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GOODS AND SERVICE TAX (GST) Seminar Compendium Editor–in–Chief: Rev. Dr. Daniel Fernandes, SJ. ii GOODS AND SERVICE TAX (GST) Editor–in–Chief: Rev. Dr. Daniel Fernandes, SJ. Editors CMA. Ravidarshini Dr. Shubhra Rahul Dr. Mohan P.Philip Dr. Raja Jebasingh POST GRADUATE AND RESEARCH DEPARTMENT St. Joseph’s College of Commerce (Autonomous) 163, Brigade Road, Bangalore–560 025 iii Editorial Team Rev. Dr. Daniel Fernandes, SJ. Editor-In-Chief Editors: CMA. Ravidarshini Dr. Shubhra Rahul Dr. Mohan P. Philip Dr. Raja Jebasingh Edited & Published By: Post Graduate and Research Department, St. Joseph’s College of Commerce (Autonomous), 163, Brigade Road, Bangalore – 560 025, Karnataka Email: [email protected] Copyright@2015: Rev. Dr. Daniel Fernandes, SJ. St. Joseph’s College of Commerce (Autonomous), Bangalore – 560 025. Published: 2015 ISBN: 978-81-924180-4-9 Disclaimer: Responsibilities for the content of the full papers included in the publication remain with these respective authors. Typesetting and Printed at iv PREFACE I have great pleasure in publishing a compendium of proceedings of the national seminar organized by the post graduate department of Commerce on ‘Goods and Services Tax Bill’. The proposed Goods and Service Tax Bill or GST Bill, officially referred to as the Constitution (One Hundred and Twenty-second Amendment) Bill, 2014 is expected to reform the regulatory framework that governs the indirect tax regime within India. By the implementation of GST, the central government is hoping to create a common Indian market and thereby to reduce the cascading effect of tax on the cost of goods and services. GST bill is expected to impact the present tax structure, tax incidence, tax computation, credit utilization and reporting, which may lead to a complete overhaul of the current indirect tax system. Moreover, GST is expected to bring forth far-reaching impact on almost all aspects of business operations within the country, including pricing of products and services; supply chain optimization; IT, accounting and tax compliance systems. The current multiple tax regime is widely criticized as unfairly skewed against producers. Most administrators and producers disparage the existing tax law because of its complexities, administration and compliances costs. They believe that its replacement by GST would not only be desirable but also imperative in the emerging economic environment and will make the tax procedures more fair, transparent and efficient. The GST Bill will subsume various Central indirect taxes, including the Central Excise Duty, Countervailing Duty, Service Tax, Additional Excise duty, Service tax, Additional Custom duty and Special Additional duty etc. It will also subsume State value added tax (VAT), State level taxes like, VAT or sales tax, Central Sales tax, Entertainment tax, Entry tax, Purchase tax, Luxury tax and Octroi etc. The Bill also proposes to establish a GST Council which is supposed to optimize tax collection for goods and services by the State and Centre. The GST Council will be the body that decides the taxes that are to be levied by the Centre, States and local bodies; which goods and services will be subjected to GST; and the basis and the rates at which GST will be applied. The Council will be headed by the Union Finance Minister (as Chairman), the Union Minister of State in charge of revenue or Finance, and the Minister in charge of Finance or Taxation or any other, nominated by each State government. In spite of great optimism from the ruling party about the much-hyped GST bill as a key driver which is expected to propel India’s economic growth to double digits, the Finance Ministry has already missed three of its deadlines to come out with an acceptable framework due to the resistance from the opposition members. In fact, it is reported that the proposed GST bill has not completed even the beta stage. Issues associated with the division of taxation powers v between the central government and states have yet to be resolved. Some questions that are raised in this context are: how will the goods and services tax (GST) work in India?- how is it different from the value added tax (VAT)?, how is the proposed GST framework different from the current scenario?- what are the pros and cons of implementing it?- why is there such fierce opposition to it before being implemented?- how is it going to affect various sections of the society?