A Comprehensive Analysis Of Impact Of Goods And Services Tax

Categories: Taxation

Analysis, Pages 10 (2443 words)

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Abstract

The Goods and services tax, implemented on July 1, 2017, it is regarded as a taxation reform till date implemented in India since independence in 1947. GST was implemented in April 2010 but was postponed due to conflicting of stakeholders and political issues. GST is one of the most critical tax reforms in India which has been long awaiting decision. It is a comprehensive tax system that will subsume all indirect taxes of State and Central Governments and whole economy into a seamless nation in national market.

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It is expected to remove the burden of the existing indirect tax system and play an important role in growth of India. GST includes all Indirect Taxes which will help in growth of economy and proves to be more beneficial than the existing tax system. GST will also help to accelerate the overall Gross Domestic Product (GDP) of the country.

Introduction

GST is a blanket of Indirect Tax that will subsume several indirect state and federal taxes such as Value Added Tax (VAT) and Excise Duty and different State Taxes, Central Surcharges, Entertainment Tax, Luxury Tax and many more.

GST was firstly introduced in France in 1954, with the introduction of GST France became the first country ever to introduce GST. Its introduction was requiring because very high sales taxes and tariffs encourage cheating and smuggling. After France it was adopted by 165 nations. Now, India is also going to adopt it. After its implementation in India, India will become 166th nation to adopt it In India before 16 years, in 2000 Shri Atal BihariVajpy brought this system but no one paid attention on it and due to some reasons it was not passed.

On 28th February 2006, finance minister P. Chidambaram had announced the target date for implementation of GST on 1 April, 2010. The Constitution (122nd Amendment) Bill was introduced in the LokSabha by Finance Minister Arun Jaitely, on 19th December 2014, and passed by the house on 6th May 2015. The bill was passed by LokSabha on August 2016. The bill, after ratification by the States, received assent from President Pranab Mukherjee on 8th September 2016. GST bill is brought for the reason that the different taxes paid by us on different rates would be brought under one roof so that all the taxes may get cancelled and only one tax is paid which is GST. Goods and Services Tax (GST) will include one tax one nation; this statement was given by the honorable Prime Minister Mr. Narandra Modi of India. In today's scenario, we pay 30% to 35% tax on different things but with GST it will be only 18%, which shows it will be beneficial and one main thing that GST will remain similar in all nations.

Statement Of The Problem

Rationalization and harmonization of commodity taxation is a serious problem of the Indian tax system the roof of this problem lies in federal structure of the Indian constitution which makes intricate arrangement for the division of taxation powers between the central and state government. The problem has been further compounded by the confrontation politics pursed by different political parties ruling at the Centre and in the states. Many trading communities, enterprises dealer at the general public are not aware of GST in its fullest context. In the existing all tax structure there are problem of dual tax system on commodity. This study makes an attempt to study the GST as its implementation process among 32 district Tirunelveli is one of the popular business and trading district in Tamilnadu. The researcher believes that conducting a detailed and comprehensive study on impact of GST in this district will reflect in Tamilnadu. Hence the research has made an attempt to undertake the research study in the title of "A Study on Impact of Gst in Tirunelveli District".

Scope Of The Study

The present study has been designed to contain an analysis of GST payer's problems. In Tamilnadu there are 32 districting the confines to the district of Tirunelveli in Tamilnadu. This study is mainly focused on impact of GST in manufacturer and dealers. Under GST more than 500 commodities were covered from that the researcher has taken only 6 essential commodities such as consumer durables, pharmaceutical product, textile, real estate, cement, small enterprises. Hence the research has focused and analyzed the problem of GST payer and introduction and implementation of GST.

Objectives Of The Study

The following are the objectives of the present study.

To study the impact of GST after its implementation.
To study the problem of GST payer in Tirunelveli district.

Methodology And Data Collection

The study is based on the collection of primary and secondary data was used. The primary data were collected from GST payers in Tirunelveli district with the help of the well-structured questionnaire. The secondary data were collected from the records of sales tax department in Tirunelveli district, journal, magazine, Tirunelveli chamber of commerce and from web sources. The purpose of analysis data as a way of comparing, contrasting and describing such data, descriptive statistics was used. The data collected from both primary and secondary sources were arranged and presented in the tables. The data were analyzed and interpreted with the help of various statistical tools.

