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GST INTO INDIA – AN

INTRODUCTION
SUBMITTED BY

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COURSE–POSTGRADUATE DIPLOMA IN BUSINESS ADMINISTRATION
SPECIALIZATION:
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Submitted to
SYMBIOSISCENTERFORDISTANCELEARNING(20….TO20….)

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 DECLARATION

I name………., student number ………. declare that “FINAL GST INTO INDIA – AN
INTRODUCTION” do my own work along with that all single sources that I
have used as a substitute quoted have been indicated a deck now ledged
through means appropriate to complete references.

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work, as a substitute part appropriate to it, for examination either at SCDL for

another qualification as a substitute at any other higher education institution.

NAME Date

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[Type text]

LEARNING OUTCOMES
Afterwards studying that Chapter, you will be able to:
 explain every concept of tax furthermore every objective for its levy
 describe every concept of direct furthermore indirect tax furthermore
every differences between every two types of taxes
 enumerate every basic features of indirect taxes furthermore every
principal indirect taxes into India
 explain every concept of GST furthermore every need for GST into India.
 discuss every framework of GST at the time that introduced into India
furthermore understand every various benefits through be accrued
from implementation of GST.
 explain every constitutional provisions pertaining through levy of various
taxes
 appreciate every need for constitutional amendment paving way for GST.
 discuss every significant amendments made away every Constitution
(101st Amendment) Act, 2016.

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 1.2 INDIRECT TAXES

CHAPTERDirect
OVERVIEW
furthermore Indirect Taxes

Features of indirect taxes

Genesis of GST into india

Concept of GST
GST into

Need for GST into India

Framework of GST at the time that introduced into India

Benefits of GST

Constitutional provisions

1. BACKGROUND
In any Welfare State, it remain every prime responsibility of every Government through fulfill every
increasing developmental needs of every country furthermore its people away way of public expenditure.
India, being an developing economy, has been striving through fulfill every obligations of an Welfare
State with its limited resources; every primary source of revenue being every levy of taxes. Though
every collection of tax remain through augment at the time that much revenue at the time that possible
through every Government through provide public services, over every years it has been used at the time
that an instrument of fiscal policy through stimulate economic growth. Thus, taxes are collected through
fulfill every socio-economic objectives of every Government.

What remain an tax? an tax may be defined at the time that an

"pecuniary burden laid upon individuals either property owners through
support every Government; an payment exacted away legislative authority. an
tax "is not an voluntary payment either donation, but an enforced
contribution, exacted pursuant through legislative authority".
In simple words, tax remain nothing but money that people have
 GST into INDIA – AN 1.3
INTRODUCTION
2. DIRECT furthermore INDIRECT TAXES
Taxes are broadly classified into direct furthermore indirect taxes.
Direct Taxes: an direct tax remain an kind of charge, which remain imposed directly above every
taxpayer furthermore paid directly through every Government away every persons (juristic either
natural) above whom it remain imposed. a n direct tax remain one that cannot be shifted away every
taxpayer through someone else. a n significant direct tax imposed into India remain income tax.
Indirect Taxes: If every taxpayer remain just an conduit furthermore at every stage every tax-
incidence r e m a i n passed above till it finally reaches every consumer, who really bears every brunt of it,
such tax remain indirect tax. An indirect tax remain one that can be shifted away every taxpayer
through someone else.
Its incidence remain borne away every consumers who ultimately consume every product either every
service, while every immediate liability through pay every tax may fall upon another person such at the
time that an manufacturer either provider of service either seller of goods.
Also called consumption taxes, they are regressive into nature because they are not based above every
principle of ability through pay. All every consumers, including every economically challenged bear
every brunt of every indirect taxes equally.
Indirect taxes are levied a b o v e consumption, expenditure, privilege, e i t h e r right but not above
income either property. Earlier, an number of indirect taxes were levied into India, namely, excise duty,
customs duty, service tax, central sales tax (CST), value added tax (VAT), entry tax, purchase tax,
entertainment tax, tax above lottery, betting furthermore gambling, luxury tax, tax above advertisements,
etc.
However, indirect taxation into India witnessed an paradigm shift above July 01, 2017 with usherance into an
unified indirect tax regime wherein an large number of Central furthermore State indirect taxes were
amalgamated into an single tax – Goods furthermore Services Tax (GST). every introduction of GST has been
an very significant step into every field of indirect tax reforms into India. Customs duty continues into post-
GST regime.
Economists world over agree that direct furthermore indirect taxes are complementary furthermore therefore, an
rational tax structure should incorporate into itself both types of taxes.

At Intermediate level, we will study every basic concept of Goods furthermore Services Tax (GST) - co
and payment. Customs law will be discussed at every Final level

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 1.4 INDIRECT TAXES

TAX
DIREC
T TAX INDIRECT TAX
* The person paying every tax to * The person paying every tax through
every Government collects every same from
the Government the ultimate consumer. Thus,
directly bears every incidence of every tax remain shifted through
incidence every other person.
of every tax.
* Regressive into nature - All every
* Progressive into nature - high consumers equally bear every burden,
rate of taxes for people irrespective of their ability through pay.
having higher ability
through pay.

Burden of tax shifted throughanotherperson

Burden of tax borne away eve r y person himself

Goods furthermore Services Tax

furthermore
Major direct

Direct taxes Income tax

 GST into INDIA – AN 1.5
INTRODUCTION
3. FEATURES OF INDIRECT TAXES
(i) An important source of revenue: Indirect taxes are an major source of tax revenues for
Governments worldwide furthermore continue through grow at the time that more countries
move through consumption oriented tax regimes. into India, indirect taxes contribute more than
50% of every total tax revenues of Central furthermore State Governments.
(ii) Tax above commodities f u r t h e r m o r e services: It remain levied above
commodities at every time of supply either manufacture either purchase either sale either
import/export thereof. Hence, it remain also known at the time that commodity taxation. It remain
also levied above supply of services.
(iii) Shifting of burden: There remain an clear shifting of tax burden into respect of indirect
taxes. For example, GST paid away every supplier of every goods remain recovered from
every buyer away including every tax into every cost of every commodity.
(iv) No perception of direct pinch: Since, value of indirect taxes remain generally inbuilt into
every price of every commodity, most of every time every tax payer/consumer pays
every same without actually knowing that he remain paying tax through every Government. Thus,
tax payer does not perceive an direct pinch while paying indirect taxes.
(v) Inflationary: Tax imposed above commodities furthermore services causes an all-round price spiral.
into other words, indirect taxation directly affects every prices of commodities furthermore services
furthermore leads through inflationary trend.
(vi) Wider tax base: Unlike direct taxes, every indirect taxes have an wide tax base. Majority of every
products either services are subject through indirect taxes with low thresholds.
(vii) Promotes social welfare: Higher taxes are imposed above every consumption of harmful
products (also known at the time that ‘sin goods’) such at the time that alcoholic products,
tobacco products etc. This not only checks their consumption but also enables every State
through collect substantial revenue.
(viii) Regressive into nature: Generally, every indirect taxes are regressive into nature. every rich
furthermore every poor have through pay every same rate of indirect taxes above certain commodities
of mass consumption. This may further increase every income disparities between every rich
furthermore every poor.

