HOW GST (GOODS AND SERVICE TAX) IMPLEMENTED IN INDIA?

In this article, the author has discussed the ways on which the GST norms are implemented in India.


After a decade long struggle, overcoming all the troubles appearing as a barricade in its implementation, Goods and Services Tax (GST) has finally been carried out in federal India from 1st July 2017[1]. The implementation of GST has led to the elimination of cascading impact of taxes in the economic system and also promoting free movement of goods crosswise the States, thereby creating “one nation, one market”. A simplified tax regime has resulted in less compliance burden for taxpayers and promotes simple of doing business within the country. This blog highlights a short analysis of GST which would carry a substantial change in the purview of indirect tax in India. It is known as the mother of indirect tax as it will link most of the indirect tax leading to a lucid ambiance for the taxpayer to address with it. Although it is a modern version of VAT. It has put an end to the complex and cascading nature of the multiple-tier indirect taxation. GST is officially called as 101st amendment Act, 2016 which introduced the GST (Goods and Services tax) in our country. By the report, GST has been enforced by quite a 160 countries around the world. Hence it includes very interesting records of successes and failures. There are three attempts of reforms of indirect tax by the committee for implementing of GST:

1. The 1st attempt of reform under the chairmanship of John Mathew in 1953 wherever he suggested that sale tax should be levied by the state government as a source of revenue with the intervention of union government only in case of inter-state sale transaction at the rate of 1%.

2. The 2nd attempt of reform was taken in 1976, the inquiry commission under the chairmanship of L.K Jha where he was given some recommendations for modification of VAT w.r.t input tax credit mechanism at the manufacturing level.

3. The 3rd attempt was at the time of the Manmohan Singh government and introduced the LPG for the betterment of the economy in 1991; the indirect reform was done under the chairmanship of prof. Raja J.Chelliah committee whereas he suggested that we should increase the tax rate while wasting services and extension of modified VAT.


In 1995, the Vajpayee government headed by the union finance minister doing a conducted a with state CM(Asim Dasgupta ) creating a standing committee in Nov 1999 to deliberate the design the GST model and the Dasgupta Committee has been introduced the back –end technology and logistics (which is known as GST NETWORK or GSTN[2] in 2015 ). GSTN is ensuring the taxpayers to smooth filing of return. So it is basically GST is a destination-based indirect tax collected by central as well as state government after consumed the final goods and services by the consumer then GST has been paid by any consumer.[3]

In Union budget 2020 was presented On 1st Feb. 2020 by Union Finance Minster Smt. Nirmala Sitharaman wherein the main source of revenue of the government is the customs duty and GST. In her speech[4] she called that Arun Jaitley was the architect of GST. According to this budget, there are many changes in the GST procedure and to end the fake invoicing memos. These legislative changes of GST which were recommended by the GST council will be introduced in Finance Bill, 2020 (later on known as Finance Act, 2020). The custom law and foreign trade measures were also announced for increasing the domestic industries and encourages the export sectors. There are many amendments in GST has been made under that budget like,

1. The person who is benefited from fake ITC shall be liable for a penalty of 100% of tax that has been involved.

2. The composition scheme also restricted to the taxpayers for making the inter-state supply of services and those supplies through e-commerce operators where TCS is deductible.

3. The 6% CGST rate (total of 12% IGST rate) is applicable to the supply of pulley, wheels, and products used in Agricultural - machinery between 1st July 2017 to 31st December 2018.

4. A new provision was inserted for the cancellation of voluntary registration for specific persons.

5. A provision should be introduced where extending the time limit to returning the inputs and capital goods from job worker.


In India, each policymaker and the public have a lot of expectations from the GST in terms of finding loopholes and resolving them in a pre-existing revenue enhancement structure. Thus, The main focus on the study the functioning of GST of 6 ASIAN countries - Philippines, Indonesia, Singapore, Vietnam – and it might be compared with the Indian GST regime. There has also been made to draw lessons for India for the growth of the economy from the experience of these countries. By this, our country ought to learn from the pitfalls in administration and application of the law in developing countries similarly as from the successful administrative strategies of the developed countries like Singapore. A tax system that is regressive in nature will harm the poor and is the opposite of a progressive tax system and govt. also made the composition levy scheme in GST for small taxpayers or traders. Their aims to provide information for policy by reviewing the Goods and Services Tax (GST) structure among fully-fledged countries.

GST is the most logical step towards the comprehensive indirect tax reforms in our country since independence. Basically GST is a single, unified Indian indirect tax that is applied on different stages of supply of production, distributions or etc. The most important thing is that it divided the taxation burden into manufacturers and services. It was also boosts up the growth of our economy.


Endnotes:

[1] https://www.livemint.com/Politics/7KHC3cniR8mjzof3fcydSK/GST-rollout-deferred-to-1-July-Arun-Jaitley.html [2] Ajay Bhushan Pandey, currently chairman of the Goods and Services Tax Network. [3] GSTN, under section -8 of Companies Act. [4] https://www.businesstoday.in/union-budget-2020/news/union-budget-2020 .


References: 1. https://www.indiatoday.in/india/story/goods-and-services-gst-reformers-atal-bihari-asim-dasgupta-chidambaram-arun-jaitley-985352-2017-06-29

2. Kumar, N, 2014, Goods and Service Tax in India: A way forward. Global Journal of Multidisciplinary studies , 216-225

3. https://cleartax.in/s/what-is-gstn

4. https://www.quora.com/How-will-the-goods and-sevices-tax-GST-work

5. Kumar, N. (2014). Goods and Service Tax in India: A Way Forward. Global Journal of Multidisciplinary Studies, 3(6), 216-225.

6. Nantob, N. (2014). Taxes and economic growth in developing countries

7. Goods and Services Tax Council ,2017 (http://www.gstcouncil.gov.in)

Submitted by:

Ritul Tyagi,

Galgotias University.


(Images used for representative purpose only)

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