CHAPTER - II

Review of Literature
 CHAPTER – II

REVIEW OF LITERATURE

2.1 INTRODUCTION

This chapter offers the theoretical framework for and a discussion of

empirical literature relevant to the study. There is a very limited body of

literature available covering studies on GST implications on the Automobile

industry in India. Despite the impressive growth rate of the Automobile industry

in recent years, a comprehensive database and other information are not in place.

The database is necessary for better planning for the GST implication analysis

on various industries. The review of literature here covers a few bodies of the

current theoretical and empirical studies to show the present status of research in

this area. The review of the past studies in research is a way to note the

observations, search, and many other things done in the past about the question

and other research. It is a base of social sciences. It provides introductions

regarding the searches worked out in the past. It provides details regarding all

facts of automobile industry viz. production, area, product varieties, techniques

and quality of products, marketing, and GST related problems, potential,

challenges and threats, strategic planning and policies, procedures adopted,

conclusion and observations made. It also guides how the introductions and data

should be collected & from where & how it could be made available. All this

information can be done from this type of study. The study of past researches is

useful to define & delimit the sphere of the research. It saves time, energy &

helps indirectly towards a particular goal.

Sharma (2006) analyses the performance of the Indian auto industry

concerning productivity growth. Partial and total factor productivity of the

Indian automobile industry has been calculated for the period from 1990-91 to

2003-04, using the Divisia Tornquist index for the estimation of the total factor

productivity growth. The author finds that the domestic auto industry has

registered a negative and insignificant productivity growth during the last one

and a half-decade. Among the partial factor productivity indices, only labor

productivity has seen a significant improvement, while the productivity of the

other three inputs (capital, energy, and materials) hasn’t shown any significant

improvement. Labour productivity has increased mainly due to the increase in

the capital intensity, which has grown at a rate of 0.14 percent per annum from

1990-91 to 2003-04.1

Piplai (2001) studies the policy environment and its impact on the Indian

automobile industry. While Piplai appears to be justified in saying that there has

been excess capacity in the auto industry and the auto majors are facing

difficulties in aggressively marketing their products, it is probably not correct to

conclude, as he has done, that the current levels of competition resulting from

liberalization are unsustainable. As noted in the introduction, car penetration

levels are very low in India and hence the future potential for demand is very

1
Sharma, S. (2006). A Study on Productivity Performance of Indian Automobile Industry:
Growth Accounting Analysis, Available at http://www.uq.edu.au/economics/ appc2004/
Papers/cs6C4.pdf.

15
high. This would ensure that competition is quite sustainable as there will be

enough consumers, given the rapid economic growth that is taking place. Till the

1940s, the Indian auto industry was non-existent, since automobiles were

imported from General Motors and Ford. In the early 1940s, Hindustan Motors

and Premier Auto started, by importing know-how from General Motors and Fiat

respectively. Since the 1950s, a few other companies entered the market for two-

wheelers and commercial vehicles. However, most of them either imported or

indigenously produced auto-components, till the mid-1950s, when India had

launched an import substitution program, thereby resulting in a distinctly

separate auto-component sector. . Intense competition had led to price wars and

aggressive cost-cutting measures including layoffs and large-scale retrenchment.

While Indian companies started focusing on the price-sensitive commercially

used vehicles, foreign companies continued utilizing their expertise on

technology-intensive vehicles for individual and corporate uses. Thus, Piplai

concludes that the vehicle industry has not gained much from the reforms, other

than being thrust upon a high degree of unsustainable competition.2

Kathuria (1996) analyses the Commercial Vehicles (CV) industry in India

in a detailed manner, dwelling on the concepts of vertical integration and

subcontracting production technology, and technological change. After an

overview of the global auto industry, Kathuria traces the developments in the

Indian auto industry from the 1950s to 1991. To evaluate the competitiveness of

Indian commercial vehicles manufacturers in the domestic market, growth

2
Piplai, T. (2001). Automobile Industry: Shifting Strategic Focus, Economic and Political
Weekly, 36(30), pp. 2892-2897.

16
trends, structural trends, market shares, profitability, productivity ratios, prices,

quality, dealer network, and performance are analyzed. Macro and micro

performance of India’s vehicle exports with major markets and Indian vehicle

characteristics have been outlined, along with an analysis of global demand

patterns. Domestic resource costs and global comparison of prices, credit, and

service are the other international trade-related aspects analyzed in this study.

On vertical integration, the analysis leads to the conclusion that the Indian CV

industry needs to learn from international experience to get into subcontracting

and buying-in. Lack of scales and high inventories had impeded the

competitiveness of Indian CV firms in the 1980s. R&D capabilities and new

product ranges were the results of the challenges arising from the time-bound

indigenization program, but still Indian technology frontier remained far below

global levels. Further, different firms have followed very different strategies, and

hence the impacts on their technological capabilities were also very different.

However, the success of Indian firms despite such a wide range of strategies is

partly due to the protection available to them in the domestic market. Kathuria

concludes that the Indian auto industry in general, and the CV industry in

particular, have a lot to learn from the global auto industry, in terms of best-

practice technology and vertical integration, and supplier relationship. The study

rightly predicted that the industry would see heightened activity and

recommended that the government should ensure that the domestic firms do not

lose out because of the unrestricted entry of highly competitive foreign firms.3

3
Kathuria, S. (1996). Competing through Technology and Manufacturing: A Study of the
Indian Commercial Vehicles Industry, Oxford University Press, Delhi.

17
 The Investment Information and Credit Rating Agency of India studies

the competitiveness of the Indian auto industry, by global comparisons of macro

environment, policies and cost structure. This has a detailed account of the

evolution of the global auto industry. The United States was the first major player

from 1900 to 1960, after which Japan took its place as the cost-efficient leader.

Cost efficiency being the only real means in as mature an industry as automobiles

to retain or improve market share, global auto manufacturers have been sourcing

from the developing countries. India and China have emerged as favorite

destinations for the first-tier OEMs since the late 1980s. There are only a few

dominant Indian OEMs, while the number of OEMs is very large in China (122

car manufacturers and 120 motorcycle manufacturers). According to this study,

the major advantage of the Indian economy is an educated and skilled workforce

with knowledge of English. Our disadvantages include poor infrastructure,

complicated tax structure, inflexible labor laws, inter-state policy differences and

inconsistencies. The drivers of Chinese economic growth are FDI, labor

productivity growth, which was 1.5 times higher than that in India in the last

decade, and domestic demand. Fiscal pressure is mounting on the Chinese

government, while India is in a better state. Based on comparisons of cost

composition to pinpoint the areas in which the Indian auto industry is at a

disadvantage, this study recommends a VAT regime, speedy procedures, imports

duty cuts on raw materials, common testing and design facility, labor reforms,

upgradation of design and engineering capabilities and brand building.4

4
ICRA (2003), Report on the Competitiveness of Indian Auto Industry, Society of Indian
Automobile Manufacturers, Automotive Component Manufacturers Association of India and
Investment Information and Credit Rating Agency of India.

18
 In August 2006, the Working Group on Automotive Industry in the

Ministry of Heavy Industries has brought out a report for the Eleventh Five Year

Plan. This document stresses the need of speeding up the move towards VAT in

the states and GST at the Centre. Labour regulations, the paperwork involved in

government-related transactions, internal trade barriers,63 infrastructure

bottlenecks, raw materials, human capital, increasing interest rates and threats

due to FTAs are, as mentioned in this document, barriers to competitiveness.

This report notes that the effective levy is lower for a Counter-Vailing Duty

(CVD) than excise duties locally, because excise is made after including the post-

manufacturing expenses64 in the price, while imported Completely Built Units

(CBUs) have the advantage of being levied the CVD before post-manufacturing

expenses. In addition, the document recommends various other measures such

as upgrading human resources, mandatory inspection and control, and retirement

of vehicles based on roadworthiness.5

Considering the disputes at the global level with the existing Merchandise

Export from India Scheme (‘MEIS’), a new scheme Remission of Duties or

Taxes on Export Product (RoDTEP) is introduced. The purpose of this scheme

is to refund the taxes or duties/ levies forming part of the export product by way

of issuance of duty credits. The above scheme is aligned to the global principle

of “Export the goods and not the taxes”. While the Government measures and

commitment to the Indian exporters by continuous assurance in this regard have

5
Report of Working Group on Automotive Industry, Ministry of Heavy Industries and Public
Enterprises (2006), pp. 16-17.

19
been appreciated by the industry at large. It is recommended that the guidelines

in this regard are rolled out, to bring in certainty for the Indian exporters. It is

imperative that the remission should not be linked only to the tax costs directly

built in the cost of the export product but should also provide for the remission

of taxes indirectly built in the export products, for instance, in the form of excise

duty & VAT / CST on fuel used for transportation of vehicles, components from

one place to another, tax costs built by the vendors of the vehicle manufacturer,

etc. This excess input tax though refundable, leads to significant blockage of

working capital, thereby posing a difficulty for new entrants or MSMEs to

sustain in this segment. Government should consider reducing the GST

rates applicable for all components of EVs; this would reduce the overall cost of

production of such vehicles and provide impetus to the EV industry (including

start-ups in the sector) which can then be passed on to end consumers to boost

demand.6

A McKinsey study has estimated that supply-chain disruptions. It could

occur every 3.7 years across industries. Amid such uncertainty, companies will

need operational resilience across the entire value chain, especially within

product development, manufacturing, and supply chain. To increase resilience,

automakers should undertake a thorough review of their product portfolios to

make them more customer-centric. They should also reduce the number of

product variants to become more focused. In addition, automakers should re-

6
Saurabh Agarwal (2020), “Opinion: Need of the hour is to bring Indirect tax reforms for the
ailing auto industry”, https://auto.economictimes.indiatimes.com/.

20
examine their product-platform architectures and strive to reduce complexity by

emphasizing modular product designs. This strategy can reduce part counts by

20 to 30 percent and improve the cost base by decreasing material costs by 6 to

8 percent. One leading Indian car manufacturer already has more than seven of

its car models and over 60 percent of its sales volume on one platform. Other

automakers should aim to cut the number of their vehicle platforms by half or

more to achieve lower cost structures and faster time-to-market with new

products.

As the manufacturing and supply-chain philosophy expands from being

just-in-time to just-in-case, companies can win by embedding digital and ana-

lytics into their operations. In addition to reducing inefficiencies, this strategy

will help companies build the robustness and resilience needed to respond to

unpredictable external challenges. Globally, automakers are moving very fast to

incorporate digital and analytics into their daily work. Consider Volkswagen,

which has embarked on a massive Internet of Things and cloud-enabled digital

transformation of production and logistics across its 124 plants globally.7

The automotive industry in India has come a long way from its nascent

state at the time of India’s independence in 1947 to its present-day dynamic form.

As compared to the production of mere 4,000 vehicles in 1950, the production

of the industry crossed the historic landmark of 10 million vehicles in 2006.

Today, the industry produces a wide range of automobiles and auto components

7
Nitesh Gupta (2021), “The Indian automotive industry: From resilience to resurgence?”,
www.mckinsey.com.

21
catering to both domestic as well as foreign markets. The development of the

industry has been shaped by the demand on the one hand and the government

interventions on the other; the influence of the latter being considerable. The

evolution of India’s automotive industry is identified to have occurred in four

phases. In the first (1947-1965) and the second phase (1966-1979), the important

policies identified were related to protection, indigenization, and regulation of

the industry. On the one hand, these policies helped India to build an indigenous

automotive industry, while on the other it led to unsatisfactory industry

performance. In the third phase (1980-1990), the single most important policy

identified as the one about relaxation in the means of technology acquisition. The

foreign competition inducted into the industry transformed its dynamics. Lastly,

in the fourth phase (1991 onwards) the liberalization of foreign investment had

a significant influence on the Indian automotive industry as we see it today. This

work traces the evolution of the automotive industry from its inception to the

present day and identifies the important policies made by the Indian government.

The work also studies the influence of important policies on the development of

the industry.8

The Government in 1953 required progressive manufacturing on the

automobile assemblers. The measure used to implement the decision was

restricted allocation of foreign exchange. The policy decision with its intention

of indigenizing the production of vehicles in the country had a significant impact

Mahipat Ranawat and Rajnish Tiwari (2009), “Influence of Government Policies on Industry
8

Development: The Case of India’s Automotive Industry”, Working Paper No. 57, Hamburg
University of Technology.

