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PROJECT QUESTION
Project Title: Understanding Goods and Services Tax (GST)

Objective: Students will explore the concept of GST, understand its implications on various
goods and services, and analyze its impact on the economy.

Project Components:

Introduction to GST:

• Research and explain what GST is.

• Discuss the history and implementation of GST in India.
• Compare GST with the previous tax system (e.g., VAT, service tax).
1. Categories and Rates:
• Identify the different GST rates applicable to various categories of goods and services
(e.g., 0%, 5%, 12%, 18%, 28%).
• Create a chart or table listing examples of items in each GST category.
2. Calculating GST:
• Provide examples of how to calculate GST on goods and services. (Collect at least
five bills on different categories or purchases.)
• Include different scenarios, such as discounts and multiple GST rates.
3. Impact Analysis:
• Analyze the impact of GST on businesses, consumers, and the overall economy.
• Discuss both positive and negative effects.
• Include interviews or surveys with local businesses about their experience with GST.

5. Case Study:

• Select a specific industry (e.g., retail, hospitality, automotive).

• Conduct a detailed study on how GST has affected this industry.
• Include data, graphs, and personal accounts from industry professionals.

6. Comparison with Other Countries:

• Compare the GST system in your country with those in other countries.
• Highlight similarities and differences.

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ACKNOWLEDGEMENT
I would like to express my sincere gratitude to my teacher, Ms. Anima Choudhury, for
assigning and discussing this project on Understanding Goods and Services Tax (GST). Her
guidance and support have been invaluable throughout the process.

I would also like to thank the local businesses and industry professionals who took the time
to share their experiences and insights regarding the impact of GST on their respective
industries. Their contributions have been instrumental in enriching the case study and
impact analysis sections of this project.

Finally, I would like to acknowledge the various resources, including books, articles, and
online materials, that have been referenced in the preparation of this project report. The
information gathered from these sources has been crucial in developing a comprehensive
understanding of GST and its implications.

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 INDEX
Section Page Number
Project Question 2
Acknowledgement 3
Introduction 5
Categories and Rates 6
GST - How is it Calculated? 7
Impact of GST - Analysis 9
Case Study – Automobile 14
Industry
Comparison of Taxes 18
Conclusion 20
Bibliography 21

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 INTRODUCTION
Goods and Services Tax (GST) is a comprehensive indirect tax levied on the supply of
goods and services in India, aimed at creating a unified tax structure. Implemented
on July 1, 2017, GST replaced a complex web of multiple indirect taxes, including
Value Added Tax (VAT), Service Tax, and Central Excise Duty. The primary objective of
GST is to simplify the tax system by eliminating the cascading effect of taxes, where
tax is levied on tax, thereby reducing the overall tax burden on consumers and
businesses.

The journey towards GST began in 2000 when the Kelkar Task Force proposed a
unified tax system. After years of discussions and legislative processes, the
Constitution (122nd Amendment) Bill was passed in 2016, facilitating the
implementation of GST. The GST Council, comprising representatives from the
central and state governments, was established to oversee the tax structure,
including tax rates and exemptions.

In comparison to the previous tax system, GST offers several advantages. Under the
old regime, multiple taxes were levied at different stages of the supply chain, leading
to inefficiencies and compliance challenges. GST, on the other hand, operates on a
dual structure, with Central GST (CGST) and State GST (SGST) collected concurrently,
along with Integrated GST (IGST) for interstate transactions. This unified approach not
only streamlines tax compliance but also enhances transparency and reduces the
compliance burden on businesses, promoting a more integrated economic
environment.