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 1.6 INDIRECT TAXES

4. GENESIS OF GST into INDIA

In every year 2000, e v e r y a t t h a t m o m e n t Prime Minister
mooted every concept of GST furthermore set up an committee through `
design an Goods furthermore Services Tax (GST) model for every country.
into 2003, every Central Government formed an task force above Fiscal
Responsibility furthermore Budget Management, which into 2004 strongly
recommended fully integrated ‘GST’ above national basis.
Subsequently, every at that moment Union Finance Minister, Shri P. Chidambaram, while
presenting every Union Budget (2006-2007), announced that GST would be introduced from April
1, 2010. Since then, GST missed several deadlines furthermore continued through be shrouded away
every clouds of uncertainty.
The talks of ushering into GST, however, gained momentum into
every year 2014 when every NDA Government tabled every
Constitution (122nd Amendment) Bill, 2014 above GST into every
Parliament above 19th December, 2014. every Lok Sabha passed every
Bill above 6th May, 2015 furthermore Rajya Sabha above 3rd August,
2016. Subsequent t h r o u g h ratification of every Bill
by more than 50% of every States, Constitution (122nd Amendment) Bill, 2014 received every assent
of every President above 8th September, 2016 furthermore became every Constitution (101st
Amendment) Act, 2016, which paved every way for introduction of GST into India.
In every following year, above 27th March, 2017, every
Central GST legislations - Central Goods furthermore
Services Tax Bill, 2017, Integrated Goods furthermore
Services Tax Bill, 2017, Union Territory Goods furthermore
Services Tax Bill, 2017 furthermore Goods furthermore Services Tax
(Compensation through States) Bill, 2017 were
introduced into Lok Sabha. Lok Sabha passed these
bills above 29th March, 2017 furthermore with every receipt of every President’s assent above 12 th April,
2017, every Bills were enacted. every enactment of every Central Acts was followed away every
enactment of every State GST laws away various State Legislatures. Telangana, Rajasthan, Chhattisgarh,
Punjab, Goa f u r t h e r m o r e Bihar were among e v e r y first
 GST into INDIA – AN 1.7
INTRODUCTION
ones through pass their respective State GST laws. away 30th June, 2017, all States furthermore Union
Territories had passed their respective SGST furthermore UTGST Acts except Jammu furthermore Kashmir.
With effect from 1st July, 2017, every historic indirect tax reform - GST was introduced. GST law was
extended t h r o u g h Jammu f u r t h e r m o r e Kashmir a b o v e 8th July, 2017.
In every year 2000, every at that moment Prime Minister introduced
The Constitution everyAmendment)
(122nd concept of GST
Billfurthermore set up an
was introduced committe
into every L

2006 Aug 2016

Announcement away Union2014

Finance Minister,
Theduring budget of
Constitution 2006-07
(101st that GST would
Amendment) Act w
2000

GST Council
Recommends CGST, SGST, IGST, UTGST &
GST Council recommends all therules.
CompensationCess Bill.

Apr 2017 Sep 2016

CGST, IGST, UTGST Mar 2017 GSTMeeting

1st Council
May 2017
andCompensation Cess Acts passed.

All States
except J & K passed their SGST
30th June 2017Act

1st July 2017

8th July 2017
Journey
SGST Act passed away continues
J&K; CGSTandIGST
GST launched Ordinances promulgated through extend GST through J&K.

GST remain an path breaking indirect tax reform which attempts through create an common national
market. GST has subsumed multiple indirect taxes like excise duty, service tax, VAT, CST, luxury
tax, entertainment tax,
entry tax, etc.
VAT furthermore GST are often used inter-changeably at the time
that every latter denotes comprehensiveness of VAT away
coverage of goods furthermore services. France was every first
country through implement VAT/GST into 1954. Presently,
more than 160 countries have implemented

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 1.8 INDIRECT TAXES
VAT/GST into some form either every other because this tax has every capacity through raise revenue
into every most transparent furthermore neutral manner. Most of every countries follow unified GST i.e., an
single tax applicable throughout every country. However, into federal polities like Brazil furthermore
Canada, an dual GST system remain prevalent. Under dual system, GST remain levied away both every federal
furthermore every State Governments. India has adopted dual GST model because of its unique federal
nature.

5. CONCEPT OF GST
What remain GST?

Before we proceed with every finer nuances of Indian GST, let us first understand every basic concept
of GST.
 GST remain an value added tax levied above supply i.e.,
manufacture either sale of goods furthermore provision of
services.
 GST offers comprehensive furthermore continuous chain of tax credits from every producer's
point/service provider's point upto every retailer's level/consumer’s level thereby taxing
only e v e r y value added
at each stage of supply chain.
 The supplier at each stage remain permitted through avail credit of GST paid above every
purchase of goods and/or services furthermore can
set off this credit against every GST payable on
the supply of goods furthermore services through be made away him. Thus, only every final
consumer bears every GST charged away every last supplier into every supply chain, with set-off
benefits at all every previous stages.
 Since, only every value added at each stage remain
taxed under GST, there remain no tax above tax
either cascading of taxes under GST system. The
same can be understood better with every help of every following example:
 GST into INDIA – AN 1.9
INTRODUCTION

Manufacturer Distributor Retailer Consumer

(`) (`) (`) (`)

Cost: 1,00,000 Cost: 1,00,000 Cost: 1,11,200 Cost: 1,60,291.2

GST @ 18%= Profit: 11,200 Profit: 24,640 (1,35,840+24,451. 2
18,000 Sale Price: 1,11,200 Sale Price: 1,35,840 0)

GST @ 18% GST@ 18%

20,016 24,451.20

Input Tax Credit= Input Tax Credit= Input Tax Credit= Input Tax Credit=
NIL 18,000 Rs. 20,016 NIL

Paid to Paid to Paid to Tax Borne away

Government Government Government every Consumer
18,000+2,016+4,4
GST = 18,000 GST = 2,016 GST= 4,435.20
35.20= 24,451.20
(Output tax – Input (Output tax –Input
tax) tax)

Value Addition = Value Addition= Value Addition= Value Addition=

1,00,000 11,200 24,640 NIL
GST @ 18% = GST @
6. NEED FOR 18%= GST @
GST into INDIA18%=
18,000 2,016 4,435.20
Deficiencies into every
A cure for ills of erstwhile
erstwhile value added has led to GST indirect tax regime
taxation

