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A DISSERTATION REPORT

ON

Goods and Services Tax


In India

Submitted in Partial Fulfillment of the Required Credits for the Degree of

BACHELOR OF COMMERCE

AND BACHELOR OF LAWS 5 YEARS INTEGRATED

Supervised by: Prof. (Dr.) RK PATNI Submitted by: RAVINA

Jv-I/14/7066

Faculty of Law & Governance

Jayoti Vidyapeeth Women’s University, Jaipur

1
CERTIFICATE

The report is hereby approved as a benefit and creditable dissertation/training/project


work on “GOODS AND SERVICES TAX IN INDIA” carried out and presented by RAVINA
(JV-I/14/7066) in a manner to warrant its acceptance in partial fulfillment of the re-
quired credits for the degree of B.COM-LLB in Specialization. However, the undersigned
does not necessarily endorse or take responsibility for any statement or opinion ex-
pressed or conclusions is drawn therein, but only approve the report for the purpose for
which it is submitted.

(…………………………) (……………………..)

Supervisor (External) Supervisor (Internal)

Organization Jayoti Vidyapeeth Women’s University

(…………………………)

Coordinator

Department of Law and Governance

Jayoti Vidyapeeth Women’s University

(……………………………..)

Dean

Faculty of Law and Governance

Jayoti Vidyapeeth Women’s University

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Acknowledgment

I express my gratitude to all those who helped me to prepare and complete my dis-
sertation/training/project work entitled “Goods AND SERVICES TAX IN INDIA”.
First of all, I convey my deep gratitude and heart full thanks to Prof. (Dr.) R.K.
PATNI, Jayoti Vidyapeeth Women’s University for her inspiration, cooperation
and encouragement for pursuing my dissertation. Her valuable suggestion and guid-
ance helped me a lot to complete my work in this institution within a very short pe-
riod.

I render my sincere respect and heart full gratitude to Prof. (Dr.) R.K. PATNI
, Law and Governance, Jayoti Vidyapeeth Women’s University, and Jaipur. I am also
thankful to all the faculty members, for their valuable suggestion towards complet-
ing the dissertation work. I am also grateful to all my classmates, who helped me di-
rectly or indirectly in completing my dissertation/training/project work successful-
ly.

Last but not least, I am really ever grateful to my parents, who remained a constant
source of encouragement and inspiration during the completion of this work suc-
cessfully in Jayoti Vidyapeeth women’s University, Jaipur.

Ravina

(JV-I/14/7066)

Faculty of Law & Governance

Jayoti Vidyapeeth Women’s University, Jaipur

3
DECLARATION

"I hereby declare that this submission is my own work and that, to
the best of my knowledge and belief, it contains no material previ-
ously published or written by another person nor materials which
have been accepted for the award of any other degree or diploma of
any university or institution of higher learning, except where due ac-
knowledgment has been made in the text.”

Place.………………… Name: RAVINA

Date.…………………. Enrolment No: JV-I/14/7066

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CONTENTS

HEADING PAGE No.


S. No

1 Introduction to Tax 6

2 History of Tax 8

3 Taxation in India 10

4 History of GST 14

5 What is GST 22

6 GST Bill 24

7 Benefits of GST 31

8 GST Return 35

9 SAC Codes 43

10 Conclusion 67

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INTRODUCTION TO TAX

“Taxes are the price we pay for a civilized society.” - Oliver


Wendell Holmes.
Tax is a mandatory liability for every citizen of the country. There are
two types of tax in India i.e. direct and indirect. Taxation in India is
rooted from the period of Manu Smriti and Arthasastra. Present In-
dian tax system is based on this ancient tax system which was
based on the theory of maximum social welfare."It was only for the
good of his subjects that he collected taxes from them, just as the
Sun draws moisture from the Earth to give it back a thousand fold"
By Kalidas in Raghuvansh eulogizing KING DALIP.

The origin of the word "Tax" is from "Taxation" which means


An Estimate.

In India, the system of direct taxation as it is known today has been


in force in one form or another even from ancient times. Variety of
tax measures are referred in both Manu Smriti and Arthasastra. The
wise sage advised that taxes should be related to the income and
expenditure of the subject. He, however, cautioned the king against
excessive taxation; a king should neither impose high rate of tax nor
exempt all from tax.

According to Manu Smriti, the king should arrange the collection


of taxes in such a manner that the tax payer did not feel the pinch of
paying taxes. He laid down that traders and artisans should pay
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1/5th of their profits in silver and gold, while the agriculturists were
to pay 1/6th, 1/8th and 1/10th of their produce depending upon cir-
cumstances.
Kautilya has also described in great detail the system of tax admin-
istration in the Mauryan Empire. It is remarkable that the present
day tax system is in many ways similar to the system of taxation in
vogue about 2300 years ago.

Arthasastra mentioned that each tax was specific and there was
no scope for arbitrariness. Tax collectors determined the schedule of
each payment, and its time, manner and quantity being all pre-
determined. The land revenue was fixed at 1/6 share of the produce
and import and export duties were determined on ad-valorem basis.
The import duties on foreign goods were roughly 20% of their value.
Similarly, tolls, road cess, ferry charges and other levies were all
fixed.

Kautilya also laid down that during war or emergencies like famine
or floods, etc. the taxation system should be made more stringent
and the king could also raise war loans. The land revenue could be
raised from 1/6th to 1/4th during the emergencies. The people en-
gaged in commerce were to pay big donations to war efforts.
Kautilya's concept of taxation emphasised equity and justice
in taxation. The affluent had to pay higher taxes as compared to
the poor.

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HISTORY OF TAX
In India, this tax was introduced for the first time in 1860, by Sir
James Wilson in order to meet the losses sustained by the Govern-
ment on account of the Military Mutiny of 1857. In 1918, a new in-
come tax was passed and again it was replaced by another new act
which was passed in 1922.This Act remained in force up to the as-
sessment year 1961-62 with numerous amendments.
In consultation with the Ministry of Law finally the Income Tax Act,
1961 was passed. The Income Tax Act 1961 has been brought into
force with 1 April 1962. It applies to the whole of India and Sikkim
(including Jammu and Kashmir).Since 1962 several amendments of
far-reaching nature have been made in the Income Tax Act by the
Union Budget every year. Since 1962 several amendments of far-
reaching nature have been made in the Income Tax Act by the Union
Budget every year.
Central Board of Revenue bifurcated and a separate Board for Direct
Taxes known as Central Board of Direct Taxes (CBDT) constituted
under the Central Board of Revenue Act, 1963. The major tax en-
actment in India is the Income Tax Act, 1961 passed by the Parlia-
ment, which imposes a tax on the income of persons.
This Act imposes a tax on income under the following five
heads:

 Income from salaries.


 Income from business and profession.
 Income from capital gains.
 Income from house property.

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 Income from other sources.
In Terms of the Income Tax Act, 1961, a person includes:

 Individual
 Company
 Firm
 Association of Persons (AOP)
 Hindu Undivided Family (HUF)
 Body of Individuals (BOI)
 Local authority
 Artificial Judicial person not falling in any of the preceding cate-
gories.

Why are Taxes Imposed?


Everybody is obliged by law to pay taxes. Total Tax money goes to
government exchequer. Appointed government decides that how
are taxes being spent and how the budget is organized.

Tax payment is not optional; an individual has to pay tax if his/her


incoming is coming under the income tax slab. It is a duty of every
citizen to pay taxes. More collection of tax allows the government to
launch more and more welfare schemes.
The reasons why do we pay taxes?
1) To Provide Basic Facilities for Every Citizen of the Country:
Whatever money is received by the government in terms of direct
tax and indirect tax is spent by it for the welfare of the citizens of the
country. Some of the services provided by the government are:
9
health care, electricity, roads, education system, and free houses for
poor, water supply, police, firefighters, judiciary system, disaster re-
lief, taking care of bridges and other things of public welfare.

2) To Finance Multiple Governments: All the local government of


the state like village panchayats, block panchayats and municipal
corporations receive fund from the state finance commission.

Dissatisfaction with Taxes: we often hear that there are so many


scams in the country which confiscates the precious public money.
There are so many others reasons because of them tax payers are
angry i.e.
 Rate of tax is too high
 Unfair tax is collected from the peoples. Some rich people
pays less tax while poor pays high and vice versa.

Taxation in India
Tax System in India
India has a well-developed tax structure with clearly demarcated au-
thority between Central and State Governments and local bodies.
Central Government levies some direct and indirect taxes on indi-
vidual and commodities respectively. Direct taxes are, Personal In-
come Tax, Wealth Tax, and Corporation Tax while indirect tax in-
cludes; Sales Tax, Excise Duty, Custom Duty and Service Tax. Value
Added Tax (VAT), stamp duty, state excise, land revenue and profes-
sion tax are levied by the State Governments. Local bodies are em-
powered to levy tax on properties, octroi and for utilities like water
10
supply, drainage etc. Indian taxation system has undergone tremen-
dous reforms during the last decade. The tax rates have been ra-
tionalized and tax laws have been simplified resulting in better com-
pliance, ease of tax payment and better enforcement. The process
of rationalization of tax administration is ongoing in India.
Direct Taxes
In case of direct taxes (Income Tax, Wealth Tax, Corporation tax
etc.), the burden directly falls on the taxpayer. These are those taxes
which can’t be transferred on the others by the tax payers.

