Open Access Research Article
CHANGE IN TAXING REGIME- GOODS AND SERVICES TAX (BOON OR BANE) BY: MEGHA SHARMA
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CHANGE IN
TAXING REGIME- GOODS AND SERVICES TAX (BOON OR BANE)
AUTHORED BY:
MEGHA SHARMA
BBA.LLB(H),
Amity University, Noida India
ABSTRACT
This study provides a comprehensive
analysis of the Goods and Services Tax (GST) regime in India, focusing on its legislative
framework, compliance challenges, and practical implications for businesses and
taxpayers. The study examines key aspects of the GST regime, including the
Central Goods and Services Tax Act (CGST), Integrated Goods and Services Tax
Act (IGST), State Goods and Services Tax Acts (SGST), and associated rules,
notifications, and circulars. Through real-world case studies, the study
illustrates the complexities of GST compliance across different sectors and
scenarios, highlighting the need for robust systems and processes. Furthermore,
the study explores the impact of GST on consumer prices, inflation, and
economic dynamics, revealing insights into market behavior and consumer
welfare. The study concludes with future trends and limitations, identifying
areas for policy intervention and research to optimize the effectiveness and
efficiency of India's tax system.
Keywords: Goods and Services Tax (GST),
legislative framework, compliance challenges, taxation, CGST Act, IGST Act,
SGST Acts,
CHAPTER-1
INTRODUCTION
A sea change occurred in India's tax
system with the introduction of the Goods and Services Tax (GST). Businesses,
consumers, & the economy were all expected to benefit greatly from the
Goods and Services Tax (GST), which was introduced on July 1, 2017, with the
goal of simplifying the country's complicated taxing structure. Nevertheless,
views on its effectiveness differ substantially, as is typical with any
substantial change. To determine whether the Goods and Services Tax (GST) has
been beneficial or detrimental to India's tax system, this article explores the
complexities of the regime, looking at how it has affected different groups. A
worldwide movement to simplify taxation systems and promote frictionless
commerce gave rise to the Goods and Services Tax (GST) in the early 2000s. The
creation by the Kelkar Task Force around 2002 marked the beginning of India's
serious pursuit of GST, since it established the framework for its eventual
implementation. In 2017, however, under Prime Minister Narendra Modi's
leadership, the GST was finally implemented after its structure and rates had
been agreed by the GST Council, which included members from both the federal
and state governments.
The Goods and Services Tax (GST) is
essentially a consolidation of several other indirect taxes that were formerly
imposed by both the federal and state governments. These taxes included things
like octroi, value-added tax (VAT), service tax, and excise duty. It is based
on the idea of "One Nation, One Tax," which seeks to unite the
country's markets by reducing or doing away with tax cascades and encouraging
free trade across state lines. Together, the Central Goods and Services Tax Act
(CGST), the Integrated Goods and Services Tax Act (IGST), as well as the State
Goods and Services Tax Act (SGST) constitute the legal framework that governs
the administration and compliance with GST. These acts were enacted alongside
the implementation of GST.
By establishing a single, consistent
tax system in place of several tax regimes, one of the main goals of GST was to
make tax compliance easier for companies. Businesses must use the Goods and
Services Tax Network (GSTN), a strong IT infrastructure created to allow easy
tax administration, to electronically register, submit returns, and pay taxes
under the GST system. To further reduce the tax cascade effect and boost supply
chain efficiency, GST also introduced the idea for input tax credit (ITC),
which companies may use to recoup taxes spent on inputs.
CHAPTER-2
LITERATURE REVIEW
Indian Goods and Services Tax: A
Review of its Introductory Stage and its Possible Contribution Towards
Sustainable Economic Development. International Journal of Management Studies, Kumar, A. (2018)
One of the most significant changes
to indirect taxes since 1947 is the Goods and Services Tax (GST). A number of
current taxes, including the value-added tax (VAT), excise duty, tax on
services, and sales tax, will be replaced by the Goods and Services Tax (GST).
Sales and consumption of manufactured products and services will be subject to
this tax. The Goods and Services Tax (GST) is supposed to bring the country's
economy closer together by fixing the domino effect of the current tax system.
This article provides an overview of the history, goals, and current tax
situation in India as they pertain to the planned Goods and Services Tax (GST).
Several advantages and potential
prospects of GST are further investigated in the article. The paper concludes
after an examination.
To estimate is the meaning of the
Latin word "taxare," from which the English word "tax"
comes. In accordance with the power of the legislature, a levy is imposed as a
mandatory payment. There are two main components to India's tax system: direct
and indirect taxes. Among the many proposed changes to indirect taxes, the
Goods and Services Tax (GST) has received the greatest attention. Everything
from production to final consumption is subject to this all-encompassing tax
system. The country's GDP is projected to have a 2% incremental rise as a
result. Therefore, GST is a must-have right now.