22
on the development of India’s automotive industry. The immediate result was

the exit of foreign assemblers from the country. The domestic assemblers entered

into collaborations with foreign players for manufacturing vehicles in the

country. Since the auto-component segment was not well-developed at that time,

the automobile firms undertook in-house manufacture of components. This

resulted in a vertically-integrated structure of the industry. The government

progressively increased the indigenization content from 50% in the 1950s to 80%

in the 1960s. Since the extent of indigenization is subject to increasing costs, this

increased the price of automobiles. Low GDP per capita combined with the high

price of automobiles had a negative influence on the demand development. The

learning by doing involved in local manufacturing of vehicle sub-assemblies

certainly helped to improve the manufacturing capabilities of the industry. The

important policy decisions of the liberalization package were delicensing, 51%

FDI via automatic route, relaxations for critical imports, and suspension of local

content requirements. The impact of these policy decisions on the developmental

aspects of the industry was visible by the mid-1990s. The policy decisions led to

the second wave of restructuring of the industry and resulted in a fiercely

competitive domestic market, both in terms of price and quality.9

The policies laid by Auto Policy 2002 have continued to apply till date

with minor modifications. Within a decade of introducing structural reforms into

9
Singh, N. (2004), “Strategic approach to strengthening the international competitiveness in
knowledge based industries: The case of Indian automotive industry”, Research and
Information Systems for the Non-Aligned and Other Developing Countries (RIS), New Delhi,
http://www.ris.org.in/Dp80_pap.pdf.

23
the country, the production of India’s automotive industry had increased from

1,603,736 2-wheelers, 165,309 cars, 144,248 CVs, 76,750 3-wheelers, and

31,530 UVs in 1991-92 to 4,271,327 2-wheelers, 564,052 cars, 162,508 CVs,

212,748 3-wheelers and 105,667 UVs in 2001-02. Along with reductions in the

overall tariff level to open up India for international trade, the government has

also progressively rationalized its domestic taxation structure to provide a fair

competition ground for its domestic manufacturers against the international

competition. For instance, the excise duty on passenger cars has been brought

down from its peak rate of 66% in 1991-92 to 24% in 2008-09.39 About the

import tariffs in the year 2008-09, the customs duty on WTO-bound segments

(CVs and auto components) has been reduced to 10%, whereas that for the WTO-

unbound segments (passenger cars, MUVs, and 2-/3-wheelers) has been 10% for

CKD units and 60% for SKD/CBU form.10

G. Garg, (2014) analysed the impact of GST on the Indian tax scenario.

He tried to highlight the objectives of the proposed GST plan along with the

possible challenges and opportunities that GST brings. He concluded that GST

is the most logical step towards the comprehensive indirect tax reform in our

country since independence. GST is leviable on all supply of goods and provision

of services as well combination thereof. All sectors of the economy i.e. the

industry, business including Govt. departments, and the service sector shall have

to bear the impact of GST. All sections of economy viz., big, medium, small

SIAM (2008), “Custom duty”, Society of Indian Automobile Manufacturers (SIAM), New
10

Delhi, online in internet: Format: http://www.siamindia.com/scripts/custom-duty.aspx

24
scale units, intermediaries, importers, exporters, traders, professionals, and

consumers shall be directly affected by GST. One of the biggest taxation reforms

in India – the Goods and Service Tax (GST) is all set to integrate State economies

and boost overall growth. GST will create a single, unified Indian market to make

the economy stronger. Experts say that GST is likely to improve tax collections

and boost India’s economic development by breaking tax barriers between States

and integrating India through a uniform tax rate. Under GST, the taxation burden

will be divided equitably between manufacturing and services, through a lower

tax rate by increasing the tax base and minimizing exemptions. 11

Pinki et al., (2014) the authors in the paper have explored the concept of

GST, the need to introduce it in India, the hurdles in introducing it in India, and

suggestions to overcome the same. The paper also discusses the benefits of

introducing GST at the earliest. The authors have discussed the options to

introduce the dual GST in India which could be Concurrent Dual GST, National

GST, or State GST. Under the concurrent dual GST, the better option was the

one where GST is applied on both goods and services. The other option explored

was whether the Central GST would be on goods and services but state GST

would be only on goods since state to collect GST in services is difficult to

determine. This option also recommended one single return with both CGST and

SGST details and PAN-based registration. The authors have also discussed the

constitutional amendments required if GST is ever to be introduced since without

11
Garg, G., Basic concepts and features of Goods and Services Tax in India, International
Journal of Scientific Research and Management, 2014, 2(2), pp.542-549

25
the amendment taxing both goods and services using one tax is not possible. The

paper also highlights the issues in the credit mechanism in the CGST/SGST

model since it is difficult to practically implement in terms of determination of

place where service is taxable. The other challenges to the introduction of GST

in India highlighted are the availability of a strong IT network, infrastructure and

programs, agreement on other provisions like basic threshold, an exemption to

goods/services, rates to be applied, and the like.12

Rashid et al., (2014) in this paper author’s study the impact of GST in

Malaysia since it is proposed to introduce GST in Malaysia in 2015. The GST is

being introduced mainly to increase the revenue collections of the government

and reduce the deficit. The authors have studied the impact of the introduction

of this GST and its relation to certain indicators like the consumer price index

and the structural balance. For this, the relation between these factors and the

GST are studied for Singapore, Thailand, and Indonesia so that whilst

implementing GST in Malaysia the administration can adopt the best practice.

The paper recommends transparency in implementing GST and review of the

rates/base of GST after 5 years and rectification based on the 5-year

experience. 13

N. Kumar, (2014) concluded that GST will help in eradicating economic

distortion by the current Indian tax system and is expected to encourage unbiased

12
Pinki, Kamna S. and Verma R., Goods and Service Tax – Panacea for Indirect Tax System
in India, Tactful Management Research Journal, Vol. 2,2014, Issue 10, pp. 1-7
13
Rashid N., Yusoff H. and Nor H., Study on the possible impact of GST towards Malaysia
using selected Economic Indicators: Case of Singapore, Thailand and Indonesia as Model
countries, 5th ICBER, 2014 Proceeding, pp. 569-578

26
tax structures which will be indifferent to geo-locations. Jaiprakash ( 2014) in

his research study mentioned that the GST at the Central and the State level are

expected to give more relief to industry, trade, agriculture, and consumers

through more comprehensive and wider coverage of input tax set-off and service

tax setoff, subsuming of several taxes in the GST and phasing out of CST. 14

Saravanan Venkadasalam, (2014) has analysed the post effect of the

goods and service tax (GST) on the national growth of the ASEAN States using

the Least Squares Dummy Variable Model (LSDVM) in his research paper. He

stated that seven of the ten ASEAN nations are already implementing the GST.

He also suggested that the household final consumption expenditure and general

government consumption expenditure are positively significantly related to the

gross domestic product as required and support the economic theories. But the

effect of the post-GST differs in countries.15

Shaik et al, (2015) studied the concept and impact of GST on the Indian

economy. The study also focused on some aspects of GST models. This study

also covered the advantages and working of GST. The study concluded that GST

in the Indian framework will lead to commercial benefits which were untouched

by the VAT system and would essentially lead to economic development. 16

14
Kumar, N., Goods and Services Tax in India: A Way Forward. Global Journal of
Multidisciplinary Studies, 3(6), 216-225. 2014
15
Saravanan Venkadasalam, Implementation of Goods and Service Tax (GST): An Analysis
on ASEAN States using Least Squares Dummy Variable Model (LSDVM)International
Conference on Economics, Education and Humanities (ICEEH'14) Dec. 10-11, 2014 Bali
(Indonesia), Pp No. 7-9
16
Shaik, Sameera, and Firoz, “Does Goods and Services Tax (GST) Leads to Indian Economic
Development?” IOSR Journal of Business and Management (IOSR-JBM), eISSN: 2278-487X,
p-ISSN: 2319-7668. Volume 17, Issue 12 .Ver. III , 2015, pp 01-05

27
 Sehrawat & Dhanda, 12 (2015) conducted a study focused on the

advantages and challenges of GST faced by India in execution. They concluded

that a simplified and transparent tax system was the need of the Indian economy.

Pointing out the various advantages they said that GST will provide India with a

world-class tax structure and a seamless tax system but it will depend upon the

effectiveness of its implementation.17

Khurana & Sharma, (2016) conducted a study to explore various benefits

and opportunities of GST by throwing light on its’ background, objectives of the

proposed GST plan, and its impact on the Indian tax scenario. They concluded

that GST implementation will benefit producers and consumers although its’

implementation requires concentrated efforts of all stakeholders especially

central and state governments.18

Munde & Chavan, (2016) conducted a study to discuss the pros and cons

of GST and accordingly make suggestions to minimize loopholes and make it

more effective. They concluded that if the probable loopholes are dealt with

effectively, taxpayers will accept the change brought upon and if procedures in

GST prove to be simple and assure the involvement of interest of all stakeholders

then definitely it will lead to economic development and rationalization of prices.

They concluded that if the probable loopholes are dealt with effectively,

taxpayers will accept the change brought upon and if procedures in GST prove

17
Sherawat, M., & Dhanda, U., GST in India: A key tax reform. International Journal of
Research Granthaalaya, 3 (12), 133-41, 2015
18
Khurana, A. & Sharma, A., Goods and Services Tax in India –A Positive return for indirect
tax system. International Journal of Advanced Research, 4 (3), 500-505, 2016.

28
to be simple and assure the involvement of interest of all stakeholders then

definitely it will lead to economic development and rationalization of prices. 19

Kumar, R., (2016), in his paper ‘Comparison between Goods and

Services Tax and Current Taxation System – A Brief Study’ differentiate the

GST framework and previous taxation system and highlighted the impact of GST

on the Indian economy. The author has concluded that GST will help in

eradicating economic distortion by the current Indian tax system and is expected

to encourage unbiased tax structures which will be indifferent to geo-

locations. 20

Khurana, A. And Sharma, A., (2016), in their paper ‘Goods and Services

Tax in India – A Positive Reform for Indirect Tax’ highlighted the objectives of

GST and reforms in the indirect taxation system in India. And conclude after the

implementation of GST, manufacturers, wholesalers, and retailers can be easily

recovered input taxes in form of a tax credit.21

Shefali Dani, (2016) stated the impact of GST on the Indian economy in

the study in which some benefits of GST such as one nation one tax, free from

cascading effect, increased consumption due to a cascading effect, transparency,

and GDP growth are studied. Petroleum products, real estate, and liquor are free

from GST.22

19
Munde, B. M., & Chavan, A., Perspective of GST in India. International Journal of Innovative
Research in Science, Engineering and Technology, 5 (11), 2016.
20
Kumar, P. et al., Goods and service tax in India: problems and prospects, Asian Journal of
Management Research, 2016, Vol. 6 Issue 3, pp. 504-513.
21
Khurana, A and Sharma, A., Goods and Services Tax in India – A Positive Reform for
Indirect Tax, International Journal of Advance Research, 2016, Vol. 4, Issue 3, pp. 500-505.
22
Shefali Dani , An Impact Of Goods And Service Tax On Indian Economy, Business and
Economics Journal, 2016, vol. 7 (4).ri

29
 Dani, S., (2016) in her research study revealed that GST being a system

replacing all indirect taxes might hamper the progress of the country as they

attempt to implement it is not being made wholeheartedly. 23

Lourdunathan F and Xavier P., (2016) studied the inexplicit opinion of

manufacturers, traders, and society. It also included challenges and prospects of

GST in the future in India. Centre and state-level taxes are also discussed in this

paper. Various states are shown in which GST is followed for the growth of the

economy. Some issues such as demonetization issue, inappropriate time,

political issues, the rate for manufacturers and traders, impact on working and

cash flow, and implementation in unorganized sectors became some main issues

in the path of GST. They concluded that no doubt GST stands with one tax one

nation slogan and will provide relief to producers as well as consumers. Its

efficient implementation will lead to resource and revenue gains. They also said

that seamless credit and return processing without human intervention requires

educating, training, and conducting workshops on GST on the part of the

government 24

Mitra Priya, (2017) stated GST is a Game changer in the Indian Economy.