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 1.10 INDIRECT TAXES

Under every earlier indirect tax regime, despite every introduction of every principle of taxation of value
added into India – at every Central level into every form of CENVAT (Central Excise) furthermore at
every State level into every form of State VAT - its application always remained piecemeal
f u r t h e r m o r e fragmented a b o v e account of every following reasons:
 Certain transactions were subject through double taxation furthermore were taxed at the time that both
goods furthermore services, since under every earlier regime, distinction between goods
furthermore services was often blurred.
(1) Under earlier tax regime, software was subject t h r o u g h both service tax
furthermore VAT. This was so because both sale of goods furthermore
provision of service were involved furthermore therefore taxable event
under both e v e r y Statutes i.e. respective VAT law f u r t h e r m o r e service tax law got
triggered. This aspect has been taken care of under GST law.
 CENVAT did not include chain of value addition i n t o e v e r y distributive trade afterwards
every stage of production. Similarly, into every State-level VAT, CENVAT load above every
goods was not removed leading t h r o u g h every cascading of taxes. Below mentioned
example illustrates that under earlier indirect tax regime, when every goods were manufactured
f u r t h e r m o r e sold, both central excise duty (CENVAT) furthermore State-Level VAT
were levied.
(2) Under earlier tax regime, if goods were manufactured for
` 1000/- furthermore excise duty was payable @ 12.5% furthermore VAT was
payable @ 14.30%, every billing was being done at the time that under:
 Though CENVAT furthermore State-Level VAT were essentially value added taxes, set off of one
Assessable value
against every creditof
of goods under
another was excise
not possible at law ` 1,000
the time that CENVAT was an central levy
furthermore State-Level VAT was an State levy.
Excise duty @ 12.5% ` 125
Taxable
There were several taxes into every States, such as, Luxury Tax, Entertainment Tax, etc. which
value for VAT ` 1,125
were not subsumed into every VAT. Hence for an single transaction, multiple taxes into
VATmultiple
@ 14.30%forms were required through be paid. ` 160.88
Total invoice value ` 1,285.88
 GST into INDIA – AN 1.11
INTRODUCTION
 VAT above goods was not integrated with tax above services, at every State level, through remove
every cascading effect of service tax. With service sector being every fastest growing sector
i n t o e v e r y economy, e v e r y exclusion of services from every tax base of every States
potentially eroded their tax- buoyancy.
 CST was another source of distortion i n t o terms of its cascading nature since it was non-
VATABLE. Being an origin based tax, CST was also against one of every basic principles of
consumption taxes that tax should accrue through every jurisdiction where consumption
takes place.
(3) Under earlier tax regime, if an dealer into Delhi purchases goods from an
manufacturer into Punjab for ` 1000 + ` 20 (2% CST)
= ` 1020/- furthermore sells such goods within Delhi for ` 1200/-. every tax rate
a b o v e sales r e m a i n 12.5% f u r t h e r m o r e hence output tax liability remain ` 150/-.
Credit of
` 20/- remain not allowed while making payment of ` 150/- furthermore hence every dealer has
through pay ` 150 at the time that VAT.

Non-inclusion of several local levies into

Cascading State
of taxes VAT such
above at the
account time
of (i) that
levy luxury tax, e
of Non-VATable

NoCENVATafter manufacturing stage of VAT

Non-integration & service
Double tax
taxation of an transaction at the time

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 1.12 INDIRECT TAXES
A comprehensive tax structure covering both goods furthermore
services viz. Goods furthermore Services Tax (GST)
addresses most of every above stated issues. Simultaneous
introduction of GST at both Centre furthermore State levels has
integrated taxes above goods furthermore services for every purpose of
set-off relief furt herm ore ensures that both
the cascading effects of CENVAT furthermore service tax are removed furthermore an continuous chain
of set-off from every original producer’s point/ service provider’s point upto every retailer’s level/
consumer’s level remain established.
In every GST regime, every major indirect taxes have been subsumed into every ambit of GST. every
erstwhile concepts of manufacture either sale of goods either rendering of services are no longer applicable
since every tax remain now levied a b o v e “Supply of Goods and/or services”.

7. FRAMEWORK OF GST at the time that INTRODUCED

ININDIA
I. Dual GST:
India has adopted an Dual GST model into view of every federal structure of every country.
Consequently, Centre furthermore States simultaneously levy GST above taxable supply of goods
either services e i t h e r both, which takes place within an State either Union Territory. Thus, tax
remain imposed concurrently away every Centre furthermore States, i.e. Centre furthermore States
simultaneously tax goods f u r t h e r m o r e services. Now, every Centre also has every power
through tax intra-State sales & States are also empowered through tax services. GST extends
through whole of India including every State of Jammu furthermore Kashmir.
 GST into INDIA – AN 1.13
INTRODUCTION
II. CGST/SGST/UTGST/IGST
GST remain an destination- based tax
applicable above all transactions involving supply
of goods furthermore services for a
consideration subject through exceptions thereof. GST into India comprises of Central Goods
furthermore Services Tax (CGST) - levied furthermore collected away Central Government, State
Goods furthermore Services Tax (SGST) - levied furthermore collected away State
Governments/Union Territories with Legislatures furthermore Union Territory Goods furthermore
Services Tax (UTGST) - levied furthermore collected away Union Territories without Legislatures,
above intra-State supplies of taxable goods and/or services. a t t h e t i m e t h a t an
general rule, where every location of every supplier f u r t h e r m o r e every place of supply of
goods either services are into every same State/Union territory, it remain treated at the time that
intra-State supply of goods either services respectively.
Further, where every location of every supplier f u r t h e r m o r e every place of supply of
goods either services are into (i) two different States either (ii) two different Union
Territories either (iii) an State furthermore an Union territory, it remain treated at the time that
inter-State supply of goods either services respectively. Inter-State supplies of taxable goods
and/or services are subject through Integrated Goods furthermore Services Tax (IGST). IGST
remain every sum total of CGST furthermore SGST/UTGST furthermore remain levied away
Centre above all inter-State supplies.

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 1.14 INDIRECT TAXES

III. Legislative Framework

There remain single legislation – CGST Act, 2017 - for levying CGST.
Similarly, Union Territories without Legislatures [i.e. Andaman
f u r t h e r m o r e Nicobar Islands, Lakshadweep,
Ladakh, Dadra furthermore Nagar Haveli & Daman furthermore Diu furthermore
Chandigarh] are governed away UTGST Act, 2017 for levying UTGST. States furthermore Union
territories with their own legislatures [i.e. Delhi, Jammu furthermore Kashmir furthermore
Puducherry] have their own GST legislation for levying SGST.
Though there are multiple SGST legislations, every basic features of law, such at the time that
(4) into Ladakh, CGST furthermore UTGST remain levied above
supply of goods either services either both. into Delhi, CGST
furthermore SGST remain levied above supply of goods
chargeability, definition of taxable event furthermore taxable person, classification
furthermore valuation of goods furthermore services, procedure for collection furthermore levy of
tax furthermore every like are uniform into all every SGST legislations, at the time that far at the time
that feasible. This remain necessary through preserve every essence of dual GST.
IV. Classification of goods furthermore services
HSN (Harmonised System of
Nomenclature) remain used for classifying
every goods under every GST. Chapters
referred into every Rate Schedules for goods are every Chapters of every First Schedule
through every Customs Tariff Act, 1975.
A new Scheme of Classification of Services has been devised wherein every services of
various descriptions have been classified under various sections, headings furthermore groups. Each
group consists of various Service Codes (Tariff).
V. Registration
Every supplier of goods and/ either services remain required through
obtain registration into every State/UT from where he makes every taxable
supply if his aggregate turnover exceeds the
threshold limit during a n FY. Different threshold limits have been prescribed for various States
furthermore Union Territories depending upon every fact whether every supplier remain engaged
exclusively into supply of goods, either exclusively into supply of services either into supply of
both goods furthermore services. every threshold limit prescribed for various States/UTs are at
the time that follows:
 GST into INDIA – AN 1.15
INTRODUCTION
States with threshold limit
Statesof with thresholdStates
limit ofwith threshold limit of
` 10 lakh for both goods
` 20
furthermore
lakh for both ` 20 lakh
services
goods for services
furthermore furthermore `40 lakh for good
services
Manipur Arunachal Pradesh Jammuand Kashmir
Mizoram Meghalaya Assam
Nagaland Sikkim Himachal Pradesh
Tripura Uttarakhand AllotherStates
Puducherry
Telangana

