introduction of the Goods and Services Tax (GST) is a very significant step in
the field of indirect tax reforms in India. By amalgamating a large number of
Central and State taxes into a single tax, GST will mitigate ill effects of
cascading or double taxation in a major way and pave the way for a common
national market. From the consumer’s point of view, the biggest advantage would
be in terms of reduction in the overall tax burden on goods, which is currently
estimated to be around 25%-30%. It would also imply that the actual burden of
indirect taxes on goods and services would be much more transparent to the
consumer. Introduction of GST would also make Indian products competitive in
the domestic and international markets owing to the full neutralization of
input taxes across the value chain of production and distribution. Studies show
that this would have a boosting economy. The government has introduced GST with
effect from 1st July 2017. Last but not the least, this tax, because of its
transparent and self-policing character, would be easier to administer. It
would also encourage a shift from the informal to formal taxation system in
“GST is a tax on goods and services with
value addition at each stage having comprehensive and continuous chain of
set of benefits from the producer’s / service provider’s point up to the
retailers level where only the final consumer should bear the tax.”
OF THE STUDY:-
To study the benefits of GST in India
To know the working mechanism of GSTN
This present study is purely secondary data based, and was done with the
help of journals, websites, newspapers etc.
REVIEW OF LITERATURE:
Anshu Jain 1(2013) Goods and Services
is a broad based and a single comprehensive tax levied on goods and services consumed in an economy.
GST is levied at every stage of the production-distribution chain with applicable set offs in respect
of the tax remitted
at previous stages.
It is basically
a tax on final consumption. In simple
terms, GST may be defined
a tax on goods and services, which
is leviable at each point of sale or provision of service,
in which at the time of sale of goods or providing the services
the seller or service provider
may claim the input credit of tax which he has paid while purchasing the goods or procuring the service.
India, being one of the largest
democracies in the world, has to follow the convention of welfare
state. This paper puts an attempt to explore the impacts,
implications and policies of introduction of GST in India.
Mohd Rizal Palil2 (2011) the introduction of GST in Malaysia
has called many arguments
from various parties including academics, professionals and the nation (would
become the taxpayers) on how GST affect goods prices increase or decrease. Data was collected through a structured survey among middle income earners. This study is expected
to suggest a proposal to the relevant authorities on the social and economy
impacts on those groups so that the authorities could develop strategies in order to reduce the financial
burden of middle income earners in Malaysia if GST is implemented. This study is also expected to make a contribution to the tax administration and policy developments literature by demonstrating the impact of a new tax policy in a developing country
in order to facilitate low income earners to survive in competitive environment.
R.Sithanamoorthy 3(2009) This article
examines the reach and effectiveness of a nationwide VAT publicity campaign carried out by the government of India with the aim of educating
the of VAT, and explores
the perception that stakeholders in a developing economy
have of VAT. These aspects are examined in the context
of the nationwide VAT publicity campaign initiated by the central
the introduction of state
VAT, which gradually
started from 1 April 2005. A metropolitan city, namely Chennai,
the capital of the state
of Tamil Nadu, has been selected as a representative sample to analyze
the study objectives. The study revealed that the penetration of the central government’s publicity
campaign on VAT was indeed conclusion applied to the
White Paper VAT.
Though there are studies in present GST in many countries as the concept new
and of recent applicability this paper is an maiden effort on to know the
working mechanism of GSTN in India.
SUBSUMED UNDER PRESENT GST
ADVANTAGES OF GST:-
·Simple tax system.
·Reduction in prices of goods and
services due to elimination of cascading.
·Uniform prices throughout the
·Transparency in taxation system.
· Increase in employment
Benefits to Traders:
Ø Reducing the multiple taxes
Ø To mitigate the cascading or double taxation.
Ø Neutralization of
taxes for benefiting exports.
Ø Develop of common
national market – one nation one tax.
Ø Simple tax regime,
fewer rates and exemptions.
Benefits to Central/State
and single common national market to boost Foreign Investment and “Make
export/manufacturing activity and to create more employment.
eradicate poverty and to increase the GDP growth.
the overall investment climate in the country in order to benefit the states
and their developments.
SGST and IGST rates.
reduce the tax evasion. Reduce the compliance cost and to reduce the
maintenance of multiple records.
Lack of trained staff.
Multiple registration increases compliances and cost
Lack of clear mechanism to control tax.
to estimate the exact impact on GST
Maintaining invoices and registers.
Cooperation needed between state and
Separate registration for each place of business.
Network problem and connectivity issues in
It would lead to inflation.
Systematic understanding of e-filing.
Difficulty in electronic records maintenance.
and compensation problem
Input Tax Credit
Services Tax Network (GSTN) is a Section 8 (under new companies Act, not for
profit companies are governed under section 8), non-Government, private limited
company. It was incorporated on March 28, 2013. The Government of India holds
24.5% equity in GSTN and all States of the Indian Union, including NCT of Delhi
and Puducherry, and the Empowered Committee of State Finance Ministers (EC),
together hold another 24.5%. Balance 51% equity is with non-Government
financial institutions. The Company has been set up primarily to provide IT
infrastructure and services to the Central and State Governments, tax payers
and other stakeholders for implementation of the Goods and Services Tax (GST).
