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Essay on GST for Students | Goods and Service Tax Essay, Benefits and Laws of GST

February 13, 2024 by Prasanna

Essay on GST: GST or Goods and Services Tax, India is a tax based on the usage of goods or services across India. GST is an indirect tax replacing the previous indirect taxes imposed on the goods and services. Direct taxes such as income tax, corporate tax, etc., are not influenced by the GST.  Everything you need to know about GST essay writing, Essay on GST in English, Essay GST.

Essay on Goods and Services Tax (GST)

Goods and Services Tax was introduced in 1999, by the government of India when Atal Bihar Vajpayee was the Prime Minister of India. Moreover, a board was set up by Prime Minister under the Finance Minister of West Bengal, Asim Dasgupta to express a GST model. Since then, the GST could not be executed, until lately by the NDA (National Democratic Alliance)  government on 1st July 2017 led by the Bhartiya Janata Party or in short BJP.

Goods and Services Tax is a necessary indirect tax improvement in India. Ere GST, India possessed many indirect taxes imposed respectively by both central and state governments. It resulted in a high volume of taxes, also requiring a high amount of supplies for their stock and managing records.

A combination of both state and central taxes into one will forego many difficulties of the former tax system such as recurring taxations, cascading of taxes, loss of time and sources, etc. Furthermore, GST counts the whole of India as one combined market, consequently encouraging foreign investment. Read an essay about GST.

Essay on GST With Headings

By reducing the cascading of tax at numerous levels, GST offers the goods more affordable for the listed dealers as well as the end customer and hence leading to the financial growth of the country. India is a developing country, still coping with the matter of unemployment. GST is demanded to create new job opportunities in the area of taxation and accountancy, along with openings in the industrial sector.

A centralized GST has emerged in the exclusion of different check posts through the interterritorial transport of goods. The travel time of regional goods vehicles has decreased considerably by 20% due to the lack of check posts. Also, the involvement of multiple parties in GST will increase the assent level.

GST is a big step to lead India into a more transparent and corruption-free taxation system. The GST rules are formed such that it is advantageous for both the sellers and the buyers. India required a better tax improvement on indirect tax like the Goods and Services Tax. GST puts India to a better place to accommodate in the international market. Also, by inducing Small and Medium Enterprises (SMEs) and another organized sector, under it, GST heads to a more enduring Indian industrial area and an enriched economy.

Laws of GST

GST includes a total of 5 laws which are:

• Central GST Law
• State GST Law
• Union Territory GST Law
• Integrated GST Law
• The Goods and Services (Compensation To State) Law

Here, Central GST Law administers with the combination of all taxes on goods and services, their compilation and organizations. Similarly, State GST Law governs at the state level (29 states and 2 Union Territory: Delhi and Puducherry which have their legislative assembly ). Union Territory GST consolidates the stipulations of CGST and practices it to the outstanding Union territories and Indian territories which are away from the regional waters.

Integrated GST administers with import and business between 2 states or union territory. Any disagreement arising under IGST will be resolved by the Centre or by any state authorized by the Centre. Lastly, The Goods and Services Law administers with managing a payment process for paying the states which incited a loss for the first five years of implementation of GST.

GST is a progressive tax, it will have various tax rate for many goods because an alike tax rate on all goods, for example, a toothbrush and a Mercedes car is not possible and not supported as the relevant customer group is different for distinct products.

Benefits of GST

• The primary benefit of GST is that it will decrease the likelihood of tax manipulation by the officials as the customer has to pay only one tax collectively rather than multiple taxes levied in the previous tax system.
• This taxation method is more transparent. It will continuously abolish expansion and various requirements like the tax-return will serve the state also.
• Customers will be benefitted the most since they are considered to be the King.

Disadvantages of GST

• Many thoughts have come stating GST is an old taxation law fulfilled with a new name and some new requirements. GST is divided between CGST and SGST. It may direct to conflict between state and Centre.
• Furthermore, many products will be imposed higher as the tax will be charged on some commodities on which there were no taxes before. Some of the product’s tax percentages would be raised to either 12% or 18% or 28% if they were previously charged with 10 %, 16% or 26% tax respectively.
• GST is a very long and cumbersome method that takes time and manpower.
• GST incorporates 29 states 2 Union Territories and The Centre. So there could be many views which could undesirably delay the judgments and thus the main cause behind the GST will disappear.

GST Essay Conclusion

Small companies can undoubtedly profit significantly beneath GST. Moreover, these small industries have a turnover of Rs 25 to 70 lakh. The advantage of these small trading takes place because of the planning scheme. Below GST, there is a choice for such business to lower taxes. It can be done by using the planning scheme.

The whole process of GST is accessible online. The unique thing is- it is an easy and straightforward online method. Hence, it is advantageous for start-ups, as they don’t have to strive to get multiple registrations.

In the end, GST has been an innovative tax system for India. Many specialists praise it as one of the most significant tax reforms. GST surely is profitable for the complete population of India.

FAQ’s on Essay on GST

Question 1. What is GST?

Answer: GST or Goods and Service Tax is an indirect or consumption-based tax imposed by the Indian Government on all the goods and services parties of a supply chain. GST is an Indirect Tax which has succeeded in many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a complete, multi-stage, destination-based tax that is levied on every value addition.

Question 2. What are the types of GST?

Answer: There are four types of GSTs:

• Central Goods & Services Taxes (CGST)
• State Goods & Services Taxes (SGST)
• Integrated Goods & Services Taxes (IGST)
• Union Territory Goods & Services Taxes (UTGST)

Question 3. Why GST is Important?

Answer: GST strives to replace all indirect taxes levied on goods and services by the Central and State governments of India. GST would subsume with a sole comprehensive tax, reducing the cascading impact of taxes on the production and circulation prices of goods and services.

Question 4. What are the advantages of GST?

Answer: GST has largely eliminated the Cascading impact on the sale of goods and services. Elimination of cascading of tax has impacted the cost of goods. Since the GST administration eliminates the tax on tax, the cost of goods reduces. GST is also more technologically inspired. All actions like registration, tax return, applying for refund and acknowledgment to notice requires to be done online on the GST Portal this stimulates the processes.

Question 5. What was the list of Indirect Tax before the GST was launched?

• Central Excise Duty
• Duties of Excise
• Additional Duties of Excise
• Additional Duties of Customs
• Special Additional Duty of Customs
• Central Sales Tax
• Purchase Tax
• Entertainment Tax
• Taxes on advertisements
• Taxes on lotteries, betting, and gambling

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Introduction

GST is an acronym for goods and services tax. The GST has been introduced as a part of the reforms in India's taxation system to make the process simplified and more transparent. In this essay, we will discuss what GST is, how it is applied, the problem faced by businesses as well as common people due to GST implementation and the possible solutions that the government can take to mitigate those problems.

What is GST?

GST stands for Goods and Services Tax, and it is a tax that is levied on the manufacture, sale, or consumption of goods and services at a national level. The GST replaces all the indirect taxes that are currently being levied in India, such as service tax, value-added tax (VAT), central excise duty, etc.

The GST is levied on every transaction that takes place within India's territory, and it will be the responsibility of the buyer to pay the applicable taxes for any goods or services purchased. GST aims to do away with all indirect taxes like service tax, VAT, etc., making India a single market.

How is GST Applied?

The GST is a destination-based tax, and it will be levied on the value of the goods or services that are consumed within India's territory. The tax will be collected by the person who is responsible for the final consumption of the good or service. For example, if an item is produced in India and is sold to a consumer in another state, the GST will be levied by the state in which the final consumption takes place.

The GST is a multi-stage tax, and it will be levied at every stage of production and distribution of goods and services. The rate of GST at each stage will be based on the value addition that has taken place at that stage.

The GST aims to simplify the taxation system by ensuring a single tax rate across India's territory, thus making sure that goods and services are not taxed multiple times at different rates even if they cross through multiple states before reaching their destination.

Essay on GST

GST was firstly launched in 1954 in France. Currently, 160 countries in the world have implemented GST. As the Canadian model of GST has a federal structure, India has chosen the Canadian model of dual GST. GST stands for goods and service tax which has been applicable in India since July 1st 2017, so July 1st is declared as 'GST day. More specifically, Asam was the first state to get applied with GST. During the passing of the 'GST Bill' in the parliament, 336 votes were with it, and 11 votes were against it. The previous structure of indirect taxes in India was very complex, and quantitative taxes were levied by the central government and state government on goods and services. It has been a long-pending issue to streamline a variety of indirect taxes and implement a 'single taxation' system. 

GST requires businesses who have exceeded the prescribed threshold value to register and must keep records of all inputs and outputs. It is exempted from a few products such as alcohols, natural gas, motor spirits and crude petroleum products. GST is simple in a calculation, simply multiplying taxable amount by GST rate. GST rates are covered under 5 tax slabs as 0%, 5%, 12%, 18% and 28%. Most goods fall under the tax slab of 5%, 12% and 18%, while certain services are under 18%. Cement, tobacco lies under the highest tax slab of 28%.

The GST system is categorised into Central GST, also known as CGST, State GST known as SGST and Integrated GST known as IGST. CGST is levied by the central government, SGST by the state government and IGST by the central government on inter-state supplies. In short, while selling within the same state, CGST and SGST need to be paid, and in Inter-state, IGST is.

Due to the implementation of GST, the count of incidences of tax evasion came down in the country, which brings an increase in tax collection for the government. GST has been implemented under Article 279 of the Indian Constitution. The existence of sales tax, service tax, customs duty, excise duty, VAT, Octroi tax etc., vanished. Moreover, A very common procedure for registration of taxpayers, refund of taxes, uniform format of tax returns. With minimum tax or even no tax, the exporters are encouraged to export with the best quality and increase the economy. 

GST proved beneficial with more transparency, efficient compliance to central and state manufactures. GST assists in the growth of the Gross Domestic Products (GDP). GDP is expected to increase by 2%. Before the implementation of GST, the prices of the commodity were varying state to state. But, the prices became uniform throughout the country as the GST applied. The implementation of GST has proven a great decision for the country's people. The common man has gained momentum in life due to GST. True life is lived when a few changes occur in it. In addition, GST makes the Indian companies more compatible with the foreign companies and the Indian market more stable than the previous one.

GST is a country-wide tax and was introduced as The Constitution (One Hundred and First Amendment) Act 2017. GST had brought uniformity in the indirect taxation system, which had differently levied by states and centres before now. Different taxes, such as central excise duty, state VAT, etc., have been unified under one single umbrella of GST. Now, businesses do not have to pay taxes as per the state they belong to. Moreover, it has simplified tax calculation as well as returns filing. Under GST, businesses that exceed the prescribed threshold value must register themselves, keep records of input and output, and file their GST returns regularly.

GST is a 'one country-one tax' system. It requires businesses that have exceeded the prescribed threshold value to register and keep records of all inputs and outputs. There are five tax slabs under GST, that is 0%, 5%, 12%, 18% and 28%. Most goods fall under the 5%, 12%, and 18% tax slab, while certain services are subject to 18%. Cement, tobacco lies under the highest tax slab of 28%.

GST is governed by three different acts: The Central Goods and Services Tax Act 2017, Integrated Goods and Services Tax Act 2017, and Union Territory Goods and Services Tax Act 2017. It includes central excise duty that falls under One Hundred and the First Amendment of the Constitution of India.

FAQs on GST Essay

1.What is GST?

GST stands for Goods and Services Tax, a tax that has been applicable in India since July 1st, 2017. It is a single tax that is levied on goods and services, and it replaces the previous structure of indirect taxes in India, which were very complex. GST simplifies the calculation of taxes by multiplying the taxable amount by the GST rate. The tax rates are covered under 5 tax slabs which are 0%, 5%, 12%, 18% and 28%. One of the benefits of GST is that it brings more transparency and efficiency to the compliance of taxes by both central and state manufacturers. Businesses that exceed the prescribed threshold value are required to register and must keep records of all inputs and outputs.