• Income Tax: According to Income Tax Act 1961, every person,


who are an assessed and whose total income exceeds the maximum
exemption limit, shall be chargeable to the income tax at the rate or
rates prescribed in the Finance Act. Such income tax shall be paid on
the total income of the previous year in the relevant assessment
year.

• Corporate Tax: it is a tax imposed on the net income of the com-


pany. Description: Companies, both private and public which are
registered in India under the Companies Act 1956, are liable to pay
corporate tax. For the assessment year 2014-15, domestic compa-
nies are taxed at the rate of 30%.

Different kinds of taxes relating to a company

 Minimum Alternative Tax (MAT)


 Fringe Benefit Tax (FBT)
 Dividend Distribution Tax (DDT)
 Banking Cash Transaction Tax (BCTT)

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 Securities Transaction Tax (STT)

1. Wealth Tax
Wealth tax, in India, is levied under Wealth-tax Act, 1957. Wealth
tax is a tax on the benefits derived from property ownership. The tax
is to be paid year after year on the same property on its market val-
ue, whether or not such property yields any income. Under the Act,
the tax is charged in respect of the wealth held during the assess-
ment year by the following persons: -
• Individual

• Hindu Undivided Family (HUF)

• Company

Indirect Taxation

Indirect taxes are those taxes which can be transferred on the oth-
ers by the tax payers. As if the central government increases the rate
of service tax on different services then sellers pass on this incre-
ment on the final consumers of the services.
1. Sales tax (imposed on the sale of goods. It can be of two types;
central sales tax and states sales tax)
2. Central Sales Tax (CST): It is generally payable on the sale of all
goods by a dealer in the course of inter-state trade or commerce or,
outside a state or, in the course of import into or, export from India.
• Value Added Tax (VAT) VAT is a multi-stage tax on goods that is
levied across various stages of production and supply with credit
12
given for tax paid at each stage of Value addition. Introduction of
state level VAT is the most significant tax reform measure at state
level. The state level VAT has replaced the existing State Sales Tax. It
was introduced from April 1, 2005 in the country.
3. Excise Duty: Central Excise duty is an indirect tax levied on goods
manufactured in India. Excisable goods have been defined as those,
which have been specified in the Central Excise Tariff Act as being
subjected to the duty of excise. There are three types of Central Ex-
cise duties collected in India namely
Additional Duty of Excise
Section 3 of the Additional duties of Excise (goods of special im-
portance) Act, 1957 authorizes the levy and collection in respect of
the goods described in the Schedule to this Act. This is levied in lieu
of sales Tax and shared between Central and State Governments.
These are levied under different enactments like medicinal and toi-
let preparations, sugar etc. and other industries development etc.

Special Excise Duty


As per the Section 37 of the Finance Act, 1978 Special excise Duty
was attracted on all excisable goods on which there is a levy of Basic
excise Duty under the Central Excises and Salt Act, 1944. Since then
each year the relevant provisions of the Finance Act specifies that
the Special Excise Duty shall be or shall not be levied and collected
during the relevant financial year.

4. Customs Duty

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Custom or import duties are levied by the Central Government of
India on the goods imported into India. The rate at which customs
duty is livable on the goods depends on the classification of the
goods determined under the Customs Tariff. The Customs Tariff is
generally aligned with the Harmonized System of Nomenclature
(HSL).In line with aligning the customs duty and bringing it at par
with the ASEAN level, government has reduced the peak customs
duty from 12.5 per cent to 10 per cent for all goods other than agri-
culture products. However, the Central Government has the power
to generally exempt goods of any specified description from the
whole or any part of duties of customs livable thereon. In addition,
preferential/concessional rates of duty are also available under the
various Trade Agreements.

5. Service Tax
Service tax was introduced in India way back in 1994 and started
with mere 3 basic services viz. general insurance, stock broking and
telephone. Today the counter services subject to tax have reached
over 120. There has been a steady increase in the rate of service tax.

HISTORY OF GST
The implementation of the Goods and Services Tax (GST) in India
was a historical move, as it marked a significant indirect tax reform
in the country. The amalgamation of a large number of taxes (levied
at a central and state level) into a single tax is expected to have big
advantages. One of the most important benefits of the move is the
mitigation of double taxation or the elimination of the cascading ef-
14
fect of taxation. The initiative is now paving the way for a common
national market. Indian goods are also expected to be more compet-
itive in international and domestic markets post GST implementa-
tion. From the viewpoint of the consumer, there would be a marked
reduction in the overall tax burden that is currently in the range of
25% to 30%. The GST, due to its self-policing and transparent nature,
is also easier to administer on an overall scale.
When did GST start?
Several countries have already established the Goods and Services
Tax. In Australia, the system was introduced in 2000 to replace the
Federal Wholesale Tax. GST was implemented in New Zealand in
1986. A hidden Manufacturer’s Sales Tax was replaced by GST in
Canada, in the year 1991. In Singapore, GST was implemented in
1994. GST is a value-added tax in Malaysia that came into effect in
2015.
History of GST in India

 2000: In India, the idea of adopting GST was first suggested by


the Atal Bihari Vajpayee Government in 2000. The state finance
ministers formed an Empowered Committee (EC) to create a
structure for GST, based on their experience in designing State
VAT. Representatives from the Centre and states were request-
ed to examine various aspects of the GST proposal and create
reports on the thresholds, exemptions, taxation of inter-state
supplies, and taxation of services. The committee was headed

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by Asim Dasgupta, the finance minister of West Bengal. Das-
gupta chaired the committee till 2011.
 2004: A task force that was headed by Vijay L. Kelkar the advi-
sor to the finance ministry indicated that the existing tax struc-
ture had many issues that would be mitigated by the GST sys-
tem.
 February 2005: The finance minister, P. Chidambaram, said that
the medium-to-long term goal of the government was to im-
plement a uniform GST structure across the country, covering
the whole production-distribution chain. This was discussed in
the budget session for the financial year 2005-06.
 February 2006: The finance minister set 1 April 2010 as the GST
introduction date.
 November 2006: Parthasarthy Shome, the advisor to P. Chid-
ambaram, mentioned that states will have to prepare and make
reforms for the upcoming GST regime.
 February 2007: The 1 April 2010 deadline for GST implementa-
tion was retained in the union budget for 2007-08.
 February 2008: At the union budget session for 2008-09, the fi-
nance minister confirmed that considerable progress was being
made in the preparation of the roadmap for GST. The targeted
timeline for the implementation was confirmed to be 1 April
2010.
 July 2009: Pranab Mukherjee, the new finance minister of In-
dia, announced the basic skeleton of the GST system. The 1
April 2010 deadline was being followed then as well.
 November 2009: The EC that was headed by Asim Dasgupta put
forth the First Discussion Paper (FDP), describing the proposed

16
GST regime. The paper was expected to start a debate that
would generate further inputs from stakeholders.
 February 2010: The government introduced the mission-mode
project that laid the foundation for GST. This project, with a
budgetary outlay of Rs.1, 133 crore, computerised commercial
taxes in states. Following this, the implementation of GST was
pushed by one year.
 March 2011: The government led by the Congress party puts
forth the Constitution (115th Amendment) Bill for the introduc-
tion of GST. Following protest by the opposition party, the Bill
was sent to a standing committee for a detailed examination.
 November 2012: P. Chidambaram and the finance ministers of
states hold meetings and set the deadline for resolution of is-
sues as 31 December 2012.
 February 2013: The finance minister, during the budget session,
announces that the government will provide Rs.9, 000 crore as
compensation to states. He also appeals to the state finance
ministers to work in association with the government for the
implementation of the indirect tax reform.
 August 2013: The report created by the standing committee is
submitted to the parliament. The panel approves the regulation
with few amendments to the provisions for the tax structure
and the mechanism of resolution.
 May 2014: The Constitution Amendment Bill lapses. This is the
same year that Narendra Modi was voted into power at the
Centre.
 February 2015: Jaitley, in his budget speech, indicated that the
government is looking to implement the GST system by 1 April
2016.
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 March 2016: Jaitley says that he is in agreement with the Con-
gress’s demand for the GST rate not to be set above 18%. But
he is not inclined to fix the rate at 18%. In the future if the Gov-
ernment, in an unforeseen emergency, is required to raise the
tax rate, it would have to take the permission of the parlia-
ment. So, a fixed rate of tax is ruled out.
 June 2016: The Ministry of Finance releases the draft model law
on GST to the public, expecting suggestions and views.
 August 2016: The Congress-led opposition finally agrees to the
Government’s proposal on the four broad amendments to the
Bill. The Bill was passed in the Rajya Sabha.
 September 2016: The Honourable President of India gives his
consent for the Constitution Amendment Bill to become an Act.
 2017: Four Bills related to GST become Act, following approval
in the parliament and the President’s assent:
o Central GST Bill

o Integrated GST Bill

o Union Territory GST Bill

o GST (Compensation to States) Bill

The GST Council also finalized on the GST rates and GST rules. The
Government declares that the GST Bill will be applicable from 1 July
2017, following a short delay that is attributed to legal issues.
Tax Structure before GST