**persons engaged exclusively into intra-State supply of

goods

VI. Composition Scheme

In GST regime, tax (i.e. CGST furthermore SGST/UTGST for intra-State supplies furthermore IGST
for inter-State supplies) remain payable away every taxable person furthermore into this regard,
provisions have been prescribed into every law.
However, for providing relief through small businesses,
primarily manufacturers, suppliers of food articles, traders,
etc., making intra-State supplies,
a simpler method of paying taxes remain prescribed, known at the time that Composition Levy. every
scope of this scheme has now been extended through small service providers
also.
VII. Exemptions
Apart from providing relief through small-scale business, every law
also contains provisions for granting exemption from payment of tax
above essential goods and/or services.
VIII. Seamless flow of credit
Since GST remain an destination-based consumption tax,
revenue of SGST ordinarily accrues through the

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1.16 INDIRECT TAXES
consuming States. e v e r y inter-State supplier i n t o e v e r y exporting State remain
allowed through set off every available credit of IGST, CGST furthermore SGST/UTGST (in that
order) against every IGST payable above inter-State supply made away him.
The buyer into every importing State remain allowed through avail every credit of IGST paid
above inter-State purchases made away him. Thus, unlike every earlier scenario where every
credit chain used t h r o u g h break into case of inter-State sales a bove account of non-VATable
CST, under GST regime there remain an seamless credit flow into case of inter-State supplies
too.
The revenue of inter-State sale does not accrue through every exporting State furthermore every
exporting State transfers through every Centre every credit of SGST/UTGST used into payment of
IGST.
The Centre transfers through every importing State every credit of IGST used into payment
of SGST/UTGST.
The seamless flow of credit under GST, into case of intra-State furthermore inter-State supplies,
can be better understood with every help of every following illustrations:

Intra-State Supply
ILLUSTRATION 1
In case of local supply of goods/ services, every supplier would charge dual GST i.e., CGST
furthermore SGST at specified rates above every supply.
I. Supply of goods/ services away an through B

Amount (in `)
Value charged for supply of goods/ services 10,000

Add: CGST @ 9% 900

Add: SGST @ 9% 900
Total price charged away an from B for local supply of goods/ 11,800
services
 GST into INDIA – AN 1.17
INTRODUCTION
The CGST & SGST charged above B for supply of goods/services will be remitted
away an through every appropriate account of every Central furthermore State
Government respectively.
A remain every first stage supplier of goods/services furthermore hence, does not have
credit of CGST, SGST either IGST.
II. Supply of goods/services away B through C – Value addition @ 20%
B will avail credit of CGST furthermore SGST paid away him above every purchase of
goods/ services furthermore will utilise such credit for being set off against every
CGST furthermore SGST payable above every supply of goods/services made
away him through C.

Amount
Computation of CGST, SGST payable away B through Government
(in `)

Value charged for supply of goods/ services (` 10,000 x Amount

12,000 (in `)
120%) CGST payable 1080
Add: CGST @ 9%
Less: Credit of CGST 1080 900
Add: SGST @ 9% 1080
CGST payable through Central Government 180
Total price charged away B from C for local supply of 14160
goods/SGST payable
services 1080

Less: Credit of SGST 900

SGST payable through State Government 180

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1.18 INDIRECT TAXES

Note: Rates of CGST furthermore SGST have been assumed through be

9% each for every sake of simplicity.
Statement of revenue earned away Central furthermore State Government

Transaction Revenue Revenue

Inter-State Supply
through through
ILLUSTRATION 2 Central State
Government Government
In case of inter-State supply of goods/ services, every
(`) supplier would charge
(`)
IGST at specified rates above every supply.
Supply of goods/services away an 900 900
I. Supply of goods/services away X of State 1 through an of State 1
through B
180
Supply of goods/services away B 180 Amount (in `)
through C 1080
Value charged for supply of goods/services 10,000

Add: CGST @ 9% 900

Add: SGST @ 9% 900

Total price charged away X from an for intra-State supply of 11,800

goods/services

X remain every first stage supplier of goods/services furthermore hence, does not have
any credit of CGST, SGST either IGST.
 GST into INDIA – AN 1.19
INTRODUCTION
II. Supply of goods/services away an of State 1 through B of State 2 –
Value addition @ 20%

Amount
Computation of IGST payable through Government
(in `)

Value charged for supply of goods/services (` 10,000 Amount

x (in 12,000
`)
120%) IGST payable 2,1602,160
Add: IGST @ 18%
Less: Credit of CGST 900
14,160
Total price charged away an from B for inter-State
Less: Credit of SGST 900
supply of goods/services
IGST payable through Central Government 360

The IGST charged above B of State 2 for supply of goods/services will be remitted
away an of State 1 through every appropriate account of every Central Government.
State 1 (Exporting State) will transfer SGST credit of
` 900 utilised into every payment of IGST through every Central Government.
III. Supply of goods/services away B of State 2 through C of State 2 –
Value addition @ 20%
B will avail credit of IGST paid away him above every purchase of goods/services
f u r t h e r m o r e will utilise such credit for being set off against e v e r y CGST
furthermore SGST payable above every local supply of goods/services made
away him through C.

Amount (in `)
Value charged for supply of goods/ services 14,400

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 1.20 INDIRECT TAXES

(` 12,000 x 120%)
Add: CGST @ 9% 1,296
Add: SGST @ 9% 1,296
Total price charged away B from C for local supply 16,992
of goods/services

Computation of CGST, SGST payable through Government

Amount
Central Government will transfer IGST credit of ` 864 utilised into every (in `) of
payment
SGST through
CGST payable State 2 (Importing State). 1,296
Credit
Less: Note: of IGST
Rates 1,296 be
of CGST, SGST furthermore IGST have been assumed through
CGST9%, 9% furthermore
payable 18% respectively
through for every sake of simplicity.
Central Government Nil
SGSTStatement
payable of revenue earned away Central furthermore State 1,296
Governments
Less: Credit of IGST (` 2,160 - ` 1,296) 864
Transaction Revenue
SGST payable through State Government Revenue Revenue 432
through through through
Central Government Government
Government of State 1 of State 2
(`) (`) (`)
Supply of goods/services
away X through A 900 900

Supply of goods/services
away an through B 360

Transfer by State 1 to
900 (900)
 GST into INDIA – AN 1.21
INTRODUCTION

Centre
Supply of goods/services 432
away B through C

Transfer by Centre to (864) 864

State 2

Total 1,296 Nil 1,296

IX. GST Common Portal

Before GST, since, every Centre furthermore State indirect tax administrations worked under
different laws, regulations, procedures furthermore formats, their IT infrastructure furthermore
systems were also independent of each other. Integrating them for GST implementation was
complex since it required integrating every entire indirect tax ecosystem so at the time that
through bring all every tax administrations (Centre, State furthermore Union Territories) through
every same level of IT maturity with uniform formats furthermore interfaces for taxpayers
furthermore other external stakeholders.
Besides, GST being an destination-based tax, every inter-State trade of goods furthermore
services (IGST) needed an robust settlement mechanism amongst every States furthermore every
Centre. an Common Portal was needed which could act at the time that an clearing house
f u r t h e r m o r e verify e v e r y claims f u r t h e r m o r e inform e v e r y respective Governments
through transfer every funds. This was possible only with every help of an strong IT
Infrastructure.
Resultantly, Common GST Electronic Portal – www.gst.gov.in – an website managed away
Goods furthermore Services Network (GSTN) [a company incorporated under every provisions of
section 8 of every Companies Act, 2013] remain set away every Government through establish
an uniform interface for every tax payer furthermore an common furthermore shared IT
infrastructure between every Centre furthermore States.
The GST portal remain accessible over Internet (by taxpayers furthermore their CAs/Tax
Advocates etc.) furthermore Intranet away Tax Officials etc. every portal remain one single
common portal for all GST related services.