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CATEGORIES AND RATES
GST Rate Categories
0% Fresh fruits and vegetables, unprocessed cereals, rice, pulses, milk,
buttermilk, curd, natural honey, fresh meat, fish, eggs, books (excluding e-
books), children’s coloring books, picture books, judicial and non-judicial
stamp papers
5% Edible oil, sugar, spices, tea, coffee, coal, railway transport services,
economy class air travel, life-saving drugs, fertilizers, footwear (value less
than ₹1,000)
12% Processed foods, computers and computer software, fruit juices and other
beverages, frozen meat products, Ayurvedic medicines, business class air
travel, hotel accommodation (room tariff between ₹1,001 and ₹7,500),
footwear (value more than ₹1,000)
18% Furniture, automobiles (small cars), instant food mixes, hair oil, toothpaste,
soaps, refrigerators, washing machines, vacuum cleaners, mobile phones,
telecommunication services, hotel accommodation (room tariff between
₹7,501 and ₹10,000)
28% Luxury items (high-end cars, motorcycles), aerated drinks, tobacco
products, cigarettes, pan masala, hotel accommodation (room tariff above
₹10,000), yachts, private jets, aircraft for personal use

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 GST-HOW IS IT CALCULATED?

I have collected five bills from different categories of purchases, demonstrating

various GST rates and scenarios, including discounts and multiple rates.

Example Calculations
Bill 1: Grocery Purchase (Rice)
• Total Amount (before GST): ₹1,000
• GST Rate: 5%GST = ₹1,000×0.05 = ₹50GST = ₹1,000×0.05 = ₹50
• Total Amount (after GST): ₹1,000 + ₹50 = ₹1,050
Bill 2: Electronics Purchase (Smartphone)
• Total Amount (before GST): ₹20,000
• GST Rate: 18%GST = ₹20,000×0.18 = ₹3,600GST = ₹20,000×0.18
= ₹3,600
• Total Amount (after GST): ₹20,000 + ₹3,600 = ₹23,600
Bill 3: Clothing Purchase (Shirt) with Discount
• Original Price: ₹1,500
• Discount: 10%
• GST Rate: 12%
• Discounted Price: ₹1,500−(₹1,500×0.10) = ₹1,350₹1,500−(₹1,500×0.10)
= ₹1,350
• GST Calculation:

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 GST = ₹1,350×0.12 = ₹162GST = ₹1,350×0.12 = ₹162
• Total Amount (after GST): ₹1,350 + ₹162 = ₹1,512
Bill 4: Restaurant Bill (Dinner for Two)
• Total Amount (before GST): ₹2,000
• GST Rate: 18%GST = ₹2,000×0.18 = ₹360GST = ₹2,000×0.18=₹360
• Total Amount (after GST): ₹2,000 + ₹360 = ₹2,360
Bill 5: Luxury Item Purchase (Designer Handbag)
• Total Amount (before GST): ₹5,000
• GST Rate: 28%GST = ₹5,000×0.28 = ₹1,400GST = ₹5,000×0.28 = ₹1,400
• Total Amount (after GST): ₹5,000 + ₹1,400 = ₹6,400

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IMPACT OF GST – ANALYSIS
The implementation of Goods and Services Tax (GST) in India has had a
profound impact on businesses, consumers, and the overall economy. This
analysis will explore these effects, highlighting both the positive and negative
aspects.

Impact on Businesses

Positive Effects:
• Simplified Compliance: GST has streamlined the tax structure by
replacing multiple indirect taxes with a single tax. This simplification
reduces compliance costs and administrative burdens for businesses,
particularly small and medium enterprises (SMEs) that previously
struggled with various state and central taxes.
• Increased Competitiveness: By eliminating the cascading effect of
taxes, GST has improved the competitiveness of Indian businesses.
Companies can now operate more efficiently, leading to potential cost
savings and increased profitability.
• Input Tax Credit: Businesses can claim input tax credits for the GST paid
on their purchases, which reduces the overall tax burden and encourages
investment in production and services.
Negative Effects:
• Compliance Challenges: Despite simplification, businesses, especially
smaller ones, face challenges in adapting to the new GST regime,
including the need for digital record-keeping and filing.

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 • Increased Costs for Some Sectors: Certain sectors, such as real estate
and hospitality, have reported increased costs due to higher GST rates,
which can affect pricing strategies and profit margins.