 Before the implementation of GST, taxation laws between the


Centre and states were clearly demarcated. There were no
overlaps between the fiscal powers, whatsoever. The Centre

18
would levy tax on goods manufacture, except alcohol for con-
sumption, narcotics, opium, etc.
 The states had the power to charge tax on the sale of goods.
 The Centre would levy the Central Sales Tax that was collected
by the originating states.
 The Centre was also levying service tax on all types of services.
 Additionally, the Centre was charging and collecting additional
duties of customs on goods that were imported into or export-
ed from India. This tax was levied in addition to the Basic Cus-
toms Duty. This additional duty of customs is referred to as
Countervailing Duty (CVD) and Special Additional Duty (SAD)
and it counter balances excise duties, state VAT, sales tax, and
other such taxes.
Constitution (One Hundred and First) Amendment Act, 2016

In order to address prevalent issues in taxation, the Constitution


122nd Amendment Bill was put forth in the 16th Lok Sabha on 19
Dec 2014.

 The Bill suggests levy of GST on all goods and services, except
alcohol that humans consume.
 The tax is levied as Dual GST by the Centre and states/union
territories. The component levied by the Centre is Central Tax -
CGST, while that levied by the state is State Tax - SGST. The tax
levied by union territories is Union Territory Tax - UTGST.
 The Centre would levy the GST on inter-state trade or imports
of services and goods. This tax is referred to as Integrated Tax -
IGST.

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 The Central Government will also levy excise duty on tobacco
products, in addition to GST.
 The tax on five petroleum products, i.e., high speed diesel,
crude, petrol, natural gas, and Aviation Turbine Fuel (ATF) will
be outlined later after a decision is made by the GST Council.

September 2016: A Goods and Services Tax Council (GSTC) was cre-
ated by the union finance minister, revenue minister, and ministers
of state to take decisions on GST rates, thresholds, taxes to be sub-
sumed, exemptions, and other features of the taxation system. The
state finance ministers mentioned that the EC would be a platform
for states where there would be discussions of their regional issues.
The GST Council is a separate entity that would oversee the imple-
mentation of the GST system.
Goods and Services Tax Network

Goods and Services Tax Network (GSTN) was set up as a private


company in 2013 by the Government under Section 25 of the Com-
panies Act, 1956. GSTN is expected to offer the front-end services of
registration, payment, and returns to taxpayers. It would also devel-
op back-end technical modules that will be utilised by 25 states that
have opted in.

GSTN has also identified 34 IT and financial technology companies


and tagged them as GST Suvidha Providers (GSPs). These organisa-
tions will develop applications that will be used by taxpayers when
they interact with GSTN...

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Benefits of GST Implementation

Key benefits of the GST announcement are detailed below:

 As mentioned above, the GST system will create a com-


mon national market that boosts foreign investment.
 The cascading effect of taxation will be mitigated.
 There will be uniformity in laws, rates of tax, and proce-
dures across states.
 The GST regime is expected to boost manufacturing activi-
ties and exports. This would, in turn, generate more em-
ployment and lead to the growth of the economy.
 Indian products would be more competitive in the interna-
tional markets.
 The GST system is likely to improve the overall investment
climate in India.
 Uniformity in the rates of SGST and IGST will reduce tax
evasion to a large extent.
 The average sales burden experienced by companies is ex-
pected to come down, thereby increasing consumption
and boosting subsequent production of goods.
 GST is a simpler system of taxation with smaller number of
exemptions.

A huge segment of small-scale retailers may be either exempt


from tax or may benefit from low tax rates based on the com-
pounding scheme. Consumers will further benefit if purchases are
made from these small retailers.

21
What is GST?

GST (Goods and Services Tax) is a single indirect tax aimed at making
the country a unified common market. It is imposed on the supply of
goods and/or services within India. Multiple indirect taxes that the
Central Government or State Governments impose on suppliers and
consumers are subsumed by GST. The taxes levied and collected by
the Centre until 1 July, 2017, that are subsumed by GST include Cen-
tral Excise duty, Duties of Excise (medicinal and toilet preparations),
Additional Duties of Excise (goods of special importance), Additional
Duties of Excise (textile and textile products), Additional Duties of
Customs, Special Additional Duties of Customs, Service Tax, and Cen-
tral surcharges and cesses. The State taxes subsumed under GST in-
clude State VAT, Entry Tax, Central Sales Tax, Entertainment and
Amusement Tax, Luxury Tax, Purchase Tax, Taxes on advertise-
ments, Taxes on gambling, betting and lotteries, and State surcharg-
es and cesses relating to the supply of commodities and services.
The implementation of GST by Prime Minister Narendra Modi is con-
sidered a historical move, considering the fact that it significantly re-
formed indirect tax in India. The consolidation of several different
taxes into one is forecast to help the country move forward by elim-
inating the cascading of taxes. The reform is also set to pave the way
for a common national market, thereby making Indian commodities
and services increasingly competitive in both local as well as global
markets a number of countries around the globe have already im-
plemented GST. For instance, Australia saw the introduction of the
tax in 2000, replacing the Federal Wholesale Tax. Canada witnessed
the replacement of the Manufacturer’s Sales Tax with GST in 1991.
New Zealand saw the implementation of the reform in 1986, while

22
Singapore did so in 1994. GST in Malaysia was introduced in 2015,
and India has jumped on the bandwagon to provide benefits to the
consumers, the industry, and the government. Atal Bihari Vajpayee,
the 10th Prime Minister of India, was the first to recommend the
idea of adopting GST during his time in office, in the year 2000. An
Empowered Committee was formed by the state finance ministers
at the time, and their aim was to formulate a structure for GST as
they already had experience in creating State VAT. The Centre as
well as the State had representatives who were urged to examine
several different aspects of the proposal so as to come up with re-
ports on the taxation of services, taxation of inter-state supplies,
thresholds, and exemptions. The Finance Minister of West Bengal at
the time, Asim Dasgupta, headed the committee and chaired it till
2011. The advisory to the Finance Ministry between 2002 and 2004,
Vijay Kelkar, led a task force and sent a report to the Ministry in
2004, highlighting the issues with the then tax structure, adding that
these issues could be mitigated by adopting GST. During his third
term as the Finance Minister of India, P. Chidambaram said in 2005
that the government’s medium-to-long term objective was to intro-
duce a uniform taxation structure across India and cover the entire
production-distribution chain. As a result, a discussion regarding the
same took place in the Budget Session in FY 2005-06, and 1 April,
2010, was set as the date on which GST would be implemented in
India. The advisor to Chidambaram, Parthasarathy Shome, said that
preparations by the state to make reforms may take time, but the
deadline to implement the regime was retained at 1 April, 2010, in
the Union Budget 2007-08. Chidambaram confirmed that significant
progress was being made by the states to prepare for the implemen-

23
tation of GST in the Union Budget 2008-09, and the deadline re-
mained intact.
In 2009, following the appointment of Pranab Mukherjee as the new
Finance Minister of India, an announcement was made regarding
the basic framework of GST, and there was still no change in the
deadline. In late 2009, the Empowered Committee, led by Asim Das-
gupta, presented the First Discussion Paper (FDP), explaining in de-
tail the proposed GST reform. The foundation for GST, however, was
laid by the Mission-Mode Project introduced by the government.
The budgetary outlay of the project was Rs.1, 133 crore, and it led to
the computerization of commercial taxes in the various states of In-
dia. Following this move, GST implementation was delayed by a
year.
The 115th Amendment to the Constitution saw the Government,
headed by Congress, put forth the bill for the implementation of
GST. The bill drew protests from the opposition party and was then
sent for detailed scrutiny to a standing committee. The bill was dis-
cussed by the committee in June 2012, and concerns were raised by
the opposition party over clause 279B as it provided extra powers to
the Centre. As a result, Finance Ministers of various states along
with the Finance Minister of India held meetings before setting a
deadline to resolve the issues by 31 December, 2012.