The paper showed that GST reduced the complexity of various taxes and also

removed cascading effect. The tax structure is shown in a paper in which various

tax rates are included. Impact on Tax incidence included various sectors such as

23
Dani, S., Impact of Goods and Service Tax (GST) on Indian Economy. Business and
Economics Journal, Bus Eco J 7: 264, 2016
24
Lourdunathan F and Xavier P., A study on Implementation of Goods and Services Tax (GST)
in India; Prospectus and Challenges, International Journal of Applied Research,2016, vol. 3(1),
pp. 626-629

30
Telecom, E-Commerce, Automobile, real estate, banking, and consumer goods.

Impact on input tax credit showed that there would be the availability of cross-

credit utilization in CGST and SGST.25

Kapoor Kapil, (2017) critically examined GST implementation, models,

mechanism, issues, and challenges. Development stages GST in India are studied

in this paper. Exclusions from GST which are petrol alcohol, tobacco, Diesel,

and some benefits such as simplicity, transparency, cascading effect, reduction

in the burden of tax revenue collection, economic growth, and no tax for

exporters are included in this paper. Challenges are also studied in the paper. So

the paper concluded that proper implementation of GST will lead to economic

growth.26

Amaresh Bagchi Report (1993) The principal broad-based consumption

taxes that the GST would replace are the CENVAT and the Service Tax levied

by the Centre and the VAT levied by the states. All these are multi-stage value-

added taxes. The structure of these taxes today is much better than the system

that prevailed a few years ago, which was described in the Bagchi Report as

―archaic, irrational, and complex – according to experts, the most complex in

the world‖. Over the past several years, significant progress has been made to

improve their structure, broaden the base and rationalize the rates. Notable

among the improvements made are:

25
Mitra Priya., GST- A Game Changer, International Journal of Management Research and
Social Science (IJMRSS),2017, vol. 4(1), pp. 10-12.
26
Kapil Kapoor, GST New Tax Regime: Issues and Challenges. International journal of recent
scientific research,2017, vol. 8(4), pp. 16786- 16790.

31
 • the replacement of the single-point state sales taxes by the VAT in all

of the states and union territories,

• reduction in the Central Sales Tax rate to 2%, from 4%, as part of a

complete phase-out of the tax,

• the introduction of the Service Tax by the Centre, and a substantial

expansion of its base over the years, and

• rationalization of the CENVAT rates by reducing their multiplicity

and replacing many of the specific rates with ad valorem rates based

on the maximum retail price (MRP) of the products. These changes

have yielded significant dividends in the economic efficiency of the

tax system, ease of compliance, and growth in revenues.27

The application of CENVAT at fewer rates and the new system of

CENVAT credits has likewise resulted in fewer classification disputes, reduced

tax cascading, and greater neutrality of the tax. The introduction of the Service

Tax in its original form was a mixed blessing. While it had broadened the tax

base, its structure was complex. The tax was levied on specified services,

classified into one hundred plus different categories. This approach had spawned

many disputes about the scope of each category. Unlike goods, services are

malleable, and can and are often packaged into composite bundles that include

taxable as well as non-taxable elements. Also, there is no standardized

nomenclature for services, such as the HSN for goods. Therefore to overcome

27
Amaresh Bagchi Report (1993); Reform of Consumption Taxes in India

32
this shortcoming and as a step towards the introduction of GST, Government has

introduced the concept of a Negative List in Service Tax. The design of the

CENVAT and state VATs was dictated by the constraints imposed by the

Constitution, which allows neither the Centre nor the States to levy taxes on a

comprehensive base of all goods and services and at all points in their supply

chain. The Centre is constrained from levying the tax on goods beyond the point

of manufacturing, and the States in extending the tax to services. This division

of tax powers makes both the CENVAT and the state VATs partial and

contributes to their inefficiency and complexity. 28

Benedict, (2011) creator considers law game-plans managing money-

related associations under GST law with a target to certify whether blueprints

have been seen sufficiently considering intriguing motivation driving request

and how concerns apparent might be changed. Producer moreover observes

blueprints followed in Australia to overview money-related associations courses

of action and whether want for regulating body in upsetting financial associations

is important. Through the paper, the creator has shown how clear drafting of said

approaches has acknowledged extreme cognizance of same by Courts and has

subsequently accomplished disappointment of complete point behind blueprints.

The author studied the law provisions dealing with financial services under the

Australian GST law to verify whether the provisions have been construed

correctly in light of the original purpose of the legislation and how the concerns

identified may be rectified.29

28
Central Excise Act, 1944, (Bare Act), as amended
29
Benedict K., 2011, The Australian GST regime and financial services: How did we get here
and where are we going?, E Journal of Tax Research, Volume 9, (Issue 2), pp.174-193

33
 Bikas, (2013) The authors have studied the VAT rate and the EU economy

and also the link between the VAT and macroeconomic indicators and their

influence on the VAT rate. The authors conclude that there is a positive

relationship between macroeconomic indicators like GDP, per capita income and

consumption, export, import, etc, and the VAT rate applicable. 30

Borec, (2013) creators are advocates with PwC Switzerland and have

talked about how to assess my consent to VAT laws given that GST is the target-

based expense. Productive 1 January 2015, a spot of supply standards have been

acclimated to change the taxability of associations like media

transmission/broadcasting, and so forth in B2C cases from the zone of power

focus to zone of association beneficiary. The authors have discussed how

assesses may comply with the VAT laws given that the GST is a destination-

based tax. The authors mainly deal with B2C cases where the VAT compliances

would need to be done in the state where the customer is located. The authors

have discussed the difficulties in this compliance, especially in e-commerce

transactions. 31

Bovenberg, (1992) The author uses a general equilibrium model to assess

different instruments of indirect taxation in middle-income countries. The author

has specifically studied Thailand and concluded by giving various methods to

increase the effectiveness of indirect taxes. 32

30
Bikas E. and Andrukaite E., 2013, Factors affecting Value Added Tax revenue, European
Scientific Journal, Volume 1, pp. 41-49
31
Borec T. and Merz M. and Salanki A., 2013, World Wide VAT Forum: E Commerce, Tax
Planning International – Indirect Taxes, Volume 5, pp.13-15
32
Bovenberg A.,1992, Indirect taxation in developing countries, International Monetary Fund
– Staff Papers, Volume 1, pp. 333-373

34
 Brew, (2012) The authors have studied the relation between the mode of

collection of VAT revenues with the target of VAT collection for the

municipality of Tarkwa – Nsuaem in West Ghana. The authors have used

questionnaires and interviews to collect the data and then analyzed it using the

regression analysis and established that the method of VAT collection in the said

municipality was above average. The study is important because VAT is one of

the primary revenue generators for any Government. 33

Ciobanasu (2012) The authors trace the correlation between the types of

taxes and their role in the budgeted revenues and the fiscal development of

Romania. Indirect tax by its very nature is easier to govern, is neutral to the status

of the taxpayer, and increases revenue but leads to inflation. On the other hand,

direct taxes depend on the taxpayer and are difficult to govern. Further, indirect

tax helps the government to an extent to direct consumption of the public. The

authors conclude that both taxes are important for the overall growth of the

economy. 34

Cnossen, (1992) VAT is operative in several countries and primarily in

countries where the federal government is not in existence. The author has

studied the various VAT systems existing in the world and tried to arrive at an

appropriate VAT for Central and East European countries. The author has laid

33
Brew L. and Wiah E.N., 2012, As assessment of the efficiency in the collection of Value
Added Tax Revenue in Tarkwa- Nsuaem Municipality (Ghana) using Time Series Model,
British Journal of Arts and Social Sciences, Volume 6, (Issue 2), pp. 140-150
34
Ciobanasu M. and Postole M., 2012, Contribution of Taxes to the making up of Budget
Revenues in the Economic Growth, Journal of Knowledge Management, Economics and
Information Technology, Volume 2, (Issue 6), pp.1- 12

35
down various requirements to ensure that the said VAT is completely effective

like it should be destination-based, the input credit mechanism should be

seamless, the law should be easy to understand, the cost of conformity should be

below, etc. 35

Crossley, (2009) In 2009, the United Kingdom Government decided to

reduce the VAT rate by a marginal amount to boost consumer spending. The

authors have studied the said relation in their paper and concluded that if the

VAT rate is reduced, the spending by general consumers increases resulting in

overall buoyancy in the economy.36

Firth, (2012) GST on financial services has always been a subject matter

of great debate. There is a problem in taxing financial services due to their

intangible nature, the confusion around the location of the service provider and

service recipient, and the value of the service. The authors in their paper are

trying to address these issues especially for the country of Canada. In Canada,

there is an exclusion for monetary associations, go-between associations in

relationship with money-related associations, and so on producers in their paper

have examined existing laws and recommended changes to existing laws for

better capacity in furnishing budgetary associations. Precisely when money-

related associations are restricted, as is the case in Canada, input costs combine

ITC acknowledging expansion in costs. In any case, concerning exact money-

35
Cnossen S., 1992, Key Questions in considering a Value Added Tax for Central and Eastern
European Countries, International Monetary Fund Staff Papers, Volume 39 (Issue 2), pp.211-
255
36
Crossley T. and Low H. and Wakefield M., 2009, The Economies of a temporary VAT cut,
IFS Working Paper, Volume W09, (Issue 02), Page 3-20

36
related help is risky and from this time forward not got a handle on it. In

circumstance, creators have recommended zero-rating for example permitting

ITC to master affiliation if the beneficiary is a matter of truth. This recommends

in B2B exchanges money-related associations to be treated as zero surveyed and

ITC permitted and in others it be treated as restricted and no ITC permitted. In

any case, under this system, master focuses would need to isolate the status of

clients and record for two sorts of associations uninhibitedly inciting distinctive

course of action of difficulties. creators have in addition proposed procedures to

evaluate the import of budgetary associations and recommended time obliges on

overview authoritative corrections to diminish shortcoming in participating.

Further changes ought to go with adequate time for use and direction of open to

avoid expenses to business since these commitments must be gathered from the

client and paid.37

Halakhandi, (2007) GST was supposed to be introduced in India way back

in 2010. It has been getting postponed due to various reasons major one being

getting to a consensus between the various states and the center for

compensation. The author in the paper has discussed the existing laws in India

for indirect taxes, the VAT laws in various states with their advantages and

disadvantages, the impact of the proposed GST, the compliances under the

proposed GST, etc. The author has also used various numerical examples to

demonstrate how GST is cost-effective.38

37
Firth M. and Mckenzie K., 2012, The GST and financial services: pausing for perspective,
The School of Public Policy – SPP research Papers, Volume 5, (Issue 29), pp.1-41
38
Halakhandi S., 2007, Goods and Service Tax – An introductory study, The Chartered
Accountant, pp.1595- 1601

37
 Herekar, (2012) The Ministry of Finance had set up the Task Force with

Mr. V. Kelkar as the chairman of the Task Force. The main task of the Task

Force was to evaluate the impact of the proposed GST on the Indian economy.