Impact on Consumers

Positive Effects:
• Transparency in Pricing: GST has made the tax component of goods and
services more transparent, allowing consumers to see exactly how much
tax they are paying.
• Potential Price Reductions: In some cases, GST has led to a reduction
in prices for goods and services, benefiting consumers.
Negative Effects:
• Increased Prices for Essential Goods: The implementation of GST has
led to price hikes on several essential goods and services, impacting the
cost of living for many consumers, particularly those in lower-income
brackets.
• Consumer Price Index (CPI) Impact: The Consumer Price Index (CPI)
rose post-GST implementation, indicating that inflation has affected
purchasing power, contrary to initial expectations that GST would lower
prices overall.

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Impact on the Overall Economy

Positive Effects:
• Boost to GDP: GST has the potential to enhance India’s GDP by creating
a unified market, facilitating smoother interstate trade, and increasing
tax compliance. Studies indicate that GST may contribute significantly to
economic growth in the long term.
• Encouragement of Formalization: GST has encouraged many
businesses to register formally, increasing the tax base and improving
government revenue.

Negative Effects:
• Initial Economic Disruption: The transition to GST caused some initial
disruptions in the economy, including fluctuations in GDP growth rates
as businesses adjusted to the new system.
• Unemployment Concerns: Some sectors experienced job losses as
businesses restructured to adapt to the new tax regime, leading to
concerns about rising unemployment rates in the short term.

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Impact according to interviews and surveys from

local businesses

To analyze the impact of GST on businesses, I conducted interviews and surveys with
local businesses across various sectors. The key findings are as follows:

Positive Effects

• Simplified Compliance: Most businesses reported that GST has streamlined

the tax structure, reducing compliance costs and administrative burdens. As
one retailer mentioned, "GST has made it much easier to manage our taxes.
We no longer have to deal with multiple state and central taxes."
• Increased Competitiveness: Many businesses felt that GST has improved
their competitiveness by eliminating the cascading effect of taxes. A
manufacturing firm stated, "We can now operate more efficiently, leading to
cost savings and increased profitability."
• Input Tax Credit: Businesses appreciated the ability to claim input tax credits,
which reduces their overall tax burden. As a service provider mentioned, "The
input tax credit has encouraged us to invest more in our business."

Negative Effects

• Compliance Challenges: While GST has simplified the tax structure, some
businesses, especially smaller ones, faced challenges in adapting to the new
regime. A small business owner said, "The requirement for digital record-
keeping and filing has been difficult for us to manage."

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 • Increased Costs for Some Sectors: A few sectors, such as real estate and
hospitality, reported increased costs due to higher GST rates. As a hotel
manager stated, "The higher GST rate has affected our pricing and profit
margins."

Impact on Consumers

To assess the impact of GST on consumers, I conducted surveys with a diverse group
of individuals across different age groups and income levels. The key findings are as
follows:

Positive Effects

• Transparency in Pricing: Most consumers appreciated the increased

transparency in pricing, as the tax component is now clearly visible. As a
consumer mentioned, "It's good to know exactly how much tax I'm paying on a
purchase."
• Potential Price Reductions: Some consumers reported experiencing price
reductions for certain goods and services after the implementation of GST. A
student stated, "I noticed that the price of my textbooks has gone down
slightly."

Negative Effects

• Increased Prices for Essential Goods: Many consumers, particularly those in

lower-income brackets, expressed concerns about the price hikes on essential
goods and services. A homemaker said, "The cost of living has increased due
to higher prices for basic necessities."
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CASE STUDY – AUTOMOBILE
INDUSTRY

Introduction

The introduction of the Goods and Services Tax (GST) in India on July 1, 2017, was a
landmark reform aimed at simplifying the tax structure and enhancing compliance.
The automobile industry, a key sector in the Indian economy, has experienced
significant changes due to GST. This case study examines the effects of GST on the
automobile industry, focusing on Original Equipment Manufacturers (OEMs),
dealers, and component manufacturers, supported by relevant data and
visualizations.

