Theintroduction of the Goods and Services Tax (GST) is a very significant step inthe field of indirect tax reforms in India. By amalgamating a large number ofCentral and State taxes into a single tax, GST will mitigate ill effects ofcascading or double taxation in a major way and pave the way for a commonnational market.
From the consumer’s point of view, the biggest advantage wouldbe in terms of reduction in the overall tax burden on goods, which is currentlyestimated to be around 25%-30%. It would also imply that the actual burden ofindirect taxes on goods and services would be much more transparent to theconsumer. Introduction of GST would also make Indian products competitive inthe domestic and international markets owing to the full neutralization ofinput taxes across the value chain of production and distribution. Studies showthat this would have a boosting economy. The government has introduced GST witheffect from 1st July 2017. Last but not the least, this tax, because of itstransparent and self-policing character, would be easier to administer. Itwould also encourage a shift from the informal to formal taxation system inIndia.”GST is a tax on goods and services withvalue addition at each stage having comprehensive and continuous chain ofset of benefits from the producer’s / service provider’s point up to theretailers level where only the final consumer should bear the tax.
“OBJECTIVESOF THE STUDY:-· To study the benefits of GST in India· To know the working mechanism of GSTN RESEARCHMETHODOLOGY:- This present study is purely secondary data based, and was done with thehelp of journals, websites, newspapers etc.REVIEW OF LITERATURE: Anshu Jain 1(2013) Goods and ServicesTaxis 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 respectof the tax remittedat previous stages.It is basicallya tax on final consumption.
In simpleterms, GST may be definedasa tax on goods and services, whichis leviable at each point of sale or provision of service,in which at the time of sale of goods or providing the servicesthe seller or service providermay claim the input credit of tax which he has paid while purchasing the goods or procuring the service.India, being one of the largestdemocracies in the world, has to follow the convention of welfarestate. 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 Malaysiahas called many argumentsfrom various parties including academics, professionals and the nation (wouldbecome 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 expectedto suggest a proposal to the relevant authorities on the social and economyimpacts on those groups so that the authorities could develop strategies in order to reduce the financialburden 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 countryin order to facilitate low income earners to survive in competitive environment. R.Sithanamoorthy 3(2009) This articleexamines the reach and effectiveness of a nationwide VAT publicity campaign carried out by the government of India with the aim of educatingthe of VAT, and exploresthe perception that stakeholders in a developing economyhave of VAT. These aspects are examined in the contextof the nationwide VAT publicity campaign initiated by the centralgovernment beforethe introduction of stateVAT, which graduallystarted from 1 April 2005. A metropolitan city, namely Chennai,the capital of the stateof Tamil Nadu, has been selected as a representative sample to analyzethe study objectives.
The study revealed that the penetration of the central government’s publicitycampaign on VAT was indeed conclusion applied to theWhite Paper VAT. RESEARCH GAP:Though there are studies in present GST in many countries as the concept newand of recent applicability this paper is an maiden effort on to know theworking mechanism of GSTN in India.TAXESSUBSUMED UNDER PRESENT GSTADVANTAGES OF GST:-·Simple tax system.
·Reduction in prices of goods andservices due to elimination of cascading. ·Uniform prices throughout thecountry. ·Transparency in taxation system.· Increase in employmentopportunities.Benefits to Traders:Ø Reducing the multiple taxesØ To mitigate the cascading or double taxation.Ø Neutralization oftaxes for benefiting exports.
Ø Develop of commonnational market – one nation one tax.Ø Simple tax regime,fewer rates and exemptions.Benefits to Central/StateGovernment:· Unificationand single common national market to boost Foreign Investment and “MakeinIndia” campaign.· Boostexport/manufacturing activity and to create more employment.
· Toeradicate poverty and to increase the GDP growth.· Improvethe overall investment climate in the country in order to benefit the statesand their developments.· UniformSGST and IGST rates.
· Toreduce the tax evasion. Reduce the compliance cost and to reduce themaintenance of multiple records.DISADVANTAGEOF GST:-· Lack of trained staff.· Multiple registration increases compliances and cost· Lack of clear mechanism to control tax.· Hard to estimate the exact impact on GST · Maintaining invoices and registers.· Cooperation needed between state andcentral government.
· Separate registration for each place of business.· Network problem and connectivity issues inrural areas.· It would lead to inflation.· Systematic understanding of e-filing.· Difficulty in electronic records maintenance.
· Settlement and compensation problem· Availing Input Tax Credit GSTNWOKING MECHANISM:- Goods andServices Tax Network (GSTN) is a Section 8 (under new companies Act, not forprofit companies are governed under section 8), non-Government, private limitedcompany. It was incorporated on March 28, 2013. The Government of India holds24.5% equity in GSTN and all States of the Indian Union, including NCT of Delhiand Puducherry, and the Empowered Committee of State Finance Ministers (EC),together hold another 24.5%. Balance 51% equity is with non-Governmentfinancial institutions.