The author of the paper has studied the different parts of GST and their impact

on the common man, the business, and the economy. The author has concluded

based on secondary data that if GST is introduced in India, it would have a

positive impact on the overall economy.39

Huang, (2013) The authors examine the relationship between the newly

introduced GST in Australia in 2000 and the mortgage costs between 1999 and

2001. The study concludes that given that in Australia financial services industry

is taxed on an input taxation basis i.e. the output mortgage service is not liable

to GST and GST paid on input services to provide these mortgage services are

also not allowed. This extra cost of sunk input tax is passed in the form of

increased mortgage costs to customers making housing costly post introduction

of GST in Australia.40

Keating, (2010) GST is operative in both Australia and New Zealand with

anti-evasion/avoidance provisions under the GST law framed in both the

countries. The author compares the said anti-evasion provisions in both

countries, examines their effectiveness, and also whether taxpayers have

successfully evaded the law. The author concludes that if the law interpretations

39
Herekar P.M., 2012, Evaluation of Impact of Goods and Service Tax, Indian Streams
Research Journal, Volume 2, (Issue 1), pp. 1-4
40
Huang A. and Liu B., 2013, The Impact of Goods & Service Tax on Mortgage Costs :
Evidence from Australian Mortgage Corporations, International Journal of Financial Research,
Volume 4, (Issue 1), pp.54-65

38
based on the New Zealand Court decisions are referred to, it implies that

Assessee will find it difficult to evade the law.41

Diksha Panwar and Sidheswar Patra (2017) dissected the effect of GST

on Restaurants and nourishment administration business in India, the target of

the examination was to discover the experiences in execution and to feature the

unfavorable impacts of cafés and nourishment industry. The investigation

presumes that incessant change in charge rates and backward tax collection

strategy disheartens the new contestants in the café business. 42

Dr.Kala Ganeshan and Deepa (2017) conveyed a contextual analysis

on GST in the administration area with extraordinary reference to the Hotel

industry. The goal of the investigation was to examine the outcomes of GST on

Chidambaramvial’s extravagance resort. The investigation finishes up on a

positive note that it's a straightforward and uniform assessment the nation over

which could decrease tax avoidance and make sends out increasingly serious,

could carry more income to the exchequer.43

Shana and Rohit Bhat (2018) analysed issues of GST on the lodging

industry in the Mysore area, the investigation objective was to inspect the

discernments towards GST among buyers based on populace extent and the

examination dependent on test study. The examination finds and reasons that the

41
Keating M., 2010, GST Tax Avoidance, A New Zealand perspective on the application of
Div. 165, E Journal of Tax Research, Volume 8, (Issue 1), pp.64-89
42
Diksha Panwar and Sidheswar Patra (2017). Impact of Goods and Services Tax on
Restaurants and food service Businesses in India, International Journal of Applied Business
and Economic Research, pp.203-213
43
Kala Ganeshan and Deepa (2017). A Case Study on GST In Service Sector Particularly in
Reference to Hotel Industry. Journal of Management and Science, pp.33-41

39
age bunch till 30 yrs. in the area were not having clear comprehension on the

framework than the above age gatherings. Not many of the clients have the issue

in an instalment of extravagance charge. The execution of GST had diminished

the instalment of different charges at each phase of business movement and was

perceived as one assessment.44

Aswathy Krishna and et.al (2018) dissected the impacts of GST on the

Inn industry. The examination portrays the upsides and downsides of the GST in

the Inn business and it infers that organizations that centre around nourishment

and refreshments could be the greatest recipients within the neighbourliness

sector (budget inns profited), the inns with the levy scope of 18-28% hit

gravely.45

Bharati Sharma and et.al (2018) read an important tax assessment

framework for the café industry contrasting VAT and GST and investigating the

effect on buyer and eatery proprietors. The examination presumes that GST is

an important framework for both eatery proprietors and customers, improving

the fundamental portion of the buyer by decreasing the taxation rate. It will

straightforwardly affect the productivity of entrepreneurs as decreased expenses

draw in more clients and will expand the market development of the café industry

additionally the GDP of the Indian Economy.46

44
Shana and Rohit Bhat (2018). A study on the problems of Goods and Services Tax on Hotel
Industry in Mysore District, Journal of Business and Management-IOSR, pp.49-52
45
Aswathy Krishna and et.al (2018). A study on GST and its effects on hotel industry. Journal
of Business and Management-IOSR, pp 4-5
46
ibid

40
 Vasanthagopal. R, (2011) though the positive impacts referred above are

dependent on a neutral and rational design of the GST, balancing the conflicting

interests of various stakeholders, full political commitment for fundamental tax

reform with a constitutional amendment, the switchover to a flawless GST would

be a big leap in the indirect taxation system and also give a new impetus to

India’s economic change.47

Agrawal. A (2011) GST is also expected to bring many benefits to the

Indian economy. Though, all these benefits are based on the assumption that the

overall taxation structure is less bureaucratic and umber some than the present.

The implementation is going to be crucial so that the promised benefits are

realized.48

Jaiprakash (2014) VAT is an improvement over the existing union excise

duty at the central level and the sale tax at the state level while GST is a further

improvement over the existing VAT which is yet to be implemented most

probably in the coming financial year as a promise made by our union finance

minister.49

Monika Sehrawat and Upasana Dhanda (2015), GST is one of the most

crucial tax reforms in India which has been long pending. It was supposed to be

implemented in April 2010, but due to political issues and conflicting interests

47
Vasanthagopal.R,(2011).GST in India: A Big Leap in the Indirect Taxation System,
International Journal of Trade, Economics and Finance, Vol. 2, No. 2, page 144 -146.
48
Agrawal. A (2011), Value Added Tax and Consumer Spending: A Graphical Descriptive
Analysis, Asian Journal of Finance &Accounting, ISSN 1946-052X, Vol. 5, No. 1
49
Jaiprakash (2014) Indirect Tax Reforms in India and A way ahead for GST, International
Journal of Computing and Corporate Research, ISSN (Online): 2249-054X, Volume 4 Issue 1
January 2014.

41
of various stakeholders, it is still pending. It is a comprehensive tax system that

will subsume all indirect taxes of states and central governments and a unified

economy into a seamless national market.50

Kesarisinh S. Parmar (2015).In the light of the empirical conclusions

developed in this paper, it seems appropriate to conclude by briefly noting the

policy implications of the results. In the first place, the macroeconomic impact

of a change to the introduction of the GST is significant in terms of growth

effects, price effects, current account effects, and the effect on the budget

balance. Secondly, in a highly developed open economy with a high and growing

service sector, a change in the tax mix from income to consumption-based taxes

is likely to provide a fruitful source of revenue.51

Mukherjee (2015) has highlighted that to remove cascading effect of taxes

and provide a common national market for goods and services, India is moving

towards the introduction of the Goods and Services Tax (GST). Under the

proposed indirect tax reform both Central and State Governments will have

concurrent taxation power to levy tax on the supply of goods and services.52

50
Monika Sehrawat and Upasana Dhanda (2015) International Journal of Research
Granthaalayah, A knowledge Repository.Vol.3 (Iss.12), ISSN- 2350-0530(O) ISSN- 2394-
3629(P) Impact Factor: 2.035 (I2OR) International Journal of Research –
GRANTHAALAYAH, pp.133-141.
51
Kesarisinh S. Parmar (2015). An Illustrated framework for GST implementation in India,
Journal of commerce and management. KCG portal of Journals ISSN:2279-225X, Continuous
issue-14.
52
Mukherjee (2015) Present State of Goods and Services Tax (GST) Reform in India. Working
Paper No. 2015-154. National Institute of Public Finance and Policy New Delhi
.http://www.nipfp.org.in.

42
 Bhawna (2016) The e-commerce industry in India is still in its infancy,

but it has shown remarkable growth over some time and has contributed

significantly to the country’s GDP. GST is an indirect tax levied on the sale of

goods and services and is considered a solution to several complex tax maladies

being encountered by E-commerce companies in the retail sector.53

Jaisheela (2016), Goods and Service Tax (GST) is a comprehensive tax

levy on manufacture/producer sale and consumption of goods and service at a

national level. GST is a tax on goods and services with the value addition at each

stage having a comprehensive and continuous chain of set-of benefits from the

producer’s/ service provider’s point up to the retailer’s level where only the final

consumer should bear the tax”.54

Ahmad, (2009) creators in paper have talked about proposed GST to be

shown in India, explicitly in relationship with a spot of supply rules for

associations to be gotten, methodology to apply twofold GST for example by

what means may GST work among states and focus, charge rate to be applied,

and so forth producers have assessed choices to introduce twofold GST in India

which could be Concurrent Dual GST, National GST or State GST. Under

simultaneous twofold GST better alternative was one where GST is applied on

two items and endeavours. Another alternative looked into was spot Central GST

53
Bhawna Manyal Aanchal Nagpal (2016) GST on e-commerce in retail sector: BOON or
BANE XVII Annual International Seminar Proceedings, ISBN no. 978-81-923211-8-9, Page
No 1058-1067
54
B. Jaisheela, (2016) Implementation of Goods and Service Tax in India 2016: Challenges
and Opportunities, International Journal of Advanced Research in ISSN: 2278-6236
Management and Social Sciences Vol. 5 | No. 9 | www.garph.co.uk IJARMSS | Page No 34.

43
would be on things and experiences yet state GST would be essentially on the

stock since state to collect GST in associations is hard to pick. This choice in like

way prescribed one single come back with both CGST and SGST subtleties and

PAN-based enlistment. Given challenges in seeing states where SGST on

associations is payable, one powerfully assortment of twofold GST was spot

focus collects SGST to help states and a brief timeframe later scattering it on

some reasonable explanation. National GST is joining state and focus blames for

any one body social event costs and after that dispersing relying on some

concurred explanation. The third model where CGST and SGST would exist

together essentially requires guaranteed to change with the target that states can

evaluate associations and focus can constrain things. Further spot of supply of

associations should be vivacious to permit choice on which state would

aggregate SGST particularly in event of subtle associations.55

Ahmad, (2010) creator of this paper has talked about endeavours of the

Pakistan Government to execute General Sales Tax. The creator has broken

down existing anomalous commitment structure in Pakistan, history of

examination framework, changes suggested by National Taxation Reforms

Commission, and a brief span later included issues and focal points in proposed

changes. The proposed structure is required to lessen the falling impact of

backhanded assessments. Paper endorses that to decrease backward impacts of

VAT, VAT rates can be in two pieces, one standard rate for all items and a

55
Ahmad E. and Poddar S., 2009, GST Reforms and Intergovernmental Considerations in India,
Asia Research Centre, Working Paper 26, pp. 1-43

44
reduced rate for favoured things which are considered as basics. A producer has

in like way talked about how for suitable execution of VAT it would wind up

basic to completely re-attempted whole cost affiliation framework. Further

game-plan would be found for the procedure to solidify GST at the state level

and national level. The creator besides conveys that for a framework to move it

has been recommended that it not be shown in parts area canny in any case be

presented at both local and state government level overall divisions.56

Aizenman (2005) has in paper examined 44 nations over the period

regarding ability in a get-together of VAT. Factors on which reasonability

depends are political scene for example political unwavering quality,

dynamically fundamental political interest, and so forth increment VAT

accumulations. Different elements considered are right-hand parts like

straightforwardness to keep up key good ways from charge, the obligation of

agribusiness to economy, straightforwardness in business, level to which

economy is urbanized, and so on paper think about the association between these

segments and their effect on VAT social events. Rule two segments picking VAT

accumulations appear to be a likelihood of being evaluated and teach one would

need to pay for having kept up vital good ways from charge57

Bhat, (2010) creator of the paper has investigated e association of VAT

framework in India with express reference to Rajasthan. India had a strategy of

56
Ahmad E., 2010, Why is it so Difficult to Implement GST in Pakistan?, Lahore Journal of
Economics, Vol. 15, pp. 139-169
57
Aizenman J. and Jinjarak Y., 2005, Collection Efficiency of Value Added Tax: Theory and
International Evidence, NBER, Working Paper 11539, Pp. 1-24

45
offers charge which was cluttered up to straightforwardly around 2005. In 2005,

a bundle of states got Value Added Tax rather than deals commitment, Goa and

Kerala being two of them. Principle bit of room of VAT was receptiveness of

ITC on stock purchased. paper depends after taking a gander at a valuation for

Vat laws as they are by common relationship to which it applies in Goa and

Kerala. Further, at present enormous consistency under VAT frameworks is

gotten a handle on electronically. It is seen that change to mechanize everything

is invited overall masses since it collects straightforwardness in working.

Regardless, individuals should be told about different laws. Preferably

government should direct some availability programs for re-association to

develop its consideration and to diminish the reliance of relationship on pros for

e- compliances. Study shows that affiliations feel that E association diminishes

visits to the charge office and smoothen consistency. Structures, and so forth for

consistency are effectively secured on the web. Regardless, the government

needs to streamline laws further to fabricate consistency. Another issue

perceived under investigation has been that even with e-association, the speed of

award of points of confinement is moderate. This should be improved for better

consistency.58

W. animal, (2012) creator seeks after a history of offers charge in Canada

from start to current GST, and so on in government foundation for example

58
Dr Shiv K. Shrivastava, Dr Vinod K. Bhatnagar and Dr Prakash Sharma (2010) Goods and
Service Tax (GST) - study with special reference to warehouses in India Journal of
Management, Asian School of Business Management, Bhubaneswar, vol. IV No. 1. Pp. 155-
168, 2011.

46
where there is focal government charged GST or plans cost or VAT and

unmistakable express territory level assessments charged. In this way, the paper

seeks after best frameworks/structures for government VAT charge gathering.

Paper takes a gander at changed techniques to improve government charge

examination. The fundamental guideline of VAT is that credit is receipt based

and taxability is goal-based. Canada from outset had Manufacturer's Sales Tax

or MST which was uprooted by GST in 1991.59

Focal Sales Tax Act, 1956 This Act supervises game plans to charge on

the interstate room of items. It is especially appropriate considering how that it

shows how beginning at now the condition of starting stage or state from where

progression of item starts gathers courses of action charge on interstate plans.