1 April, 2016. However, due to disagreements between states and


parties in addition to legal issues, the implementation of the regime
was delayed by over a year, and on 1 July, 2017, the four GST-
related bills, viz. Central GST Bill, Union Territory GST Bill, Integrated
GST Bill, and GST (Compensation to States) Bill became Acts. The

24
GST council, over time, finalized GST rules and rates, and the Gov-
ernment announced that GST will come into effect on 1 July, 2017
GST Bill

The GST Bill has become one of the main points of discussion around
the country thanks to its ability to completely reform the whole tax-
ation system in India. The objective of the bill is to simplify the sys-
tem for taxpayers by unifying the taxes applicable to consumers and
suppliers alike. GST was implemented after the approval of four bills
passed by the government, viz., Goods and Services Tax Bill, Inte-
grated GST Bill, Compensation GST Bill, and Union Territory GST Bill.
One of the reasons for the implementation of the GST Bill, as re-
vealed by the Finance Minister of India, Mr. Arun Jaitley, is the im-
pact it will have in keeping inflation in check. Moreover, the differ-
ent kinds of taxes applicable to different commodities and services
in different states will be uniform across the country depending on
the category under which they fall, therefore removing ambiguity.
Even individuals who are heavily taxed can find some respite under
GST.
Prior to 1 July, 2017, the Centre and the State calculated and
charged taxes depending upon the tax layers that were already be-
ing charged on a commodity or service, and not the original price of
the commodity or service. A move like this could adversely affect the
country’s GDP. Through the GST Bill, not only will business opera-
tions become smoother, but it will also keep a check on tax evasion.

Through the GST Bill, the introduction of a multi-tier tax slab will see
four tax slabs applicable to commodities and services in India – 5%,

25
12%, 18% and 28%. Although GST aimed at levying a uniform tax
rate on all products and services, four different tax slabs were intro-
duced because daily necessities could not be subject to the same
rate as luxury items. As a result, the GST Bill is expected to have a
good impact on the general public as products of mass consumption,
such as food grains, will not be taxed. Other commodities and ser-
vices that are commonly used, like soaps and toothpaste will attract
12%-18% tax, which is lower than the current rate of more than
20%. Even household products such as refrigerators and washing
machines will be cheaper as the rate of tax now applicable to them
is 28% as opposed to the previous rate of 30%-31%.

GST Rates in India

Most of the commodities and services that are subject to GST have
been categorized under four tax slabs, viz. 5%, 12%, 18%, and 28%.
However, GST Rates is not applicable to some goods and services,
such as jute, fish, eggs, fresh meat, milk, chicken, curd, fresh fruits,
butter milk, vegetables, natural honey, bread, salt, besan, prasad,
sindoor, printed books, bindi, judicial papers, newspapers, hand-
loom, bangles, horn cores, bone meal, bone grist, horn meal, hoof
meal, palmyra jaggery, cereal grains hulled, colouring and drawing
books, etc.

Here is a list of goods and services under the different tax slabs:
Commodities subject to 5% GST:

 Agarbatti
 Apparels up to Rs.1,000

26
 Braille paper
 Braille typewriters
 Braille watches
 Cashew nuts
 Medicines
 Milk food for babies
 Packaged food items
 Packed paneer
 Pizza bread
 Postage stamps
 Revenue stamps
 Roasted coffee beans
 Rusk
 Sabudana
 Skimmed milk
 Spices
 Stamp-post marks
 Stent
 Sugar
 Tea
Services Subject to 5% GST:

 Transport services such as airways and railways


 Air travel in economy class
 Sale of advertisement space for print media
 Supply of tour operators’ services
 Road transport by radio taxis and motor cabs
 Small restaurants earning turnover up to Rs.50 lakhs

27
Commodities Subject to 12% GST:

 Almonds
 Animal fat sausage
 Apparel above Rs.1000
 books
 Fish knives
 Forks
 Frozen meat products
 Fruits
 Ghee
 Glasses for corrective spectacles and flint buttons
 Jelly
 Jam
 Ludo
 Mobile
 Namkeen
 Non-AC restaurants
 Notebooks
 Nuts
 Packaged dry fruits
 Packed coconut water
 Preparations of vegetables
 Sewing machine
 Skimmers
 Spoons
 State-run lotteries
 Tongs
 Tooth powder

28
 Umbrella
 Work contracts
Services Subject to 12% GST:

 Air tickets by business class


 Guest houses, inns, and hotels with room tariff ranging be-
tween Rs.1000 and Rs.2500 per night
Commodities Subject to 18% GST:

 Aluminium foil Furniture


 Bamboo
 Bidi Patta
 Biscuits
 Branded garments
 Cakes
 Camera
 CCTV
 Circuits
 computers
 Corn flakes
 Curry paste
 Electrical transformer
 Envelopes
 Flavoured refined sugar
 Footwear priced above Rs.500
 Hair oil
 Headgear
 Ice cream

29
 Instant food mixes
 Kajal pencil sticks
 Preserved vegetables
 printed
 Printers
 Salad dressings
 Soap
 Soups
 Speakers
 Steel products
 Tampons
 Tissues
Services Subject to 18% GST:

 AC hotels serving alcohol to customers


 Guest houses, inns and hotels with room tariff ranging from
Rs.2500 and Rs.5000 per night
 IT services
 Telecom services
Commodities Subject to 28% GST:

 Aerated water
 After shave
 Aircraft for personal use
 Automobiles Motorcycles
 Bidis
 Ceramic tiles
 Chewing gum Molasses

30
 Chocolates devoid of cocoa
 Deodorants
 Dishwasher
 Dye
 Hair clippers
 Hair shampoo Sunscreen
 Paint
 Pan masala
 Shavers
 Shaving creams
 Vacuum cleaner
 Vending machines
 Waffles and wafers coated with chocolate
Services Subject to 28% GST:

 Gambling and race club betting


 Cinema and entertainment
 5-star hotels
 Guest houses, inns and hotels with room tariff of Rs.5000 and
upwards.

Benefits of GST
The Goods and Services Tax (GST) is imposed on the supply of prod-
ucts and/or services within the country. It subsumes multiple indi-
rect taxes that are imposed by the State Governments or the Central
Government, such as Service Tax, Purchase Tax, Central Excise Duty,
Value Added Tax, Entry Tax, Luxury Tax, Local Body Taxes, etc.

31
GST offers benefits to the government, the industry, as well as the
citizens of India. The price of goods and services is expected to re-
duce under the new reform, while the economy will receive a
healthy boost. It is also expected to make Indian products and ser-
vices internationally competitive. Following are some of the main
benefits of GST:
 Uniformity in Taxation: The objective of GST is to drive India
towards becoming an integrated economy by charging uniform
tax rates and eliminating economic barriers, thereby making
the country a common national market. The subsuming of the
aforementioned State and Central indirect taxes into just one
tax will also provide a major lift to the Government’s ‘Make in
India’ campaign, as goods that are produced or supplied in the
country will be competitive not only in national markets, but in
the international ones as well. Moreover, IGST (Integrated
Goods and Services Tax) will be levied on all imported goods.
IGST will be equal to State GST + Central GST, more or less, thus
bringing uniformity in taxation on both local as well as import-
ed goods.
 Cascading of Taxes: The cascading of taxes will be prevented by
GST as the whole supply chain will get an all-inclusive input tax
credit mechanism. Business operations can be streamlined at
each stage of supply thanks to the seamless accessibility to in-
put tax credit across products or services.

 Common Portal: Since technology will be used heavily to drive


GST, taxpayers will have a common portal (GSTN). The proce-
dures for different processes like registration, tax payments, re-

32
funds, returns, etc., will be automated and simplified. Whether
it is the filing of returns, filing of refund claims, payment of tax-
es, or even registration, all processes will be done online via
GSTN. The verification of input tax credit will be done online
too, and input tax credit across the country will be matched
electronically, thereby turning the process into an accountable
and transparent one. As a result, the process will also be much
quicker since the taxpayer will not have to interact with the tax
administration.

 Common Procedures: The procedures for refund of taxes and


registration of taxpayers will be common, while the formats of
tax return will be uniform. The tax base will also be common, as
will the system of assortment of products or services in addi-
tion to the timelines for each activity, thereby ensuring that
taxation systems have greater certainty.

Benefits of GST to business and industry


Industry will avail the maximum benefits of GST as the reform would
not only contribute significantly to its rapid growth, but it would also
contribute to a 2% increase in the GDP. By subsuming numerous
taxes, GST would make the taxation system easier for businessmen
by helping them avoid the filing of several different taxes and reduc-
ing hassles.
Since GST will operate on an advanced IT platform, all GST-related
issues will be addressed online, thereby ensuring ease and transpar-
ency in GST payments. Moreover, GST clubs various indirect taxes
under one umbrella and eliminates cluster in the calculation of tax-

33
es. A single rate and a single mechanism will prevail across India,
thereby helping in ensure that there is no overlapping of taxes. For
instance, if the GST rate applicable to a certain product is 20% and a
consumer purchases it for Rs.200, the GST amount would be 20% of
Rs.200 = Rs.40. The overall GST amount paid by all three entities, viz.
the manufacturer, the wholesaler, and the retailer will never be
more than Rs.40. As a result, the tax applicable to the retailer as per
the previous system will be waived off and he can save money on
tax. The same applies to manufacturers and wholesalers as they
would all have paid GST on the same commodity, thereby providing
relief on each other’s tax burden.
GST helps in decreasing transaction costs, which in turn make it easy
to improve business, which eventually increases competition within
the industry. An increase in competition will also help in generate
more jobs as newer businesses are established across industries. Ex-
porters and manufacturers can also reap the benefits of GST as most
of the state and central taxes would no longer be applicable to
products and services, and there will be no more levy of Central
Sales Tax either. Lowered costs in the Indian industry will mean that
Indian exports will receive a major boost, therefore making Indian
goods and services more competitive in international markets.