Overview of the Automobile Industry

India's automobile industry is one of the largest in the world, contributing

approximately 7.1% to the country's GDP and employing over 35 million people. The
sector includes a diverse range of vehicles such as two-wheelers, passenger cars,
commercial vehicles, and auto components. The implementation of GST aimed to
create a unified tax structure, replacing various indirect taxes like excise duty, VAT,
and service tax.

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Impact on OEMs

Tax Structure Changes

Before GST, the cumulative tax burden on automobiles was around 30-33%. With
GST, tax rates for most vehicles were reduced to 18% for smaller vehicles and 28% for
larger vehicles, along with an additional cess for luxury cars. This reduction has made
vehicles more affordable for consumers.

Sales growth data

*Note - GST was introduced on 1st July, 2017

Year Sales (in million units) Growth Rate (%)

2016-17 3.71 -

2017-18 4.02 8.34

2018-19 4.51 12.19

2019-20 3.77 -16.38

2020-21 3.09 -18.00

2021-22 3.88 25.62

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 Growth in Sales before and after GST

2021-22

2020-21

2019-20

2018-19

2017-18

2016-17

-25 -20 -15 -10 -5 0 5 10 15 20 25 30

Column1 Growth Rate (%) Sales (in million units)

By this data we can conclude that the automobile industry wasn’t heavily impacted
by GST and the sales increased by a small percentage and the years in which the
growth rate is negative is due to the pandemic.

Impact on Automobile Dealers

Simplified Compliance

Dealers have benefited from a simplified compliance process under GST. Previously,
they had to navigate various state and central taxes, but now they only deal with GST,
which is a single tax structure.

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Financial Benefits

Dealers can now claim input tax credits on the GST paid for vehicles purchased for
resale, improving their cash flow and profitability.

Impact on Auto Components Manufacturers

Cost Reduction
The GST regime has subsumed several indirect taxes, leading to a reduction in the
overall cost of manufacturing auto components. This has allowed manufacturers to
offer competitive pricing for their products.

Challenges in Compliance
However, the transition to GST has not been without challenges. Many component
manufacturers have faced difficulties in adapting to the new compliance
requirements and digital record-keeping.

Economic Implications

The GST regime has not only simplified the tax structure but has also contributed to
the overall growth of the automobile industry. The reduction in tax rates has led to
increased consumer demand, as vehicles have become more affordable.

Moreover, the GST framework encourages manufacturers to invest in new

technologies and expand their operations, further driving economic growth. The
government has also benefited from increased tax compliance and revenue sharing
between states and the central government.

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 COMPARISON OF TAXES

GST in Australia
Australia introduced GST on July 1, 2000, replacing multiple indirect taxes with a single
consumption tax. The standard GST rate is set at 10%, which applies to most goods and
services, with exemptions for certain items like basic food and education. Unlike India,
Australia has a simpler compliance requirement, where businesses with an annual turnover
exceeding AUD 75,000 must register for GST. Smaller businesses can opt for voluntary
registration.

GST in Canada
Canada's GST was introduced in January 1991 and operates under a dual system, similar to
India. The federal GST is set at 5%, but provinces can also impose their own sales taxes,
leading to a combined rate that can reach up to 15%. Certain items, such as basic groceries
and prescription medications, are zero-rated. Businesses with an annual turnover exceeding
CAD 30,000 must register for GST, but the complexity of compliance can vary significantly by
province.

GST in Singapore
Singapore implemented GST in April 1994, starting with a rate of 3% and increasing it to 7%
in 2007. As of January 2023, the rate is set to rise to 8%, with plans for a further increase to
9% in 2024. Singapore’s GST system is straightforward, with a single rate applied to most
goods and services, and businesses must register if their annual taxable turnover exceeds
SGD 1 million. The simplicity of the system facilitates compliance and efficient tax
collection.

GST in New Zealand

New Zealand introduced its GST system in October 1986, with a standard rate of 15%
applicable on most goods and services. The country is often cited as a model for GST
implementation due to its broad base and minimal exemptions. Businesses must register
for GST if their annual turnover exceeds NZD 60,000. The New Zealand GST system
emphasizes simplicity and transparency, which has contributed to high compliance rates.