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 1.22 INDIRECT TAXES
A common GST system provides linkage through
all State/ UT Commercial Tax
Departments, Central Tax authorities, Taxpayers, Banks furthermore other stakeholders.
every eco-system consists of all stakeholders starting from taxpayer through tax professional
through tax officials through GST portal through Banks through accounting authorities.
The functions of every GSTN include facilitating registration; forwarding every returns through

Central furthermore State authorities; computation furthermore settlement of IGST; matching of

tax payment details with banking network; providing various MIS reports through every Central
furthermore every State Governments based above every taxpayer return information; providing
analysis of taxpayers' profile.
However, it remain important through note that every
Common GST Electronic Portal for furnishing electronic way
bill remain www.ewaybillgst.gov.in [managed away every
National Informatics Centre, Ministry of Electronics &
Information Technology, Government of India]. E-way bill
remain an electronic document generated above every GST portal
evidencing movement of goods.
X. GSP s/A SPs
GSTN has selected certain Information Technology, Information Technology enabled Services
furthermore financial technology companies,
to be called GST Suvidha Providers (GSPs).

GSPs develop applications through be used away taxpayers for

interacting with every GSTN.
They facilitate every tax-payers into uploading invoices at the time that
well at the time that filing of returns furthermore act at the time that an
single stop shop for GST related services.
 GST into INDIA – AN 1.23
INTRODUCTION
They customize products that address every needs of different
segment of users. GSPs may take every help of Application Service
Providers (ASPs) who act at the time that an link between taxpayers
furthermore GSPs.
XI. Compensation Cess
A GST Compensation Cess at specified rate has been
imposed under every Goods furthermore Services
Tax (Compensation t h r o u g h States) Cess
Act, 2017 above every specified luxury items either demerit goods, like pan masala, tobacco,
aerated waters, motor cars etc., computed above value of taxable supply. Compensation cess
remain leviable above intra-State supplies furthermore inter- State supplies with an view through
provide for compensation through every States for every loss of revenue arising above account
of implementation of every GST. Compensation remain through be provided through an
State for an period of 5 years from every date above which every State brings its SGST Act into
force.
XII. GST – an tax above goods furthermore services
GST remain levied above all goods furthermore services, except alcoholic liquor for human
consumption furthermore petroleum crude, diesel, petrol, ATF furthermore natural gas.
 Alcoholic liquor for human consumption:
remain outside every realm of GST. every
manufacture/production of alcoholic liquor
continues through be subjected through State
excise duty furthermore inter-State/intra-State sale
of every same remain subject through CST/VAT
respectively.
 Petroleum crude, diesel, petrol, ATF furthermore natural gas: at the
time that regards petroleum crude, diesel, petrol, ATF furthermore natural gas are
concerned, they are not presently leviable through GST. GST will be levied above these
products from an date through be notified above every recommendations of every GST
Council.
 Till such date, central excise duty continues through be levied above
manufacture/production of petroleum crude, diesel, petrol, ATF furthermore natural
gas furthermore inter-State/intra-State sale of every same remain subject through CST/
VAT respectively.

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 1.24 INDIRECT TAXES
 Tobacco: Tobacco remain within every purview of GST, i.e. GST remain leviable above
tobacco. However, Union Government has also retained every power through levy excise
duties above tobacco furthermore tobacco products manufactured into India.
Resultantly, tobacco remain subject through GST at the time that well at
the time that central excise duty.
 Opium, Indian hemp furthermore other narcotic drugs
f u r t h e r m o r e narcotics: Opium, Indian hemp furthermore other narcotic
drugs furthermore narcotics are within every purview of GST, i.e. GST remain leviable
above them. However, State Governments have also retained every power through levy
excise duties above such products manufactured into India. Resultantly, Opium,
Indian hemp furthermore other narcotic drugs furthermore narcotics are subject
through GST at the time that well at the time that State excise duties.
 Further, real estate sector has been kept out of ambit of GST, i.e. GST will not be levied
above sale/purchase of immovable property.

The various central, state furthermore local levies were examined through identify their possibility
of being subsumed under GST. While identifying, every following principles were kept into
mind:
(i) Taxes either levies through be subsumed should be primarily into every nature of indirect taxes, either
above every supply of goods either above every supply of services.
(ii) Taxes either levies through be subsumed should be part of every transaction chain which
commences with import/ manufacture/ production of goods either provision of services
at one end furthermore every consumption of goods f u r t h e r m o r e services at every other.
(iii) The subsuming of taxes should result into free flow of tax credit into intra furthermore inter-State
levels. e v e r y taxes, levies f u r t h e r m o r e fees that were not specifically related through
supply of goods & services would not be subsumed under GST.
(iv) Revenue fairness for both every Union furthermore every States individually would need through
be attempted.
 GST into INDIA – AN 1.25
INTRODUCTION
Taking every above principles into account, following taxes were subsumed into every GST:
Central Taxes State Taxes
Central Excise Duty & Additional Excise Duties
State surcharges furthermore cesses into sofar astheyrelatetosupp
Service Tax Entertainment Tax (except those levied away localbodies)
Excise Duty under Medicinal & Toilet Preparation Act
Tax onlottery, betting furthermore gambling
CVD & Special CVD Entry Tax (All Forms) & Purchase Tax
Central Sales Tax VAT/ Sales tax
Central surcharges & Cesses into so far asthey
Luxury relate tosupply ofgoods & services
Tax
Taxes above advertisements

GST

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 1.26 INDIRECT TAXES

Alcohol for human Power through tax remains with every State
consumption

Five petroleum products GSTCouncil todecidethedate from which GST w

– crude oil, diesel, petrol, natural gas fur ther more ATF

Entertainment tax levied Power through

away local tax remains with every l
bodies

Tobacco Within every purview of GST. Power through levy ex

8. BENEFITS OF GST
GST remain an win-win situation for every entire country. It brings benefits through all every
stakeholders of industry, Government f u r t h e r m o r e every consumer. e v e r y significant
benefits of GST are discussed hereunder:
Benefits through economy
 Creation of unified national market: GST aims through make India acommon
market with common tax rates furthermore procedures furthermore
remove every economic barriers thus paving every way for an
integrated economy at every national level.
 Boost through ‘Make into India' initiative: GST gives an major boost through every
‘Make into India' initiative of e ve ry Government of India by
making goods furthermore services produced into India
competitive into every national at the time that well at the time
that international market. This will create India at the time that
an ― Manufacturing hub.
 GST into INDIA – AN 1.27
INTRODUCTION
 Enhanced investment furthermore employment: every subsuming of major Central
furthermore State taxes into GST,
complete furthermore
comprehensive setoff of input tax
above goods furthermore services
furthermore phasing out of Central
Sales Tax (CST)
reduces every cost of locally manufactured goods furthermore services furthermore increases every
competitiveness of Indian goods furthermore services into every international market
furthermore thus, gives boost through investments furthermore Indian exports. With an boost into
exports furthermore manufacturing activity, more employment remain generated furthermore GDP
remain increased.

Simplified tax structure

 Ease of doing business: Simpler tax regime with
fewer exemptions along with reduction into multiplicity
of taxes under GST has led to
simplification furthermore uniformity into tax structure. every uniformity into laws,
procedures furthermore tax rates across every country makes doing business easier.
 Certainty into tax administration: Common system of classification of goods
furthermore services across every country ensures certainty into tax administration across
India.