Benefits to central and state government

Since all indirect taxes charged by the state governments and the
central government will be subsumed by GST, it will become simpler
to administer the taxation system, especially because of the pres-
ence of a robust IT system. Evading GST will become almost impos-

34
sible due to the use of an advanced IT platform, thereby promoting
the payment of taxes.
Benefits to consumer

A good number of products and/or services are either exempt from


tax or charged at 5% or less under GST, thereby making daily neces-
sities more easily available to the poor. Small traders will find them-
selves on a level playing field thanks to a simplified tax structure
with fewer exemptions. Products and services will be allowed to
move freely across the country, thus resulting in increased competi-
tion between manufacturers and businesses which will eventually
benefit consumers. Items such as movie-ticket prices, two-wheelers,
televisions, stoves, washing machines, SUVs and luxury cars, two-
wheelers, etc. will be cheaper.

GST RETURN
GST returns must be filed by all persons who register themselves
under GST. There are many different kinds of GST returns that must
be filed every month, according to the CGST Act, 2017. Even an an-
nual return has to be filed by all those who are registered under
GST. Entities registered under the GST Composition Scheme will
have to file their returns on a quarterly basis as well as annually. The
most common returns that must be filed include GSTR 1, GSTR 2,
and GSTR 3.Normal taxpayers will have to submit these three re-
turns on a monthly basis along with one annual return, as per the
CGST law. Taxpayers who are registered as Input Service Distributors
are liable to collect or deduct the tax (TCS/TDS). All registered taxa-

35
ble individuals are required to submit outward supply information in
Form GSTR 1 by the 10th day of the following month.
The Kinds of returns applicable under GST

GST has a number of returns that must be filed electronically via the
GST Network portal. Here is a list of returns applicable under GST:
 GSTR 1: Information regarding outward supplies of commodi-
ties or services by registered taxable suppliers. The return due
date will be the 10th day of the following month.
 GSTR 1A: Information relating to auto-drafted supplies of
commodities or services. The return due date will be the 15th
day of the following month.
 GSTR 2: Information relating to inward supplies of products and
services by registered taxable recipients. The return due date
will be the 15th day of the following month.
 GSTR 2A: Information relating to auto-drafted supplies from
GSTR 1 or GSTR 5 to the recipient.
 GSTR 3: This is a monthly return based on the finalisation of in-
formation relating to outward supplies as well as inward sup-
plies in addition to the payment of tax amount by registered
taxable persons. The return due date will be the 20th day of the
following month.
 GSTR 3A: Notice to return defaulter under Section 46 of the
Central GST Act, 2017.
 GSTR 4: Quarterly return for registered individuals who have
selected the composition levy by composition suppliers. The re-
turn due date will be the 18th day of the month next to quar-
ter.

36
 GSTR 4A: Auto-drafted information for registered individuals
who have chosen the composition levy.
 GSTR 5: Return for NRI taxable individuals by NRI taxable indi-
viduals. The return due date will be the 20th day of the follow-
ing month.
 GSTR 5A: Information relating to the supply of database access,
online information, or retrieval service by an individual located
outside the country made to non-taxable individuals in India.
 GSTR 6: Return for Input Service Distributor by Input Service
Distributor. The return due date will be the 13th day of the fol-
lowing month.
 GSTR 6A: Information relating to auto-drafted supplies from
GSTR 1 or GSTR 5 to Input Service Distributors.
 GSTR 7: Return for Tax Deducted at Source by the tax deductor.
The return due date will be the 10th day of the following
month.
 GSTR 7A: Tax Deducted at Source Certificate.
 GSTR 8: Statement for Tax Collected at Source by the tax collec-
tor or e-commerce operator. The return due date will be the
10th day of the following month.
 GSTR 9: GST Annual return by registered taxable persons. The
return due date will be the 31st of December of the following
financial year.
 GSTR 9A: Simplified annual return by compounding taxable in-
dividuals registered under Section 8.
 GSTR 10: GST final return by taxable individual whose registra-
tion is either cancelled or surrendered. The return due date will
be within three month from the date on which the registration

37
was cancelled or the date on which the cancellation order was
issued, whichever is later.
 GSTR 11: GST inward supplies statement for (Universal Identifi-
cation Number) UIN by individuals having UIN and claiming a
refund. The return due date will be the 28th day of the month
after the month for which the statement was filed.
 ITC-1A: GST ITC mismatch report.

Who needs to file a GST return?


All registered dealers should file their returns for the specified tax
period. Even in case there are no business activities during the pre-
scribed tax period, the registered dealers are expected to file their
returns. PSUs and government entities that do not engage in GST
supplies or individual who deal exclusively in nil-
rated/exempted/non-GST products or services, however, will not
have to register themselves or even file their returns under the GST
regulations. Such PSUs and government entities that do not engage
in GST supplies may be assigned Departmental IDs by state tax au-
thorities, and request them to quote the ID in their supply invoices
for every inter-state sale they make.

GST returns can be filed only via the online mode. Offline prepara-
tion of returns can also be done, and individuals who choose the of-
fline route will have to upload their returns onto the portal. A com-
mon e-return will have to be filed for Central GST, State GST, Inte-
grated GST and Additional Tax. Taxpayers who are registered under
38
GST will have to file their returns on the GST portal. The filing can be
done by the individual himself/herself or via an authorised repre-
sentative.

Here are the forms that need to be filled in and submitted:


 GST PCT 1: Application for enrolling as a Goods and Service Tax
practitioner.
 GST PCT 2: Application for Enrolment Certificate for Goods and
Service Tax practitioner.
 GST PCT 3: Show cause notice for disqualification.
 GST PCT 4: Order of rejection of application for enrolment as
GST practitioner / or disqualification to function as a GST practi-
tioner.
 GST PCT 5: Authorisation / withdrawal of authorisation of a
Goods and Service Tax practitioner.
Monthly Returns

All registered entities, apart from a person as specified in Section 14


of the Integrated Goods and Services Act, 2017, or An NRI taxable
person, or an Input Service Distributor, or an individual paying tax
under Section 51 or Section 10, is required to electronically submit a
return mentioned under sub-section (1) of Section 39 in Form GSTR
3 via the GST portal. The return can be submitted directly or via a
Facilitation Centre notified by the Commissioner.

Annual Returns
All registered entities, apart from persons who pay tax under Section
51 or 52, or an Input Service Distributor, as an NRI taxable person

39
and a regular taxable person, should electronically submit their an-
nual returns as mentioned in sub-section (1) of Section 44 in Form
GSTR 9 via the GST portal. The return can be filed by the person di-
rectly or via a Facilitation Centre notified by the Commissioner.
Final Return

All registered entities are required to electronically submit a final re-


turn under Section 45 in Form GSTR 10. The submission can be done
via the GST portal either directly or via a Facilitation Centre notified
by the Commissioner.

GST and current tax structure

The current tax structure that has been replaced by GST and a num-
ber of changes are in order. Here are the most prominent difference
between the VAT structure and GST:

Parameter VAT GST


Structure Under the old taxation sys- Under GST, all the
tem, the central taxes ap- central and state
plicable were custom du- taxes will be sub-
ty/central excise duty, cen- sumed and a single
tral sales tax on commodi- tax will be levied on
ties and services, surcharge all commodities and
and cesses. The state taxes services apart from
included state VAT, WCT, motor spirit, petro-
entertainment tax, luxury leum, natural gas
tax, and tax on gambling, and high speed die-
betting and lottery, sales sel.

40
tax deducted at source,
and surcharge and cesses.
Validation Under VAT, the system will Under GST, the vali-
partly validate the returns, dation will take place
and full verification will be on the system, and
subject to assessments by consistency checks
state or central authorities. will be carried out on
input credit availed,
tax payments, and
utilisation.
Basic Customs Under VAT, the centre No change.
Duty charges tax on imports un-
der a separate act.
Excise Duty Under VAT, excise duty will Under GST, the ex-
be levied up to the point of cise duty will be re-
manufacturing. placed by Central
GST and tax will be
levied up to retail
level.
Service Tax Under VAT, the centre Under GST, the State
charges service tax on a list GST subsumes ser-
of services under the Fi- vice tax depending
nance Act on provi- upon rules relating
sion/payment basis. to Place of Supply.
State VAT Under VAT, all commodi- Under GST, the State
ties apart from those ex- GST subsumes this
empt are taxed. tax.
Central Sales Under VAT, CST is charged Under GST, the Inte-
Tax at a concessional rate of grated GST sub-
41
2% so far as inter-state sumes CST.
transfers are concerned
against C-Forms. The full
rate applicable otherwise
ranges from 5% to 14.5%.
Tax on Inter- Under VAT, this tax is ex- Under GST, this tax is
State Transfer empt against Form F. levied but dealers
of Commodities will have access to
to Agent or full credit.
Branch
Tax on Export of Under VAT, this tax is ex- No change.
Commodities empt.
and Services
Tax on Transfer Under VAT, this tax is gen- Under GST, this tax
of Commodities erally exempt, but its ap- may be levied unless
to Agent or plicability depends upon TIN of the transferor
Branch state procedures. and transferee is the
same.
Cross Set-Off of Under VAT, set-off of ser- Under GST, set-off
Levy vice tax and excise duty is between State GST
permitted. and Central GST is
not allowed.
Cascading Effect Under VAT, credit between Under GST, credit
service tax and excise duty available on the
is available, but there is no whole amount of
set-off against VAT on ex- taxes up to retailer.
cise duty.
Disallowance of Under VAT, this is not per- Under GST, there will
inputs or input mitted. be no such disallow-
42
services utilised ance, unless the GST
in exempted Council finalises a list
commodities or of those items falling
services under the Negative
List.
Disallowance of Under VAT, there are a few Under GST, there will
credit on cer- non-creditable commodi- be no such disallow-
tain items ties and services under VAT ance unless the GST
as well as CENVAT rules. Council specifically
allows it.

