gst-india-vs-foreign-gst
Failure or delay in price reduction would have a [6] http://www.hindustantimes.com/
bearing on inflation. Though the government is [7] (http://taxguru.in/goods-and-service-tax/impact-gst-india-
confident of GST being non-inflationary, economy.html)
[8]https://cleartax.in/s/gst-india-and-other-countries-comparison
international experience suggests otherwise. [9] https://www.oneindiatax.com/single-post/2017/05/31/How-
In numerous countries, GST tax was introduced at India%E2%80%99s-GST-in-its-current-avatar-
a lower rate than pre-existing tax rate. Despite that, deviates-from-global-practices.
the GST pushed up inflation for one year in all the [10] www.profitbooks.com.
five countries in our study (Australia, Canada,
Japan, Malaysia and Singapore), after which
inflation moderated. In some countries, the pass-
through of higher tax costs by firms occurred with
a lag, as firms took time to fully assess the cost
implications of the new tax structure
To conclude, a simpler tax law results in better tax
compliance and improved tax collection efficiency.
But with a complex GST, India may have many
more teething troubles to overcome compared to
other countries that have adopted this tax.

SUMMARY
The idea behind having one consolidated indirect
tax currently existing is to benefit the Indian
economy in a number of ways:

 It will help the country’s businesses gain a


level playing field
 It will put us on par with foreign nations
who have a more structured tax system
 It will also translate into gains for the end
consumer who not have to pay cascading
taxes any more
 There will now be a single tax on goods
and services

In addition to the above,


The Goods and Services Tax Law aims at
streamlining the indirect taxation regime. As
mentioned above, GST include all indirect taxes
levied on goods and service, including State and
Central level taxes. The GST mechanism is an
advancement on the VAT system, the idea being
that a unified GST Law will create a seamless
nationwide market
It is also expected that Goods and Services Tax will
improve the collection of taxes as well as boost the
development of Indian economy by removing the
indirect tax barriers between states and integrating
the country through a uniform tax rate.

REFERENCES
[1] https://gst.caknowledge.in/gst-impact-central-
government-state- govt/1/3
[2] (http://taxguru.in/goods-and-service-tax/gst-tax-
structure-returns-and-penaltyprovisions
[3] http://taxguru.in/goods-and-service-tax/impact-gst-
india-economy

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CHAPTER 1: INTRODUCTION TO GST

1.1 BASICS OF GST

1.1.1 What is GST?

Goods and Services Tax (GST) is a value-added indirect tax at each stage of the supply of goods
and services precisely on the amount of value addition achieved. It seeks to eliminate
inefficiencies in the tax system that result in ‘tax on tax’, known as cascading of taxes. GST is a
destination-based tax on consumption, as per which the state’s share of taxes on inter-state
commerce goes to the one that is home to the final consumer, rather than to the exporting state.
GST has two equal components of central and state GST.

1.1.2 Who is liable to pay GST?

Businesses and traders with annual sales above Rs20 lakh are liable to pay GST. The threshold for
paying GST is Rs. 10 lakh in the case of northeastern and special category states. GST is applicable
on inter-state trade irrespective of this threshold.

1.1.3 Which taxes will be included in GST?

GST will be substitute all indirect taxes levied by the state and central government. GST would
apply to all goods other than crude petroleum, motor spirit, diesel, aviation turbine fuel and
natural gas and alcoholic liquor for human consumption. Indirect Taxes that are going to subsume
under GST are given below:

1
1.1.4 TYPES OF GST

UTGST : If transaction is related to any Union Territory (At present : Andaman & Nikobar Island,
Lakshadweep, Dadra & Nagar Haveli, Daman & Diu and Chandigarh), then in place of SGST, UTGST
will be charge.

Transaction Old Regime New Regime


Intra state (Sale VAT + Central CGST + SGST
within the state) Excise/Service tax
Inter State (Sale to Central Sales Tax + IGST
another State) Excise/Service Tax

Example 1: Company A in UP sold goods to a Company B in UP worth Rs. 10,000.


The GST rate is 18% comprising (9% CGST + 9% SGST). In this case Company A charges Rs. 1800
GST. From this amount, Rs. 900 will go to the central government and Rs. 900 will go to the UP
government.

Example 2: Company A in UP sold goods to a Company C in Gujarat worth Rs. 10,000.


The GST rate is 18% comprising (18% IGST). In this case Company A charges Rs. 1800 IGST and this
entire amount will go to the central government.