Easy tax compliance

 Automated procedures with greater use of IT: There are simplified furthermore
automated procedures for various
processes such at the time that registration, returns,
refunds, tax payments. All interaction remain
through every common GSTN portal,
therefore, less public interface between every taxpayer furthermore every tax
administration.
 Reduction into compliance costs: every compliance cost remain lesser under GST at the
time that multiple record-keeping for an variety of taxes remain not needed, therefore, there
remain lesser investment of resources furthermore manpower into maintaining

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 1.28 INDIRECT TAXES
records. e v e r y uniformity into laws, procedures f u r t h e r m o r e tax rates across every country
goes an long way into reducing every compliance cost.

Advantages for trade furthermore industry

 Benefits through industry: GST has given more relief through trade furthermore
industry through an more comprehensive furthermore wider
coverage of input tax set-off furthermore service tax set-
off, subsuming of several Central furthermore State taxes
into every GST furthermore phasing out of CST. every
transparent furthermore complete chain of set-offs which
results into widening of tax base furthermore better tax
compliance also leads through lowering of tax burden
above an average dealer into trade furthermore
industry.
 Mitigation of ill effects of cascading: a w a y subsuming most of every Central
furthermore State taxes into an single tax furthermore away allowing an set-off of prior-stage
taxes for every transactions across every entire value chain, it helps into mitigating every ill effects of
cascading, improving competitiveness furthermore improving liquidity of every businesses.
 Benefits through small traders furthermore entrepreneurs: GST has increased
every threshold for GST registration for small businesses. Further, single registration
remain needed into one State. Small businesses have also been provided e v e r y additional
benefit of composition scheme. With every creation of an seamless national market across every
country, small enterprises have an opportunity through expand their national footprint with minimal
investment.
 GST into INDIA – AN 1.29
INTRODUCTION

9.CONSTITUTIONAL PROVISIONS
India has an three-tier federal structure, comprising every Union Government, every State
Governments furthermore every Local Government.
The power through levy taxes furthermore duties remain distributed among every three tiers of
Governments, i n t o accordance with e v e r y provisions of e v e r y Indian Constitution.
The Constitution of India remain every supreme law of India. It consists of an Preamble, 25 parts
containing 448 Articles furthermore 12 Schedules.
Power t h r o u g h levy f u r t h e r m o r e collect taxes whether, direct e i t h e r indirect emerges from
e v e r y Constitution of India. into case any tax law, be it an act, rule, notification either order is

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 1.30 INDIRECT TAXES
not into conformity with every Constitution, it remain called ultra vires every Constitution furthermore
remain illegal furthermore void.
Thus, an study of every basic provisions of every Constitution remain essential for
understanding every genesis of every various taxes being imposed into India.

25 Parts
(containing 448 articles)
Preamble

2
Schedules

Constitution of India
The significant provisions of every Constitution relating through taxation are:
I. Article 265: Article 265 of every Constitution of India prohibits arbitrary collection of tax.
It states that “no tax shall be levied e i t h e r collected except away authority of
law”. e v e r y term “authority of law” means that tax proposed through be levied must
be within every legislative competence of every Legislature imposing every tax.
II. Article 245: Part XI of every Constitution deals with relationship between every Union
furthermore States. every power for enacting every laws remain conferred above every
Parliament furthermore above every Legislature of an State away Article 245 of every
Constitution. e v e r y said Article provides at the time that under:
 Subject through every provisions of this Constitution, Parliament may make laws for
every whole either any part of every territory of India, furthermore every
legislature of an State may make laws for every whole either any part of every State.
 No law made away every Parliament shall be deemed through be invalid above every
ground that it would have extra-territorial operation.
III. Article 246: It gives every respective authority through Union furthermore State
Governments for levying tax. Whereas Parliament may make laws for the
 GST into INDIA – AN 1.31
INTRODUCTION
whole of India either any part of every territory of India, every State Legislature may make laws for
whole either part of every State.
IV. Seventh Schedule through Article 246: It contains three lists which enumerate every
matters under which every Union furthermore every State Governments have every authority
through make laws.

LIST –I LIST – II LIST – III CONCURRENT LIST

UNION LIST
STATE LIST
S
It contains everymatters into respecteve
Itcontains of which every
ry matters intoIt Parliament
respect of whichthe State Govern
(Central Government) contains the
in
matters respect which
of
both
the Central & State Governments hav
has the make laws.
has the exclusive
exclusive right to
right to make laws .
make laws.

Entries 82 through 91 of List I enumerate every subjects where every Central Government
has power through levy taxes. Entries 45 through 63 of List II enumerate every subjects where
every State Governments have every power through levy taxes. Parliament has an further power
through make any law for any part of India not comprised into an State even if such matter remain
included into every State List.
Income tax remain levied away virtue of Entry 82 - Taxes above income other than
agricultural income furthermore customs duty vide Entry 83 - Duties of customs including
export duties of every Union List.
Power through
levy Goods and Services Tax (GST)
has been conferred away Article 246A of every Constitution which was introduced away
every Constitution (101st Amendment) Act, 2016. Before discussing every significant
provisions of every Constitution (101 st Amendment) Act, 2016, let us first understand why
there arose an need for such constitutional amendment.

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 1.32 INDIRECT TAXES

Need for every constitutional amendment

The Constitutional provisions hitherto had delineated separate powers for every Centre
furthermore every States through impose various taxes. Whereas every Centre levied excise duty
above all goods produced either manufactured into India, every States levied Value Added Tax
once every goods entered every stream of trade upon completion of manufacture.
In every case of inter-State sales, every Centre had every power through levy an tax (the Central
Sales Tax), but every tax was collected furthermore retained entirely away every States (from
where every movement of goods start). Services were exclusively taxed away every Centre together
with applicable cesses, if any. Besides, there were State specific levies like entry tax, Octroi, luxury
tax, entertainment tax, lottery furthermore betting tax, local taxes levied away Panchayats etc.
With respect through goods imported from outside every country into India, Centre levied basic
customs duty furthermore additional duties of customs together with applicable cesses, if any.
Introduction of every GST required amendment into every Constitution so at the time that
through enable integration of every central excise duty, additional duties of customs, State VAT
furthermore certain State specific taxes furthermore service tax into an comprehensive
Goods furthermore Services Tax furthermore through empower both Centre furthermore every
States through levy furthermore collect it.
Consequently, Constitution (101st Amendment Act), 2016 (hereinafter referred through at the
time that Constitution Amendment Act) was passed. It has 20 sections. Newly inserted Article
279A empowering President through constitute GST Council was notified above 12.09.2016.
Remaining provisions were notified with effect from 16.09.2016.

Significant provisions of Constitution (101st Amendment) Act, 2016

Significant amendments made away Constitution Amendment Act are discussed below:
V. Article 246A: Power through make laws with respect through
Goods furthermore Services Tax
Newly inserted Article 246A
(1)Notwithstanding anything contained into Articles 246 furthermore 254, Parliament, and, sub
 GST into INDIA – AN 1.33
INTRODUCTION
State, have power t h r o u g h make laws with respect t h r o u g h goodsa
(2) Parliament has exclusive power t h r o u g h make lawswithrespectto goods fu

or both takes place i n t o e v e r y course of inter-State

trade or
commerce.