SAC Code

SAC stands for Services Accounting Code. This code is used for the
classification of services. Each kind of service offered has a unified
code for measurement, recognition and taxation. SAC Codes in the
present regime have been clearly defined for each kind of service of-
fered. Here are the SAC codes for the sections under which they are
classified:
SECTION 5: CONSTRUCTION SERVICES Group 99541: Construction
Services of Buildings

995411 Construction services of single dwelling or multi-dwelling or


multi-storied residential buildings
995412 Construction services of other residential buildings such as
old age homes, homeless shelters, hostels, etc.

43
995413 Construction services of industrial buildings such as build-
ings used for production activities (used for assembly line
activities), workshops, storage buildings and other similar
industrial buildings
995414 Construction services of commercial buildings such as office
buildings, exhibition & marriage halls, malls, hotels, restau-
rants, airports, rail or road terminals, parking garages, pet-
rol and service stations, theatres and other similar build-
ings.
995415 Construction services of other non-residential buildings
such as educational institutions, hospitals, clinics including
vertinary clinics, religious establishments, courts, prisons,
museums and other similar buildings
995416 Construction Services of other buildings n.e.c
995419 Services involving Repair, alterations, additions, replace-
ments, renovation, maintenance or remodelling of the
buildings covered above.
Group 99542: General Construction Services of Civil Engineering
Works

995421 General construction services of roads, streets, highways,


airfield runways, railways, tunnels and bridges.
995422 General construction services of waterways, water lines
and mains, harbors, irrigation, dams and other waterworks.
995423 General construction services of long-distance overland /
underground/ submarine pipelines, electric and communi-
cation cables; transformer stations and work related to it;
pumping stations and work related to it.
995424 General construction services of local sewage and water
44
pipelines, communication and electricity cables and works
related to it.
995425 General construction services of industrial plants and
mines.
995426 General construction services of power plants and infra-
structure related to it.
995427 General construction services of recreation and outdoor
sports facilities.
995428 General construction services related to other civil engi-
neering works.
995429 Services that involve repair, replacement, alterations, reno-
vation, additions, remodelling or maintenance of the con-
structions covered above.
Group 99543: Site Preparation Services
995432 Site formation as well as clearance services that include the
preparation of services for readying sites for subsequent
construction work, test drilling and core extraction and bor-
ing, digging of trenches.
995433 Earthmoving and excavating services.
995434 Septic system installation services and water well drilling
services.
995435 Other site preparation services.
995439 Services involving alterations, repairs, replacements, addi-
tions and maintenance of the constructions covered above.
Group 99547: Building Completion and Finishing Services
995471 Glazing services.
995472 Plastering services.

45
995473 Painting services.
995474 Wall tiling and floor services.
995475 Wall covering, wall papering, and other floor laying ser-
vices.
995476 Carpentry and joinery services.
995477 Railing and fencing services.
995478 Other building finishing and completion services.
995479 Services that involve repair, replacements, alterations,
maintenance and additions or the finishing or completion
of the aforementioned works.
SECTION 6: DISTRIBUTIVE TRADE SERVICES, ACCOMMODATION,
FOOD AND BEVERAGE SERVICES, GAS AND ELECTRICITY DISTRIBU-
TION SERVICES, AND TRANSPORT SERVICES
Group 99611: Services in Wholesale Trade
996111 Services provided on a contract basis or for a commis-
sion/fee on wholesale trade.

Group 99621: Services in Retail Trade

996211 Services provided on a contract basis or for a commis-


sion/fee on retail trade.
Group 99633: Food, Edible Preparations, Alcoholic and Non-
Alcoholic Beverages Serving Services
996331 Services offered by cafes, restaurants and similar eating fa-
cilities including door delivery, takeaway services and room
services.
996332 Services offered by guest houses, hotels, clubs, inns, etc. in-

46
cluding door delivery, takeaway services and room services.
996333 Services offered in canteens and other similar establish-
ment functions.
996334 Catering in marriage halls, exhibition halls and other in-
door/outdoor events.
996335 Catering in flights, trains, etc.
996336 Preparation and/or supply services, edible preparations,
non-alcoholic and alcoholic beverages to airlines and other
transport operators.
996337 Other contract food services.
996339 Other food, edible preparations, non-alcoholic and alcohol-
ic beverages serving services.
Group 99641: Passenger Transport Services

996411 Local land transport services of passengers by railways,


metro, monorail, bus, tramway, autos, three wheelers,
scooters and other motor vehicles
996412 Taxi services including radio taxi & other similar services;
996413 Non-scheduled local bus and coach charter services
996414 Other land transportation services of passengers.
996415 Local water transport services of passengers by ferries,
cruises, etc.
996416 Sightseeing transportation services by rail, land, water & air
996419 Other local transportation services of passengers
Group 99642: Long-Distance Transport Services of Passengers

996421 Long-distance transport services of passengers through Rail


network by Railways, Metro etc
996422 Long-distance transport services of passengers through

47
Road by Bus, Car, non-scheduled long distance bus and
coach services, stage carriage etc
996423 Taxi services including radio taxi & other similar services
996424 Coastal and transoceanic (overseas) water transport ser-
vices of passengers by Ferries, Cruise Ships etc
996425 Domestic/International Scheduled Air transport services of
passengers
996426 Domestic/international non-scheduled air transport ser-
vices of Passengers
Group 99651: Land Transport Services of Goods
996511 Road transport services of goods including parcels, office
and household furniture, letters, live animals, containers,
etc. by trucks, animal or man-drawn vehicles, refrigerator
vehicles, trailers and other vehicles.
996512 Railway transport services of goods including office and
household furniture, parcels, letters, live animals, bulk car-
go, intermodal containers, etc.
996513 Transport services of natural gas and petroleum, sewerage,
water and other goods.
996519 Other land transport services of goods.
Group 99652: Water Transport Services of Goods
996521 Transoceanic and coastal water transport services of goods
by tankers, container ships, bulk cargo vessels, refrigerator
vessels, etc.
996522 Inland water transport services of goods by tankers, refrig-
erator vessels and other vessels.
Group 99653: Air and Space Transport Services of Goods

48
996531 Air transport services of parcels, letters and other goods.
996532 Space transport services of freight.
Group 99660: Rental Services of Transport Vehicles with or without
Operators
996601 Rental services of road vehicles including buses, coaches,
cars, trucks and other motor vehicles, with or without op-
erator
996602 Rental services of water vessels including passenger ves-
sels, freight vessels etc with or without operator
996603 Rental services of aircraft including passenger aircrafts,
freight aircrafts etc with or without operator
996609 Rental services of other transport vehicles. with or without
operator
Group 99671: Cargo Handling Services

996711 Container handling services


996712 Customs House Agent services
996713 Clearing and forwarding services
996719 Other cargo and baggage handling services
Group 99672: Storage and Warehousing Services
996721 Refrigerated storage services
996722 Bulk liquid or gas storage services
996729 Other storage and warehousing services
Group 99673: Supporting Services for Railway Transport
996731 Railway pushing or towing services
996739 Other supporting services for railway transport.
Group 99691: Electricity and Gas Distribution Services
49
996911 Electricity transmission services.
996912 Electricity distribution services.
996913 Gas distribution services.
SECTION 7: FINANCIAL AND RELATED SERVICES, REAL ESTATE SER-
VICES, AND RENTAL AND LEASING SERVICES

Group 99711: Financial Services (Not including pension services, in-


surance services and investment banking services)

997111 Central banking services.


997112 Deposit services.
Group 99713: Pension and Insurance Services (Not including rein-
surance services)
997131 Pension services.
997132 Life insurance services (not including reinsurance services).
997133 Health insurance and accident services.
997134 Motor vehicle insurance services.
997135 Aviation, marine and other transport insurance services.
Group 99714: Reinsurance Services