2.How is GST beneficial?

There are many benefits of GST, such as the implementation of a simple taxation system that enables businesses to calculate their taxes easily. It eliminates the indirect taxes, including VAT, CST, Excise Duty and Service Tax. Also, it encourages exports which in turn leads to an increase in GDP. The government's revenue also increases since there is a reduction in tax evasion and the expenses on tax collection and compliance drop. Moreover, GST makes goods and services more affordable as most of them are now under the 18% tax slab. Businesses are no longer required to register multiple times for different indirect taxes, which means that the compliance process becomes easier, and there is less chance of error.

3.What is the difference between Central and State GST?

Central GST is also known as CGST, and State GST is also known as SGST. The main difference between the two is that CGST is levied by the Central Government, and SGST is levied by the State government. IGST is levied by the Central government on inter-state supplies. All three taxes (CGST, SGST and IGST) are collected by the Government of India and then distributed among the states. One should know that the tax rates for CGST, SGST and IGST are different. Different states have different tax slabs. One should be aware of the tax slab for their state in order to pay the correct GST. This will ensure that one is not required to pay more than the amount due.

4.What is the impact of GST on businesses?

The implementation of GST has positively impacted businesses as it has brought more transparency and efficiency to the compliance process. Businesses are now required to register only once and keep track of all input and output transactions. The tax rates are also clearer, making it easier for businesses to calculate their taxes. There is a reduction in tax evasion and the overall expenses on tax collection and compliance. GST has also made Indian businesses more competitive in the global market as it is now aligned with international taxation standards.

5.What are the benefits of GST for consumers?

The main benefit of GST for consumers is that it makes goods and services more affordable as most of them are now under the 18% tax slab. GST has also removed the cascading effect of taxes, which means that there is no tax on tax. This results in a decrease in the prices of goods and services. Consumers are now required to pay tax only on the amount they receive from the business. The benefits of GST for consumers also include a reduction in turn-around time for businesses since there is no need to register multiple times. This means that they receive their goods and services faster. The implementation of GST has had a positive impact on most sectors. The transportation, banking and insurance, telecom and IT sectors have all received benefits from GST.

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Goods and Services Tax (GST)

• 13 Jul 2020
• 10 min read
• GS Paper - 3
• Government Policies & Interventions
• Growth & Development
• Constitutional Bodies

Introduction

The Goods and Services Tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption. The GST is paid by consumers, but it is remitted to the government by the businesses selling the goods and services.

Main Features of GST

• Applicable On supply side: GST is applicable on ‘supply’ of goods or services as against the old concept on the manufacture of goods or on sale of goods or on provision of services.
• Destination based Taxation: GST is based on the principle of destination-based consumption taxation as against the present principle of origin-based taxation.
• Import of goods or services would be treated as inter-state supplies and would be subject to Integrated Goods & Services Tax (IGST) in addition to the applicable customs duties.
• GST rates to be mutually decided: CGST, SGST & IGST are levied at rates to be mutually agreed upon by the Centre and the States. The rates are notified on the recommendation of the GST Council.
• Multiple Rates: Initially GST was levied at four rates viz. 5%, 12%, 16% and 28%. The schedule or list of items that would fall under these multiple slabs are worked out by the GST council.

Legislative Basis Of GST

• In India, GST Bill was first introduced in 2014 as The Constitution (122nd Amendment) Bill.
• Central GST to cover Excise duty, Service tax etc, State GST to cover VAT, luxury tax etc.
• Integrated GST to cover inter-state trade. IGST per se is not a tax but a system to coordinate state and union taxes.
• Article 246A – States have power to tax goods and services.
• Article 279A - GST Council to be formed by the President to administer & govern GST. It's Chairman is Union Finance Minister of India with ministers nominated by the state governments as its members.
• The council is devised in such a way that the centre will have 1/3 rd voting power and the states have 2/3 rd .
• The decisions are taken by 3/4 th majority.
• Creation of common national market: By amalgamating a large number of Central and State taxes into a single tax.
• Mitigation of cascading effect: GST mitigated ill effects of cascading or double taxation in a major way and paved the way for a common national market.
• Reduction in Tax burden: From the consumers’ point of view, the biggest advantage would be in terms of reduction in the overall tax burden on goods.
• Making Indian products more competitive: Introduction of GST is making Indian products more competitive in the domestic and international markets owing to the full neutralization of input taxes across the value chain of production.
• Easier to administer: Because of the transparent and self-policing character of GST, it would be easier to administer.

Advantages of GST

For the Government

• Create a unified common market: Will help to create a unified common national market for India. It will also give a boost to foreign investment and “Make in India” campaign.
• Streamline Taxation: Through harmonization of laws, procedures and rates of tax between Centre and States and across States.
• Increase tax Compliance: Improved environment for compliance as all returns are to be filed online, input credits to be verified online, encouraging more paper trail of transactions at each level of supply chain;
• Discourage Tax evasion: Uniform SGST and IGST rates will reduce the incentive for evasion by eliminating rate arbitrage between neighbouring States and that between intra and inter-state sales.

For Overall Economy

• Bring about certainty: Common procedures for registration of taxpayers, refund of taxes, uniform formats of tax return, common tax base, common system of classification of goods and services will lend greater certainty to taxation system;
• Reduce corruption: Greater use of IT will reduce human interface between the taxpayer and the tax administration, which will go a long way in reducing corruption;
• Boost secondary sector: It will boost export and manufacturing activity, generate more employment and thus increase GDP with gainful employment leading to substantive economic growth;
• Ultimately it will help in poverty eradication by generating more employment and more financial resources.

For the Trade and Industry

• Simpler tax regime with fewer exemptions.
• Increased ease of doing business.
• Reduction in multiplicity of taxes.
• Elimination of double taxation on certain sectors.
• More efficient neutralization of taxes especially for exports
• Making our products more competitive in the international market.
• Simplified and automated procedures for registration, returns, refunds and tax payments.
• Decrease in average tax burden on supply of goods or services.

For Consumers

• Transparent prices: Final price of goods is expected to be transparent due to seamless flow of input tax credit between the manufacturer, retailer and service supplier.
• Price reduction: Reduction in prices of commodities and goods in long run due to reduction in cascading impact of taxation;
• Poverty eradication : By generating more employment and more financial resources.

For the States

• Expansion of the tax base: As states will be able to tax the entire supply chain from manufacturing to retail.
• More economical empowerment: Power to tax services, which was hitherto with the Central Government only, will boost revenue and give States access to the fastest growing sector of the economy.
• Enhancing Investments: GST being destination based consumption tax will favour consuming States. Improve the overall investment climate in the country which will naturally benefit the development in the States.
• Increase Compliance: Largely uniform SGST and IGST rates will reduce the incentive for evasion by eliminating rate arbitrage between neighbouring States and that between intra and inter-state sales

Exemptions under GST

• Custom duty will be still collected along with the levy of IGST on imported goods.
• Petroleum and tobacco products are currently exempted.
• Excise duty on liquor, stamp duty and electricity taxes are also exempted.

Challenges Of GST

• SCGT and CGST input credit cannot be cross utilized.
• Manufacturing states lose revenue on a bigger scale.
• High rate to tax to compensate the revenue collected now from multiple taxes i.e High Revenue Neutral Rate.
• The reduction in the fiscal autonomy of the States.
• Concerns raised by banks and insurance companies over the need for multiple registrations under GST.
• The levy of additional cess.
• The capacity of State tax authorities, so far used to taxing goods and not services, to deal with the latter is an unknown quantity.
• The success of GST depends on political consensus, technology and the capacity of tax officials to adapt to the new requirements.

Thus GST is a positive step towards shifting Indian economy from the informal to formal economy. It is important to utilise experiences from global economies that have implemented GST before us,to overcome the impending challenges.

• Public Economics

Goods and Services Tax: Benefits and its Impact on Indian Economy

• August 2021
• International Journal of Engineering and Management Research 11(4)
• CC BY-NC-ND 4.0

• Aligarh Muslim University

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Home » Knowledge Base » Essay on Goods and Services Tax (GST) by Aman Agiwal, GLC, Mumbai

Essay on Goods and Services Tax (GST) by Aman Agiwal, GLC, Mumbai

• Aman Agiwal
• Apr 11, 2017

Essay on Goods and Services Tax

What is goods and services tax.

Goods and Services Tax (GST) is an indirect tax. The GST Bill was discussed in length in Parliament in order to end the prevailing taxation system of imposing various indirect taxes and implement a new system in which most of these taxes will be covered under one umbrella.

In order to understand the features and objectives of GST Act, first we need to take a quick look on the previous taxation system.

Previously taxes were charged on every stage viz. excise on manufacture, VAT/CST on sales, entry tax on entry of goods in local area etc.

These taxes get accumulated with the original price as the input credit for the tax already paid is not available to the consumers. This cascading effect of tax i.e. tax on tax results in hiking the prices of goods or services.

These taxes were imposed by the Centre and state differently according to the Lists in The Constitution of India.

Now the new concept of GST is that the GST would be a single tax system which would be levied on ‘supply’ of goods and services and this tax will be jointly imposed by the Centre and the state with the recommendation of a Federal Institution created which is the GST Council.

GST: Explained in Numbers

For example, suppose a person wants to buy a shirt. Now in order to determine the price of the shirt, we need to start from the very first step i.e. purchase of raw material.

NON-GST PROCEDURE:

Raw material was purchased for say Rs. 100 (inclusive of Rs. 10 as tax). A value of Rs. 50 is added to it by the manufacturer.

This good is sold to wholesaler at Rs. 165 (inclusive of 10% tax). Now the wholesaler adds his margin of Rs. 20 to it and sells it to the retailer at Rs. 203.5 (inclusive of 10% tax).

Retailer then adds his margin of Rs. 20 more and sells this good to the consumer at Rs. 245.85 (inclusive of 10% tax).

Hence the good costs Rs. 245.85 to the consumer which includes Rs. 65.85 paid as tax.

GST PROCEDURE:

Raw material was purchased for say Rs. 100 (inclusive of ₹10 as tax). A value of Rs. 50 is added to it by the manufacturer.

This good is sold to wholesaler at Rs. 150 (10% Tax on 150 is 15 but Rs. 10 is already calculated on raw material ,so effective tax set aside at this stage is only RS. 5(Rs. 15-Rs. 10).

Now the wholesaler adds his margin of ₹20 to it and sells it to the retailer at Rs. 170(10% tax on Rs. 170 is 17 but 15 is already set aside, so effective tax set aside at this stage us Rs. 2).

Retailer then adds his margin of Rs. 20 more and sells this good to the consumer at Rs. 209 (inclusive of all earlier taxes viz. Rs. 10+Rs. 5+Rs. 2+Rs. 2 {10%tax set aside on retailer stage}).

Hence the good costs Rs. 209 to the consumer which includes Rs. 19 paid as tax.

Thus, by way of GST concept, the commodity is relatively cheaper as there is no cascading effect.

The 5 Laws of GST

GST comprises of total 5 laws which are; Central GST Law, State GST Law, Union Territory GST Law, Integrated GST Law and The Goods and Services (Compensation To State) Law.

In this, Central GST Law deals with integration of all taxes on goods and services, their collection and arrangements.

Similarly State GST Law deals at the state level (29 states and 2 Union Territory: Delhi and Puducherry which have their own legislative assembly ). Union Territory GST incorporates the provisions of CGST and applies it to the remaining Union territories and Indian territories which are beyond the territorial waters.

Integrated GST deals with import and transaction between 2 states or union territory.