1.1.5 What is the anti-profiteering mechanism?

To prevent the possibility of prices going up and to make sure that the reduced tax burden on products
and services are passed on to consumers, the government has introduced an anti-profiteering clause in
the GST law. The anti-profiteering authority to be set up will act on complaints of profiteering and direct

2
a profiteering supplier to cut price, return the benefit of reduced tax burden to the buyer with 18%
interest, or recover such amount if the buyer cannot be identified or doesn’t make a claim. A profiteering
business could lose its GST registration, too.

1.1.6 How are decisions taken at the GST Council?

No decision can be taken in the Council without the concurrence of both the Union and the state
governments. Decisions will be taken by a 75% majority of the weighted votes of members present and
voting. The Union government’s vote has a weightage of one-third of the votes cast, while all states
together will have a weightage of two-thirds of the votes cast.

3
CHAPTER 2: MAJOR DIFFERENCES IN PRE & POST GST RULES

2.1 REGISTRATION

Old Regime Single registration PAN India


Each state from where business is done would be required to
GST Regime get registration under GST

2.2 RETURN FILING

VAT Laws: Depends upon state to state


Old Regime Service Tax: Return is filed every six months i.e. for the period
of April to September and October to March
GST Regime Returns have to be filed every month

2.3 TAX RATE

Old Regime Rates have been changed


GST Regime

2.4 INPUT TAX CREDIT

Input credit means at the time of paying tax on output, you can reduce the tax you have already
paid on inputs.

Say, you are a manufacturer –


tax payable on output (FINAL PRODUCT) is Rs 450
tax paid on input (PURCHASES) is Rs 300
You can claim INPUT CREDIT of Rs 300 and you only need to deposit Rs 150 in taxes.

Old Regime Credit of all taxes were not available seamlessly (excise, VAT,
service tax, etc)
GST Regime Available (subject to certain condition)

2.5 MATCHING OF GST RETURNS OF SELLER & BUYER

In GST if the invoice of the supplier does not match with the details of invoice of the recipient, the
credit shall not be allowed to that person.

Example: Company A purchases computers from Company B for Rs.2 Lakhs and Rs. 36000 GST
been charged. However if Company B in its GST return, states that goods provided are of Rs.1 Lac

4
only and GST on it is Rs.18000, then Company A will get credit worth only Rs.18000 and not Rs
36000. Hence both supplier & recipient should file returns properly.

2.6 REVERSE CHARGE

Reverse charge means the liability to pay tax is by the recipient (customer) of goods/services
instead of the supplier (service provider or seller).
Normally, the supplier (service provider) pays the tax on supply. In certain cases, the receiver
(customer) becomes liable to pay the tax, i.e., the chargeability gets reversed which is why it is
called reverse charge.
In India, this is a partly new concept introduced under GST. The purpose of this charge is to
increase tax compliance and tax revenues. Earlier, the government was unable to collect service
tax from various unorganized sectors like goods transport. Compliances and tax collections will
therefore be increased through reverse charge mechanism.

2.7 Working with Unregistered Supplier/Vendors

Reverse charge will be applicable in case CCIC is purchasing goods or taking services (greater than
Rs 5000 in a single day) from unregistered person. In such a case, the registered dealer has to
pay GST on the supply under reverse charge.

Old Regime No reverse charge was there on purchasing goods or taking services from
unregister supplier (person not registered under service/ VAT tax)
GST Regime In case CCIC is taking services or purchasing goods from unregistered supplier
(for value greater than Rs 5000, in a single day), than following would be the
impact on CCIC :

1. Raise tax invoice on yourself and pay GST on it. Also issue payment
voucher to the unregistered supplier.
For e.g. – for even tea/ pen/ pencil purchased from local vendor (not
registered under GST), tax invoice would be required to be raised
and GST would be required to be paid
2. This transaction would be required to be shown in the GST return

2.8 Compliance rating

Old Regime No such concept


GST Regime In GST compliance rating will be given to every taxpayer. Compliance rating
will be based on timely filling of return and payment of taxes and will be
shown on GSTN network. So, doing business might become difficult if the
compliance rating goes down

5
IMPACT If returns are not filed properly or in time, rating will be poor and will be
difficult to do business.

2.9 Invoice / documents

Old Regime In GST regime, invoice format are different from the one we are making in
GST Regime current regime.