997141 Life reinsurance services.


997142 Health reinsurance and accident services.
997143 Motor vehicle reinsurance services.
997144 Aviation, marine and other transport reinsurance services.
997145 Travel reinsurance services.
997146 Freight reinsurance services.
Group 99715: Services Auxiliary to Financial Services (apart from
pensions and insurance)
50
997151 Services relating to investment banking, like acquisition and
merger services, venture capital services and corporate fi-
nance services.
997152 Brokerage and related commodities and securities services
including commodity exchange services.
997153 Portfolio management services (not including pension
funds).
997154 Custody and trust services.
997155 Services relating to the administration of financial markets.
997156 Financial consultancy services.
Group 99716: Services Auxiliary to Pensions and Insurance

997161 Insurance agency and brokerage services.


997162 Insurance claims adjustment services.
997162 Actuarial services.
997164 Pension fund management services.
997169 Other services auxiliary to pensions and insurance.
Group 99717: Services of Holding Financial Assets
997171 Services of holding equity of subsidiary companies.
997172 Services of holding securities and other assets of funds and
trusts and similar financial entities.
Group 99721: Real Estate Services Involving Leased or Owned
Property
997211 Leasing or rental services involving leased or own residen-
tial property.
997212 Leasing or rental services involving leased or own non-
residential property.
997213 Trade services relating to buildings.
51
997214 Trade services relating to time-share properties.
997215 Trade services relating to subdivided and vacant land.
Group 99722: Real Estate Services on a Contract Basis or Commis-
sion/Fee Basis
997221 Property management services on a contract basis or a
commission/fee basis.
997222 Building sales on a contract basis or a commission/fee ba-
sis.
997223 Land sales on a contract basis or a commission/fee basis.
997224 Real estate appraisal services on a contract basis or a com-
mission/fee basis.
Group 99731: Rental or Leasing Services Related to Equipment and
Machinery with or without Operator

997311 Rental or leasing services relating to transport equipment


including containers, with or without operator.
997312 Rental or leasing services relating to agricultural equipment
and machinery with or without operator.
997313 Rental or leasing services relating to construction equip-
ment and machinery with or without operator.
997314 Rental or leasing services relating to office equipment and
machinery (not including computers) with or without oper-
ator.
997315 Rental or leasing services relating to computers with or
without operators.
997316 Rental or leasing services relating to telecommunications
equipment with or without operator.
997319 Rental or leasing services relating to other equipment and

52
machinery with or without operator.
Group 99732: Rental or Leasing Services Related to Other Goods
997321 Rental or leasing services related to radios, projectors, tele-
visions, audio systems, video cassette recorders, and relat-
ed accessories and equipment (Home entertainment sys-
tems).
997322 Rental or leasing services related to disks and video tapes
(Home entertainment systems).
997323 Rental or leasing services related to furniture and other
household appliances.
997324 Rental or leasing services related to leisure and pleasure
equipment.
997325 Rental or leasing services related to household linen.
997326 Rental or leasing services related to footwear, clothing and
textiles.
997327 Rental or leasing services relating to do-it-yourself equip-
ment and machinery.
997329 Rental or leasing services related to other goods.
Group 99733: Licensing Services for the Right to Use Intellectual
Property and Similar Goods
997331 Licensing services for the right to use databases and com-
puter software.
997332 Licensing services for the right to show and broadcast origi-
nal films, television and radio program, sound recordings,
etc.
997333 Licensing services for the right to reproduce original art
works.

53
997334 Licensing services for the right to copy and reprint manu-
scripts, journals, periodicals and books.
997335 Licensing services for the right to use Research and Devel-
opment products.
997336 Licensing services for the right to use franchises and trade-
marks.
997337 Licensing services for the right to use minerals including
their evaluation and exploration.
997338 Licensing services for the right to use other natural re-
sources including telecommunication spectrum.
997339 Licensing services for the right to use other intellectual
products and other resources.
SECTION 8: BUSINESS AND PRODUCTION SERVICES

Group 99811: Research and Experimental Development Services in


Natural Sciences and Engineering

998111 Research and experimental development services in natural


sciences
998112 Research and experimental development services in engi-
neering and technology
998113 Research and experimental development services in medi-
cal sciences and pharmacy.
998114 Research and experimental development services in agri-
cultural sciences.
Group 99812: Research and Experimental Development Services in
Social Sciences and Humanities

998121 Research and experimental development services in social

54
sciences.
998122 Research and experimental development services in hu-
manities
Group 99813: Interdisciplinary Research Services
998130 Interdisciplinary research and experimental development
services.
Group 99814: Research and Development Originals

998141 Research and development originals in pharmaceuticals


998142 Research and development originals in agriculture
998143 Research and development originals in biotechnology
998144 Research and development originals in computer related
sciences
998145 Research and development originals in other fields n.e.c.
Group 99821: Legal Services
998211 Legal representation and advisory services with regard to
criminal law.
998212 Legal representation and advisory services with regard to
other fields of law.
998213 Legal certification and documentation services with regard
to copyrights, patents and other intellectual property
rights.
998214 Legal certification and documentation services with regard
to other documents.
998215 Conciliation and arbitration services.
998216 Other legal services.

99822: Accounting, Bookkeeping and Auditing Services

55
998221 Financial auditing services.
998222 Bookkeeping and accounting services.
998223 Payroll services.
998224 Other similar services.

99823: Tax Consultancy and Preparation Services

998231 Corporate tax consulting and preparation services.


998232 Individual tax preparation and planning services.

Group 99824: Insolvency and Receivership Services

998240 Insolvency and receivership services.

Group 99831: Management Consulting and Management Services


and Information Technology Services

998311 Management consulting and management services that in-


clude strategic, financial, marketing, human resources,
supply chain management and operations.
998312 Business consulting services that include public relations
services.
998313 Information technology consulting and support services.
998314 Information technology design and development services.
998315 Hosting and information technology infrastructure provi-
sioning services.
998316 IT infrastructure and network management services.
998319 Other information technology services.

Group 99832: Architectural Services, Urban and Land Planning and


Landscape Architectural Services

56
998321 Architectural advisory services.
998322 Architectural services for residential building projects.
998323 Architectural services for non-residential building projects.
998324 Historical restoration architectural services.
998325 Urban planning services.
998326 Rural land planning services.
998327 Project site master planning services.
998328 Landscape architectural services and advisory services.

Group 99833: Engineering Services

998331 Engineering advisory services.


998332 Engineering services for building projects.
998333 Engineering services for manufacturing and industrial pro-
jects.
998334 Engineering services for transportation projects.
998335 Engineering services for power projects.
998336 Engineering services for broadcasting and telecommunica-
tions projects.
998337 Engineering services for waste management projects, haz-
ardous and non-hazardous projects, for water, drainage
and sewerage projects.
998338 Engineering services for other projects.
998339 Project management services for construction projects.

Group 99834: Scientific and Other Technical Services

998341 Geological and geophysical consulting services.


998342 Subsurface surveying services.
998343 Mineral exploration and evaluation.
57
998344 Surface surveying and map-making services.
998345 Weather forecasting and meteorological services.
998346 Technical testing and analysis services.
998347 Certification of ships, dams, aircraft, etc.
998348 Certification and authentication of works of art.
998349 Other technical and scientific services.

Group 99835: Veterinary Services

998351 Veterinary services for pet animals.


998352 Veterinary services for livestock.
998359 Other veterinary services.

Group 99836: Advertising Services and Provision of Advertising


Time or Space

998361 Advertising services.


998362 Sale or purchase of advertising time or space on commis-
sion.
998363 Sale of advertising space in print media, except on commis-
sion.
998364 Sale of radio and TV advertising time.
998365 Sale of internet advertising space.
998366 Sale of other advertising time or space, except on commis-
sion

Group 99837: Market Research and Public Opinion Polling Services

998371 Market research services.


998372 Public opinion polling services.

58
Group 99838: Photography and Videography and their Processing
Services

998381 Public opinion polling services.


998382 Advertising and related photography services.
998383 Event photography and event Videography services.
998384 Specialty photography services.
998385 Restoration and retouching services of photography.
998386 Photographic and video graphic processing services.
998387 Other photography and Videography and their processing
services.

Group 99839: Other Professional, Business and Technical Services

998391 Specialty design services including interior design, industrial


design fashion design, and other specialty design services.
998392 Design originals.
998393 Technical and scientific consulting services.
998394 Original compilations of information/facts.
998395 Translation and interpretation services.
998396 Franchises and trademarks.
998397 Brand promotion services and sponsorship services.
998399 Other professional, business and technical services.

Group 99841: Telephony and Other Telecommunications Services

998411 Carrier services


998412 Fixed telephony services
998413 Mobile telecommunications services
998414 Private network services

59
998415 Data transmission services
998419 Other telecommunications services including Fax services,
Telex services

Group 99842: Internet Telecommunications Services

998421 Internet backbone services


998422 Internet access services in wired and wireless mode.
998423 Fax, telephony over the Internet
998424 Audio conferencing and video conferencing over the Inter-
net
998429 Other Internet telecommunications services.