This is stand-out in association with the proposed GST where interstate

exchanges will settle managerial responsibility condition of goal. Further

commitments under this Act at any rate subject of focal toll is obliged by

autonomous government and continues thereof are kept by said Government.

This can be depended upon while the brainstorming framework for future GST

relationship of IGST. Further in the perfect world after the presentation of GST,

this Act should be repudiated to evade an assortment of charges. The measures

gave definitions on a very basic level vital ones being a capital item, information

sources, and information benefits as ITC are open on same. Drives in like way

offer rejections to the criticalness of each. From money-related associations’

perspective significance of information associations and dissents thereto are

59
ibid

47
remarkably material since they pick qualified ITC for budgetary affiliations. All

other data overviews on rejections would progress toward getting a chance to be

expenses and result in falling charges.60

CRISIL, (2014) creators have in this paper through CRISIL, set their

perspectives and examined how GST would be an unprecedented reaction for

explaining budgetary insufficiency of India, particularly considering the current

lion's offer Government. GST would help since it is partner change, inciting

higher assessment social affairs since at this stage deficiency can't be brought

someplace around diminishing use. The paper recommends that Government

could think about reducing use on portions and spending on direction,

flourishing, framework, and so on. The government needs to decrease cash-

related needs and for this, they can take a gander at GST as a mind-blowing pay

generator. Regardless, related law and guidelines, balanced issues ascending in

perspective on questionable plans on the spot of course of action of associations,

IT structure to arrange GST, and so on should be tended to before the

presentation.61

Debruyne, (2013) creator has in the paper examined existing laws in

relationship with charges in Malaysia and after that broke down proposed GST

to be shown in Malaysia. As of now in Malaysia, basic circumlocutory

assessments operational are association charge, deal cost, import and entry

60
Focal Excise Act
61
CRISIL, 2014, In Fiscal correction quest, best bet’s GST, CRISIL Insight, CRISIL Research,
Pp. 1-13

48
responsibilities and concentrate. A producer has then talked about whether GST

when acquainted with subsume these wandering expenses ought to be compelled

on use, net thing or pay. Further, whether GST ought to be root-based or target-

based. Paper records all inclinations and injuries of proposed GST close by

responsibilities from generally speaking knowledge.62

Deloitte, (2014) in this paper Deloitte gives a rundown of changes

proposed in Place of Supply Rules for e associations, media transmission

associations, and broadcasting associations from 1 January 2015 in the European

Union. This paper is essentially huge from Indian GST and money-related

association’s viewpoint since India has twofold government and budgetary

associations are in like way tricky like e associations. In other words, new picks

suggest that e associations accommodated private clients and non-chose clients,

for example, B2C supplies will be assessable in a state where the client is found.

This is in opposition to existing standards in the EU, where such supplies are

assessable where the provider is found. The new estimates make it necessary to

see the nature of the client and also state where the client said is found, rate

appropriate, and so on if there should be the occasion of supply being B2C. Right

when this is done, consistency should be done in the state where the client is

found self-sufficient of whether the provider is having business in a said state or

not. The base edge won't have any sort of impact and along these lines, even one

store to the client will trigger consistency in that EU part state. In case there

62
Debruyne J., 2013, Challenges of implementing GST in Malaysia, Journal of Belgian
Embassy, Pp. 1-25

49
should rise an occasion of MOSS, elective must be boring overall EU part states.

Thusly affiliations should complete two sorts of compliances, one in their local

state and one for MOSS selection which will solidify all associations outside of

their family state. Greenery is then expected to reasonable VAT crosswise over

part EU states where associations are eaten up. India can have to get from this in

relationship with current POPS existing in India, proposed CGST, SGST and

IGST structure to be given GST and its effect on money related associations

industry.63

Deol, (2012) creator of this paper has examined the foundation of GST

proposed to be presented in India. India has been attempting to show GST since

2008. At any rate, given that India has national government and variation charges

contribute hugely to compensations of states, it is absurd to plan to show GST in

India except if there is understanding inside states and centre intrigue. The

producer reviews focal centres, issues states have with its usage, and so on in the

paper. The creator has in like way conveyed the 'zero-rating model' for interstate

courses of action. Under this model passing on state, the shipper doesn't charge

any roundabout expense on deals. Regardless, getting state dealer reports the

majority of his imports and settles government cost on them in his state to some

degree like comprehensive rework charge structure working at present. Under

this framework, consistency is less perplexing and GST stays target-based

commitment. Another choice that broke down is one like in Canada where the

63
Deloitte, 2014, EU: 2015 Place of Supply changes: Changes to VAT place of Supply for e-
services, Pp. 1-7

50
spotlight will scatter government GST on interstate courses of action dependent

on regard. Regardless this model is ridden with issues and is extraordinarily

abnormal. A charge of both CGST and SGST is another model advanced in the

paper. Given the Indian economy and political condition, this looks like a likely

model to be presented. Further, the paper examines how the presentation of GST

will create a cost base, decrease expenses of commitment embedded in costs of

things, and by and large increase passes on. The blessed correction will engage

states and connection government to power stock/benefits starting at as of late

not inside their cost evaluation net. Further, in relationship with compliances

paper conveys that enlistment, returns, and so on are proposed to be PAN based

and separate for the local and state. This is in all probability going to manufacture

consistency. Paper presumes that the presentation of GST would be helpful to

the Indian economy.64

FICCI, (2013) in this paper, creators through FICCI, body tending to

industry, have divulged way to deal with oversee proposed GST and have

investigated same near to proposals from FICCI. FICCI recognizes that GST as

commitment would actuate increment in the proficiency of Indian economy,

decline expenses and endeavours of consistency, increment all-around pay rates

and improve charge affiliation. Thinking about these needs, FICCI has put this

recommendation orally and through association before the government.

Essentially, recommendation wire focuses like no unique cases to be yielded,

64
Deol R., 2012, Goods and Service Tax in India: Effect on Government Revenue, Research
Paper – Maxwell School – Syracuse University, Pp. 1-6

51
state and near to bodies ought not to have a position to drive extra charges once

GST is presented. Further, states may have the alternative of not getting GST till

they need it, at any rate once got a handle on they ought not to be given the choice

of stopping. Further, once GST is shown then start-based costs like CST should

be discredited. It has additionally investigated, managerial issues, dismissals

proposed, the pace of GST, and so forth paper recommends that unique cases

ought to be generally a couple of, they ought to be uniform crosswise over the

nation, and edge breaking points ought to be sensibly high with the target that

incredibly self-governing undertakings are kept out of grave compliances. Paper

also endorses negation of obsolete practices like fragment charge, waybill, and

so forth. It proposes having uniform mediating experts for both local and state

levels to reduce the time and expenses of arraignment and to guarantee that

tantamount issues shouldn't be directed by assessment at both local and state

levels. Further paper fittingly conveys that strong progression blueprints must be

drafted to guarantee that things like assembled credits and so forth are overseen.

The reason for the paper is that GST should be shown by thinking about these

parts. Reports from the Empowered Committee on the proposed pace of GST,

treatment of interstate supplies, twofold affiliation, and so forth are in like way

applicable before GST is presented.65

M. T. Bohra (2014) in this paper endeavour has been made to see the

upsides of GST and its present status in India. Paper gives information about

GST and impeccable use would trigger advancement in association pay and flood

65
www.ficci.in

52
in the Indian economy. In India straightforwardly we are having association

charges and VAT for accumulation meandering expenses.66

Rajesh R. D. (2015) word cost is gotten from Latin word 'tax is' which

means to quantify. Commitment systems play exchange overviews India. Things

and attempts charge (GST) is prepared for making produced using atypical

commitments on the item and imperative occupation on the economy through

their effect on both productivity and worth. GST would anticipate transformative

work and achieve an uprising in the Indian economy. Improvement in association

charge from 12.36% to 14% would in a perfect world be the forerunner to the

presentation of GST. Partner of GST with dislodge current different commitment

structures of Center and State assessments aren’t just enchanting at any rate basic

in rising budgetary condition.67

B.S. Gosavi (2015) GST Stands For: 'G' – Goods; 'S' – Services; 'T' – Tax.

This is a short portrayal of GST for example Merchandise and Enterprises Tax.

It might expect critical movement strengthening for adjustments in the cost

structure. (From standard to GST model as appeared by its need) GST is an

expense on things and tries with the expansion of enormous worth.68

66
Monika Tushir Bohra (2014), Goods and Services Tax and Its Likely Impact on Indian
Economy, International Journal of Economic Issues, Vol. 7, No. 2 , Page No279-286
67
Rajesh R. Desai and Ankit D. Patel,(2015) Review Article Goods and Services Tax in India:
Opportunities and Challenges, International Journal of Current Research International Journal
of Current Research 7, Issue, 11, pp.23347-23349
68
B.S. Gosavi (2015) GST: CONCEPT AND FEATURES, Vidyabharati International
Interdisciplinary Research Journal 4(1) ISSN 2319-4979, Page No-51-53.

53
 N. I. BintiIshak. Muhammad Hanif compartment O. M. F. Omar’s (2015)

reason behind this paper is to investigate understudies' affirmation towards

starting late executed GST that has been acknowledged in Malaysia beginning

from April 1, 2015. Understudies' affirmation is assessed through fulfillment

assessment. Sets of overviews have been sorted out and passed on to 242

understudies at International Islamic University Malaysia and later analysed

utilizing SPSS.69

Yashoda (2016) at present, charges are requested self-governing on items

and adventures. Goods and Services Tax is a uniform pace of assessment.

Proposed GST is said to supersede every roundabout evaluation that is

constrained on items and undertakings by Government, both Central and States

when it is finished.70

Aamir, (2011) creators in this paper have thought about the course of

action of brisk and meandering commitments in full-scale pay age for

Government in India and Pakistan over some unclear time length, for period

1999-00 to 2008-09. Clarification is that atypical charges increment distinction

between rich and poor for instance it is backward in any case direct expenses are

consistently astounding. Direct examination or individual commitment is

69
Nor IzaBintiIshak. Muhammad Hanif bin Othman. Muhamad Fuzi Omar (2015) Students’
Perception towards Newly Implemented Goods and Services Tax (GST) in Malaysia.
International Journal of Contemporary Applied Sciences Vol. 2, No. 6, (ISSN: 2308-1365) Page
No 80 -88
70
A. Yashoda (2016) IMPACT OF GST ON ECONOMY, International Double-Blind, Peer
Reviewed, Refereed Open Access Journal - Included in International Indexing Directories
International Journal of Business Economics and Management Research Vol. 7, Issue 9, Impact
Factor: 4.611 ISSN: (2229-4848) Page No 36-54.

54
ordinarily expensed on pay earned. Thus, more pay earned higher is commitment

paid. In this way, prompt commitments are considered astonishing. In any case,

self-decision of pay levels, devious commitments which are evaluations

exhibited in costs of things similarly as associations ate up are paid by every

person/part rich or poor at the hour of utilization. In this manner, the examination

is seen as in turn around. Therefore, the country improves to rely on direct

assessments for its compensation age with the objective that development is

better.71

Bird (2012) creator looks for after recorded setting of offers charge in

Canada from beginning to current GST, HST, QST, etc. in bureaucratic

establishment for instance where there is focal government charged GST or

courses of action cost or VAT and unquestionable express zone level

commitments charged like HST or PST. Further, there are self-regulating VATs

charged like QST. Thusly the paper looks for after-best systems/structures for

government VAT charge assessment. The paper looks at changed frameworks to

improve organization charge gathering. Essential standard of VAT is that credit

is receipt based and beyond what many would consider possible is target based.

Canada from the beginning had Manufacturer's Sales Tax or MST which was

displaced by GST in 1991. In any case, the requirement to proportionate was

high to such degree, that social gathering which indicated GST lost decisions in

1993. Concise range later, new government regardless comforting abandoning

71
Aamir M., Qayyum A., Nasir A., Hussain S., Khan K. and Butt S., 2011, Determinants of
Tax Revenue: Comparative Study of Direct taxes and Indirect taxes of Pakistan and India,
International Journal of Business and Social Science, Vol. 2, Issue 19, Pp. 173-178

55
GST just displayed arrangement as conventional VAT-HST in a couple of

regions where the base for charge assessment resembled bureaucratic GST.

