GST: BENEFITS AND
CHALLENGES IN INDIAN
CONTEXT
GROUP-4
ASHWIN-5
HEMANTH-14
PRACHI-23
SOURAV TUTEJA-32
SWARN KUMAR-41

INTRODUCTION
• GST is a comprehensive value added tax on goods and services.
• It is a comprehensive tax system that will subsume all indirect
taxes of states and central governments and unified economy
into a seamless national market.
• It is collected on value added at each stage of sale and purchase
in the supply chain without State boundaries.
• It is expected to iron out wrinkles of existing indirect tax system
and play a vital role in growth of India.
• “The success of GST depends on proper administration. Much
will depend on its simplicity and efficient implementation,
which are even more difficult in a disparate federal setup”.

BENEFITS:
• Abolition of multiple layer of taxes
• Mitigation of cascading taxation
• Development of common national market
• Increase in voluntary compliance
• Reduce litigation
• Efficient administration by government
• Export will be zero rate

ABOLITION OF MULTIPLE LAYER OF
TAXES
• Implementation of GST in India will integrate the
existing line of taxes.
• Help in avoiding multiple taxes being levied on
products and services.
• Eg: For restaurant we were paying both service tax
and VAT making taxable amount more.

MITIGATION OF CASCADING
TAXATION
• Under GST final tax will be paid by the consumer.
• GST would be levied only on the value added at every
stage unlike the previous tax system wherein tax is also
required to be paid on tax i.e. VAT on excise duty.
• Input tax credit system is there to ensure there is no
cascading effect.

DEVELOPMENT OF COMMON
NATIONAL MARKET
• GST introduced uniform taxation law across the states and
different sectors in respect to indirect taxes.
• This will ensure easy supply of goods and services across the
country.
• This will help in removing economic distortions, promote exports
and bring out development of common national market.
• This promote the economic efficiency and sustainable long term
growth.

INCREASE IN VOLUNTARY
COMPLIANCE
• Under GST regime, the process is simple and articulate with
the lesser scope for error.
• As all the information flows through the GST network.
• It will be upon the payment of tax , will get credit for the
taxes they pay on inputs.
• This will generate an automatic audit trail of value addition
and income across the production chain, which creates
unified base of tax potential which can be tapped.

REDUCE LITIGATION
• It reduce litigation on account of clarity regarding the
jurisdiction of tax.
• Where as in previous system there was uncertainty
regarding jurisdiction of taxation by centre and state
such as software, right to use goods etc.
• In GST regime with single tax law in place, there will be
smooth assessment as compared to different tax laws.

EFFICIENT ADMINISTRATION BY
GOVERNMENT
• Due to multiplicity of tax , cascading effect , lack of
integrated network, the administration of indirect
taxes was difficult.
• With GST this administration work became easy
which reduces compliance and administrative cost.

EXPORT WILL BE ZERO RATE
• No GST will be levied on exports because of which input
credit of exporter will not be affected and can use these
input credit in future.
• With zero rated exports, domestic goods will be more
competitive in international market.
• Which will help in increasing exports which in turn the
fulfilment of objective of 3.5% share of India in world
exports by 2020.

CHALLENGES
• IT preparedness and Infrastructure
• Officers training
• New registrations
• Transitional issues
• Pending cases

IT PREPAREDNESS AND
INFRASTRUCTURE
• GST is an IT driven law and it cannot be assured
whether all the States and Union Territories are
currently equipped with infrastructure and
requisite manpower to embrace this law.

OFFICERS TRAINING
• In any new law, the old law as well as the new thought
process of trust needs to be imbibed.
• The unlearning of the old law and learning of GST provisions
is imperative,
• All the Central and States officers should learn about GST
provision and implications.
• GST law heavily banks on IT and hence proper training has
to be given to the departmental officers for effective usage
and implication.

NEW REGISTRATIONS
• GST is expected bring within its fold many new
registrants, who have been kept outside the
purview of tax.
• Transition of existing registered assesses and
registration of new assesses and resolving of
migration issues is a big challenge.

TRANSITIONAL ISSUES
• There are many areas, which have to be addressed
as a pert of transition to GST.
• There are concern about registration, carry forward
of credits and taking new credits, pending
refunds/rebate claims, review of contracts, etc.
• The need of smooth transition is imperative for
success of GST.

PENDING CASES
• There are many disputes are pending with previous
tax system.
• If this past disputes are allowed to continue then
courts/tribunals would be pre – occupied with
previous cases.
• This will affect the dispute settlement of new GST
law.

OTHER CHALLENGES:
• There are various definitional issues related to manufacturing, sale,
service, valuation etc. arises. These needs to be rationalized.
• Several transactions take the character of sales as well as services, thus
there is complexity in determining the nature of transaction.
• The mechanism of imposing taxes, exemptions, abatements, other
benefits are different in state and centre
• Existing law has resulted in significant number of issues related to
interpretation or various provisions and the category of the products
and the nature of services.
• Administration mechanics of the centre and state and even in different
states is different.

OPPORTUNITY -
AN END TO CASCADING EFFECTS
• This will be the major contribution of GST for the
business and commerce.
• At present, there are different state level and
central level indirect tax levies that are compulsory
one after another on the supply chain till the time
of its utilization.

Growth of Revenue in States and
Union
• It is expected that the introduction of GST will
increase the tax base but lowers down the tax rates
and also removes the multiple point This, will lead
to higher amount of revenue to both the states and
the union.

Reduces transaction costs and
unnecessary wastages
• If government works in an efficient mode, it may be
also possible that a single registration and single
compliance will suffice for both SGST and CGST
provided government produces effective IT
infrastructure and integration of such infrastructure
of states level with the union.

Eliminates the multiplicity of
taxation
• One of the great advantages that a taxpayer can
expect from GST is elimination of multiplicity of
taxation.
• The reduction in the number of taxation applicable
in a chain of transaction will help to clean up the
current mess that is brought by existing indirect tax
laws.

One Point Single Tax
• Another feature that GST must hold is it should be ‘one
point single taxation’.
• This also gives a lot of comforts and confidence to
business community that they would focus on business
rather than worrying about other taxation that may
crop at later stage.
• This will help the business community to decide their
supply chain, pricing modalities and in the long run
helps the consumers being goods competitive as price
will no longer be the function of tax components but
function of sheer business intelligence and innovation.

Reduces the corruption
• It is one of the major problems that India is
overwhelmed with.
• We cannot expect anything substantial unless there
exists a political will to root it out.
• This will be a step towards corruption free Indian
Revenue Service

CONCLUSION:
• GST offers transparency to measure tax levied on
product, bringing an end to the host of hidden and
embedded taxes that were been paid so far.
• GST is expected to facilitate free flow of goods and
services across the country.
• Expected add to India’s GDP 1 to 1.8 per cent.
• Reduction in tax multiplicity gives boost to FDI in
the country.

Reference
• Gst in india: a key tax reform by Monika Sehrawat , Upasana
Dhanda (International Journal Of Research )
• Does Goods and Services Tax (GST) Leads to Indian
Economic Development? By Dr. Shakir Shaik, Dr.
S.A.Sameera, Mr. Sk.C. Firoz (IOSR Journal of Business and
Management (IOSR-JBM) )
• Goods and Services Tax (GST) - Benefits and Challenges of
Implementation in India by T.Venkataramana and
T.Mahvdeva Reddy (International Journal Of Economics And
Business Management )