Group 99843: Online Content Services

998431 On-line text based information such as online books, news-


papers, periodicals, directories etc
998432 On-line audio content
998433 On-line video content
998434 Software downloads
998439 Other on-line contents

Group 99844: News Agency Services

998441 News agency services to newspapers and periodicals


998442 Services of independent journalists and press photogra-
phers
998443 News agency services to audiovisual media

Group 99845: Library and Archive Services

60
998451 Library services
998452 Operation services of public archives including digital ar-
chives
998453 Operation services of historical archives including digital ar-
chives

Group 99846: Broadcasting, Programming and Programme Distri-


bution Services

998461 Radio broadcast originals


998462 Television broadcast originals
998463 Radio channel programmes
998464 Television channel programmes
998465 Broadcasting services
998466 Home programme distribution services

Group 99871: Maintenance and Repair Services of Fabricated Met-


al, Equipment and Machinery

998711 Maintenance and repair services of fabricated metal prod-


ucts, not including equipment and machinery.
998712 Repair and maintenance services of accounting and office
machinery.
998713 Repair and maintenance services of peripheral equipment
and computers.
998714 Repair and maintenance services of transport equipment
and machinery.
998718 Repair and maintenance services of escalators and eleva-
tors.
998719 Repair and maintenance services of other equipment and
61
machinery.
998725 Repair services of bicycles.

Group 99873: Installation Services (Not Including Construction)

998731 Installation services of fabricated metal products, not in-


cluding equipment and machinery.
998732 Installation services of manufacturing, industrial, and ser-
vice industry equipment and machinery.
998733 Installation services of accounting and office machinery and
computers.

Group 99881: Food, Beverage and Tobacco Manufacturing Services

998811 Meat processing services.


998812 Fish processing services.
998813 Vegetables and fruit processing services.
998814 Vegetable and fat and animal oil manufacturing services.
998815 Dairy product manufacturing services.
998816 Other food product manufacturing services.

Group 99882: Textile, Wearing Apparel and Leather Manufacturing


Services

998821 Textile manufacturing services.


998822 Wearing apparel manufacturing services.
998823 Leather and leather product manufacturing services.

Group 99883: Paper and Wood Manufacturing Services

998831 Wood and wood product manufacturing services.

62
998832 Paper and paper product manufacturing services.

Group 99884: Petroleum, Pharmaceutical and Chemical Manufac-


turing Services

998841 Coke and refined petroleum product manufacturing ser-


vices.
998842 Chemical product manufacturing services.
998843 Pharmaceutical product manufacturing services.

Group 99885: Plastic, Rubber and Other Non-Metallic Mineral


Product Manufacturing Services

998851 Rubber and plastic product manufacturing services.


998852 Plastic product manufacturing services.
998853 Other non-metallic mineral product manufacturing ser-
vices.

Group 99886: Basic Metal Manufacturing Services

998860 Basic metal manufacturing services.

Group 99887: Fabricated Metal Product, Equipment and Machinery


Manufacturing Services

998871 Structural metal product, reservoir, steam generator and


tank manufacturing services.
998872 Ammunition and weapon manufacturing services.
998873 Other fabricated metal product treatment and product
manufacturing services.
998877 Special-purpose machinery manufacturing services.

63
Group 99888: Transport Equipment Manufacturing Services

998881 Trailer and motor vehicle manufacturing services.


998882 Other transport equipment manufacturing services.

Group 99889: Other Manufacturing Services

998891 Furniture manufacturing services.


998892 Jewellery manufacturing services.
998893 Imitation jewellery manufacturing services.
998894 Musical instrument manufacturing services.
998898 Other manufacturing services.

Group 99891: Printing, Publishing and Reproduction Services

998911 Publishing on a contract or fee basis.


998912 Printing and reproduction services of recorded media on a
contract or fee basis.

Group 99892: Moulding, Pressing, Extruding, Stamping and Similar


Plastic Manufacturing Services

998920 Moulding, pressing, extruding, stamping and similar plastic


manufacturing services.

Group 99893: Casting, Stamping, Forging and Similar Metal Manu-


facturing Services

998931 Steel and iron casting services.


998932 Non-ferrous metal casting services.
998933 Metal forging, stamping, roll forming, pressing and powder
metallurgy services.
64
Group 99894: Materials Recovery Services

998941 Metal waste and scrap recovery services on a contract or


fee basis.
998942 Non-metal waste and scrap recovery services on a contract
or fee basis.

Group 99925: Specialized Education Services

999259 Specialized education services.

Group 99929: Other Education and Training Services, and Educa-


tional Support Services

999291 Cultural education services.


999292 Recreation and sports education services.
999293 Coaching and commercial training services.
999294 Other training and education services.
999295 Services that involve conduct of examination for admission
to educational institutions.
999299 Other educational support services.

Group 99941: Sewerage, Sewage Treatment and Septic Tank Clean-


ing Services

999411 Sewerage and sewage treatment services


999412 Septic tank emptying and cleaning services

Group 99949: Other Environmental Protection Services

999490 Other environmental protection services.

65
Group 99961: Audio-Visual and Related Services

999611 Sound recording services


999612 Motion picture, videotape, television and radio programme
production services
999615 Motion picture projection services

Group 99962: Performing Arts and Other Live Entertainment Event


Presentation and Promotion Services

999621 Performing arts event promotion and organization services


999622 Performing arts event production and presentation services
999623 Performing arts facility operation services
999629 Other performing arts and live entertainment services
n.e.c.

Group 99965: Sports and Recreational Sports Services

999651 Sports and recreational sports event promotion and organi-


zation services
999652 Sports and recreational sports facility operation services
999659 Other sports and recreational sports services n.e.c.

Group 99966: Services of Athletes and Related Supported Services

999661 Services of athletes


999662 Support services related to sports and recreation

Group 99969: Other Amusement and Recreational Services

999691 Amusement park and similar attraction services


999692 Gambling and betting services including similar online ser-
66
vices
999693 Coin-operated amusement machine services
999694 Lottery services
999699 Other recreation and amusement services n.e.c.

Group 99971: Washing, Cleaning and Dyeing Services

999711 Coin-operated laundry services


999712 Dry-cleaning services (including fur product cleaning ser-
vices)
999713 Other textile cleaning services
999714 Pressing services

Group 99972: Beauty and Physical Well-Being Services

999721 Hairdressing and barbers services


999722 Cosmetic treatment (including cosmetic/plastic surgery),
manicuring and pedicuring services

Conclusion
Goods and Service Tax, with end-to-end IT-enabled tax mechanism,
is likely to bring buoyancy to government revenue. It is expected
that the malicious activity of tax theft will go away under Goods and
Service Tax regime in order to benefit both governments as well as
the consumer. In reality, that extra revenue that the government is
expecting to generate won’t come from the consumers’ pocket but

67
from the reduction of tax theft. . Now goods not conducive or harm-
ful to the health of people are taxed extra by means known as 'Sin
Tax' or 'deterrent tax’. Thus tobacco and tobacco related items are
penalized making cost of Cigarettes etc more. Kerala state has start-
ed a 'Fat Tax' on Pizza etc. That was to discourage and even prevent
people from falling victims to such habits. That serves a social –
health responsibility of the government. Now they are all out of ex-
tra taxation and are taxed as any other goods. This will pave way for
higher social health cost which will only help to increase further tax-
ation. The government ha not agreed to put any higher cap for tax
rates. That very clearly shows that there is always chance of higher
rates of taxes. This will tear away the arguments of those who say
that GST is good. GST does not do away with or replace all kinds of
taxation. It has just merged just a handful or less different taxes and
fused them in one name. Service tax is subsumed, but all services
are included in GST as akin to goods. Those sectors now excluded
may first resist a try to avoid but if compelled will simply transfer the
burden on the final service user. So in effect there will be more
items coming under service tax in the guise of GST. The supporters
of GST claim that litigation on tax matters will be reduced. That is
not true. It depends on how clearly terms of implementation are
worded and interpreted. Going from the experience of 'officialise' or
the jargons and clause- in-clause wordings of our laws and rules, I
am not that optimistic. The legal sector itself will be one which may
start litigations as now they also come under service taxes if inter-

68
preted correctly .The service sectors will try to avoid or reduce tax
liability by terming the major part of service costs as reimburse-
ments or revenue expenses etc which could be got back and tax ex-
emptions obtained. That can defeat the expectation of higher tax
revenue from service sector by GST. The possible favourable points I
see are (a) E commerce will get boost and more respectability. How-
ever as online shopping does not deal in day to day items generally,
common man is not going to get much out of it. Moreover, as of
now the scene is controlled by big multinationals .There will be a lit-
tle more ease for tax machinery. That is for the government and not
for common man. Retailers have to continue with same formalities
as earlier though in different names and forms. The inclusion of pe-
troleum products in GST is going to be a boon for the oil companies,
which also mainly goes to the private corporate.

69