Any dispute arising under IGST will be judged by the Centre or by any state (other than those who are parties in the dispute) empowered by the Centre.

Lastly, The Goods and Services (Compensation To State) Law deals with maintaining a compensation cess for compensating the states which incurred loss for the first five years of implementation of GST.

GST is a progressive tax i.e. it will have different tax rate for different commodities because a similar tax rate on all product for example a toothbrush and a Mercedes car is not possible and not recommended as the relevant consumer group is different for different products.

As mentioned by The Finance Minister Arun Jaitley in the Loksabha on 29th March, 2017, a 0% tax will be levied upon Food grains. Other tax brackets of 5% , 12%, 18% and 28% are made.

These brackets will be used in such a way say for example a product had a tax of 13%, so now it will be kept under 12% bracket i.e. the nearest bracket.

Sin Products i.e. those products which are injurious to health like tobacco, cigarettes, which earlier used to have taxes of 40% 50% of 65% , will have tax of 28% from now onwards and the difference i.e. say 65%-28% will be added to compensation cess.

Similarly extra amount (above 28% Tax ) which are charged on luxury items or items which are harmful to environment like coal will also be added in compensation cess.

If, after 5 years , there is some amount left in the compensation cess, then that amount will be distributed between the Centre and the states For the time being, Real estate has been excluded from GST and this issue will be further discussed within the first year.

The reason behind its exclusion was because some states were concerned about its effect on their revenue collection by way of Stamp Duty.

Similarly, petroleum products and portable alcohol were also excluded. Later on it was agreed that constitutionally, petroleum products will come under ambit of GST but its tax rate will be 0% in GST and will be later on decided by the GST Council with a majority of 75%

This act does not implement to Jammu & Kashmir as Centre does not have power to do so. Jammu & Kashmir has to make their own similar law and then that law will be integrated with the GST Act so that they can also benefit from the same.

Benefits of GST?

The very basic benefit of GST is that it will reduce the possibility of tax manipulation by the authorities as there is only single tax to be paid in contrast to multiple taxes in earlier system .

This method or system is much more transparent. This will gradually eradicate inflation and various provisions like the compensation cess will benefit the state also.

Consumers will the most benefited party and they should be as Consumers are deemed to be the King. What are the disadvantages of GST?

There are various thought saying GST is nothing but the old taxation law implemented with new name and some new provisions. GST again gets divided between CGST and SGST. This may lead to dispute between state and Centre.

Moreover many commodities will be charged higher as tax will be charged some products on which there was no taxes earlier or their tax rate will be increased to either 12% or 18% or 28% if they were earlier charged with say for example 10% ,16% or 26% tax respectively.

GST is a very length and cumbersome procedure which will take time and man power.

GST covers 29 states 2 Union Territories and The Centre. So many opinions will unnecessarily delay the decisions and thus the main motive behind the GST will vanish.

Every concept has both positive and negative aspects. Just on the basis of some negative aspects, a system cannot be just torn out which has many big long term advantage.

Thus the GST should be widely accepted and supported because similar to the Demonetisation Policy, this will also come up with flying colours.

As correctly said, “ GST is like that one slightly expensive and bitter pill given by the doctor instead of various pills. Now it is your call whether you want to take that one pill or go for many ”.

By Aman Agiwal, GLC, Mumbai

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7 Responses

Sir. Mera. Group discussion h ye. Points thik rhege kya

Producer, wholesaler, retailer all are bearing the fee’s of CA s at three times to file gst written this heavy burdon imposed on costmer so, in this way needs so many improvement

okay now that is a good explaination

i want to contact you how i will contact you send hi to my email [email protected] plz sir

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Goods and Services Tax (GST) Implementation in India: A SAP–LAP–Twitter Analytic Perspective

• Original Research
• Published: 26 January 2022
• Volume 23 , pages 165–183, ( 2022 )

Cite this article

• Arun Kumar Deshmukh   ORCID: orcid.org/0000-0003-1839-1364 1 ,
• Ashutosh Mohan 1 &
• Ishi Mohan 2  

In a federal structure, India's determination to much-needed fiscal reforms has been widely applauded at its face value when she relinquished her previous complex and inefficient tax regime to embrace the long-awaited Goods and Services Tax (GST). It has been a significant economic move post-independence and requires validation of facts after its introduction. The present study aims to present a general macroeconomic analysis of the extent to which the adoption of GST has improved existing tax administration and resultant general economic well-being of a democratic political economy like India in light of innovation implementation theoretical perspective. Further, the study tried to determine how the stakeholders perceived such big-bang reform even after the three years of its adoption. The study attempted to assess to what extent the adoption of GST has indeed influenced the economy in general and citizens and/or consumers in particular while using a case-based qualitative inquiry. The present research applied the situation–actor–process; learning–action–performance analysis framework for the case analysis. The facts reveal that India has observed a tremendous increase in tax base vis-à-vis revenue collection. Yet, some efforts are desired to improve the low tax to GDP ratio, skewed GST payers base, negative stakeholders’ perception of GST (revealed through Twitter sentiment analysis), and the evil of tax evasion. The other merits realized by the economy are presented as benefits to the consumers, MSMEs, improved ease of doing business ranking, and foster make-in-India and AatmanirbharBharat move by the government.

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Introduction

The economic reforms in India after the 1990s pushed her growth as a globally integrated nation with remarkable improvements in terms of regulatory efficacy, macroeconomic stability, and geopolitical constancy (World Bank, 2019 ). Besides China in the Asian continent, India emerged as one of the fastest-growing economies in the last few decades (Paul & Mas, 2016 ). Fortifying the topsy-turvy yet relatively sustained growth story, India has witnessed phenomenal indirect tax reform (Chikermane, 2018 ) in the past three decades and demonstrated economic resilience by embarking upon another breakthrough in July 2017. According to the experts, after liberalizing the Indian economy in 1991, the Goods and Services Tax (henceforth GST) is a significant taxation turnaround by the Indian government (Jha, 2019 ; Siddiqui, 2018 ). India has traversed a long path to embrace GST as an excellent and long-awaited indirect tax reform aimed at one nation, one tax, and one market (GST Council, 2020a ). The global experience revealed that GST has made the business processes more efficient than ever by simplifying the tax structure and reducing the number of state and central levies (Nutman et al., 2021 ). GST is an indirect and destination-based tax. It appears to have influenced the consumers indirectly and directly impacted the businesses (Fernando & Chukai, 2018 ); however, its ripple effect is being felt across the three core sectors of the economy (Jha, 2019 ).

The complexities and inefficiencies of previous tax regimes in India (Roychowdhury, 2012 ) compelled the authorities to convert the decade-long discussion into reality. The shortcomings were primarily characterized by cascading turnover taxes between the center and states in the federal structure, making the regime less comprehensive (Rao & Chakraborty, 2010 ). The central and state levies had some inherent limitations, such as central taxes could not cover the value addition in goods outside the manufacturing stage, including a few listed services (Deloitte, 2020 ; Roychowdhury, 2012 ). To transform the indirect taxation system, GOI had introduced the long-awaited Goods and Services Tax or GST in July 2017. Sensing its magnificence, FICCI ( 2021 ) called it a big bang economic reform after independence. Despite all merits and demerits of the Indian GST implementation, little understanding exists of its influence on the economy (Kir, 2021 ) in general from the perspective of the stakeholders. Also, a little understanding was observed in the existing body of knowledge, particularly on innovation implementation in the emerging Indian public policy domain even though GST roll-out to be a process innovation in the economic system. It calls for research in the identified field about how fruitful was the introduction and implementation of GST in the economy and the response patterns of the stakeholders.

The present study aims to analyze the extent to which the implementation of GST has improved exiting indirect tax administration and the general economic state of a democratic political economy like India. The way stakeholders have perceived such big-bang economic reform after three years. A theoretical perspective of innovation implementation was applied, citing the context and knowledge gaps concerning a public policy measure in a developing economy. Thus, it attempts to answer two diverse research questions (RQs):

RQ1. How has the implementation of GST affected India's general economic scenario? and

RQ2. How have various stakeholders perceived the new tax regime?

The nature of the research questions asked determines the epistemological ground for the research (Saunders et al., 2019 ). The core aspect of questions mentioned above predominantly belongs to the interpretive paradigm, which requires selecting appropriate methods justifying constructivist ontology (Saunders et al., 2019 ). The SAP–LAP analysis-backed qualitative case-based inquiry meets the methodological and contextual requirements.

The study is organized in various sections and sub-sections comprising a literature review about GST, innovation implementation, and SAP–LAP analysis followed by research methods comprising how SAP–LAP analysis is performed with its framework to answer the above research questions. The result and discussion section elaborates the detailed analysis and interpretation of individual components of the SAP–LAP framework concerning GST implementation.

Review of Literature

This section presents a literature review about GST and indirect taxes, innovation implementation, and SAP–LAP analysis under three sub-sections followed by motivation for this research and gap analysis.

Literature on GST and Indirect Taxes

In public finance, taxes are usually collected as significant revenue sources as direct and indirect taxes. The taxes paid directly by the public, such as corporate income tax, income tax, wealth tax, are referred to as direct taxes. In contrast, indirect tax is essentially consumption-based tax such as value-added tax or VAT, service tax, and customs. The revenues from indirect taxes are shared jointly by the central and state government and some local bodies in the federal structure. In contrast, direct taxes are the central government's subject matter. France implemented GST in 1954, and the same was followed by over 100 countries, including several emerging economies such as Brazil, China, and now India (Kir, 2021 ), after observing its demonstrated success across the globe. Economists noted that a country's development hinges upon the mobilization of tax revenue (Dabla-Norris et al., 2017 ; Schlotterbeck, 2017 ). It is pertinent to ensure stable tax revenues to meet the significant budgetary heads such as healthcare, infrastructure, and education. The increasing tax revenue leads to economic growth and development (Besley and Persson, 2009 ; Gaspar et al., 2016 ; Milios, 2021 ). Also, enhancing tax collection is crucial (Akitoby et al., 2018 ; Fenochietto & Pessino, 2013 ) to attain the Sustainable Development Goals (SDGs) propounded by United Nations. Therefore, an economy is expected to have an efficient tax policy and administration. However, the tax structure differs across the continents and countries (Besley & Persson, 2009 ; Fenochietto & Pessino, 2013 ). Sindzingre ( 2007 ) pinpointed that Asian developmental states do not rely on high levels of taxation, which is characterized by their capacity to commit and intervene credibly in policies directed toward growth rather than a tax.

Research by Onaolapo et al. ( 2013 ) revealed that the adoption of value-added tax showed a statistically significant influence on revenue generation in the Nigerian context. The study also pinpointed the need for dedicated and integrated efforts from the stakeholders to improve VAT collections. The study also analyzed how value-added tax impacted revenue generation in Nigeria. They asserted that the consumption-based taxes should be assessed on different considerations such as administrative feasibility, relative revenue potential, voluntary compliance, for better implementation. These considerations also equally apply to GST implementation.

Some of the cross-sectional studies with panel data and case studies were conducted to analyze the impact of socio-political determinants, tax policy, economic dynamics, and economic structure in an economy (Garg, 2019 ; Kir, 2021 ; Kulkarni, & Apsingekar, 2021 ). Plenty of studies unveiled the relationship among factors influencing the revenue outcome while highlighting the complexities in separating the relevant determinants (Crandall & Kidd, 2006 ; Dom, 2018 , 2019 ). The study conducted by Gupta ( 2007 ) explored the relationship between economic development and the structure of the tax revenue realization in developing countries and asserted a positive correlation between per capita GDP and revenue.