- At this juncture it is appropriate to open up an opportunity for discussions and deliberations about the probable impact of the proposed GST bill among the academicians. In this collection of articles, an attempt is made to present the role of GST as a game changer in the process of economic progress of the nation. All the paper presenters, with their vision and outlook, have made it possible in compiling these articles. I record my sincere thanks to all contributors. Dr. Daniel Fernandes SJ Principal vi CONTENTS 1. A Benefit Study of Petroleum Inclusion In GST Bill - Sonia Lobo, Akarsha Srivastava 1 2. The Impact of Goods and Service Tax (GST) on End Consumers of Manufacturing - Alamelu. L. & Sharon David 9 3. GST In India: A Swot Analysis - Anbarasi A & Rakshitha V 18 4. An Overview of Goods and Service Tax - Reduction of Tax Burden - Sanjana S I & Anson Greg Gonsalves 27 5. GST and its Provisions – An Overview - Arun Raj.R, Swetha.N, Robin Samuel 38 6. GST: A Study on the Treatment of Inter- State Transactions in India - Ashwini G Hadapad 45 7. Impact of GST on Various Sectors and Challenges for GST Implementation - Dr. N. Bagyalakshmi 53 8. A Study on GST and its Impact on Government and Retail Sector – An Analysis - Deepika Bendapudi & Sheba M Sam 60 9. A Study on Impact of Goods and Service Tax (GST) on Revenue of the State - Eliza Sophia & Maria Goretti Chaithanya. K 69 10. The Effect of GST on Small Entrepreneurs and Small Traders - Nikhita K. Murthy 76 vii 11. Impact of GST on Imports - Vinitha Bhat & Rini Rc 88 12. GST: Transition in the Indian Pharma Sector - Anola Maria DSouza & Sophia Maria Albina K. 96 13. A Comparative Analysis of Present Indirect Tax System and GST in India - Sonam dhondup & Varsha V 104 14. Title: Implementation of GST in India and its Impact on SME Sector - Vijayalakshmi S 113 15. The Impact of the Goods and Service Tax on the Hospitality Industry - Deena M. Prabhu & Vinod Kumar. G 120 16. GST and its Impact on Tax Burden - Ruth Priyanka Immanuel & Winston Terence 128 viii A BENEFIT STUDY OF PETROLEUM INCLUSION IN GST BILL Sonia Lobo, Akarsha Srivastava Abstract The paper aims at studying the inclusion of Petroleum under GST Bill in India. The paper begins with introduction and tries to highlight the objectives of the study. After a brief introduction on GST there will be a study on analysis of GST rates on petroleum product of the two countries, Australia and Canada. The third section broaches as to why GST should be levied on petroleum in India. Section four concludes the paper with a short summary. The secondary data collected is from year 2000 and the outcome of the paper is to include Petroleum in GST bill. The paper focuses on scholarly articles and current research so as to keep theory as close as possible to reality. Key words –GST, input tax credit, CGST, SGST. Introduction Goods and Service Tax (GST) is a comprehensive tax levied on manufacturing, sales and consumption of goods and services at a national level. 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 theailer’s ret level where only the final consumer should bear the tax. In 2000, the discussionGST on Bill was started. During the Central Budget of 2007-08 it was announced to beroduced int on April 1, 2010, but the Empowered Committee missed its deadline. In 2014, Constitution Amendment Bill introduced in the Lok Sabha and taken up for discussion. On 6 May, , 2015Lok Sabha passed the bill and it is introduced in Rajya Sabha with minor amendments andis stillit pending in Rajya Sabha for the winter session of the Parliament to be passed. ____________________________________________________________________ Sonia Lobo, Student 2nd year MIB, Akarsha Srivastava, Student 2nd year MIB, St. Joseph’s College of Commerce, Bangalore 1 Goods and Service Tax (GST) GST is a simple, transparent and efficient system of indirect tax, introduced to over 140 countries across the globe. It was first introduced in France in 1954. Many countries have a unified GST system, whereas in our country a dual GST is proposed wherein a central goods and services tax (CGST) and a state goods and services tax (SGST) will be levied in the taxable value of the transaction. The CGST will subsumecentral excise duty (Cenvat), services tax, additional duties of customs at the Central Level and value-added tax, central sales tax, entertainment tax, luxury tax, octroi, lottery taxes, electricity duty, state surcharges related to supply of goods and services and purchase tax at theState Level. GST has a vast impact on all the sectors such as Food and Industry, Housing and Construction Industry, FMCG, Rail Sector, Financial Services, Information Technology, MSME. We are only taking in consideration the impact of including petroleum under GST Bill. Literature Review Pigeon (2005) studied “Federal taxes on Gases and Heating Fuel” and explored that Gases and Heating fuel are ‘inelastic goods’. In Canada, at t he Federal Level, the three taxes are levied on oil namely Royalty tax, Excise tax and Sales tax.. Unli ke the Excise tax, GST/HST is calculated as a percentage and therefore increases or decreases w ith every increase and decrease in price and/or other taxes.
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