The Authorized Capital of the company is Rs. 10, 00,00,000 (Rupees ten crore
STRUCTURE OF GSTN:
This GST System Project is a unique
and complex IT initiative. It creates a common interface between the tax payer,
the centre and the states. Before this Special purpose vehicle the Centre and
the States were working separately and they do not share the information or
there was no sharing of data between these portals. They follow different laws, rules regulations
and procedures. Now, under the GSTN it has been more integrated and simpler
through a data interface and IT system enabled net work connectivity. Integrating them for GST implementation was
complex as involved integrating the entire indirect tax ecosystem so as to
bring all the tax administrations (Centre, State and Union Territories) to the
same level of IT maturity with uniform formats and interfaces for taxpayers and
other external stakeholders. Besides,
GST being a destination based tax, the inter- state trade of goods and services
(IGST) needed a robust settlement mechanism amongst the States and the Centre. Only with a strong back bone in IT
Infrastructure and Service back bone which enables capture, processing and
exchange of information amongst the stakeholders (including tax payers, States
and Central Governments, Accounting Offices, Banks and RBI). After a large rounds of deliberations, this Special Purpose Vehicle for implementing the
GST System Project was created which would enable efficient and reliable
provision of services in a demanding environment, the EG recommended a non-
Government structure for the GSTN SPV with Government equity of 49% (Centre – 24.5% and States – 24.5%) after
considering key parameters such as independence of management, strategic
control of Government, flexibility in organizational structure, agility in
decision making and ability to hire and retain competent human resources.
CONSTITUTION OF BOARD OF DIRECTORS
Through joint approval appointment of directors are done and relaxation
is granted to enable deputation of Government officers to the GSTN SPV for
exercise of strategic control and for bringing in necessary domain expertise.
GSTN SPV is a self- sustaining revenue model, where it
levies user charges on the tax payers and the tax authorities availing
services. It is an exclusive national agency responsible for delivering
integrated indirect Tax related services involving multiple tax authorities. It
was funded through a one- time non- recurring Grant- in aid of Rs. 315 crore
from the Central Government for its setting up and functioning of the SPV for a
three year period after incorporation. It is registered as a non-government,
not-for-profit, private limited company under section 8 (under new companies
Act, not for profit companies are governed under section 8) of the Companies
Act 1956 with the following equity structure:
State Governments &
LIC Housing Finance Ltd
Funding of GSTN
Funds released by GOI
Actual expenditure by GSTN
ROLE OF GSTN IN PAYMENT
OF GST BY TAXPAYERS
All challans are prepared by taxpayers on the GST
portal only quoting their TIN nos. When
this format is done registration is connected under various tax heads and
sub-heads. The tax payer has the option to make payment through online of the
agency banks (i.e. banks authorized by RBI to collect GST on their behalf) from
the dropdown menu and after that he will be taken to the website of chosen bank
to make payment by providing user ID and password of bank. After completion of
payment, he will be brought back to GST portal from where he can download the
paid challan, which is generated by GST System on confirmation from the Bank.
The next option is through printing the challan and presents the same in the
relevant bank for ‘Over the Counter Payment’ (OTC). The bank after realising
the payment will transfer the money to RBI and send confirmation of payment to
GST Portal for accounting.
ROLE OF GSTN WITH RESPECT
TO FILING OF RETURNS
Under GST, there will be common return for CGST, SGST
and IGST, eliminating the need to file separate tax returns with Central and
state GST authorities. Checking of claim of Input Tax Credit (ITC) is one of
the fundamental pillars of GST, for which data of Business to Business (B2B)
invoices have to be uploaded and matched. The Common GST Portal created and
managed by GSTN matches on the basis of invoice level data filed as part of
return by all taxpayers. Similar exercise is done for inter-state supplies where
goods or services moves from the state of origin to the state of consumption
and so will the taxes. The claim of IGST and its utilization will be settled
based on returns filed at the Common GST portal.
ROLE OF GSTN WITH RESPECT
TO REGISTRATION APPLICATION
The registration of taxpayers is common under Central
and State GST and hence one place of filing application for the same i.e. the
Common GST portal. The application so received is checked for its completeness
by the GST portal, and it carries out validation of data like PAN from CBDT,
CIN/DIN from MCA and Aadhaar of promoters. After completion of validation, the
registration application is shared with respective central and state tax
authorities. The Common GST Portal, acts as a single interface for all
taxpayers from any part of the country. Only in case where a taxpayer is picked
up for scrutiny or audit, and such cases are expected to be small in number, he
will interface with the respective tax authority issuing the notice under the
Act. For all other cases, which is expected to be around 95%, the Common GST
Portal will be the only taxpayer interface.
Hence it is helpful for creating efficient IT infra
structure in INDIA. Privacy is maintained in GSTN portal. Transparency in maintaining
the accounts helps to prevent fraudulent activities. No one access others data
in GSTN portal. It helps in removing the cascading effect. It prevents tax
evasion hence it helpful for the government to collect tax without any issues.
1 Anshu Jain, An Empirical
Analysis On Goods And Service Tax In India: Possible
Impacts, Implications And Policies, International Journal of Research, Surveys and Research,
Volume 2 Issue 1 January
2 Mohd Rizal Palil, Doctoral dissertation The Impacts Of Goods And Services Tax (Gst) On Middle Income Earners In Malaysia.
3 R. Sthanumoorthy ,Effectiveness of Publicity Compaign
on ValueAdded Tax in India