The Company has been set up primarily to provide ITinfrastructure and services to the Central and State Governments, tax payersand 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 croreonly). STRUCTURE OF GSTN: This GST System Project is a uniqueand complex IT initiative. It creates a common interface between the tax payer,the centre and the states. Before this Special purpose vehicle the Centre andthe States were working separately and they do not share the information orthere was no sharing of data between these portals. They follow different laws, rules regulationsand procedures. Now, under the GSTN it has been more integrated and simplerthrough a data interface and IT system enabled net work connectivity.
Integrating them for GST implementation wascomplex as involved integrating the entire indirect tax ecosystem so as tobring all the tax administrations (Centre, State and Union Territories) to thesame level of IT maturity with uniform formats and interfaces for taxpayers andother 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 ITInfrastructure and Service back bone which enables capture, processing andexchange of information amongst the stakeholders (including tax payers, Statesand Central Governments, Accounting Offices, Banks and RBI). After a large rounds of deliberations, this Special Purpose Vehicle for implementing theGST System Project was created which would enable efficient and reliableprovision 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%) afterconsidering key parameters such as independence of management, strategiccontrol of Government, flexibility in organizational structure, agility indecision making and ability to hire and retain competent human resources.CONSTITUTION OF BOARD OF DIRECTORSThrough joint approval appointment of directors are done and relaxationis granted to enable deputation of Government officers to the GSTN SPV forexercise of strategic control and for bringing in necessary domain expertise.GSTN SPV is a self- sustaining revenue model, where itlevies user charges on the tax payers and the tax authorities availingservices. It is an exclusive national agency responsible for deliveringintegrated indirect Tax related services involving multiple tax authorities. Itwas funded through a one- time non- recurring Grant- in aid of Rs. 315 crorefrom the Central Government for its setting up and functioning of the SPV for athree year period after incorporation.
It is registered as a non-government,not-for-profit, private limited company under section 8 (under new companiesAct, not for profit companies are governed under section 8) of the CompaniesAct 1956 with the following equity structure: Central Government 24.5% State Governments & EC 24.5% HDFC 10% HDFC Bank 10% ICICI Bank 10% NSE Strategic Investment Co 10% LIC Housing Finance Ltd 11% Funding of GSTN year Funds released by GOI Actual expenditure by GSTN 2013-14 3,03,65,612 3,03,65,612 2014-15 20,00,00,000 13,80,31,415 2015-16 120,93,00,000 45,27,97,027 Total 143,96,65,612 62,11,94,054 ROLE OF GSTN IN PAYMENTOF GST BY TAXPAYERSAll challans are prepared by taxpayers on the GSTportal only quoting their TIN nos. Whenthis format is done registration is connected under various tax heads andsub-heads. The tax payer has the option to make payment through online of theagency banks (i.
e. banks authorized by RBI to collect GST on their behalf) fromthe dropdown menu and after that he will be taken to the website of chosen bankto make payment by providing user ID and password of bank. After completion ofpayment, he will be brought back to GST portal from where he can download thepaid 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 therelevant bank for ‘Over the Counter Payment’ (OTC).
The bank after realisingthe payment will transfer the money to RBI and send confirmation of payment toGST Portal for accounting.ROLE OF GSTN WITH RESPECTTO FILING OF RETURNSUnder GST, there will be common return for CGST, SGSTand IGST, eliminating the need to file separate tax returns with Central andstate GST authorities. Checking of claim of Input Tax Credit (ITC) is one ofthe fundamental pillars of GST, for which data of Business to Business (B2B)invoices have to be uploaded and matched. The Common GST Portal created andmanaged by GSTN matches on the basis of invoice level data filed as part ofreturn by all taxpayers. Similar exercise is done for inter-state supplies wheregoods or services moves from the state of origin to the state of consumptionand so will the taxes. The claim of IGST and its utilization will be settledbased on returns filed at the Common GST portal.ROLE OF GSTN WITH RESPECTTO REGISTRATION APPLICATIONThe registration of taxpayers is common under Centraland State GST and hence one place of filing application for the same i.
e. theCommon GST portal. The application so received is checked for its completenessby 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, theregistration application is shared with respective central and state taxauthorities. The Common GST Portal, acts as a single interface for alltaxpayers from any part of the country.
Only in case where a taxpayer is pickedup for scrutiny or audit, and such cases are expected to be small in number, hewill interface with the respective tax authority issuing the notice under theAct. For all other cases, which is expected to be around 95%, the Common GSTPortal will be the only taxpayer interface.CONCLUSIONHence it is helpful for creating efficient IT infrastructure in INDIA. Privacy is maintained in GSTN portal.
Transparency in maintainingthe accounts helps to prevent fraudulent activities. No one access others datain GSTN portal. It helps in removing the cascading effect. It prevents taxevasion hence it helpful for the government to collect tax without any issues.1 Anshu Jain, An EmpiricalAnalysis On Goods And Service Tax In India: PossibleImpacts, Implications And Policies, International Journal of Research, Surveys and Research,Volume 2 Issue 1 January2013 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 Compaignon ValueAdded Tax in India