These regions were made up for presentation. Therefore, a couple of territories-

controlled GST and HST while Quebec had GST and QST. Others continued

with Retail Sales Tax or RST. Accordingly, spaces applying HST had GST bit

imbedded in it, were made up for sorting out GST. Quebec administered QST

separate from GST. Spot of stock benchmarks is dominatingly starting based.

Along these lines, areas have had free Sub-national VATs or subsumed them

with GST – HST.72

Deol, (2012) maker in this paper has discussed the establishment of GST

proposed to be exhibited in India. India has been endeavouring to show GST

since 2008. At any rate, given that India has organization and shrewd

commitments that contribute astonishingly to vocations of states, it is past space

of imaginative character to might want to show GST in India close to if there is

accord inside states and focus interest. Maker looks at central focuses, issues

states have with its execution, etc. in the paper. The maker has in like manner

granted a 'zero-rating model' for interstate courses of action. Under this model

passing on state, the vendor doesn't charge any indirect expense on courses of

action. In any case, obtaining a state seller conveys most of his imports and

covers government responsibility on them in his state genuinely like overall turn

charge structure working at present. Under this structure, consistency is

72
Bird R., 2012, GST/HST : Creating Integrated Sales Tax In Federal Country, School of Public
Policy Research Papers, Vol. 5, Issue 12, Pp. 1-38

56
progressively clear and GST remains objective-based expense. Another decision

separated is one like in Canada where inside will course organization GST on

interstate game plans reliant on respect. At any rate, this model is ridden with

issues and is particularly implausible. Charge of both CGST and SGST is another

model progressed in the paper. Given the Indian economy and political

condition, this takes after sensible model to be displayed. Further, the paper looks

at how the presentation of GST will develop an assessment base, decline costs

of cost embedded in expenses of things, and everything considered increase

sections. The favored change will connect with states and alliance government

to constrain things/benefits beginning at starting late not inside their cost

examination net. Further, in association with consistency paper conveys that

determination, returns, etc. are proposed to be PAN based and separate for the

local and state. This is, without doubt, going to develop consistency. Paper

impels that the presentation of GST would be valuable to the Indian economy.73

The purpose behind GST on money-related associations has constantly

been a point of extraordinary talk there is an issue in upsetting money-related

associations because of their slippery nature, perplexity around the area of master

affiliation and association beneficiary, and estimation of the association.

Creators in their paper are attempting to address these issues especially for the

country of Canada. In Canada, there is of a kind case for monetary associations,

focusing individual focal points in association with budgetary associations, etc.

73
Deol R., 2012, Goods and Service Tax in India: Effect on Government Revenue, Research
Paper – Maxwell School – Syracuse University, Pp. 1-6

57
creators in their paper have researched present laws and proposed changes to

present laws for better capability in upsetting cash-related associations.

Absolutely when money-related associations are pardoned, much proportional to

the case in Canada, data costs join ITC accomplishing expansion in costs.

Regardless, concerning watchful budgetary assistance is gravely structured and

thus not gotten. In condition, producers have proposed zero-rating for instance

allowing ITC to master affiliation if the beneficiary is business. This proposes in

B2B exchanges cash related associations be treated as zero surveyed and ITC

allowed and in others it be treated as limited and no ITC allowed. Regardless,

along these lines of reasoning, master focuses would need to see the status of

clients and record for two sorts of associations uninhibitedly inciting substitute

system of challenges. Creators have in like manner proposed systems to cost

import of money related associations and prescribed time controls on audit

definitive changes by decline weakness in taking an interest. Further

progressions should be gone with sufficient time for use and direction of people

all things considered to keep up essential fairways from costs to business since

these assessments must be gathered from customer and paid.74

Storm, (2011) producers in this paper have inspected how organization

VAT could be the potential response for money-related need issues in the United

States of America. The paper surveyed ideal VAT that could be appeared in the

USA subject to the Canadian experience. Producers have discussed yield degree,

which shows the degree of augmentation in VAT profit as a dash of GDP in

74
ibid

58
perspective on improvement in the VAT rate. This would make certain for the

USA and help in diminishing deficiency. Creators have in like manner given

relative estimations for other OECD countries in like manner to display how

VAT produces compensation for the association. Creators have furthermore

separated focal concentrations and weights by zero-rating certain favored items

or making them cleared. The paper additionally gives information on how VAT

can be used to stimulate and continue with cash-related improvement. paper in

the like manner discussed the backward effect of VAT, how it might be adjusted

certain welfare frameworks, genuine issues experienced by two examinations

and relationship to complete VAT, etc. paper in like manner analyses how USA

could understand Canadian methodology of VAT wherein states would drop

their neighbourhood courses of action commitment and breaker state blame for

GST.75

Gelardi (2013) maker in the paper has considered the customary effect on

customers of the proposed National Consumption Tax to be exhibited in the USA

since it would mean additional costs to clients. This proposed examination would

be government and paying little mind to present state courses of action charge in

various conditions of US. For this evaluation, UK and Canada where VAT or

GST relative examination on utilization, is correct now usable have been

concentrated to see an adjustment in client lead with the presentation of these

charges. Maker reasons that there isn't tremendous effect on client lead because

75
Gale W, and Harris B., 2011, VAT for United States: Part of Solution, Tax Analysts, VAT
Reader, Pp. 64-82

59
of presentation of these utilization charges, at any rate, paces of these

assessments do impact essentially indistinguishable in UK and Canada. If a rate

change is major in these examinations, checked change in buyer direct is other

than observed. At any rate, given that in the US commitment isn't overriding

existing commitments yet is extra commensurate outcomes may not search for

after since to degree in the UK and Canada GST or VAT replaced existing

expenses to a monstrous degree.76

Goeydeniz, (2010) maker has built a paper for International Fiscal

Association to show how a better spot of spare controls, authoritative

commitments, etc. acknowledge difficulties in draining cross edges exchanges

extraordinarily those of unclear associations. The maker has discussed issues

developing strikingly in cross periphery dubious associations gave, where

picking region which gets preferred position to study and people included who

should be disturbed is incredibly seriously orchestrated. The paper thinks about

issues in convincing and storing upcharge from non-occupant clients. For this

maker has unequivocally prescribed European VAT Laws. The maker has

likewise discussed standards ground-breaking 1 January 2015, whereby in

Europe spot of stock for insignificant associations like budgetary, media

transmission, etc. will be recognized customer lives. This is contrary to prior

circumstances wherein such cases spot of stock was that of position focus. This

is like manner joins issues to master networks to degree consistency in states

76
Gelardi M., 2013, VAT and Consumer Spending: Graphical Descriptive Analysis, Asian
Journal of Finance and Accounting, Vol. 5, Issue 1, Pp. 1-20

60
where clients withstand. Creators have analysed issues in this consistence

especially in web business exchanges. For this EU has proposed Mini One Stop

Shop intends to diminish the significance of consistency. Under this strategy at

any rate laws, etc. are appropriate as exhibited by target express, consistence for

instance segment of cost, returns, etc. may be finished by his favoured shipper

in condition for all states together. Another issue recognized by the proposed

change in the law is that genius affiliation is constrained to see the status of the

customer whether individual or business with the objective that exchange can be

chosen B2C or B2B and after that treated fittingly. The maker has analysed

various sorts of associations, the status of clients, and the status of suppliers and

after that separated VAT proposals in different conditions. Everything

considered VAT laws present issues if there should rise event of cross edges

exchanges especially in case of indistinct associations.77

Importers/dealers can cheer as they would be able to claim the GST paid

on goods imported/sold whereas previously, they were ineligible to claim the

excise duty and VAT paid. Excise paid on stock transfer would be covered by

IGST under the GST law. Advance received for supply of goods will also be

taxed under GST. GST would help the manufacturers in procuring auto parts at

a cheaper cost due to an improved supply chain mechanism under GST. GST on

cars and bikes is kept under the 28% bracket and a list of cess to be levied on a

different kind of automobile has also been declared by the Indian government.

77
Goeydeniz S., 2010, VAT on Cross Border Services, International Fiscal Association -
Research Paper, Pp. 1-36

61
Cess has been levied on different kinds of automobiles ranging from 1 to 15%.

We have created an infographic for an understanding of different cess rates

applied on different kinds of automobiles.78

GST or Goods and Services Tax is considered to be a game-changer in

the Indian Economy. India has posed a beacon of hope with ambitious growth

targets, supported by a bunch of strategic undertakings such as the Make in India

and Digital India campaigns. The Goods and Services Tax (GST) is another such

undertaking that is expected to provide the much-needed stimulant for economic

growth in India by transforming the existing base of indirect taxation towards

the free flow of goods and services. This research paper uses primary sources of

data such as surveys and analyses of the data collected. Secondary sources such

as books, journals, and articles are also referred to for this research. A total of

305 responses were collected in the survey. The responses were analysed. The

survey had found that raising petroleum prices is a barrier to middle-class people,

the government could likely provide relief considering the rising prices. GST

especially in the automobile industry had proven to be very profitable to both

consumers and the profitability of companies. Many changes have been

constantly made ensuring simplicity in the GST tax system. Raising petroleum

prices is a barrier to middle-class people, government could likely provide relief

considering the rising prices.79

78
ibid
79
Saravana Rajan S and Kirubagaran K, (2018), “A Study on GST (Goods And Services Tax)
and its Impact on Automobile Industry in India”, International Journal of Pure and Applied
Mathematics, Vol. 120 No. 5, pp.3643-3648

62
 The Indian Automobile Industry had been paying a tax range between 30-

45%. The introduction of the Goods and Services Tax will be a very noteworthy

step in the field of indirect tax reforms in India. By merging a large number of

Central and State taxes into a single tax, GST is expected to significantly ease

double taxation and make taxation overall easy for the industries. For the end

customer, the most beneficial will be in terms of reduction in the overall tax

burden on goods and services. The introduction of GST will also make Indian

products competitive in the domestic and international markets. Last but not

least, the GST, because of its transparent character, will be easier to administer.

Once implemented, the proposed taxation system holds great promise in terms

of sustaining growth for the Indian economy.80

The main issue raised by both the general public, several politicians, and

scholars is the petroleum and diesel prices which are not brought under GST.

The survey results say that the people are hoping to add petrol and diesel within

the proposed GST model. But several newspapers and articles have stated the

reason why they may not have possibly been brought under GST. An important

reason is revenue collected by both central and state governments. The

international prices of crude oil had been reduced over the past several years but

the government had constantly raised the taxes in reason that people would over

consume it. The revenue to the government due to the petroleum sector alone

80
Ajay Kumar, Kankipati, and Kankipati Ajay Kumar., “A Journey of Goods and Services Tax
(GST) and Structural Impact of GST on the Growth of GDP in India”, Advances in Sciences
and Humanities, Vol. 3(5), 2017, p. 50.

63
almost reached Rs.3,40,000 crores. Due to rising petroleum prices, the central

government may likely provide relief by cutting taxes but only to an extent.81

The survey indicates that the people’s opinions on the current GST model

are on both extremes. The difference between the number of people who think

GST is profitable to consumers and the automobile industry and people who

don’t is less. However, the prices of automobiles including cars and motorcycles

have been reduced which indicates the reduced tax burden to the companies

which have decided to pass on the benefit of lower taxes to the consumers. The

price reduced after the implementation of GST ranges from Rs. 4000 in several

smaller cars up to Rs.7,00,000 in several luxury cars. However, prices of several

bikes such as Royal Enfield under 350cc have risen after the implementation of

GST. (“Here’s the Full List of Slashed Prices of Cars and Bikes after GST

Rollout”)82

Under the Pre GST regime, central and state governments have levied

multiple taxes on the same supply chain. There was the cascading effect of taxes,

as taxes levied by the central government, were not allowed as set off against the

taxes levied by the state government. Given the above difficulties, certain taxes

have been subsumed in one tax called the goods and service tax (GST). The

Automobile sector in India is one of the greatest effects and developing

manufacturing industries after liberalization. The industry has the potential to

grow and become a major contributor to economic expansion and employment

81
Sharma, Amit., “Impact of Goods and Services Tax (GST) on Indian Economy”, Journal of
Business Management & Quality Assurance, Vol. 2(1), June 2018, pp. 15–23.
82
Mukherjee, Sharmistha. (2017), “Small-Car Buyers Will Have to Shell out More under GST,
SUVs to Cost Less”, The Economic Times.