The researcher collected primary data through a structured questionnaire for the GST payers in the various businesses. The secondary data were collected from journal, periodicals, books and reports, published articles and also through the data provided by the commercial tax office Tirunelveli, to collect more information relevant to this project. The primary data were collected from the respondents have been classified and tabulated for the purpose of analysis of the data have been scrutinized by using statistical packages for (spss) with appropriate coding for drawing of the inference.

The researcher conducted a pilot study among 30 respondents through the questionnaire. After the pilot study the questionnaire was modified based on the suggestions given by the respondents and the hurdles contributions which were faced by the researcher at the time of the pilot study.

Sampling Design

Tirunelveli district has Taluk namely Ambasamudram, Nanguneri, Palayamkottai, Sivagiri, Sankarankoil, Shenkottai, Tenkasi, Radhapuram, Alangulam, Veerakelamputhur, Tirunelveli, among the total number of GST registered the research has 5 percent as sample and therefore of the total population that is 120 respondents (approx.) were selected on the basis of simple random sampling technique.

Hypothesis

To give a specific focus to be objectives the following hypotheses have been formulated to analyses the impact of GST.

There is no relationship between Socioeconomic factors and level of problems from GST act.
There is no relationship between Socioeconomic factors and implementation of structure.

Limitations Of The Study

The study suffers from the respondents recall bias and the inherent limitations of cross-sectional studies namely the absence of proper form of records with the sample GST payers. These had been minimized by suitable interaction as well as cross-checks then and there with the commercial tax office. As the study is based on opinion provided by the sample respondents, result of the study cannot be generalized and should be used with caution.

Findings

It was cleared that out of 120 respondents 3 (2 percent) respondents were below 30 years, 67(56per cent) no.of the respondents were under the age of group 30-40 years, 26 (22 per cent) of the respondents were 41-50 years, and 24 (20 percent) of the respondents were above 50 years.
It was referred that out of 120 respondents, 4 (3 percent) respondents were illiterate, 2 (2 percent) respondents have completed their up to SSLC, 7 (6 percent) respondents were at HSC L level, 72 (60 percent) of the respondents were degree and 35 (29per cent) respondents were professional.
It was cleared that out of 120 respondents, 89(74per cent) respondents Hindu, 7 (6 percent) respondents Muslim and 24 (20 percent) respondents of Christian.
It was cleared out of the 120 respondents, 6(5 percent) of the respondents monthly income 15,000-25000, 31 (26 percent) of the respondents monthly income lies between 25001-50000 and 83 (69 percent) respondents earning above 50000 per month.
It was refer that out of 120 respondents, 20(17 percent) of the respondents know GST through family/friends, 59 (49 percent) of the respondents know through mass media and 41 (34 percent) of the respondents know through online sources.
It was cleared that out of 120 respondents, 11 (9 percent) of the respondents sole trader, 46 (38 percent) of the respondent's partnership and 63 (53 percent) of the respondents are company.
It was cleared that out of 120 respondents, 99 (83 percent) respondents are choosing the central government, 18(15per cent) respondents state government and 3 (2 percent) respondents are manufacturer.
It was cleared that out of 120 respondents, 19 (16 percent) respondents are manufacturers, 60 (50 percent) respondents are business community, and 41 (34 percent) no.of respondents are consumer.
It was cleared that out of 120 respondents, 110 (92 percent) respondents are increase, and 10 (8 percent) respondents are decrease.
It was cleared that out of 110 respondents, 92 (84 percent) of the respondents are purchase price is high, 18 (16 percent) of the respondents are multi-stages concept leads to increase the price of goods.
It was cleared that out of 120 respondents, 33 (28 percent) respondents are yes, and 87 (72 percent) respondents are NO.
It was cleared that out of 120 respondents, 30 (25 percent) respondents are yes, 90 (75 percent) respondents are NO.
It was cleared that out of 30 respondents, 25 (83 percent) respondents are yes, and 5 (17 percent) respondents are no.
It was cleared that out of 120 respondents, 25 (21 percent) respondents are GST, 95 (79 percent) respondents are VAT.
It was cleared that out of 120 respondents, 94 (78 percent) respondents are yes, and 26 (22 percent) respondents are No problems regarding payment of GST.
It was cleared that out of 120 respondents, 108 (90 percent) respondents are yes, and 12 (10 percent) respondents are No cost of maintaining accounts increased after implementation.
It was cleared that out of 120 respondents, 28 (23 percent) respondents are maintaining accounts, 57 (48 percent) respondents are loss of revenue, 13(11 percent) respondents are invoice issue, and 22 (18 percent) respondents are tax input credit.
It was cleared that out of 120 respondents, 107 (89 percent) respondents are yes, and 12(11 percent) respondents are no, eliminate the unfair trade practice.
It was cleared that out of 120 respondents, 43 (36 percent) respondents are good impact, 54 (45 percent) respondents are average impact, and 23 (19 percent) respondents are minor impact is the respondents average impact on daily routine work.
It was cleared that out of 120 respondents, 102 (85 percent) respondents are yes, and 18 (15 percent) respondents are nogoods will be increased by this one country one tax system.
It was cleared that out of 120 respondents, 31 (26 percent) respondents are yes, and 89 (74 percent) respondents are NO to favour of business people.
It is also observed that the overall mean of the respondents 3.94 reveals that the respondents are satisfied with the effects of GST on some factor. It is also observed from table that the GST has increase the price of goods get the highest mean of 4.67, the highest mean related to GST has decrease the cascading effects 4.24, GST has increase the cost of production 4.15, GST has decrease the black marking 3.89, GST has increase the turn over 3.43, GST has increase the profit margin 3.3.
It is revealed that the calculated value of the chi-square test is less than the table value at 5 percent level of significance with 8 degree of freedom, the null hypothesis is accepted. Hence, it is concluded that there is a significant relationship between the educational qualification and the level of problems.
It is revealed that the calculated value of the chi-square test is less than the value at the 5 percent level of significance with 4 degree of freedom. It also shows that the null hypothesis is accepted. Hence, it is concluded that there is no significant relationship between the religion and the level of problems of the respondent.
It is revealed that the P-value (Sig. 0.271) is less than 0.05 (5 percent level of significance). So the null hypothesis is rejected. Thus there is a significant difference between the monthly incomes of the respondents.
It is reveals that the P-value (sig. 0.353) is less than the 0.05 (5 percent level of significance) and hence the null hypothesis is rejected. Thus there is significant difference between the ages of the respondents.