Research by Dabla-Norris et al. ( 2017 ) evaluated the firm performance changes due to the tax compliance burden in 21 countries using VAT and corporate tax rates to control tax policy. Investigating the effect of tax policy changes on revenues, the study also emphasized on an association between policy reforms and revenue growth in the emerging economies (Akitoby et al., 2018 ) and maintained that policy reforms can be increased with the rising rate of indirect tax, changing the type of tax being levied, and decreasing level of exemptions. The studies measuring the impact of VAT found mixed results as some observed growth in the revenue (Ebeke et al., 2016 ; Schlotterbeck, 2017 ) while others found it insignificant (Ngoma & Krsic, 2017 ). Some studies emphasized how socio-political factors determine the extent of revenue collected relative to GDP and asserted that the Gini coefficient was negatively correlated with the revenue collections (Fenochietto & Pessino, 2013 ). Nonetheless, not enough literature could be located in the Indian context expounding implementing a tax administration policy and associated indicators.

The early research analyzing the impact of GST implementation on the Indian economy was limited and utilized only nascent and generic indicators (Bindal & Gupta, 2018 ; Dash, 2017 ; Mishra, 2018 ) to demonstrate whether GST has attained the desired outcome after implementation. The other studies were highly sectoral and regional (Garg, 2019 ; Kulkarni & Apsingekar, 2021 ). In addition, expounding the situation after the implementation of GST, The New Indian Express ( 2021 ), in its report on GST, mentioned that the government's bonafide intentions back GST yet, technical glitches and design-related flaws caused ineffective execution during its early phase. The technical malfunction also caused fake invoicing by some business enterprises. Despite all advantages, some significant implementation flaws include technical glitches, frequent changes in the rules, malfunction of input tax credit claim system, multiple tax slabs and frequent changes in items covered under these slabs, etc. (Financial Express, 2019 ; The New Indian Express, 2021 ). Many businesses have to confront multiple litigations due to a lack of clarity on various rules and their varied interpretations in different states. This aroused interest in conducting the study to unearth several theoretical and practical learnings that may lead to future research.

Having cited the above literature, the researchers observed a lack of primary and secondary literature linking indirect tax reform in an economy and its economic impact. The studies cited primarily belong to tertiary literature, which was used to establish the viewpoint. However, due to the nascent stage of GST implementation in India, it becomes difficult to deploy quantitative panel data analysis. Therefore, the study analyzed GST implementation in the economy using a factual SAP–LAP qualitative framework and Twitter sentiment analysis using the stakeholders' perception mapping. It was an exploratory inquiry to advance understanding of a less explored phenomenon with an innovation implementation-led theoretical perspective.

Literature on Innovation Implementation

Considering GST as a process innovation in a macroeconomic context, the present research cited relevant studies to analyze the status of GST after three years of implementation. The previous research on innovation implementation revolves primarily around the organizational contexts (Chung et al., 2017 ; Damanpour & Schneider, 2006 ; Dhir et al., 2020 ; Malaviya & Wadhwa, 2005 ; Singh et al., 2021a , b ), with a slight possibility for being adapted in the context of an economy. An economy akin to an enterprise needs to constantly innovate its key processes to sustain and be competitive in a contemporary environment characterized by ever-changing technology and handling of economic operations (Chung et al., 2017 ; Krawczyk-Sokolowska et al., 2021 ). Emerging economies such as India possess numerous possibilities for innovation on several fronts including the micro- and macro-level (Dhir et al., 2020 , 2021 ). Past studies have shown that innovation keeps the system competitive and is necessary to propel superior performance (Birkinshaw et al., 2008 ; Dhir et al., 2021 ).

Nevertheless, assessing the innovation-specific outcomes is intriguing in a system at both levels. It can be analyzed with its apparent characteristics, such as the effectiveness of implementation and point of innovation itself in terms of benefits derived from it (Klein & Sorra, 1996 c.f. Chung et al., 2017 ). It is asserted that approximately two-thirds of the innovations go unsuccessful and pose a financial burden on the system (Altuwaijria & Khorsheed, 2012 ). The entities implementing the invention are bound to fail to attain desired benefits due to failure of innovation or implementation (Chung et al., 2017 ).

The introduction of GST in India is a process innovation of continuous nature, depending heavily upon the principles of appropriateness, accessibility, and affordability (Fannin, 2016 ). Also, Singh and Dhir ( 2021 ) pointed that studies addressing innovation implementation focused on specific organizational contexts, including manufacturing (Dwivedi et al., 2019 ; Jamwal et al., 2019 ), Entrepreneurship (Parameswar et al., 2019 ; Singh et al., 2019 ), health (Birken et al., 2015 ; Pradhan et al., 2019 ), transportation (Shankar et al., 2019 ), financial inclusion (Malik et al., 2019 ), and ERP implementation (Nagpal et al., 2019 ). However, studies cited in the public policy domain were scanty (Singla & Hooda, 2018 ; Sushil, 2008 ; Sushil, 2019 , Suri & Sushil, 2012 ; Suri & Sushil, 2008 ). The extant literature in this field further revealed that most of the studies on innovation implementation were conducted in the developed economies and, therefore, exhibit the strategies adopted in that context, which cannot be replicated in the emerging economy scenario (Singh et al., 2021a , b ). The key differences must be thoroughly analyzed due to contextual variations in terms of demographics, infrastructural, regulatory policies, etc., for ensuring implementation of the innovation (Dhir et al., 2020 ).

Further, from the theoretical standpoint, the implementation of innovation literature has widely used dynamic capability theory to examine how the organization can adapt its knowledge base in response to environmental changes (Teece et al., 1997 ; Teece, 2018 c.f. Singh et al., 2021a , b ). The effectiveness of such implementation can be measured using the degree to which the desired outcomes are realized (Singh et al., 2021a , b ). According to Piening ( 2011 ), the implementation of an innovation, technology, or practice necessitates the creation of new routines for desired outcomes, as was the case of GST, where the government revamped all previous processes (routine). The system continuously tracks the systemic and process-related flaws in GST implementation such as technical glitches, erroneous input-tax credit claim mechanism, multiple tax slabs with frequently changing specified items. (The New Indian Express, 2021 ). The studies primarily adopted dynamic capability theory (Teece et al., 1997 ), the resource-based view (Chichkanov et al., 2021 ), grounded theory (Deloitte, 2020 ), etc., to understand the implementation. Yet, studies in public policy-related aspects are limited in numbers (Singla & Hooda, 2018 ), requiring further investigation to analyze the same. Thus, the previous literature revealed some significant research gaps in innovation implementation comprising context gap and knowledge or theory gap. The present research aims at bridging such gaps in the context of GST implementation using an SAP–LAP framework to investigate the degree to which the GST implementation as a process innovation in public policy has impacted the general state of the economy.

Literature on SAP–LAP Analysis

The SAP–LAP framework for analysis was initially developed by Sushil ( 2000 ) and Sushil ( 2001a ). The present study uses the SAP–LAP framework (Fig.  1 ) to analyze the pre- and post-GST implementation scenario to evaluate the system's efficacy and suggest enhancements. Several scholars in the past applied SAP–LAP analysis tools to study such situations and developed valuable solutions. The selected pioneering and prominent studies are presented in Table 1 , which exhibits the cross-context and cross-concept use of the technique.

Source : adapted from Sushil, 2014

SAP- LAP Framework.

The study utilizes a case-based review approach to analyze India's indirect taxation policy framework and associated indicators. The analysis is performed with an interpretive method known as SAP–LAP (situation, actor, process and learning, action, performance) framework developed by Sushil ( 2000 ). The SAP–LAP method was widely used by the researchers in case-based studies (Anand et al., 2018 ; Charan, 2012 ; Chavan et al., 2019 ; Kanda & Deshmukh, 2007 ; Anand et al., 2018 ; Naik & Srivastava, 2017 ; Pramod & Banwet, 2010 ; Sushil, 2019 ; Suri & Sushil, 2008 ). As described by Sushil ( 2009 ), “SAP–LAP is a generic framework which can be used in various contexts, such as problem-solving, change management, be used as generalized statements for the similar cases in the future by proper synthesis” (p. 11). SAP–LAP application has not been limited to the business verticals only but applied the least in the public policy domain (Chand et al., 2018 ; Chavan et al., 2019 ; Suri & Sushil, 2008 ).

3. Research Methods

The paper focuses on exploring the present state of GST implementation in India by the government on completing its three years. The paper follows SAP–LAP framework-based qualitative design. The study used a step-by-step approach to review extant literature to understand how the past scholars have conceptualized and theorized such a phenomenon. To critically examine the initiatives about indirect taxation and GST mainly, the authors reviewed the publications of the GST Network, Central Board of Indirect Taxes & customs (CBIC), National Institution for Transforming India (NITI) Aayog, World Bank, International Monitory Fund (IMF), and relevant policy documents. An attempt was made to pinpoint the gaps and plausible implications on business and society by using the excerpts from literature and discussing with experts and stakeholders affected by GST implementation. Since the emphasis was on assuming the implementation at the last mile beside the experts, the opinions of retailers complying with GST and consumers who are indirectly paying it were considered. The existing framework gaps were recorded through 30 experts, 200 retailers, and 1000 customers. The key criterion for selecting the respondents was their direct and/or indirect involvement in GST-related regulation or compliance.

More so, to add a qualitative dimension to the SAP–LAP-based research and gauge the sentiments of different stakeholders on completion of its three years of GST, the authors have added analyses of tweets, especially as part of the situation analysis and learning synthesis. The study performs the Twitter analysis of the posts containing #GST and its associated sentiment analysis to identify how the stakeholders, including the business community vis-à-vis the common public on social media platforms, perceived the roll-out and the implementation of GST in India by the government. The researchers performed the data scrapping from Twitter with basic Tweepy (Application Programming Interface or API). The application software used in the process was NVivo (NCapture tool). It enables capturing the tweets using a #hashtag across the timelines. For this research, the restriction kept was the tweets with #GST from India. The present study captured one week's random tweets after completing three years for analysis. The purpose was to see the polarity of the sentiments after three years of GST roll-out in a random data scrapping.

SAP–LAP Analysis Framework

The SAP–LAP framework for analysis was initially developed by Sushil ( 2000 ). The expansion of the acronym SAP–LAP refers to a situation that indicates the internal and/or external environment. The external environment may include social, technological, economic, political, and natural environmental factors. In comparison, the internal environment may consist of organization-specific factors such as resources, capabilities, employees, organizational structure, and design. When considering India as an entity for analysis under this framework, the introduction of GST can be taken as a constituent of a situation aspect, and its macroeconomic, socio-political, technological impacts can be considered as the external consequences. Further, keeping the temporal orientation into account, the situation can be referred to as what has happened? what is going on? and what is expected?

The actors in the framework are people, agents, or stakeholders directly or indirectly related to the case situation under consideration. They either influence the condition or are affected by the situation. The stakeholders involved are the government, including the finance ministry, administrators, and policymakers in the GST network, business owners or managers, customers or the general public. It is indeed a highly complex web of actors in one of the largest democracies like India. The third aspect in the framework processes refers to how the situation-specific input transforms into output due to the courses of action initiated by the 'actors.' The actors enjoy the freedom of choice to transform a situation and bring about a change in the situation hand. In this context, the GST collection process, refund or input credit process, audit process, taxpayer complaint resolution process, GST council reform process, etc., are examples of various processes involved. The key actors are expected to strengthen and optimize the strategies to enhance the situation continuously.

The interaction and synthesis of the situation–actor–process framework guide the learning–action–performance framework (Sushil, 2000 , 2019 ). The first alphabet in the LAP framework stands for learning, which refers to a thorough comprehension of the core issues, problems, and challenges of SAP. It can be referred to as an outcome of the meticulous investigation of the individual components vis-à-vis the collective interplay of SAP. The learning component usually includes the generalizable output for execution or insights on specific situations or objectives. The action is all about converting the learning insights into practice to eradicate the existing systemic deficiencies. It may emphasize enhancing the current processes by improving efficiency and effectiveness.