64
creation. The Government of India has also known the implication of the

Automobile industry in the Indian economy and is presently occupied on

Automotive Mission 2026 to be at equivalence with the greatest nation of the

world. India is also a protuberant auto exporter and automobiles companies

discovering the rural markets which will also boost the progress of the sector in

near future. By the outline of GST, where all the taxes are subsumed into one, it

becomes necessary to foresee the impact of GST on this industry. This paper

covers the overall impact of GST on the Automobile sector in India.83

Neelavathi K., Sharma R (2017) identified the impact of GST on the

automobile industry, the study concluded that the automobile industry can

develop one of the important contributors for the economic growth of the country

as well as it helps in growing the employment opportunity. They were fruitfully

able to analyze different tax rates levied on vehicles during the pre and post-

period of GST. The automobile industry in India is one of the most successful

and emerging manufacturing industries post-liberalization. The industry has the

potential to grow and become a major contributor to economic development and

employment creation. The Government of India has also recognized the

significance of the Automobile industry in the Indian economy and is currently

working on Automotive Mission Plan 2026 to be at par with the supreme nations

of the world. The Government of India has planned to implement GST in the

manufacturing sector in India.84

83
Charmi Karia (2020), “A Study on Impact of GST on Automobile Sector in India”,
International Journal of Advanced Research in Commerce, Management & Social Science Vol.
03, No. 03, pp 51-54
84
Neelavathi and Rachana sharma,(2017) “Impact of GST on Automobile industry”, IOSR
Journal of Business and Management, pp.59-63

65
 The automobile industry in India is a vast business producing a large

number of cars and bikes annually, fuelled mostly by the huge population of the

country. GST subsumed most of the indirect taxes. This article attempts to

analyze the GST applicability to the automobile industry. The two main

components of this scheme were subsidies and interest-free loans allied with

VAT/CST payable on sale. The sale of goods/services without any form of

consideration was exempted from being taxed under VAT and Service

tax. Importers and dealers were ineligible for the CVD and excise duty paid by

OEMs (Original Equipment Manufacturer). When goods were transferred from

the factory, excise duty had to be paid but no VAT/CST as applicable under

previous tax laws.

These vehicles were exempted from the NCCD/auto cess: electrically

operated vehicles, three-wheeled vehicles, hydrogen vehicles based on fuel cell

technology, vehicles used solely as taxis, the ones used by physically

handicapped persons, hospital ambulances. The two taxes charged to the end

consumer on cars and bikes previously were excise and VAT, with an average

combined rate of 26.50% to 44% which is higher than the GST rates of 18% and

28%. Therefore, there has been less burden of tax on the end consumer under

GST.85

“ONE NATION, ONE TAX”, that is to say, now the tax rates are the same

across the country. Thereby state-level tax arbitrages for a consumer are things

85
www.cleartax.com , “GST Impact on Car Prices & Other Automobiles in India”, 2021

66
of the past. Thus, this has reduced incidences of tax evasion which occur due to

consumers buying vehicles from states other than where they reside. In the

erstwhile regime, car dealers used to deliberately open delivery showrooms in

states with lower tax, and sales showroom was available at the point of sales.

With GST coming in place practically speaking necessity of dual showrooms

lost charm and lead the sector to merge delivery showrooms and point of sales

showrooms.

Before July 1st,2017, Central Sales Tax (CST) was levied when there

were interstate sales, and credit on the same could not be claimed for the payment

of output VAT. This issue is now eliminated and Integrated Goods and Services

Tax (IGST) applies to the inter-state sale of goods or services, credit of which is

easily available. Hence, there was a massive cost saving on account of the

elimination of CST. Further, Input Tax credit on various other operating

overheads such as advertisement, promotion, rent, etc can now be claimed by

sector, which helped in the rationalization of the operating cost.

A big relief under GST was that the law provides for the exclusion of

subsidies provided by the Central Government and State Government from the

transaction value. Thus, the Manufacturers of electric vehicles who enjoy huge

subsidies from the Government will also save massive tax costs, which would,

in turn, be passed on to consumers. Thereby in case, any electric vehicle has a

government subsidy, then GST would be charged on transaction value excluding

67
the amount of subsidy. This provision is embedded in unambiguous terms in

GST law itself, which has an effect of ironing out any interpretation issues.86

GST or Goods and Services Tax is considered to be a game-changer in

the Indian Economy. India has posed a beacon of hope with ambitious growth

targets, supported by a bunch of strategic undertakings such as the Make in India

and Digital India campaigns. The Goods and Services Tax (GST) is another such

undertaking that is expected to provide the much-needed stimulant for economic

growth in India by transforming the existing base of indirect taxation towards

the free flow of goods and services. This research paper uses primary sources of

data such as surveys and analyses of the data collected. Secondary sources such

as books, journals, and articles are also referred to for this research. A total of

305 responses were collected in the survey. The responses were analysed. The

survey had found that raising petroleum prices is a barrier to middle-class people,

the government could likely provide relief considering the rising prices. GST

especially in the automobile industry had proven to be very profitable to both

consumers and the profitability of companies. Many changes have been

constantly made ensuring simplicity in the GST tax system. Raising petroleum

prices is a barrier to middle-class people, government could likely provide relief

considering the rising prices.87

86
http://www.businessworld.in, “Impact of GST on Automobiles sector”, 2021
87
Saravana Rajan S and Kirubagaran K, (2018), “A Study on GST (Goods And Services Tax)
and its Impact on Automobile Industry in India”, International Journal of Pure and Applied
Mathematics, Vol. 120 No. 5, pp.3643-3648

68
 The Indian Automobile Industry had been paying a tax range between 30-

45%. The introduction of the Goods and Services Tax will be a very noteworthy

step in the field of indirect tax reforms in India. By merging a large number of

Central and State taxes into a single tax, GST is expected to significantly ease

double taxation and make taxation overall easy for the industries. For the end

customer, the most beneficial will be in terms of reduction in the overall tax

burden on goods and services. The introduction of GST will also make Indian

products competitive in the domestic and international markets. Last but not

least, the GST, because of its transparent character, will be easier to administer.

Once implemented, the proposed taxation system holds great promise in terms

of sustaining growth for the Indian economy.88

The main issue raised by both the general public, several politicians, and

scholars is the petroleum and diesel prices which are not brought under GST.

The survey results say that the people are hoping to add petrol and diesel within

the proposed GST model. But several newspapers and articles have stated the

reason why they may not have possibly been brought under GST. An important

reason is revenue collected by both central and state governments. The

international prices of crude oil had been reduced over the past several years but

the government had constantly raised the taxes in reason that people would over

consume it. The revenue to the government due to the petroleum sector alone

88
Ajay Kumar, Kankipati, and Kankipati Ajay Kumar., “A Journey of Goods and Services Tax
(GST) and Structural Impact of GST on the Growth of GDP in India”, Advances in Sciences
and Humanities, Vol. 3(5), 2017, p. 50.

69
almost reached Rs.3,40,000 crores. Due to rising petroleum prices, the central

government may likely provide relief by cutting taxes but only to an extent. 89

The survey indicates that the people’s opinions on the current GST model

are on both extremes. The difference between the number of people who think

GST is profitable to consumers and the automobile industry and people who

don’t is less. However, the prices of automobiles including cars and motorcycles

have been reduced which indicates the reduced tax burden to the companies

which have decided to pass on the benefit of lower taxes to the consumers. The

price reduced after the implementation of GST ranges from Rs. 4000 in several

smaller cars up to Rs.7,00,000 in several luxury cars. However, prices of several

bikes such as Royal Enfield under 350cc have risen after the implementation of

GST. (“Here’s the Full List of Slashed Prices of Cars and Bikes after GST

Rollout”)90

Under the Pre GST regime, central and state governments have levied

multiple taxes on the same supply chain. There was the cascading effect of taxes,

as taxes levied by the central government, were not allowed as set off against the

taxes levied by the state government. Given the above difficulties, certain taxes

have been subsumed in one tax called the goods and service tax (GST). The

Automobile sector in India is one of the greatest effects and developing

manufacturing industries after liberalization. The industry has the potential to

89
Sharma, Amit., “Impact of Goods and Services Tax (GST) on Indian Economy”, Journal of
Business Management & Quality Assurance, Vol. 2(1), June 2018, pp. 15–23.
90
Mukherjee, Sharmistha. (2017), “Small-Car Buyers Will Have to Shell out More under GST,
SUVs to Cost Less”, The Economic Times.

70
grow and become a major contributor to economic expansion and employment

creation. The Government of India has also known the implication of the

Automobile industry in the Indian economy and is presently occupied on

Automotive Mission 2026 to be at equivalence with the greatest nation of the

world. India is also a protuberant auto exporter and automobiles companies

discovering the rural markets which will also boost the progress of the sector in

near future. By the outline of GST, where all the taxes are subsumed into one, it

becomes necessary to foresee the impact of GST on this industry. This paper

covers the overall impact of GST on the Automobile sector in India.91

The automobile industry in India is a vast business producing a large

number of cars and bikes annually, fuelled mostly by the huge population of the

country. GST subsumed most of the indirect taxes. This article attempts to

analyse the GST applicability to the automobile industry. The two main

components of this scheme were subsidies and interest-free loans allied with

VAT/CST payable on sale. The sale of goods/services without any form of

consideration was exempted from being taxed under VAT and Service

tax. Importers and dealers were ineligible for the CVD and excise duty paid by

OEMs (Original Equipment Manufacturer). When goods were transferred from

the factory, excise duty had to be paid but no VAT/CST as applicable under

previous tax laws.

91
Charmi Karia (2020), “A Study on Impact of GST on Automobile Sector in India”,
International Journal of Advanced Research in Commerce, Management & Social Science ,
Vol. 03, No. 03, pp 51-54

71
 These vehicles were exempted from the NCCD/auto cess: electrically

operated vehicles, three-wheeled vehicles, hydrogen vehicles based on fuel cell

technology, vehicles used solely as taxis, the ones used by physically

handicapped persons, hospital ambulances. The two taxes charged to the end

consumer on cars and bikes previously were excise and VAT, with an average

combined rate of 26.50% to 44% which is higher than the GST rates of 18% and

28%. Therefore, there has been less burden of tax on the end consumer under

GST.92

Akshara Mahesh, Karthika K, (2017) in their article "Impact of GST on

Automobile Industry in India" stated that the Automobile industry in India is one

among the most victorious and rising manufacturing industries after

liberalization. The industry has the prospective to grow and become a most

important contributor to economic development and employment formation. The

Indian government has also identified the need for the Automobile industry in

the Indian economy and is currently functioning on Automotive Mission Plan

2026. The automobile industry can become one of the important contributors to

the economic development of the country as well as help in increasing

employment opportunities.93

92
www.cleartax.com , “GST Impact on Car Prices & Other Automobiles in India”, 2021
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Akshara Mahesh ,Karthika K ,(2017) - "Impact of GST on Automobile Industry in India"
IOSR Journal of Business and Management (IOSR-JBM), www.iosrjournals.org

72
 Dr P. Mahender (2017) in his article "GST Effect on Manufacturing

Industry – India " stated that Every nation will impose various taxes on people

and things to undertake developmental work. In India, the government of India

recently enacted a law namely GST. This paper seeks to explain the positive and

negative effects of GST on the manufacturing industry in India. Tax compliance

can be improved by implementing simple reforms in personnel policy in Indian

income tax. He concluded that the GST will lead to higher tax compliance and

lower tax evasion by Indians. Examined VAT is a type of indirect tax that is

imposed on goods and services, and they advocated the tax impact on budget and

revenue.94

Tarunika Jain Agrawal, C.A. Aashna Goyal, (2017) in their article "

Impact of GST On Real Estate and Automobiles Sector " stated that One of the

crucial reforms, changing the landscape of indirect taxation in India is the

introduction of Goods and Services Tax (GST), to be implemented from 1st July

2017. It is after a lot of amendments and deliberations that this act has seen the

light of the day. The proposed idea is to have a single tax rate for all goods and

services, charged by states and central governments, in tune with the developed

nations. Discuss different aspects of GST implementation, relating to the

principles, issues, and procedures. The paper cited the introduction of GST to be

the most significant tax reform in India, increasing tax compliance and

transparency.95

94
P. Mahender,(2017) "GST Effect on Manufacturing Industry – India " International Journal
of Managerial Studies and Research (IJMSR) Volume 5, Issue 1, www.arcjournals.org
95
Tarunika Jain Agrawal ,C.A. Aashna Goyal ,(2017) " Impact of GST on Real Estate and
Automobiles Sector " IMPACT: International Journal of Research in Business Management
Vol. 5, Issue 6,