New invoice format has been made. So from 1stjuly old formats should not
be used
IMPACT Change in formats to be issued to the client

6
CHAPTER3: Documents to be maintain GST regime

2.1 Tax Invoice – a tax invoice is required to be issued for making taxable supplies of goods or services
to B2B as well as B2C supplies and in case of reverse charge where you as the recipient is liable to
discharge the tax liability. Tax invoice is also required to be issued at the time of making inter state
stock transfers.

2.2 Bill of Supply- a bill of supply is required to be issued at the time of making exempt supplies of
goods or services i.e. or to be issued by a composition dealer

2.3 Receipt Voucher: a receipt voucher is required to be issued on receipt of advance payment with
respect to any supply of goods or services or both.

2.4 Refund Voucher: Where a receipt voucher has been issued for advance received in relation to
supply of goods or services but subsequently no supply is made and no tax invoice is issued in
pursuance thereof, then the registered person may issue to the person who had made the
advance payment, a refund voucher against such payment;

2.5 Payment Voucher: A recipient liable to pay tax under reverse charge shall issue a payment voucher
at the time of making payment to the supplier.

2.6 Debit and credit notes:

 Debit Note: A debit note is required to be issued in the following situations:

Where a tax invoice has been issued for supply of any goods or services or both and the
taxable value or tax charged in that tax invoice is found to be less than the taxable value or
tax payable in respect of such supply,

 Credit Note: A credit note is required to be issued in the following situations:

 Where a tax invoice has been issued for supply of any goods or services or both and the
taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax
payable in respect of such supply, or
 Where the goods supplied are returned by the recipient, or
 Where goods or services or both supplied are found to be deficient.

2.7 ISD invoice: An ISD invoice is required to be issued to distribute the credit amongst the branches
of the entity having same PAN.

2.8 Delivery Challan: A delivery challan Is required to be issued at the time of transporting goods
without the issue of tax invoice. A delivery challan may be issued for the purpose of:

 supply of liquid gas where the quantity at the time of removal from the place of business
of the supplier is not known,
 transportation of goods for job work,
 transportation of goods for reasons other than by way of supply like goods sent on
approval, stock transfer within the state etc.

7
2.9 Other relevant provisions

 Time-limit for issuance of Invoice in case of supply of service have been kept similar to the
existing provisions under Service Tax Law i.e. within 30 days from the date of supply of
services and for banking and financial institution, it would be 45 days.

 The rules also provide for issue of tax invoice with minimum details in special cases for ISD,
Banking company or a financial institution including a non-banking financial company, goods
transport agency and passenger transportation service.

8
Responsibilities of a GST registered person

4.1 Decide if the product/ service you are buying or selling is subject to levy of GST. Check the list of
goods and services exempted from GST. On the rest, the GST is leviable. The overarching principle
is GST is applicable on all made in India supplies of Goods or Services by a taxable person for
business purpose and imports.

4.2 Know who will pay the GST in a transaction? Generally, the supplier is liable to pay the tax. But
many exceptions to this rule exist. So, if you are buying from a firm not registered (condition
apply) with GST, you have to raise a self-invoice and pay tax under the reverse charge mechanism.

4.3 Charge GST on supplies: As a GST registered firm, you must charge GST on all taxable supplies at
the prevailing rate. Use Harmonised System (HS) of nomenclature along with the description for
classifying the goods.

4.4 File returns on time: The submission of correct and timely return is the most crucial responsibility
of a GST registered firm. A GST registered firm will have to provide information to GSTN in
electronic format at regular intervals. As a GST-registered business, you must submit your GST
returns one month after the month in which supplies took place. You need to file monthly,
quarterly and annual returns. Any wrong filing of return would result in blocking of money and
possible loss of business. Annual return is to be filed by December 31 of the following financial
year. Incomplete returns are considered invalid returns.

4.5 Pay tax and claim input tax credits: The GST charged and collected at the time of supplies is known
as the output tax which must be paid to the government through the GSTN. The GST paid by you
on business purchases is known as input tax. You can claim input tax credit on such purchases if
your firm satisfies the conditions for doing so.

4.6 Keep proper business and accounting records: You need to keep all business and accounting
records for at least five years. This requirement remains even if your business ceased or is de-
registered from GST. The accounts and records must be maintained in electronic form.

4.7 Inform GST authority of changes: You need to inform the GST authority within 30 days after any
change in your business circumstances. These changes include: Change in business registered
address or mailing address, Change in business name, Change in business constitution or
ownership etc.

4.8 Reconcile account at time of de-registration: When your GST registration is cancelled, you need
to account for GST on business assets held on the last day of registration. These assets include
inventories, fixed assets, non-residential properties and goods imported under the various GST
schemes.