Moreover, the action component of the framework helps in the development of some actionable policies or guidelines. The action taken will impact the performance, which can be observed through enhanced productivity, efficiency, effectiveness, higher profitability in general and better fiscal discipline, and resultant higher revenue generation in particular. It can be inferred that how flexibility in the system improves the overall performance (Evans & Bahrami, 2020 ; Sushil, 2019 ) and, as a result, how India ranks better in terms of governance, ease of doing business, and systemic transparency by applying the SAP–LAP analysis.

Results and Discussion

Low taxes-to-gdp ratio.

The World Bank statistics (2017–2019) on taxes as a percent of GDP reveals that India needs to increase its share of taxes in GDP at par with most of its developing counterparts. It further reported that the developed countries' ratio is greater than 10 percent compared to India’s 7.8 percent (Table 2 ) and far below the OECD average of 34% (The Economic Times, 2020 , January). This ratio indicates how well a government can finance its expenditure, reducing the borrowing. The higher proportion shows faster economic development as it enhances the government's ability to finance the expenditure.

The data obtained from the official sources were analyzed and compared with the previous tax regime to answer the first research question. The analysis is presented in Table 2 and Fig.  2 revealing the government's fiscal parameters, taxes as a percent of GDP. The answer to the second research question is addressed in the upcoming sub-section nested in case-based SAP–LAP analysis.

Source compiled from the data accessed from https://www.indiabudget.gov.in

Taxes as a percent of GDP in Post-GST Era.

Table 2 exhibits the gross and net tax revenue from 2014–2015 to 2019–2020 and their share in GDP for the corresponding year. The above data highlighted the rising revenue vis-à-vis is rising cost of collection and a corresponding reduction in the net figures from 2017 to 2018, which can be attributed to the GST implementation. In 2018–2019, the gross tax to GDP ratio was 10.9, indicating a 16 percent fall in tax revenue from the budget estimates. The reduction is due to a shortfall in GST collection (Financial Express, 2019 ). The revenue growth also corresponds to the contribution of GDP figure, which hovers between 6 and 8% for net tax revenue, far below expectations. It indicates the need for further improvement to enhance the tax revenue collections.

Component-Wise GST Collection

Figure  3 depicts the component-wise GST collections in the three fiscals from July 1, 2017, to June 2020. In India, the GST council divided GST into three components: Central GST or CGST, State GST or SGST, Integrated GST or IGST. The CGST represents the share of the central government, SGST indicates the state government’s claim, whereas IGST is collected on inter-state movement of goods and/or delivery of services. As shown in Fig.  3 , the collection of IGST is highest among all across the three years, followed by SGST, CGST and cess. The cess is a minor component charged along with GST in India.

Source Compiled by authors using GOI data

Component-wise GST Revenue collection.

Lopsided GST Payers

The recent analysis on the contribution of various business forms in the total GST collection (Fig.  4 ) reveals that 62.8% of GST revenue comes from public and private limited companies, accounting for a meager 5.89% of the total taxpayer population. The remaining 94.11% of taxpayers contribute 37.2% of the total GST revenue. The proprietorship business holds a significant population with a GST contribution of 13.35%. The other considerable contributors are public sector undertakings (PSUs) and partnership firms. The data unfold several interesting insights for the policymakers on future policy decisions.

Source : www.gst.gov.in

GST Contribution from Different Forms of Business.

Presently, GST implementation is still in its infancy and needs several policy-level improvements to keep taxation inefficiencies and evasion at bay. The authorities should first prioritize solving the significant contributors' problem so that the flow of revenue remains unperturbed and then shift to increasing the tax base keeping the macroeconomic indicators into consideration. It will gradually enhance the efficiency and effectiveness of the indirect taxation system.

Grasp of Twitter Data

Besides the quantitative studies in the public policy domain, researchers started exploring the qualitative data generated through social media due to its ability to help decision-makers understand the acceptance of the particular policy by different stakeholders (Singh et al., 2020 ). Also, the policymakers have begun to recognize their social media presence and the responses of users and subscribers (Fig.  5 ). Several scholars such as Das and Kolya ( 2017 ), Durán-Vaca, and Ballesteros-Ricaurte ( 2019 ), and Das et al. ( 2020 ) have attempted to study the influence of the taxation-related aspects using social media analytics. Another study by Shakeel and Karwal ( 2016 ) examined the Indian union budget sentiment analysis 2016–2017. Das and Kolya ( 2017 ), Singh et al. ( 2019 ), and Das et al. ( 2020 ) primarily analyzed the Twitter data to understand the sentiment of the general public concerning GST. The startup ecosystem in India was thoroughly investigated by Singh et al. ( 2020 ) using Twitter analytics. Such studies revealed the rising trend of research using social network-based qualitative data. To assess the acceptance level of a particular phenomenon, researchers have a wide variety of choices to gather data such as interviews, surveys, and observation. However, whether positive or negative, collecting data objectively is challenging to infer. On the other hand, the data extracted from social networks reveal the polarity of likes and/or dislikes.

Source GST Council (2020b)

GST on social media.

The widely used social network-based sentiment analysis tool is Twitter analytics. It utilizes Natural Language Processing (NLP) to identify and extract personal information from multiple documents. It is capable of automatic massive tweet classification to generate positive, negative, or neutral polarity according to the language used in the text (Durán-Vaca, & Ballesteros-Ricaurte, 2019 ). It helps in knowing the emotion or opinion of the audience about the underlying subject. It is also evident through the social media statistics displayed on the official website of GST in Fig.  5 that the majority of the subscribers/followers comes from Twitter, followed by YouTube and Facebook.

As revealed in Table 3 , the sentiment analysis output indicated that a total of 1056 tweets were finally considered for analysis using NVivo. Most responses, i.e., 704 tweets, are either very negative or moderately pessimistic, while only 352 are recorded positively. Such sentiments are revealed based on the words used by the users in their tweets. Nineteen thousand one hundred ninety-seven negative comments were used to analyze the coding of terms indicated in the table. In contrast, only 7775 positive words were used concerning GST, resulting in various stakeholders' low sentiment index for GST. It also indicated that such responses might be due to a lack of awareness and reactive ones resulting from resistance to change in the transition.

The sectoral analysis showed that MSMEs face several challenges in adapting to the GST, which must be considered. As reported by experts and taxpayers, some other challenges associated with GST are long time lag in refunds, adaption and development of IT ecosystem, especially by the MSMEs, inability of the system to curb tax evasion, etc. As part of the situation analysis, the above issues and challenges require the concerned actors' action to improve.

In a federal structure, taxes are the subject matter of the union and the states. Therefore, while counting the actors, both are considered and referred to as the ‘government’ in general for the analysis. The other actors in this context are the business executives engaged in the compliance referred to here as ‘business’ and the customers who are paying the taxes indirectly and the society at large. In this tri-partite arrangement, the government is the prime actor while the latter are the complying parties. A systemic change in the name of GST necessitates the active involvement of prime actors in process design that attracts minimal resistance from the affected ones and manages the innovation implementation effectively.

The appropriation of GST is such that both center and state share equally. According to existing arrangements, for instance, if the tax rate is 18%, 9% CGST will go to the central government, whereas 9% SGST will be credited to state government accounts for intra-state transactions. On the other hand, inter-state transactions are dealt with under integrated GST or IGST in which the destination state and the central government share the revenue as mentioned above. Due to the complexity of transactions, especially when multiple states are involved in the trades, sometimes calls for more robust processes to deal with the input credit-related issues. The role of actors from government, both center and state, has become more prominent in resolving such matters. The problems related to revenue sharing and compensation to conditions during the COVID-19 pandemic intensified, for which the authorities are developing a robust mechanism. As a prime-mover, the Goods & Services Tax Council or GST Council-a constitutional body to regulate the various aspects of GST and its nationwide implementation plays a pivotal role. The Union Finance Minister of India chairs the council, and other members include the Union State Minister of Finance or Taxation of all the states. GST council along with the CBIC has played a significant role in the implementation process of GST in India.

The government has taken several interventions and initiatives to improve the implementation process of GST in India. GST is the most extensive indirect tax reform in India's history, which required the integration of a nationwide diverse taxation portfolio into a single taxation system. Goods and Service Tax Network or GSTN was created to enable building a platform to meet various stakeholders' GST-related needs and smoothly facilitate the complex transaction. All the GST processes are covered under the highly diverse responsibilities of GSTN. They range from GST system application design, development and operation to IT infrastructure procurement, ensuring systemic resilience against failure and disaster, helpdesk setup and procedures, training and capacity building, backend system assessment for all the states and union territories, etc. (Fig.  6 ). Precisely, GSTN is designed to provide guidance and direction on policies and governance principles.

Source GST Council Knowledge Resources

Distribution of Work under GST.

Initially, GSTN was set up as a private company by the government but later acquired a majority stake. It provides three front-end services to the taxpayers: registration, payment, and return. The front-end solution is also assigned to develop a backend IT module for all the states/Union Territories. Infosys is selected as a Managed Service Provider or MSP for this project. A total of 73 IT/ITeS and fintech companies and one commissioner of commercial taxes (Karnataka) are impaneled as GST Suvidha Providers or GSPs to provide solutions across the nation. The role of these GSPs is to develop applications to be used by taxpayers who can facilitate interaction with GSTN. Figure  6 exhibits the work allocation under GST.

Besides process-related general measures expounded earlier, some of the specific issues addressed by the actors (primarily the government) are being highlighted as—a gradual increase in the coverage and the scope of GST in the form of inclusion and exclusion of commodities and services; revision in the coverage of various base rates keeping the consumer sensitivity into account. Likewise, the mechanism for dividing IGST collection between center and state is being negotiated by the central and the state government in the various meetings of the GST council. Accordingly, the center is working out the long-pending due to states (The Economic Times, 2020 ).

Since the government is generating the lion's share of GST revenue (63% approx.) from the public and private sector companies, their significant attention is toward resolving issues they are confronting first. The government is also developing ways to formalize the informal sectors to enhance the tax base (GST Council, 2020b ) to tame lopsided GST payers. In addition to this, the government needs a mechanism that can facilitate to meaningfully engage the stakeholders on such policy matters, which will create awareness and bust the myths being spread associated with the new fiscal policy instruments such as GST.

A detailed analysis of the situation presents several issues and challenges associated with the GST implementation, prevailing even after 3 years. Some of the critical challenges are presented in this section.

Need for More Robust IT System

For easy and speedy compliance, IT holds a significant role to play. Many companies, especially the MSMEs in the unorganized sector, lack adequate IT infrastructure. It calls for an efficient IT system for user-friendly tax administration. Presently, GSTN is serving as a particular purpose vehicle to facilitate the businesses in this, yet more selective support is desired.

Need for Skilled Human Resources

Even after three years of implementation of GST, the country is facing an acute scarcity of skilled workforce in IT and accounting. India has an adequate number of IT professionals, but a shortage of qualified accountants can help businesses deal with the new compliance norms.

Ambiguity in GST Provisions

GST subsumed 17 different levies to ease the compliance and remove the cascading effect in taxation. The system needs clarity on several aspects such as precise categorization of goods and services, and tax rates for various goods and services are yet to be fixed. Every next GST council meet comes up with newer agenda for dealing. Moreover, the shift from origin-based to destination-based taxation was not easy to implement in India's largest markets. Now, taxes are being collected based on the consumption of goods and services irrespective of their place of production, which caused a loss of revenue for industrial states. The council resolved that the central government would compensate such a loss of revenue for the initial few years. Also, there has been a demand from several pressure groups to bring high revenue items such as petrol, petroleum products, and alcohol under the ambit of GST, which is still under discussion.