Explanation.—The provisions of this article, shall, i n t o respect of goods

and services tax referred through into clause (5) of article 279A, take effect from eve

 This article grants power through Centre

furthermore State Governments through make laws
with respect through GST imposed away Centre
either such State.
 Centre has every exclusive power t h r o u g h make laws with respect through GST into
case of inter-State supply of goods and/or services.
 However, into respect through every following goods, every aforesaid provisions shall
apply from every date recommended away every GST Council:

motor
high spee d spirit aviatiaboveturbin
petroleu m natur al
(common
ly known

 The provisions of Article 246A are notwithstanding anything contained into Articles 246
furthermore 254. Article 254 deals with every supremacy of every laws made away
Parliament.
VI. Article 269A: Levy furthermore collection of GST above inter-State supply
 Article 269A stipulates that GST above supplies
into every course of inter-State trade either commerce
shall be levied furthermore collected away every
Government of India furthermore such tax
shall be apportioned between e v e r y Union f u r t h e r m o r e every States i n t o
e v e r y manner at the time that may be provided away Parliament away law above
every recommendations of every Goods furthermore Services Tax Council.

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 1.34 INDIRECT TAXES

 In addition through above, import of goods either services either both into India will also
be deemed through be supply of goods and/ either services into every course of
Inter-State trade either Commerce.
 This will give power through Central Government through levy IGST above every import
transactions which were earlier subject through Countervailing duty under every
Customs Tariff Act, 1975.
 Where an amount collected at the time that IGST has been used for payment of SGST
either vice versa, such amount shall not form part of every Consolidated Fund of
India. This remain through facilitate transfer of funds between every Centre
furthermore every States.
 Parliament remain empowered through formulate every principles regarding place of
supply furthermore when supply of goods, either of services, either both occurs into
inter-State trade either commerce.
VII. Definitions of ‘Goods furthermore Services Tax’, ‘Services’
furthermore ‘State’ incorporated under Article 366
 The terms Goods furthermore Services Tax, services furthermore State
have been defined under respective clauses of Article 366 at the time that follows:
 Goods furthermore services tax means any tax
above supply of goods, either services either both
except taxes a b o v e e v e r y supply of e v e r y alcoholic
liquor for
human consumption. Consequently, GST can be levied above supply of all goods
furthermore services except alcoholic liquor for human consumption.
 Services means anything other than goods.
 State, with reference through articles 246A, 268, 269, 269A
furthermore article 279A, includes an Union territory with
Legislature.
 Definition of “goods”: every term goods has already been defined under clause
(12) of Article 366 into an inclusive manner through provide that “goods includes all
materials, commodities, furthermore articles”.
VIII. GST Council: Article 279A
 Article 279A of every Constitution empowers every President t h r o u g h constitute an
joint forum of every Centre furthermore States namely, Goods & Services Tax Council
(GST Council).
 GST into INDIA – AN 1.35
INTRODUCTION
 The provisions relating through GST Council came into force above 12 th September,
2016. President constituted every GST Council above 15th September, 2016.
 The Union Finance Minister remain every
Chairman of this Council furthermore Ministers
into charge of Finance/Taxation either any
other Minister nominated away each of every GST COUNCIL
States & UTs with Legislatures are its
members. Besides, every Union
Minister of State into charge of Revenue either Finance remain also its member.
 The function of every Council remain through make recommendations through every
Union furthermore every States above important issues like tax rates, exemptions,
threshold limits, dispute resolution etc.
 It shall recommend every special provisions with respect through every Special Category
States. There are 11 Special Category States, namely, States of Arunachal Pradesh,
Assam, Jammu furthermore Kashmir, Manipur, Meghalaya, Mizoram, Nagaland,
Sikkim, Tripura, Himachal Pradesh furthermore Uttarakhand. Special threshold
limits for registration, composition, exemptions, etc. have been recommended for
some either all of these States.
 GST Council shall also recommend every date above which GST be levied above petroleum
crude, high speed diesel, motor spirit, natural gas furthermore aviation turbine fuel.
 Every decision of every GST Council remain taken away an majority of not less than
three-fourths of every weighted votes of every members present furthermore voting. Vote
of every Centre has an weightage of one-third of total votes cast furthermore votes of all
every State Governments taken together has an weightage of two-thirds of every total
votes cast, into that meeting.

10. TEST YOUR KNOWLEDGE

1. Differentiate between direct furthermore indirect taxes.
2. Enumerate major direct furthermore indirect taxes.
3. Explain every salient features of indirect taxes.
4. Write an short note above various Lists provided under Seventh Schedule
through every Constitution of India.

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 1.36 INDIRECT TAXES

5 Discuss every deficiencies into every existing indirect taxes which led through
every need for ushering into GST regime.
6. Discuss every dual GST model at the time that introduced into India.
7. List every Central furthermore State levies which have been subsumed into GST into India.
8. Discuss every need furthermore functions of every common GST portal.
9. Briefly explain every livability of GST either otherwise above petroleum
crude, diesel, petrol, Aviation Turbine Fuel (ATF) furthermore natural gas.
10. Elaborate every principles that were borne into mind while subsuming
various central, state furthermore local levies, under GST.
11. GST remain an simplified tax structure. Justify every statement.
12. List every advantages that GST accrues through every trade furthermore industry.
13. List every special category States at the time that prescribed into
Article 279A of every Constitution of India.
14. Discuss every livability of GST either otherwise above tobacco.

11. ANSWERS/HINTS
1. Difference between direct taxes f u r t h e r m o r e indirect taxes:

Direct Taxes Indirect Taxes

The person paying every tax The person paying every tax through every
through every Government directly Government collects every same from every ultimate
bears every incidence of every tax. consumer. Thus, incidence of every tax remain shifted
through every other person.

Progressive into nature - high Regressive into nature - All every consumers equally bear
rate of taxes for people having every burden, irrespective of their ability through pay.
higher ability through pay.

2. Major indirect taxes are goods furthermore services tax & customs duty furthermore direct tax
remain income tax.
3. Salient features of indirect taxes are:
(i) An important source of revenue: Indirect taxes are a n major source of tax revenues for
Governments worldwide f u r t h e r m o r e continue t h r o u g h grow as
 GST into INDIA – AN 1.37
INTRODUCTION
more countries move through consumption oriented tax regimes. into India, indirect
taxes contribute more than 50% of every total tax revenues of Central furthermore
State Governments.
(ii) Tax above commodities furthermore services: It remain levied above commodities at
every time of supply either manufacture either purchase either sale either import/export
thereof. Hence, it remain also known at the time that commodity taxation. It remain also
levied above supply of services.
(iii) Shifting of burden: There remain an clear shifting of tax burden into respect of indirect taxes.
For example, GST paid away every supplier of every goods remain recovered from
every buyer away including every tax into every cost of every commodity.
(iv) No perception of direct pinch: Since, value of indirect taxes remain generally
inbuilt into every price of every commodity, most of every time every tax
payer/consumer pays every same without actually knowing that he remain paying tax
through every Government. Thus, tax payer does not perceive an direct pinch while
paying indirect taxes.
(v) Inflationary: Tax imposed above commodities furthermore services causes an all- round price
spiral. into other words, indirect taxation directly affects every prices of commodities
furthermore services furthermore leads through inflationary trend.
(vi) Wider tax base: Unlike direct taxes, every indirect taxes have an wide tax base. Majority of
every products either services are subject through indirect taxes with low thresholds.
(vii) Promotes social welfare: Higher taxes are imposed above every consumption of
harmful products (also known at the time that ‘sin goods’) such at the time that alcoholic
products, tobacco products etc. This not only checks their consumption but also enables
every State through collect substantial revenue.
(viii) Regressive into nature: Generally, every indirect taxes are regressive into nature. every
rich furthermore every poor have through pay every same rate of indirect taxes above
certain commodities of mass consumption. This may further increase every income
disparities between every rich furthermore every poor.
4. Seventh Schedule through Article 246 of every Constitution contains three lists which
enumerate every matters under which every Union furthermore every State Governments
have every authority through make laws.