4.9 You must ensure that not only you but firms involved in the business transactions with you file
returns and pay tax on time.

9
CHAPTER 5: Checklist - GST to be paid in reverse charge

5.1 Taxable services provided or agreed to be provided by any person who is located in a non-taxable
territory and received by any person located in the taxable territory other than non-assessee
online recipient

5.2 Service provided by GTA in respect of transportation of goods.

5.3 Legal services provided by an individual advocate or a form if advocates or an arbitral tribunal

5.4 Sponsorship service

5.5 Service provided by a govt or local authority

5.6 Service provided by a director of the co or body corporate to said co. or body corporate

5.7 Services by an insurance agent to any person carrying on insurance business

5.8 Services provided or agreed to be provided by a recovery agent to a banking company or a

5.9 financial institution or a non-banking financial company

5.10 Services by way of transportation of goods by a vessel from a place outside India up to the customs
station of clearance in India

5.11 Transfer or permitting the use or enjoyment of a copyright

5.12 Radio taxi or Passenger Transport Services provided through electronic commerce operator

10
CHAPTER 6: Checklist - Items on which Input tax credit is not allowed

6.1 Taxable services provided or agreed to be provided by any person who is located in a non-taxable
territory and received by any person located in the taxable territory other than non-assessee
online recipient

6.2 Motor vehicles and conveyances except the below cases

6.3 Such motor vehicles and conveyances are further supplied i.e. sold

6.4 Transport of passengers

6.5 used for imparting training on driving, flying, navigating such vehicle or conveyances

6.6 Transportation of goods

6.7 food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic
surgery

But if the goods and/or services are taken to deliver the same category of services or as a part of
a composite supply, credit will be available

Example: Mr. Dev purchases cosmetic creams to supply it to a customer, then credit of ITC paid
on purchases will be allowed.

6.8 Sale of membership in a club, health, fitness centre.

6.9 rent-a-cab, health insurance and life insurance except the following:
 Government makes it obligatory for employers to provide it to its employees
 goods and/or services are taken to deliver the same category of services or as a part of a
composite supply, credit will be available
Example: Mr. Dev takes the service of rent-a-cab to supply to Mr. Manoj, a customer, then credit
of ITC paid on purchases will be allowed.

6.10 travel benefits extended to employees on vacation such as leave or home travel concession.

6.11 Works contract service for construction of an immovable property (except plant & machinery or
for providing further supply of works contract service)

6.12 Goods and/or services for construction of an immovable property whether to be used for personal
or business use

6.13 Goods and/or services where tax have been paid under composition scheme

6.14 Goods and/or services used for personal use


6.15 Goods or services or both received by a non-resident taxable person except for any of the goods
imported by him.

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6.16 Goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples

6.17 ITC will not be available in the case of any tax paid due to non -payment or short tax payment,
excessive refund or ITC utilized or availed by the reason of fraud or willful misstatements or
suppression of facts or confiscation and seizure of goods.

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Chapter 6: GST Checklist

7.1 Registration

 Have you done the Migration to GST in all States and submitted requisite documents
 Have you identified locations for which fresh registration is to be sought.
7.2 Transition

 Have you identified the services on which service tax is payable under reverse charge, to
ensure its payment by June 30
 Have you initiated the process to collate all vendor invoices to capture correct credit in the
last return

7.3 DOCUMENTATION & COMPLIANCES

 Have you obtained vendors and customer's GSTN numbers


 Have you sent communications to your vendors and customers and discussed the related
changes to their business
 Have you discussed the clause relating to GST withholding till the time you get the credit and
incorporated the relevant clause in agreements/purchase orders
 Have you incorporated tax change clauses in your customer contracts and vendor contracts
 Have you finalized formats for invoices and other documents such as delivery challan, debit
credit notes etc
 Have you communication the situation types for issue of various documents to users [such
Tax invoice for supply with GST including transfer to other state warehouse etc.
 Have you done IT changes to capture credits in appropriate codes
 Have you communicated the blocked credits [items on which no credit is available under GST]
to users

7.4 Transactions

 Have you identified the HSN and SAC for your outward supplies [both goods and services]
 Have you identified the GST rates applicable on your supplies
 Have you communicated the process and requirements to users for regular transactions [such
as supply of goods services with GST, stock transfers, FOC supplies etc]
 Have you communicated the valuation methodology to related and unrelated parties
 Have you communicated the process and methodology to issue debit/credit notes to users
 Have you communicated the mechanics of set off of credits to users

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