Tackling the RNR Conundrum

It is challenging for the government to balance inflation and net revenue loss to attain an optimal revenue-neutral rate or RNR. RNR is referred to as a rate at which the government's revenue through the new tax regime (GST in this case) will be equal to the preceding taxation regime. It directly affects the fiscal policy and inflation rate (Kumar et al., 2018 ). The higher RNR causes a loss of competitive edge for India domestically vis-à-vis globally (Bhattacharya, 2017 cited from Kumar et al., 2018 ). The higher cost will push inflation and, in turn, badly affect the purchasing power. Narula ( 2016 ) asserted that RNR is one of the most significant GST implementation challenges and maintains that the government should ensure no revenue loss while adopting to a new taxation regime.

Lack of Awareness Among the Stakeholders

The Twitter sentiment analysis revealed that many stakeholders perceived the roll-out of GST negatively. One of the reasons could have been the lack of proper awareness about the new tax regime. Lourdunathan and Xavier ( 2017 ) suggested that India, a democratic country, should clarify its citizens about the recent amendments. Due to a lack of awareness, the citizens sometimes pay more taxes than required, especially in the rural areas and subsequent knowledge of which leads them to wear a negative perception of the tax regime.

After thoroughly analyzing the situation and the process, discussing the actions initiated to improve GST implementation is pertinent. The government of India, through GST council and CBIC backed by GSTN, has ensured the following changes.

Flexibility and Simplification of Compliances

The authorities have allowed taxpayers to comply during the transition by extending the deadline for filing returns and reconciliation by introducing the simplified return filing system and the nationwide e-way bill. The AI-based chatbot GITA or GST Interactive Technical Assistant trains the taxpayers' interaction easily and speedily. This way, the website visitors can interact and settle their issues without much workforce involvement after the introduction of the facility in June 2020.

Relief to MSMEs

The extension in registration threshold limit, introduction and extension of composition scheme to service providers have been taken well by the taxpayers, which proved to be a significant relief measure for MSMEs. Moreover, offering speedy solutions to the MSMEs' issues, GoI has already constituted a Group of Ministers (GoM) that thematically takes account of the situation in this regard. In another move, it was decided by the government that GSTN would provide free accounting and billing software to small taxpayers.

Rationalization of GST Rates

The rates of GST were decided considering the nature of commodities. Some of the entities classified as necessities were suitably reviewed and moved from the high tax bracket (18–28%) to the low-tax bracket, which several stakeholders took as a welcome move. In the 36th meeting of the GST Council in July 2019, the rate rationalization moves to emphasize and promote clean energy by council. The council decided to reduce the GST rates on electric vehicles from 12 to 5% and charger/charging stations from 18 to 5%.

Mobilization of Revenue

A Group of Ministers or GoM was constituted to study the revenue trend and assess the underlying reasons behind structural patterns influencing the revenue collection in some states. It would include looking at plausible reasons behind the deviation of the revenue collection targets from basic assumptions.

E-Way Bill System for Efficient Compliance

The GST council introduced an electronic way or e-way bill system from April 1, 2018, initially for all inter-state movement of goods that now covers intra-state movements. This initiative aimed to allow the movement of goods across the nation, which resulted in hassle-free transportation. The E-way bill was a monumental shift from the departmental policing model to the self-declaration model, reducing high administration costs.

Some Penal Measures

From August 21, 2018, the council decided to have a system barring the generation of the e-way bill if a recipient or supplier does not file a GST return for two consecutive tax periods. It resulted in regularity and timeliness of compliance by the taxpayers.

Anti-profiteering Mechanism by Establishing National Anti-profiteering Authority (NAA)

It was also observed that in many countries, GST implementation resulted in an inflationary trend despite a provision of an input tax credit. The meticulous analysis revealed that it has happened because of the non-passing of the benefits to the consumers by suppliers involved in the profiteering. Ideally, the benefit of increased input tax credit or decrease in tax rate should pass to the recipient. When it does not pass to the recipient, it is treated as illegal profiteering. The central government constituted NAA to examine the non-passing of the benefits of reduced tax incidence or increase in input tax credit under GST.

Composition Scheme for Small Business and Services Suppliers

The scheme envisaged for the small businessmen who are a supplier of goods and restaurant services. In this, business with turnover up to Rs. 1.5 crore required to pay taxes equal to 1–5% on the turnover and required to make quarterly payments from FY 2019–2020 and file the return annually. In the case of service suppliers, a person has a turnover of up to Rs. 50 lakh to pay a tax equal to 6 percent on the turnover and required to pay quarterly with the annual filing of the returns.

The Mechanism for Government Accounts Settlement

Periodic account settlement between Centre and State is done. Adjustments and differences related to SGST and IGST are considered so that both center and the state get their due share of tax revenues. The fund transfer is done based on the information contained in the returns filed.

Capacity Building Efforts by CBIC

The CBIC has played a significant role in drafting GST law, especially IGST and CGST law under the center’s purview. With the rising number of taxpayers, CBIC has also suitably scaled up its IT infrastructure to deal with massive data and other related challenges. CBIC is working on an ambitious project worth Rs. 2256 crore for re-engineering its existing software and planning to replace it with all new ‘SAKSHAM’ for GST. Such capacity-building initiatives facilitate the smooth transition in the innovation implementation saga at the macroeconomic level.

Performance

Having analyzed the situation, actors, processes, the authors presented learning and action taken. The present section deals with specific aspects of the action taken, which enhanced the performance. The performance analysis can be taken as benefits being realized by various stakeholders in the economy.

VAT and GST: Comparison of Two Regimes

Table 4 presents a precise comparison of the total collections of the two tax regimes, i.e., pre-GST era up to June 2017, where the taxpayers have to comply with a multiplicity of taxes and post-GST era wherein GST subsumed the other taxes with effect from July 2017 onward. In the pre-GST regime, payers have to comply with significant taxes such as value-added tax or VAT, service tax, central sales tax or CST, octroi and 14 more such state and local levies. The comparison explicitly reveals a sharp upswing in GST revenues between 2017 and 2020 compared with the taxes collected between 2014 and 2017. For instance, if the revenue figures for 2016–2017 and 2017–2018 are to be compared, there is a sharp rise of more than 30 percent. Similarly, the collections for 2018–2019 record growth of more than 60% over the previous fiscal (Fig. 7 ). The increase in the revenue also points out toward the widening tax base and reducing tax evasion incidences.

Revenue comparison between GST and VAT + Taxes (in Rs. Crore)

The difference is vast, which is higher even after accounting for corresponding inflation and GDP growth rate. The data presented for the year 2017–2018 represent the tax revenues for only one quarter (April–June 2017) as this was the final quarter of the previous tax regime. Likewise, the data indicated for 2020–2021 is also for a single quarter (April–June 2020). The data also demonstrates a sudden decline in revenues through GST in the quarter due to the COVID-19 nationwide lockdown and the resultant extension of the deadlines by the government, which may exhibit a hike in the next quarter. The GST figures include central GST, state GST, integrated GST, and cess, a revenue-sharing mechanism designed by the GST council in India.

Benefits for the Consumers

The removal of cascading effects in preceding tax regimes (CENVAT, state VAT, service tax, etc.) has benefited the consumer the most. Consequently, the prices of several products have come down considerably. The reduced prices have contributed to more consumer surplus and may accumulate greater purchasing power soon.

Performance on Ease of Doing Business

The one nation, one tax, one market formula to bring uniformity and simplicity, GST reduced multiple taxes and fewer exemptions. The compliance cost also came down significantly with the unification of the tax regime. It also resulted in convenient record-keeping and gradually automated compliance through the processes such as registration, return, and refund. All interactions are routed through the GSTN portal resulted in lesser public interference between tax administration and taxpayers. Due to the online filing of returns, the compliance environment has improved.

Such online processes have reduced the dependency on time-consuming paperwork and contributed to building a more robust taxation system. Moreover, it led to quicker online verification of input credit. These endeavors collectively enhanced India's position in the World Bank's ease of doing business performance index by 79 positions from 142 in 2014 to 63 in 2019 (IBEF, 2020 ).

Benefits to MSMEs and New Entrepreneurs

With an increase in GST registration threshold for small businesses having annual aggregate turnover of more than rupees forty lakhs in the case of goods suppliers and rupees twenty lakhs in the case of service suppliers. A single registration is required under GST, which is more straightforward than the previous regime of multiple compliances. The composition scheme for some businesses has also proved beneficial for several firms.

Fostering Make in India and Aatmanirbhar Moves

GST led to creating a unified common market, which attracted investment from foreign players as well as national corporations in various industries, which led to pursuing the Make in India initiative and AatmanirbharBharat (Self-reliant India) move for the government. Barring a few short-term exceptions due to the COVID-19 pandemic, India observed an aggregate demand boost. However, the rise in manufacturing activity and employment could not be attained as expected before the GST introduction. It has gainfully improved the country's overall investment climate, and it will subsequently benefit the states.

Implications and Conclusion

GST is assumed to be significant indirect tax reform to propel the economic growth engine, promisingly replacing the intriguingly complex and multi-layers taxation regime with a much simpler, transparent, and tech-driven administration. The present study's analysis revealed that the benefits observed due to its implementation would remove the impediments to inter-state trade and thereby project India as a common market and realize the vision of one nation, one tax, and one market. The study indicates that GST implementation is on its way to attaining the set objectives of unification of the Indian market, simplifying the compliance procedure, and enhancing the tax base to finance the developmental aspiration of the nation. The outcomes indicated that the GST being a process innovation has been implemented well hitherto with some temporal adjustments as the effectiveness of implementation hinges on the extent to which the stated objectives are attained, which is consistent with the implementation-related study by Singh et al. ( 2021a , b ). However, it is too early to say that introduction of GST has led to the attainment of these targets yet the preliminary analysis illustrates that it has been a promising move. It is evident through some of the key economic indicators mentioned in the SAP–LAP analysis that within the short span of the GST regime, the government could expand its tax base without hurting the stakeholders' sentiment and attain a much better ranking on the ease of doing business while nurturing MSMEs. Additionally, the processes involved, such as GST collection, refund or input credit, audit process, GST council reforms, GST Network, taxpayers' complaints, require continuous improvement and time bound re-engineering to meet changing business requirements.

The LAP synthesis revealed first the situation-based learning, which demands a robust IT system to tame the evaders and miscreants such as recent fake invoicing fiasco. It has reduced the chances of error and enhanced faceless and timely verification. The frequent changes in the GST provisions, on the one hand, offer flexibility, but at the same time, it causes troublesome transactions for the enterprises. As revealed from the Twitter sentiment analysis results that the stakeholders exhibited a declivity toward the GST implementation, which can be the outcome of lack of awareness and a typical tendency of inherent resistance to change for the new system. The innovation implementation literature also necessitates the constructive engagement of the stakeholders to ensure its success which is consistent with the study by Chung et al. ( 2017 ).

The action taken includes the introduction of flexibility and simplicity in the compliance mechanism as and when desired. The e-way bill system also facilitated efficient compliance and partially overcame the issues related to tax evasion. Nonetheless, the GST regime should establish a robust design with solid checks and balances to eradicate the evaders and promote good tax governance ultimately. Furthermore, the capacity-building efforts by the CBIC are yet to show up the outcomes which may be public after the implementation of the ambitious SAKSHAM system. The performance analysis explicitly exhibited the superiority of the GST regime over the past VAT regime on several dimensions. The GST implementation has immensely benefitted the consumers, MSMEs, and new enterprises by removing multiple compliance requirements through process simplification and thereby improving India's ease-of-doing-business ranking. To achieve the ambitious Make-in-India and Aatmanirbhar Bharat goals, GST can prove to be a gamechanger, provided the efforts are directed toward eradicating the systemic loopholes.