Suggestions

At present GST tax act has five slab rates of tax. Those are of 5%, 12%, 18%, 28%, and exempted. These single taxes have been creating classification at interpretational disputed and other complications for businessman. It is suggested that number of rates should be two rates among 1% - 4% for all goods that would be covered for GST.
GST is believed to be a complicated tax system taxpayers may have many doubts and fears about GST requirement of GST recording and accounting system. It is suggested that state government should create a GST public unit to address the tax queries.
At present single rates of tax structure has been followed under GST system in all states of India. so it is suggested different rates of tax state has been followed under GST in the reason of in various state has an interstate sale and create a individual worked.
Now India has followed dual tax system SGST and CGST so taxpayer has pay the tax rate is high level. So it is suggested that single tax system to be implement.
Under GST act many number of goods are in exempted category. It leads to tax revenue loss. It is suggested the exempted goods are may be changed at the rate of 1% for growth of revenue.
Under GST system most of the dealers have been filing then tax return through e-filing method regularly. Due to low server capacity in the taxpayers have been spending more time at the time of e-filing. It is suggested that the commercial tax department should increase their server for quick filing of GST tax returns.
In order to avoid the unnecessary loss of revenue to the state government, the central government may think about the considerable percentage of GST which will be helpful for all stakeholders of GST.
The loss of tax revenue should be managed and compensated properly through proper diversification of funds without burden to anyone.
The central and the state government should be in proper understanding and cooperative with each other for the successful implementation of GST.

Conclusion

The main motive of implementing GST is to increase the revenue to the government by preventing tax evasions and unfair trade practices, prevailing in the modern market. The problem has been further computed by the confrontation political parties ruling at the centre and in the states. The GST system is basically structured to simplify current indirect tax system in India. A well designed GST is an attractive method to get rid of deformation of the existing process of multiple taxation also government has promised that GST will reduce the compliance burden at present there will be no distinction between imported and Indian goods & they would be taxed at the same rate. Many indirect Indian taxes like sales tax, VAT etc., will be finished because there will be one tax system i.e. GST, that will face reducing compliance present burden. GST will face many challenges after its implementation and will result to give many benefits. In overall through this study we conclude that GST play a dynamic role in the growth and development of our country.