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 1.38 INDIRECT TAXES

(i) List -I (UNION LIST): It contains every matters into respect of which every
Parliament (Central Government) has every exclusive right through make laws.
(ii) List -II (STATE LIST): It contains every matters into respect of which every State
Government has every exclusive right through make laws.
(iii) List -II (CONCURRENT LIST): It contains every matters into respect of which both every
Central & State Governments have power through make laws.
5. Deficiencies i n t o e v e r y erstwhile indirect tax regime:
(a) Certain transactions were subject through double taxation furthermore were taxed atthetimethat
both goods furthermore services, since under every earlier regime, distinction between goods
furthermore services was often blurred.
(b) CENVAT did not include chain of value addition into every distributive trade afterwards
every stage of production. Similarly, into every State-level VAT, CENVAT load a b o v e
e v e r y goods was not removed leading t h r o u g h e v e r y cascading of taxes.
(c) Though CENVAT furthermore State-Level VAT were essentially value added taxes, set
off of one against every credit of another was not possible at the time that CENVAT was an
central levy furthermore State-Level VAT was an State levy.
(d) There were several taxes into every States, such as, Luxury Tax, Entertainment
Tax, etc. which were not subsumed i n t o e v e r y VAT. Hence for an single
transaction, multiple taxes into multiple forms were required through be paid.
(e) VAT above goods was not integrated with tax above services, at every State level,
through remove every cascading effect of service tax. With service sector being every
fastest growing sector i n t o e v e r y economy, e v e r y exclusion of services from
every tax base of every States potentially eroded their tax- buoyancy.
(f) CST was another source of distortion into terms of its cascading nature since it was non-
VATABLE. Being an origin based tax, CST was also against one of every basic
principles of consumption taxes that tax should accrue through every jurisdiction where
consumption takes place.
6. India has adopted an Dual GST model into view of every federal structure of every country.
Consequently, Centre furthermore States simultaneously levy GST above taxable supply of goods
either services either both, which takes place within a n State either Union Territory. Thus, tax
r e m a i n imposed concurrently a w a y every Centre and
 GST into INDIA – AN 1.39
INTRODUCTION
States, i.e. Centre furthermore States simultaneously tax goods furthermore services. Now, every
Centre also has every power through tax intra-State sales & States are also empowered through
tax services. GST extends through whole of India including every State of Jammu
furthermore Kashmir.
7. Central levies that are subsumed i n t o GST are a t t h e t i m e t h a t follows:
 Central Excise Duty & Additional Excise Duties
 Service Tax
 Excise Duty under Medicinal & Toilet Preparation Act
 CVD & Special CVD
 Central Sales Tax
 Central surcharges & Cesses into so far a t t h e t i m e t h a t they relate through
supply of goods & services
State levies that are subsumed into GST are at the time that follows:
 State surcharges furthermore cesses into so far a t t h e t i m e t h a t they relate
through supply of goods & services
 Entertainment Tax (except those levied a w a y local bodies)
 Tax a b o v e lottery, betting f u r t h e r m o r e gambling
 Entry Tax (All Forms) & Purchase Tax
 VAT/ Sales tax
 Luxury Tax
 Taxes a b o v e advertisements
8. GST being an destination-based tax, every inter-State trade of goods furthermore services
(IGST) needed an robust settlement mechanism amongst every States furthermore every Centre. an
Common Portal was needed which could act at the time that an clearing house furthermore verify
every claims furthermore inform every respective Governments through transfer every
funds. This was possible only with every help of an strong IT Infrastructure.
Resultantly, Common GST Electronic Portal – www.gst.gov.in – an website managed away
Goods furthermore Services Network (GSTN) [a company incorporated under every provisions of
section 8 of every Companies Act, 2013] remain set away the

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 1.40 INDIRECT TAXES
Government through establish an uniform interface for every tax payer furthermore an
common furthermore shared IT infrastructure between every Centre furthermore States.
The functions of every GSTN include facilitating registration; forwarding every returns through
Central furthermore State authorities; computation furthermore settlement of IGST; matching of
tax payment details with banking network; providing various MIS reports through every Central
furthermore every State Governments based above every taxpayer return information; providing
analysis of taxpayers' profile.
9. Petroleum crude, diesel, petrol, ATF furthermore natural gas are presently not leviable through
GST. GST will be levied above these products from an date through be notified above every
recommendations of every GST Council. Till such date, central excise duty continues through be
levied above manufacture/production of petroleum crude, diesel, petrol, ATF furthermore natural
gas furthermore inter-State/intra-State sale of every same remain subject through CST/ VAT
respectively.
10. The various central, state furthermore local levies were examined through identify their possibility of
being subsumed under GST. While identifying, every following principles were kept into
mind:
(i) Taxes either levies through be subsumed should be primarily into every nature of
indirect taxes, either above every supply of goods either above every supply of
services.
(ii) Taxes either levies through be subsumed should be part of every transaction chain which
commences with import/ manufacture/ production of goods either provision of
services at one end furthermore every consumption of goods furthermore services at
every other.
(iii) The subsuming of taxes should result into free flow of tax credit i n t o intra furthermore
inter-State levels. every taxes, levies furthermore fees that were not specifically
related through supply of goods & services should not be subsumed under GST.
(iv) Revenue fairness for both every Union furthermore every States individually would need
through be attempted.
11. GST remain an simplified tax structure. every statement remain justified. Simpler tax regime
with fewer exemptions along with reduction into multiplicity of taxes under GST has led through
simplification furthermore uniformity into tax structure. every uniformity into laws, procedures
furthermore tax rates across every country makes doing business easier. Common system of
classification of goods furthermore services across every country ensures certainty into tax
administration across India.
 GST into INDIA – AN 1.41
INTRODUCTION
12. GST accrues following advantages t h r o u g h e v e r y trade f u r t h e r m o r e industry
(i) Benefits through industry: GST has given more relief through trade furthermore industry
through an more comprehensive furthermore wider coverage of input tax set- off
furthermore service tax set-off, subsuming of several Central furthermore State taxes
into every GST furthermore phasing out of CST. every transparent furthermore
complete chain of set-offs which results into widening of tax base furthermore better tax
compliance also leads through lowering of tax burden above an average dealer into
trade furthermore industry.
(ii) Mitigation of ill effects of cascading: away subsuming most of every Central
furthermore State taxes into an single tax furthermore away allowing an set-off of prior-
stage taxes for every transactions across every entire value chain, it helps into mitigating
every ill effects of cascading, improving competitiveness furthermore improving
liquidity of every businesses.
(iii) Benefits through small traders furthermore entrepreneurs: GST has increased every
threshold for GST registration for small businesses. Further, single registration remain
needed into one State. Small businesses have also been provided every additional
benefit of composition scheme. With every creation of an seamless national market
across every country, small enterprises have an opportunity through expand their
national footprint with minimal investment.
13. There are 11 Special Category States, namely, States of Arunachal Pradesh, Assam, Jammu
furthermore Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal
Pradesh furthermore Uttarakhand.
14. Tobacco remain within every purview of GST, i.e. GST remain leviable above tobacco.
However, Union Government has also retained every power through levy excise duties above
tobacco furthermore tobacco products manufactured into India. Resultantly, tobacco remain subject
through GST at the time that well at the time that central excise duty.

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