GST : A STUDY AND ANALYSIS

GOODS AND SERVICE TAX

The full form of GST is Goods and Services Tax.

 The GST was launched at midnight on 1 July 2017 by the President of India, and the Government of India. The launch was marked by a historic midnight (30 June – 1 July) session of both the houses of parliament convened at the Central Hall of the Parliament. Though the session was attended by high-profile guests from the business and the entertainment industry including Ratan Tata, it was boycotted by the opposition due to the predicted problems that it was bound to lead for the middle and lower class Indians. The tax was strongly opposed by the opposing Indian National Congress.^[16][17] It is one of the few midnight sessions that have been held by the parliament - the others being the declaration of India's independence on 15 August 1947, and the silver and golden jubilees of that occasion.^[17] After its launch, the GST rates have been modified multiple times, the latest being on 22 December 2018, where a panel of federal and state finance ministers decided to revise GST rates on 28 goods and 53 services.^[18]

Members of the Congress boycotted the GST launch altogether.^[19] They were joined by members of the Trinamool Congress, Communist Parties of India and the DMK. The parties reported that they found virtually no difference between the GST and the existing taxation system, claiming that the government was trying to merely rebrand the current taxation system.^[20] They also argued that the GST would increase existing rates on common daily goods while reducing rates on luxury items, and affect many Indians adversely, especially the middle, lower middle and poorer income groups.^[21

These taxes are broadly classified into two types- Direct Tax and Indirect Tax

Goods and services are divided into five different tax slabs for collection of tax: 0%, 5%, 12%, 18% and 28%. However, petroleum products, alcoholic drinks, and electricity are not taxed under GST and instead are taxed separately by the individual state governments, as per the previous tax system.^{[citation needed]} There is a special rate of 0.25% on rough precious and semi-precious stones and 3% on gold.^[1] In addition a cess of 22% or other rates on top of 28% GST applies on several items like aerated drinks, luxury cars and tobacco products.^[2] Pre-GST, the statutory tax rate for most goods was about 26.5%; post-GST, most goods are expected to be in the 18% tax range

Direct Tax is imposed on the income of an assessee (individual or company or firm or HUF or any other person).

The amount of tax payable varies on the income earned by the individual from various sources such as salary, house rent income, Bank FD interest, etc. So, the more you earn, the more tax you pay to the Government which essentially means the rich pay more tax in comparison to the poor.

Hence, the tax incidence falls on the single person or the assessee and such incidence or tax-paying responsibility cannot be passed onto any other person.

The following is a list of direct taxes relevant in India:

• Income Tax
• Wealth Tax (Abolished and revoked later)
• Estate Tax

Indirect tax is not imposed directly on the income of the persons, as mentioned above. Instead, it is imposed on goods and services transacted which, in turn, increases the cost or MRP of those goods and services. 

Unlike a direct tax, indirect tax should be borne by the end customer, rich and poor are treated alike.

There are many indirect taxes. Some of these are levied by the Central Government whereas some are levied by the State Government making the indirect tax system an extremely complicated system.

The following is the list of indirect taxes, currently in India:

• Goods and Services Tax (GST)
• Customs duty
• Excise duty (on Petrol, diesel, natural gas, alcohol)
• Central Sales Tax (relevant for certain goods only)
• Securities Transaction Tax (STT)
• Stamp Duty
• Entertainment Tax

GST was introduced to replace multiple indirect taxes levied by State and Central Governments in order to simplify the indirect tax system. It has replaced almost 17 of the existing state and central indirect taxes such as central excise duty, additional customs duty, VAT, entertainment tax, service tax etc.

Technicalities of GST implementation in India have been criticized by global financial institutions/industries, sections of Indian media, and opposition political parties in India. World Bank's 2018 version of India Development Update described India's version of GST as too complex, noticing various flaws compared to GST systems prevalent in other countries; most significantly, the second-highest tax rate among a sample of 115 countries at 28%.^[48]

GST's implementation in India has been further criticized by Indian businessmen for problems including tax refund delays and too much documentation and administrative effort needed.^[49] According to a partner at PwC India, when the first GST returns were filed in August 2017, the system crashed under the weight of filings.^[49]

The opposition Indian National Congress has consistently been among the most vocal opponents of GST implementation in India with party President, Rahul Gandhi, slamming BJP for allegedly "destroying small businessmen and industries" in the country.^[50] He went on to pejoratively dub GST as "Gabbar Singh Tax" after an ill-famed, fictional dacoit in Bollywood.^[50] Claiming the implementation of GST as a "way of removing money from the pockets of the poor", Rahul has called it as a "big failure"^[51] while declaring that if the Congress party is elected to power, it will implement a single slab GST instead of different slabs.^[52] In the run-up to the elections in various states of India, Rahul has intensified his "Gabbar Singh" criticisms on Modi's administration.^{[53][editorializing]}

According to an estimate, 230,000 small businesses shut down due to complications of compliance with the GST.

The GSTN software is developed by Infosys Technologies and the information technology network that provides the computing resources is maintained by the NIC. "Goods and Services Tax Network" (GSTN) is a nonprofit organization formed for creating a sophisticated network, accessible to stakeholders, government, and taxpayers, to access information from a single source (portal). The portal is accessible to the tax authorities for tracking down every transaction, while taxpayers have the ability to connect for their tax returns.

The GSTN's authorized capital is ₹100 million (US$1.3 million) in which initially the Central Government held 24.5 per cent of shares while the state government held 24.5 per cent. The remaining 51 per cent were held by non-Government financial institutions, HDFC and HDFC Bank hold 20%, ICICI Bank holds 10%, NSE Strategic Investment holds 10% and LIC Housing Finance holds 11% .^[43][44]

However, later it was made a wholly owned government company having equal shares of state and central government