73
 Pooja Jha, F.B. Singh (2017) in their article "A Study on Implementation

of GST And Its Repercussion on Indian Automobile Sector" stated that The

paper highlights a brief analysis of GST which would bring a substantial change

in the purview of indirect tax in India. It is called the mother of indirect tax as it

will subsume most of the indirect tax leading to a lucid ambiance for the taxpayer

to deal with it. The paper depicts the background and mission of the proposed

GST and its repercussion on Indian industry with special reference to the

automobile sector. Proper GST administration and dispute resolution (more

importantly on inter-state transactions) are very critical. The industry is also

expecting the procedural changes to be notified in advance and may require a

lead time of at least six months before the introduction of GST.96

Ashok Sharma,(2018) in his article "Impact of GST on Automobile

Industry in India" stated that the Automobile industry is the fastest growing

sector in India having a clear correlation with the reforms related policies

influencing domestic demand patterns as well as trade. The Automobile sector

in India is one of the largest in the world. The industry that contributes to the

country's Gross Domestic Product (GDP) accounts for 7.1%. India is one of the

largest tractor manufacturers in the world, the second-largest two-wheeler

manufacturer, second-largest bus manufacturer, fifth-largest heavy truck

manufacturer, sixth largest car manufacturer, and eight largest commercial

vehicle manufacturers.97

96
Pooja Jha, F.B. Singh, (2017) "A Study on Implementation Of GST and its Repercussion on
Indian Automobile Sector" Global Journal of Multidisciplinary Studies.
97
Ashok Sharma ,(2018) -"Impact of GST on Automobile Industry in India" International
Research Journal of Management Science & Technology Vol 9 Issue 3

74
 Charumathi S, (2019) in his article " GST Implication on Sales Of

Automobile Industry Concerning Tata Motors " stated that In this present

generation, individuals are highly sophisticated in their life standard as it is

directly determined by their individuals and family income. The pool of earnings

in a family takes them to next level lifestyle. Copy and comparison are the two

important C’s that influence individual to lead their life in their comfort t zone.

In the last two decades, people are isolating themselves to prefer public transport.

Heavy traffic penetrates the individuals to frustrate, in turn, it leads to attract to

buy their vehicles.98

Songara Manoj,(2019) in his article " Goods and Services Tax (GST) in

India – An Overview and impact " stated that GST also known as the Goods and

Services Tax is defined as the giant indirect tax structure designed to support and

enhance the economic growth of a country. The aim of this research paper is

regarding the impact of GST and its impact on various sectors. With the

introduction of GST, there is chaos and confusion among the common man. GST

bill will be a form for the economic integration of India. The main trait of the

GST is to transform India into a unified market by dismantling the present fiscal

barrier among states and can expect improved tax compliance. GST is also

different in the way it is levied - at the final point of consumption and not at the

manufacturing stage.99

98
Charumathi S,(2019) -" GST Implication On Sales Of Automobile Industry With Reference
To Tata Motors " International Journal of Mechanical Engineering and Technology (IJMET)
Volume 10, Issue 01,
99
Songara Manoj ,(2019) - " Goods and Services Tax (GST) in India – An Overview and impact
" Journal of advanced Management Research, Vol. 12 (1)

75
 Dhyan Vishnu Prajwal N (2017) in his study “Impact of GST

Implementation on Share Prices - A Study on Automobile Industry” This study

tells about the automobile sector in India has facilitated from the introduction of

the GST. The tax rates have been abridged and the shares have been traded at a

higher rate after the application of GST with increased returns. Thus GST for the

automobile industry is a win-win condition for both the Shareholders and the

manufacturers.100

Krishna banana (2018) in his study “An Analysis of GST impact on

Motorbike Industry in India” The Government of India has envisioned to effect

of GST on the Collecting segment in India. The goal of this exploration is the

effect of GST on Automobile and bike parts in India. 'Make in India' cause of

the Government of India is furthermore going to appeal in more distant risk into

Indian bike-share making further development early stages in the coming

years.101

Indian economy is the witness for accelerating the growth in a very short

period. Tax in form of direct and indirect is the major source of income to the

government. Chairman of the 13th Finance Commission Dr. Vijay Kelkar, has

suggested having a rational, scientific and modern taxation system in tune with

100
Dhyan Vishnu Prajwal N and Shivi Khanna (2017) Impact of GST Implementation on Share
Prices - A Study on Automobile Industry International Journal of Engineering Technology
Science and Research IJETSR www.ijetsr.com ISSN 2394 – 3386 Volume 4, Issue 11
November 2017
101
Krishna Banana, Swarna Balakrishna and Meeravali Shaik (2018) An Analysis of GST
impact on Motorbike Industry in India International Journal of Marketing & Financial
Management, Volume 6, Issue 1, Jan, 2018, pp 23-31

76
developed nations form the base behind the introduction of Goods and Service

Tax (GST) in India. The tax structure is planned and implemented in such a way

that it leads to the development of the country. A Taxation Structure that

facilitates the ease of doing business and having no chance for tax evasion brings

prosperity to a country’s economy. The Good and services tax (GST) is the

principal and extensive indirect tax reform since 1947. Replacement of exiting

taxes like value-added tax, excise duty, service tax, and sales tax is the main idea

of GST. It will be imposed on manufacture sale and consumption of goods and

services. GST is expected to affect the existing tax structure and result in uniting

the country economically. This paper has highlighted the background, objectives

of the proposed GST, and the impact of GST in different areas of the Indian

economy. The paper further focused on various benefits and opportunities of

GST. Finally, the paper examines and draws out a certain conclusion.102

In India, GST is structured for efficient tax collection, reduction in

corruption, easy inter-state movement of goods, etc. Since GST on inter-state

sale of goods would be creditable, there is an opportunity to remodel the current

supply chain structure to ensure lower logistics cost and bring in significant

operational efficiency which should have a positive impact on the profitability

of the companies. The share of organized players is going to increase as the

benefit of the input tax credit is available to those businesses who get their

supplies from registered taxpayers. Hence, tax collection is going to increase.

102
Manisha Shinde (2019), “A Study of Impact and Challenges of GST on Various Constituents
of Indian Economy”, IJRAR, Volume 6, Issue 1 p.211

77
GST impact is neutral and positive on different sectors of the economy. The cost

of services is going to increase with the result of an increase in taxes from 15%

to 18%. The overall effect of GST on the Indian economy would be positive.103

The success of any social scheme or program is analysed through its

power to transform the lifestyles and welfare state of human beings and their

ability to reduce inequality in society and contribute to the country’s growth. Our

policymakers have deliberated a sequence of taxation to curb this problem which

we have been facing since independence. GST plan is one of them which have

focused on the welfare state of people. This paper is a theoretical comprehension

of the impact of Goods and Services Tax on the Indian Tax system. GST is the

only indirect tax that directly affects all sectors and sections of our economy.

The concept features and the framework of GST have been discussed in this

paper. A couple of countries implemented this tax system followed by France,

being the first country to introduce GST. India is a federal democratic and

therefore the GST was implemented parallel by the Central and State

governments as CGST and SGST respectively. The present paper focused on

explaining the concepts of GST and its evolution in India. Then it discusses the

problems faced by the country concerning its implementation and how did it

impact the economy at its initial stage.104

103
Milandeep Kour, Kajal Chaudhary, Surjan Singh, Baljinder Kaur (2016), “A study on impact
of GST after its implementation”, International journal of Innovation studies in sociology and
Humanities, Vol.2 Issue 2, November 2016.
104
Abhishek Kumar Yadav and Ashwani Kumar, “Indian Goods and Services Tax: A Review
of its Introductory Stage and its Possible Contribution towards Sustainable Economic
Development”, International Journal of Management Studies,
http://www.researchersworld.com/ijms/

78
 The auto industry is likely to gain from the implementation of the GST

since it is expected to reduce logistics costs by removing trade hurdles, paving

way for more competitive manufacturing. The execution of GST will remove the

effect of a multiplicity of taxes on the cost of goods and services. Currently,

most car manufactures are located in a few of the states in India and by some

estimates, 80 percent of these cars are sold to dealers in states outside the state

in which they are manufactured. In doing so, a two percent Central Sales Tax

(CST) is charged on the cost of the car and the same is not creditable. However,

with the GST, the two percent CST will be made fully creditable.

Moreover, with the effective tax rate dropping to around 18 percent from

up to 27 percent for some segments currently, it will result in lower prices and

consecutively, boost demand for automobiles. According to some estimates, the

on-road prices of vehicles could go down by up to eight percent. GST will

minimize and simplify the taxation burden on the automotive industry. It is

expected to drive overall consumer demand since the cost for the logistics and

supply chain inventory will be curtailed by almost 30-40 percent, the benefits of

which are expected to be passed on to the consumers.105

Jaspreet Kaur (2016) has thrown light on GST, its features, and also the

effect of GST on prices of goods and Services. According to him electronic

goods, restaurant bills, SUVs and diamonds, jewelry, textiles are going to be

cheaper and costlier respectively. He also highlighted that implementation of

105
www.autocarindia.com, “Impact of GST on auto industry”, 2016

79
GST is expected to narrow the large indirect tax differences between organized

and unorganized sectors. Raj Kumar (2016) analysed and compared the proposed

GST framework and current taxation system, described its effect on employment

and various sectors.106

GST rates for the automobile sector have been set at 28% in addition to

cess which varies from 1% to 15% based on the segment, engine size type

(petrol/diesel), and size of the for the creation of state compensation corpus.

Currently, the automobile industry pays several indirect taxes like excise,

infrastructure cess, import duty, VAT, and CST. There would be a marginal

impact on two-wheelers as it is going attract a base tax rate of 28% against the

existing rate of 30.2%. And for bikes with an engine capacity of more than 350

ccs like KTM and Royal Enfield will attract a cess of 3% in addition to the base

rate of 28% under GST resulting in prices of premium bikes going up in some

states. The impact will be limited as this segment accounts for a limited share in

the industry sales TVS, HMSI, Suzuki motorcycle India and Yamaha have

already reduced their prices to pass the GST benefits to its customers. Under

GST small petrol cars of less than 4 meters and 1200 cc and small diesel cars of

less than 4 meters and 1500 cc engine attract a base rate of 28% with a cess of

1% and 3% respectively as against the old rate of 30.2% to 33.5% which depicts

the marginal tax savings. Cars larger than 4 meters under indirect taxes were

levied at 51.6%. But under GST the rate is fixed at 43% which shows a positive

impact. Electric cars would get relaxation as tax levied under GST is at 12%

106
Jaspreet Kaur (2016), “Goods and service tax and its Impact”, International Journal of
applied Research, 2(8): 385-387, 2016.

80
against the existing rate of 20.5%. Large passenger vehicles and SUVs were

taxed at 43% against 55% in the pre-GST system. To rectify this anomaly on

September 9th the GST council decided to hike cess on larger cars by 5% and on

SUVs by 7% taking total GST incidence to 48% and 50% respectively. This will

increase the prices of vehicles.107

Overall and keen observation leads the researcher to a conclusion that

Indirect Tax is a vital subject of study which plays a significant part in the

Budgetary Revenues of Government of India. Goods and Service Tax is a major

Tax reform and the various studies ranging from the erstwhile Indirect tax regime

in India and implementation of GST and its transition by various Scholars

through this review of Literature brings to light the importance of study in this

subject. Goods and Service Tax which was rolled out in July 2017 is an evolving

subject of study and though the Goods and Service Tax Act was promulgated in

July 2017, several Notifications and Circulars and a subsequent amendment to

the GST Act which came into effect on February 2019 clearly shows that a study

on the Goods and Service Tax is an ever-evolving subject and the specific study

on the implications of Goods & Service Tax in the Automobile industry in India

throwing insights on the impact on the Business process, liquidity, cash flow,

and profitability to a business enterprise has not been done in the various studies

presently available and hence the researcher has taken this into cognizance in

bringing out her research analysis and presentation.

107
Ranjana Upash (2017), “Study on Effects of Goods and Service Tax on Different Sectors in
India”, ELK Asia Pacific Journal of Finance and Risk Management, Volume 8 Issue 4.

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