The theoretical implications of the study are evident through its propensity to address the knowledge gap encompassing an exploratory case-based inquiry linking GST implementation and economic scenario in the Indian context. It also established that the implementation issues require constant supervision and immediate action. The findings drawn from SAP–LAP analysis are also consistent with the report conceptualized by CAG ( 2019 ) presented through Fig.  8 is self-explanatory, exhibiting the extent to which the objectives of GST roll-out are attained. It mentions that the two significant market objectives, unification and simplification of the tax structure, have been achieved well except with a slight fallout on simplified form and procedure. However, the other objective about IT compliance is partially completed with some fallout. The actors must make a collaborative endeavor (Singh and Dhir, 2021 ) to create a simplified IT-enabled process to attain the last and most important objective (Fig.  8 ). Although such problems are expected during the transition phase of implementation through IT as observed in the previous research by Anand et al. ( 2018 ), Suri ( 2005 ), Suri and Sushil ( 2012 ), and Suri and Sushil ( 2008 ), which are commonly related to implementation hurdles due to ineffective change management strategies (Siddiqui, 2018 ; Singh et al., 2020 ).

Source CAG, 2019 — https://cag.gov.in/

Objectives of GST roll-out, achievement, Impact, and fallout.

Furthermore, the study advances an understanding of how SAP–LAP analysis can analyze the fiscal policy issues applying a blended method approach to establish a multi-stakeholder perspective on GST implementation through Twitter analytics coupled with SAP–LAP. Future studies may advance such a combined perspective to draw more inclusive research outcomes. The study also highlighted the social networking site such as Twitter as a powerful medium to meaningfully connect with the stakeholders in policy implementation at large. Also, the study advanced the understanding of innovation implementation research from enterprise context to the macroeconomic context for an economy which may be taken as an incremental extension of theoretical knowledge on policy execution. Nonetheless, the present study, primarily qualitative, neither delves upon the impact of GST implementation on the macroeconomic and fiscal parameters nor attempted to analyze it on any specific microeconomic indicator. Also, GST implementation in India is still in the introduction phase; therefore, not enough panel data could be generated to establish the relationship between GST tax reform and economic growth using econometric modeling. Future studies can show the relationship between the two indicators using quantitative or econometric modeling to ensure the broader generalizability of the findings. More so, the effectiveness of the GST implementation can be measured by quantitatively comparing the set objectives with several fiscal indicators.

Key Questions

How has the implementation of GST affected India's general economic scenario?

How have various stakeholders perceived the new tax regime?

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The research is a part of a funded research project from Indian council of Social Science Research (ICSSR), India and Ministry of Human Resource Development (now, Ministry of Education) under Institute of Eminence (IoE), Banaras Hindu University. The authors gratefully acknowledge the opportunity given by ICSSR and MHRD/MoE to conduct academic research on GST implementation in India and provide inputs for policymaking for improving the existing state of GST implementation.

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Deshmukh, A.K., Mohan, A. & Mohan, I. Goods and Services Tax (GST) Implementation in India: A SAP–LAP–Twitter Analytic Perspective. Glob J Flex Syst Manag 23 , 165–183 (2022). https://doi.org/10.1007/s40171-021-00297-3

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Received : 30 May 2021

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Goods And Service Tax - Free Essay Examples and Topic Ideas

Goods and Services Tax (GST) is an indirect tax system that was implemented in India on July 1, 2017. It replaces multiple indirect taxes levied by State and Central governments, simplifying the taxation system. GST is a value-added tax levied on the sale of goods and services, and it is levied at every stage of production and distribution. GST has been designed to eliminate the cascading effect of tax on tax that resulted in double taxation. GST has helped businesses in reducing their tax burden, promoting ease of doing business, and ultimately contributing to the growth of the Indian economy.

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• The Creation and Impact of the GST (Goods and Service Tax)
• A Comprehensive Analysis Of Impact Of Goods And Services Tax
• What is GST?
• How will GST work?
• What are the benefits of GST?
• Who will have to pay GST?
• The Supply of Goods and Services Act
• Mergers & Acquisitions in the Consumer Goods and Services Industry (CG&S)
• Case Analysis of the Organic Perishable Goods Industry
• When will GST come into effect?
• Fast-Moving Consumer Goods (FMCG)
• What is the GST rate?
• What items will be exempt from GST?
• What is the GST threshold?
• How will GST be collected?
• How will GST be refunded?
• What are the GST return filing requirements?
• What are the GST compliance requirements?
• What are the GST record keeping requirements?
• What are the GST payment requirements?
• What are the GST reporting requirements?

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Essay on GST (Goods and Service Tax), Council, Network and Criticism

In this article, we have explained, Essay on GST (Goods and Service Tax), also its Council, Network and Criticism.

Table of Contents

Understanding the GST

How does gst system work .

These taxes are entertainment tax, entry tax, transfer tax, luxury tax, etc. into a single tax and collected by the government. Most of the countries tax virtually everything at a single rate.

Dual Goods and Service Tax Structures

For example, in Canada, the federal government levies a 5% tax, and some provinces/states also levy a provincial state tax (PST), which varies from 7% to 10%. In this case, the consumer’s receipt will clearly have the GST & P, combining ST rates that were applied to his or her purchase value.

Which Countries Collect the Goods and Service Tax?

The first country to implement GST was France in 1954, and since then, an estimated 160 countries have adopted this tax system in some form or another. Some of the countries with a GST include Canada, Vietnam, Singapore, Australia, United Kingdom, Monaco, Spain, Italy, Nigeria, Brazil, South Korea, and India.

India’s Adoption of the Goods and Service Tax

5% tax rate was applied to household necessities such as sugar, spices, tea, coffee, etc.

In the previous system, with no GST implies that tax is paid on the value of goods and margin at every stage of the production process. Which would translate to a higher amount of total fees paid, which would, in turn, lead to the end consumer in the form of higher costs for goods and services? Thus the implementation of the GST system in India is a measure to reduce inflation in the long run, as prices for products will be lower.

Reverse Charge Mechanism

Gst council.

The governing body is known as the GST council, which contains 33 members of which two members are from the Centre, 28 members are from State, and three members are from Union Territories with legislation.

Goods and Service Tax Network

It is a non-profit organization formed by creating a sophisticated network that is accessible to stakeholders, government, and taxpayers to access information from a single source portal. The portal is accessible to the tax authorities for tracking down every transaction, while taxpayers can connect for their tax returns.

It was described as too complex by the World Bank and noticed various flaws compared to the prevalent GST system in other countries. Indian businesspeople have further criticized it for problems like tax refund delay, too much documentation, and administrative effort needed.  

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Review of Impact of Goods and Services Tax (gst) on Indian Economy

• Categories: Indian Economy

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Published: Oct 11, 2018

Words: 3946 | Pages: 9 | 20 min read

Table of contents

Taxation scheme, impact of gst on indian economy, goods and service tax (gst) impacts key sectors of india's economy.

• First of all, “input tax” means tax you pay to the govt. for the goods you buy. “Output tax” means tax you pay to the govt. for the goods you sell. This “output tax” will be added to the price of the product and hence will be paid by consumers.
• And now, let’s see what is the meaning of “input tax credit”… For example, Fathima manufactures dresses. She needs to pay Rs.50 tax to She bought fabric from Anusha. Anusha paid tax Rs.40 to the government on the fabric she sold.
• Ensuring that the cascading effect of the tax on tax will be eliminated.
• Improving the competitiveness of the original goods and services, thereby improving the GDP rate too.
• Ensuring the availability of input credit across the value chain.
• Reducing the complications in tax administration and compliance.
• Making a unified law involving all the tax bases, laws and administrative procedures across the country.
• Decreasing the unhealthy competition among the states due to taxes and revenues.
• Reducing the tax slab rates to avoid further clarification issues.

Components of GST

• CGST: Collected by the Central Government on an intra-state sale (Eg: Within Maharashtra)
• SGST: Collected by the State Government on an intra-state sale (Eg: Within Maharashtra)
• IGST: Collected by the Central Government for inter-state sale (Eg: Maharashtra to Tamil Nadu)
• Transaction
• Sale within the State
• CGST + SGST
• VAT + Central Excise/Service tax
• Revenue will be shared equally between the Centre and the State
• Sale to another State
• IGST Central Sales Tax + Excise/Service Tax
• Central Excise Duty
• Duties of Excise
• Special Additional Duty of Customs Cess
• Central Sales Tax
• The unprocessed cereals, rice & wheat etc.
• The unprocessed milk, vegetables (fresh), fish, meat, etc.
• Unbranded Atta, Besan or Maida.
• Kid’s coloring book/drawing books.
• Sindoor/Bindis, bangles, etc.

Real Estate

Travel and tourism, ride hailing apps, smartphones.

• As there will be no inter-state tax, transport of goods will be much easier. There will be no burden of check posts for states. And this will benefit the transport industry and suppliers of goods as well. This leads to improved business efficiency, which in turn helps to improve the economy.
• With the elimination inter-state tax, more goods will be imported and exported among states. This leads to improved business and hence improved economy.
• Input tax credit allows people to claim the tax paid by their suppliers. Then, no one will buy goods from those who do not pay taxes. This leads to a reduction in tax evasions and hence more money from taxes to the Indian government.
• With the tax benefits GST provides, it will reduce the prices of goods in the long run. This will increase consumerism and hence improves the economy.
• GST is a global standard tax. And hence with the implementation of GST, India will gain the trust of foreign investors. More investments will help the economy.
• GST will also help to build a transparent and corruption-free tax administration.
• Presently, a tax is levied on when a finished product moves out from a factory, which is paid by the manufacturer, and it is again levied at the retail outlet when sold.
• GST is backed by the GSTN, which is a fully integrated tax platform to deal with all aspects of GST.
• GST also has an optional scheme of lower taxes for small businesses with turnover between INR 20 to 50 lakhs. It is called the composition scheme. It has now been proposed to be increased to 75 lakhs. This will bring respite from tax burdens to many small businesses.
• Removing the cascading tax effect, the simpler online procedure under GST, defined treatment for E-commerce and regulating the unorganized sector.
• Smuggled goods may travel freely throughout the country once they cross the border, because of no separate checking at states. If this happens, it will be it will be impact Indian economy negatively.
• Prices of goods that are bought by upper middle classes and upper classes are increased. This may deter them from buying such kind of products. This will lead to decreased demand - decreased production-impacts economy negatively.
• With the increased competition from the goods from other states, local people may feel discriminated. This may lead to a decrease in the quality of products to cope up with the competition.
• Some Economist says that GST in India would impact negatively on the real estate market. It would add up to 8 percent to the cost of new homes and reduce demand by about 12 percent.
• Some Experts says that CGST(Central GST), SGST(State GST) are nothing but new names for Central Excise/Service Tax, VAT, and CST. Hence, there is no major reduction in the number of tax layers.
• Some retail products currently have only four percent tax on them. After GST, garments, and clothes could become more expensive.

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Essay on GST for Students | Goods and Service Tax Essay, Benefits and Laws of GST

Essay on GST: GST or Goods and Services Tax, India is a tax based on the usage of goods or services across India. GST is an indirect tax replacing the previous indirect taxes imposed on the goods and services. Direct taxes such as income tax, corporate tax, etc., are not influenced by the GST.  Everything you need to know about GST essay writing, Essay on GST in English, Essay GST.