The goods and services tax (GST), its
goals, the current indirect tax system, and its main revisions are introduced
in Section 1 in the article. The article's second section analyses the effects
of GST on various industries and the economy as a whole. The article's third
section delves into the many advantages and prospects of GST. Section 4
outlined the article's main points and conclusion.
CHAPTER-3
INTRODUCTION TO GST: ORIGINS,
OBJECTIVES, AND IMPLEMENTATION
After India's independence, the Goods
and Services Tax (GST) was the country's most ambitious and outstanding
indirect tax reform.
The plan's end goal is to tax all
commodities and services in India with the same uniform rate. More manufacturers
are now subject to taxation, and India is more of a nationally connected market
thanks to the Goods and Services Tax (GST), which has supplanted many Central
and State levies. Growth and government coffers may both benefit greatly from
its efficiency-boosting effects. It is likely unique in contemporary world tax
history for the federal government and the individual states to implement a new
tax that covers commodities and services inside a vast and intricate federal
structure.
Goods and services tax (GST) has a
thorough and continuous set-off benefit chain that reaches the merchant level.
Essentially, it's a tax on value addition as each level, and suppliers may
recoup some of the GST they spent on products and services via a tax credit
system. The ultimate customer or user of a product or service is the one who
ends up paying the GST.
The Goods and Services Tax (GST) has
removed the burden of indirect tax cascading and pyramiding by establishing a
continuous chain for set-off from the point of production (the producer) to the
point of consumption (the merchant). Herein lies GST's core principle. GST
alone levies taxes on the end user. Therefore, manufacturing costs are reduced
and tax cascading (tax on tax) is prevented.
It has been previously mentioned that
there were several restrictions in India's indirect tax structure before the
implementation of GST. Prior to the Goods and Services Tax (GST), the Central
Excise Duty and State Sales Tax systems were incompatible. The Goods and
Services Tax (GST) has absorbed a plethora of state and federal indirect taxes.
For the purpose of set-off relief, it has included sales and use taxes. A
number of distributive trade value enhancements have also been recorded. All
cascading impacts would be alleviated by the current continuous chain of
set-offs.
CHAPTER-4
LEGISLATIVE FRAMEWORK OF GST: ACTS,
LAWS, AND REGULATIONS
The legislative framework of the
Goods and Services Tax (GST) in India is a multifaceted structure encompassing
various acts, laws, and regulations aimed at governing the administration,
compliance, and enforcement of GST. At the core of this framework are the
following key legislations:
Central Goods and Services Tax Act
(CGST):
The CGST Act, enacted by the
Parliament of India, forms the backbone of the GST regime at the central level.
It lays down the fundamental principles, provisions, and procedures governing
the levy and collection of central goods and services tax.
Integrated Goods and Services Tax Act
(IGST):
The IGST Act provides for the levy and
collection of integrated goods and services tax on inter-state supplies of
goods and services. It ensures seamless taxation of interstate transactions and
facilitates the smooth flow of goods and services across state borders.
State Goods and Services Tax Acts
(SGST):
Each state in India has its own SGST
Act, which mirrors the provisions of the CGST Act with necessary modifications
to suit the state's requirements. These acts empower the state governments to
levy and collect state goods and services tax on intra-state supplies of goods
and services.
In addition to these primary
legislations, there are various rules, regulations, notifications, and
circulars issued by the central and state governments, as well as the GST
Council, to provide detailed guidelines and procedures for the implementation
of GST. These include:
GST Rules: The GST rules prescribe the
procedures and processes to be followed by taxpayers for various GST-related
activities such as registration, invoicing, filing of returns, and claiming
input tax credit.
GST Notifications: The government issues notifications
from time to time to announce changes in tax rates, exemptions, thresholds, and
procedural requirements under GST. These notifications have legal force and are
binding on taxpayers.
GST Circulars: Circulars are issued by the Central
Board of Indirect Taxes and Customs (CBIC) and state tax authorities to provide
clarifications and interpretations on specific provisions of the GST law,
address common issues faced by taxpayers, and ensure uniform application of the
law across jurisdictions.
The legislative framework of GST in
India is dynamic and subject to continuous amendments and revisions based on
evolving economic, administrative, and legal considerations. It is aimed at
creating a transparent, predictable, and taxpayer-friendly tax regime while
ensuring effective revenue mobilization and compliance enforcement. Compliance
with the provisions of these acts, laws, and regulations is essential for businesses
to navigate the complexities of the GST regime and fulfill their tax
obligations in a timely and lawful manner.
