THE PERCEIVED IMPACT OF GOODS AND SERVICE TAX

ON INDIAN ECONOMY; WITH SPECIAL REFERENCE

TO ONLINE RETAIL SECTOR

Author’s Details

Dr. Sarvesh Kumar

Assistant Professor, Department of Marketing and
Supply Chain Management
School of Business & Management Studies
Central University of Himachal Pradesh

Vikas Kumar Tyagi

Senior Research Fellow, Department of Marketing
and Supply Chain Management
School of Business & Management Studies
Central University of Himachal Pradesh
 OVERVIEW OF THE PRESENTATION
• Introduction
• Methodology
• Objectives
• Positive Impacts of Goods and Service Tax
• Negative Impacts of Goods and Service Tax
• Conclusion and Recommendations
• Future Scope of Research
• References
 INTRODUCTION TO GST:
• Unified indirect value added tax levied across the nation on both products and services, treated at par
(Arora, Dimri, Sriram, Roy, & Saikia, 2017).
• Most complex tax structures in the past(Agarwal, 2017).
• June 30, 2017, during a special parliament assembly, India’s Prime Minister Narendra Modi addressed the
whole nation and launched the most awaited GST. (TOI, 2017).
• GST Council. (GST Council, 2017) created in September 2016 under article 279-A of the constitution of India.
• On the recommendations of the Council CGST bill, IGST bill, UTGST bill, and GST (Compensation to States) bill
were passed by the Lok Sabha on 29 March 2017 and by the Rajya Sabha on 06 April 2017. And GST came
into force on July 1, 2017.
• The software was not even ready by 1st July 2017; it was expected to be ready on 15th July 2017 that too
only the GSTR 1, as was told by GSTN chief Navin Kumar. (Seth, 2017).
 INTRODUCTION- CONTINUE:

• Three types of GSTs have been implemented. (Arora, Dimri, Sriram, Roy, & Saikia, 2017)
• Integrated GST(IGST).
• Central GST (CGST), and State GST (SGST)/ Union Territory GST (UTGST)

• Goods outside GST are Alcohol, Real estate, Cigarettes, electricity, healthcare, petrol, and Diesel(Economic
Times, 2017)
Table I: Tax rates decided under GST on few of the products are as follows;

Percentage Goods
0% Printed books; Handloom
0.25% Rough precious; semi-precious stones
3% Gold
5% Apparel below Rs. 1,000; footwear below Rs. 500
12% Apparel above Rs. 1,000; Kitchenware
18% Biscuits; Pasta; Steel Products; Mineral Water
28% Aerated Water; Deodorants; Motorcycle
28% + cess Luxury Vehicle, Large Cars.

Source: (Economic Times, 2017); (Central Board of Excise and Custom, 2017)
 INTRODUCTION- CONTINUE:
• Table II : Tax rates in few of the nations are as follows:

• Source: (Arora, Dimri, Sriram, Roy, & Saikia, 2017

 INTRODUCTION- CONTINUE:
• In spite of all the criticisms and praises, the government tried to take all corrective measures as
possible to reduce negative impacts.
• Neutral revenue Rate (GoI, 2015) (Subramanian, 2015)
• Anti-profitability clause (Rastogi, 2017). Third party tax return preparers
• Composition scheme
• Increased threshold for registration (Kashyap, 2017)
• The workshop is to be organized for six days (Business Standard, 2017)
• Provision of deferred tax payment also (Subramanian, 2017)
• Compensation to States(CBEC Goods and Service Tax, 2017)

• According to the Section 43B(d) of the Model GST Law – ‘electronic commerce’ means the supply
of goods and/or services including digital products over digital or electronic network; and
‘electronic commerce operator’ means any person who owns, operates or manages digital or
electronic facility or platform for electronic commerce (GST Council, 2016, p. 15)

• GST registrations for e-commerce operators from September 18.

• However, the date of which tax collected at source (TCS) will be notified at the next meeting.
(Press Trust of India, 2017).
 METHODOLOGY:
• Exploratory, Qualitative and non-empirical

• The overall method used was narrative, qualitative research (Creswell & Poth, 2017).

• The study reviews and analyses the available literature and secondary data like
interviews of government officials and government reports on GST from 2015 to 2017.

• Data reduction, analysis, and the interpretation were done manually without the use of
any statistical tool or technique.

• Hypotheses are neither used nor is any importance given to them as being the study was
exploratory in nature (Creswell & Poth, 2017).
 OBJECTIVE:
To explore and present the effects of the advent of GST on Indian
economy; with special reference to the online retail sector.
 POSITIVE IMPACTS OF GOODS AND SERVICE TAX:
• PROMOTION OF STARTUPS
• NO TRADE BARRIERS: ONE NATION ONE TAX
• MORE EFFICIENT LOGISTICS AND WAREHOUSING
• EASE OF DOING BUSINESS
• TAX EXEMPTIONS OR REDUCTIONS
• EASIER ACCESS TO GOODS
• MAKING INDIA ONE COMMON MARKET
• INCREASED TAX COMPLIANCE AND REDUCED CORRUPTION:
• NO CASCADING OF TAX OR TAX OVER TAX.
• POLITICAL BENEFIT
• FORMALIZATION AND ORGANIZATION OF ECONOMY
 NEGATIVES IMPACTS OF GOODS AND SERVICE TAX:

• INCREASED COMPLIANCE BURDEN

• ONLINE SHOPPING COSTLIER
• UNSUITABLE FOR SMALL AND MEDIUM, UNORGANIZED SECTOR
• TRANSITIONAL PROBLEMS
• ABSENCE OF COMPOSITION SCHEME WHILE SELLING ONLINE
• REMOVED THRESHOLD FOR REGISTRATION ONLINE
• TAXES ON FREEBEES
• MULTIPLE REGISTRATIONS
• THE DIFFICULTY WITH RETURNS AND CANCELLATIONS OF ORDERS
• INEXPERIENCED STATE GOVERNMENTS FOR SERVICE TAX
 CONCLUSION AND RECOMMENDATIONS:

• Rates were not announced much in advance

• Promote organized business
• Extension of deadlines
• Small Companies should form groups
• The government should protect the small manufacturers selling online.
• Making website, mobile user-friendly
• No separate registrations
• Central Government should support state governments
• Still too complicated, needs amendments
 FUTURE SCOPE OF RESEARCH

• Quantitative longitudinal study in future is suggested.

• Comparative analysis with other nations

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