Essay on Goods and Services Tax (GST)

Goods and Services Tax was introduced in 1999, by the government of India when Atal Bihar Vajpayee was the Prime Minister of India. Moreover, a board was set up by Prime Minister under the Finance Minister of West Bengal, Asim Dasgupta to express a GST model. Since then, the GST could not be executed, until lately by the NDA (National Democratic Alliance)  government on 1st July 2017 led by the Bhartiya Janata Party or in short BJP.

Goods and Services Tax is a necessary indirect tax improvement in India. Ere GST, India possessed many indirect taxes imposed respectively by both central and state governments. It resulted in a high volume of taxes, also requiring a high amount of supplies for their stock and managing records.

A combination of both state and central taxes into one will forego many difficulties of the former tax system such as recurring taxations, cascading of taxes, loss of time and sources, etc. Furthermore, GST counts the whole of India as one combined market, consequently encouraging foreign investment. Read an essay about GST.

Essay on GST With Headings

By reducing the cascading of tax at numerous levels, GST offers the goods more affordable for the listed dealers as well as the end customer and hence leading to the financial growth of the country. India is a developing country, still coping with the matter of unemployment. GST is demanded to create new job opportunities in the area of taxation and accountancy, along with openings in the industrial sector.

A centralized GST has emerged in the exclusion of different check posts through the interterritorial transport of goods. The travel time of regional goods vehicles has decreased considerably by 20% due to the lack of check posts. Also, the involvement of multiple parties in GST will increase the assent level.

GST is a big step to lead India into a more transparent and corruption-free taxation system. The GST rules are formed such that it is advantageous for both the sellers and the buyers. India required a better tax improvement on indirect tax like the Goods and Services Tax. GST puts India to a better place to accommodate in the international market. Also, by inducing Small and Medium Enterprises (SMEs) and another organized sector, under it, GST heads to a more enduring Indian industrial area and an enriched economy.

Laws of GST

GST includes a total of 5 laws which are:

• Central GST Law
• State GST Law
• Union Territory GST Law
• Integrated GST Law
• The Goods and Services (Compensation To State) Law

Here, Central GST Law administers with the combination of all taxes on goods and services, their compilation and organizations. Similarly, State GST Law governs at the state level (29 states and 2 Union Territory: Delhi and Puducherry which have their legislative assembly ). Union Territory GST consolidates the stipulations of CGST and practices it to the outstanding Union territories and Indian territories which are away from the regional waters.

Integrated GST administers with import and business between 2 states or union territory. Any disagreement arising under IGST will be resolved by the Centre or by any state authorized by the Centre. Lastly, The Goods and Services Law administers with managing a payment process for paying the states which incited a loss for the first five years of implementation of GST.

GST is a progressive tax, it will have various tax rate for many goods because an alike tax rate on all goods, for example, a toothbrush and a Mercedes car is not possible and not supported as the relevant customer group is different for distinct products.

Benefits of GST

• The primary benefit of GST is that it will decrease the likelihood of tax manipulation by the officials as the customer has to pay only one tax collectively rather than multiple taxes levied in the previous tax system.
• This taxation method is more transparent. It will continuously abolish expansion and various requirements like the tax-return will serve the state also.
• Customers will be benefitted the most since they are considered to be the King.

Disadvantages of GST

• Many thoughts have come stating GST is an old taxation law fulfilled with a new name and some new requirements. GST is divided between CGST and SGST. It may direct to conflict between state and Centre.
• Furthermore, many products will be imposed higher as the tax will be charged on some commodities on which there were no taxes before. Some of the product’s tax percentages would be raised to either 12% or 18% or 28% if they were previously charged with 10 %, 16% or 26% tax respectively.
• GST is a very long and cumbersome method that takes time and manpower.
• GST incorporates 29 states 2 Union Territories and The Centre. So there could be many views which could undesirably delay the judgments and thus the main cause behind the GST will disappear.

GST Essay Conclusion

Small companies can undoubtedly profit significantly beneath GST. Moreover, these small industries have a turnover of Rs 25 to 70 lakh. The advantage of these small trading takes place because of the planning scheme. Below GST, there is a choice for such business to lower taxes. It can be done by using the planning scheme.

The whole process of GST is accessible online. The unique thing is- it is an easy and straightforward online method. Hence, it is advantageous for start-ups, as they don’t have to strive to get multiple registrations.

In the end, GST has been an innovative tax system for India. Many specialists praise it as one of the most significant tax reforms. GST surely is profitable for the complete population of India.

FAQ’s on Essay on GST

Question 1. What is GST?

Answer: GST or Goods and Service Tax is an indirect or consumption-based tax imposed by the Indian Government on all the goods and services parties of a supply chain. GST is an Indirect Tax which has succeeded in many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a complete, multi-stage, destination-based tax that is levied on every value addition.

Question 2. What are the types of GST?

Answer: There are four types of GSTs:

• Central Goods & Services Taxes (CGST)
• State Goods & Services Taxes (SGST)
• Integrated Goods & Services Taxes (IGST)
• Union Territory Goods & Services Taxes (UTGST)

Question 3. Why GST is Important?

Answer: GST strives to replace all indirect taxes levied on goods and services by the Central and State governments of India. GST would subsume with a sole comprehensive tax, reducing the cascading impact of taxes on the production and circulation prices of goods and services.

Question 4. What are the advantages of GST?

Answer: GST has largely eliminated the Cascading impact on the sale of goods and services. Elimination of cascading of tax has impacted the cost of goods. Since the GST administration eliminates the tax on tax, the cost of goods reduces. GST is also more technologically inspired. All actions like registration, tax return, applying for refund and acknowledgment to notice requires to be done online on the GST Portal this stimulates the processes.

Question 5. What was the list of Indirect Tax before the GST was launched?

• Central Excise Duty
• Duties of Excise
• Additional Duties of Excise
• Additional Duties of Customs
• Special Additional Duty of Customs
• Central Sales Tax
• Purchase Tax
• Entertainment Tax
• Taxes on advertisements
• Taxes on lotteries, betting, and gambling

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The Importance of Tax in Our Life Essay (Critical Writing)

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Introduction

Importance of tax.

Bibliography

Tax is one of the ways for authorities in the public sector to raise revenue to run their projects. Public administrations are charged with the development of sufficient revenue to finance programs that benefit the society; hence, they have to either raise the money through investments or apply levies on various commodities to generate the funds. The government can also introduce taxes with the aim of aligning the behavior of various entities with a given policy.

For instance, carbon taxes are used to compel different entities to reduce the impact of their business processes on the environment 1 . In the case under analysis, authorities in Cook County, Chicago, introduced a controversial tax on sweetened beverages in the soft drink field. Taxes are meant to generate revenue or to regulate the behavior of different entities; hence, the actual purpose of a new tax should be communicated to the public.

Lawmakers in the county responded to the pressure from citizens and various lobbying groups that had reviewed the nature and effects of the proposed tax. It is apparent that the tax was meant to reduce the consumption of sweetened soft drinks with the hope that consumers would be discouraged by the increased prices of the products 2 . However, the tax was not effective in attaining the intended health promotion objective because consumers could easily drive to the nearby towns outside the county and shop for the drinks.

A critical view of the tax reveals that its intention was not to boost health outcomes for the citizens of Cook County, but to help the administration in raising about $1.8 billion annually to increase its budget 3 . The government has been facing challenges in raising the required funds for the budget, and it is apparent that the only option it has is the development of new taxes that help in raising the deficit. Economic principles reveal that whenever an administration is facing deficits in its annual budget, there are some options that it may pursue to raise the required money 4 .

Taxes directly involve citizens in contributing to public programs run by the government 5 . However, the government is always limited by various policies when it comes to the introduction of taxes 6 . The policies are meant to ensure that the administration does not introduce laws that exploit the public in an unfair manner. For instance, in Cook County, the local government observes laws that dictate against the development of additional sales taxes on commodities 7 . The associated lawmakers had to introduce the tax at the point of sale, which was quite a bad choice because it would exempt all consumers using food stamps as stipulated by the law.

This case reveals that while taxes are necessary for boosting the capabilities of the government in meeting its obligations and plans, they have to be introduced in a manner that shows legitimacy and appropriate reasoning on the part of the proponents 8 . The tax on sweetened fizzy drinks was banned because its legitimacy was questionable. First, the administration did not have a solid reason for introducing the tax. Secondly, the intentions of the tax were concealed through the claim that the tax was meant to enhance health outcomes for the citizens of Cook County.

The Cook County administration demonstrated that it is always necessary for the authorities to look into introducing legitimate taxes. By introducing the tax, the government intended to raise more money to boost its budget, rather than promote health outcomes as the leaders claimed. Taxes are normally applied to finance government projects by raising revenue or regulating certain behaviors on the part of various entities.

Auerbach, Alan, Raj Chetty, Martin Feldstein, and Emmanuel Saez, eds. Handbook of Public Economics . Vol. 5. Boston: Newnes, 2013.

“ Chicago’s Soda Tax Is Repealed. ” The Economist , 2017. Web.

Lawton, Amy. “Green Taxation Theory in Practice: The 2012 Reform of the Carbon Reduction Commitment.” Environmental Law Review 18, no. 2 (2016): 126-141.

Lu, Xiaobo, and Kenneth Scheve. “Self-Centered Inequity Aversion and the Mass Politics of Taxation.” Comparative Political Studies 49, no. 14 (2016): 1965-1997.

Rood, Deborah K. “The Importance of Tax Quality Control.” Journal of Accountancy 219, no. 4 (2015): 24.

Saad, Natrah. “Tax Knowledge, Tax Complexity and Tax Compliance: Taxpayers’ View.” Procedia-Social and Behavioral Sciences 109, no.1 (2014):1069-1075.

• Amy Lawton, “Green Taxation Theory in Practice: The 2012 Reform of the Carbon Reduction Commitment,” Environmental Law Review 18, no. 2 (2016): 126-141.
• “Chicago’s Soda Tax Is Repealed,” The Economist , 2017. Web.
• “Chicago’s Soda Tax Is Repealed.”
• Natrah Saad, “Tax Knowledge, Tax Complexity and Tax Compliance: Taxpayers’ View,” Procedia-Social and Behavioral Sciences 109, no.1 (2014):1069-1075.
• Alan J. Auerbach et al., eds., Handbook of Public Economics , Vol. 5 (Boston: Newnes, 2013), 4.
• Deborah K. Rood, “The Importance of Tax Quality Control,” Journal of Accountancy 219, no. 4 (2015): 24.
• Xiaobo Lu and Kenneth Scheve, “Self-Centered Inequity Aversion and the Mass Politics of Taxation,” Comparative Political Studies 49, no. 14 (2016): 1965-1997.
• Tax Reform in the United States
• Public and Private Goods Relating to Taxation
• Childhood Obesity Scientific Studies
• Obesity and Its Challenges Analysis
• Legitimacy, Authority, and Power
• Fraud Examiners and the Panama Papers
• "Amazon Laws" and Taxation of Internet Sales
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• Chicago (A-D)
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IvyPanda. (2020, October 31). The Importance of Tax in Our Life. https://ivypanda.com/essays/the-importance-of-tax-in-our-life/

"The Importance of Tax in Our Life." IvyPanda , 31 Oct. 2020, ivypanda.com/essays/the-importance-of-tax-in-our-life/.

IvyPanda . (2020) 'The Importance of Tax in Our Life'. 31 October.

IvyPanda . 2020. "The Importance of Tax in Our Life." October 31, 2020. https://ivypanda.com/essays/the-importance-of-tax-in-our-life/.

1. IvyPanda . "The Importance of Tax in Our Life." October 31, 2020. https://ivypanda.com/essays/the-importance-of-tax-in-our-life/.

IvyPanda . "The Importance of Tax in Our Life." October 31, 2020. https://ivypanda.com/essays/the-importance-of-tax-in-our-life/.

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