India has chosen the dual GST
approach because of the way its government works, which is federal. Under this
plan, both the Centre and the States tax the same thing at the same time: the
production for goods or services, and both. Central GST (Central tax/CGST) is
the name of the GST that the Centre will charge. State GST (State Tax/SGST) or
UTGST (Union Territory Tax) is the name of the GST that the States and Union
Territories will charge.
India's GST system is very
complicated. The fact that there are two levels of government (Central and
State) means that both can collect and handle GST, which leads to multiple tax
probes going on at the same time. Because of this, there are times when both
the Central or State Tax officials may look closely at the same transaction or
organization. This can lead to processes going on at the same time.
CHAPTER-4
GST COMPLIANCE: REGISTRATION, FILING,
AND RETURNS
A new era in India's indirect
taxation history began with the adoption of the Goods and Services Tax (GST) in
2017. This age aims to actualize the ideal of 'One Nation, One Tax' for one of
the world's largest federal democracies. Not only has GST been divided into
three separate tax regimes—IGST, CGST, and SGST—each with its own rate
structure—in keeping with the fiscal federalism that prevails in India—but it
also includes a mechanism for compensation payments from the central government
to the states to compensate for the losses that the states sustained in
adjusting to the new system.
It is typical for such complex a tax
system to have delays during launch and ongoing growth. In addition to the
intricacy of the interactions between the federal government and individual
states, there have been a number of setbacks, including as the troublesome
process of moving away from previous regimes and getting a handle on the Goods
and Services Tax (GST) laws and regulations.
We return to the great Indian aspiration
of national unity through a single-spine tax system as we enter the fourth year
of GST implementation in India. In order to pave the road ahead, we investigate
the problems with the current GST systems and propose potential changes.
In India, the Value Added Tax (VAT)
system has been in place for 35 years, but the implementation of GST on July 1,
2017, was a watershed moment (Mukherjee 2021). We try to make sense of the new
difficulties that are cropping up with GST adoption and provide some solutions
in this article.
Previous research by Mukherjee and
Rao (2019a) indicated that different Indian states' sales tax regulations,
rates, thresholds, exemptions, etc. were not uniform. There were two big
problems with the system. To start, there was no mechanism in place to tax the
value that was added to an item after the initial sale. Secondly, there was no
mechanism in place to ensure that all taxes were paid at the first point of
sale. Without the input tax credit (ITC) adjustment, taxpayers may claim to have
paid their taxes, but the system couldn't track their transactions to back up
their claims, making it easy for them to avoid paying their fair share.
CHAPTER-5
CONCLUSION
Finally, this research has offered a
thorough evaluation of the Indian Goods and Services Tax (GST) system,
explaining its complex legal structure, the steps needed to comply with it, and
the real-world effects on taxpayers and companies. We learned about the legal
foundations as well as operational mechanisms of GST administration by looking
at the legislative framework that includes the Central Goods and Services Tax
Act (CGST), the Integrated Goods and Services Tax Act (IGST), the State Goods
and Services Tax Acts (SGST), and related rules, notifications, and circulars. Businesses
have a number of compliance obstacles, which have been examined in the
research. These challenges include registration, return filing, input tax
credit (ITC) reconciliation, etc enforcement concerns. Evidence from real-world
case studies shows that GST compliance is difficult and nuanced across
industries and situations, demonstrating the need of solid systems and
procedures for successfully navigating the regulatory environment.
The research has also looked at how
GST affected inflation, consumer pricing, and economic dynamics, which shed
light on how tax policy, market behavior, & consumer welfare interact with
one another. There have been significant changes to market dynamics and company
strategies as a result of GST, including changes in pricing tactics, changes in
consumer demand, and changes in competitive dynamics. Research has shown that
the Goods and Services Tax (GST) system has the ability to significantly
improve economic integration, transparency, its tax compliance, despite its
many problems and complications. Efficiency, competitiveness, and simplicity of
doing business have all been enhanced with the implementation of GST, which has
unified the national market, simplified the tax structure, and done away with
cascading taxes.
In order to get the most of GST and
make sure it is around for a long time, we need to fix the problems with
compliance and operational bottlenecks that this research found. In order for
GST to fully contribute to India's economic growth and development, policy
interventions are needed to streamline compliance processes, raise taxpayer
awareness and education, and use technology for efficient tax administration.
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Article Information
CHANGE IN TAXING REGIME- GOODS AND SERVICES TAX (BOON OR BANE) BY: MEGHA SHARMA
Authors: MEGHA SHARMA
- Journal IJLRA
- ISSN 2582-6433
- Published 2024/04/26
- Issue 7
About Journal
International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
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