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 New
Feature India Australia Canada Singapore Zealand

Implementation
Year 2017 2000 1991 1994 1986

0%, 5%, 5% (plus

12%, 18%, provincial 8% (rising to
Standard Rate 28% 10% taxes) 9%) 15%

Dual/Single Dual (CGST

System and SGST) Single Dual Single Single

Registration Varies by SGD 1

Threshold turnover AUD 75,000 CAD 30,000 million NZD 60,000

Yes, for Yes, for

Yes, varies basic food, basic Limited Limited
Exemptions by category etc. groceries exemptions exemptions

Compliance Moderate to High, varies

Complexity high Moderate by province Low Low

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 CONCLUSION
In conclusion, the project on Goods and Services Tax (GST) has provided a comprehensive
understanding of this significant tax reform in India. Through various components, we
explored the definition and implications of GST, its history and implementation, and how it
compares to previous tax systems such as VAT and service tax.

The categorization of goods and services under different GST rates has highlighted the
structured approach taken by the government to ensure fairness and transparency in
taxation. The analysis of GST calculations has equipped us with practical skills in financial
literacy, enabling us to understand how GST impacts pricing and consumer behavior.

The impact analysis revealed both the positive and negative effects of GST on businesses
and consumers. While GST has simplified compliance and increased government revenue,
it has also posed challenges for small businesses and led to price increases for certain
goods and services.

The case study on the automobile industry illustrated how GST has transformed a key sector
of the economy, promoting efficiency and competitiveness, while also presenting
challenges for adaptation to the new tax regime.

Finally, the comparison of GST systems in India with those in other countries provided
insights into global practices, showcasing similarities and differences that can inform future
improvements to the GST framework in India.

Overall, this project has deepened our understanding of GST's role in the economy,
highlighting its significance as a tool for economic growth and development. It emphasizes
the importance of continuous dialogue among stakeholders to address challenges and
enhance the benefits of GST for all segments of society.

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 BIBLIOGRAPHY

• GST Council: About Us

• ClearTax: GST Law
• Wikipedia: Goods and Services Tax (India)
• Bajaj Finserv: GST
• Aditya Birla Capital: GST vs Previous Tax Policy
• BankBazaar: History of GST
• Groww: GST
• Khatabook: Differences Between GST and Previous Tax Structure
• ClearTax: History of GST
• BankBazaar: GST
• ResearchGate: Comparison of GST with Previous Tax Structure and its Impact on
Indian Economy
• 5paisa: History of GST in India
• Investopedia: GST
• JETIR: History of GST
• Marg ERP: History of GST
• GST Council: GST Council
• SAG Infotech: GST Impact on Businesses in India
• ClearTax: GST Impact on GDP
• iPleaders: Impact of GST on the Indian Economy
• HostBooks: GST Impact on Businesses
• ResearchGate: Impact of GST on Indian Economy
• GIPE: Impact of Goods and Services Tax on the Economic Growth of India
• Zoho: Impact of GST on SMEs
• Registration Arena: Impact of GST on the Indian Economy
• SAG Infotech: GST Impact on GDP in India
• Vakilsearch: 5 Ways GST Affects Your Business
• Avalara: How GST Transformed the Indian Economy
• ResearchGate: Analysis of GST Impact on Indian Economy
• Bajaj Finserv: 5 Ways in Which GST Impacts Your Business
• IJNRD: Impact of GST on Indian Economy
• Fi Money: The Impact of GST on the Indian Economy
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• NIPFP: Impact of GST on the Indian Economy
• Coinmen: Analyzing the Impact of GST on the Automobile Sector in India
• SAG Infotech: GST Impact on Automobile Industry in India
• PwC: Impact of GST on Automotive Sector
• GST in India: GST on Automobiles Sector
• Economic Times: Auto Industry Leaders Talk on How GST Impacts the Used Car
Business
• ICAI: Impact of GST on Automobile Dealers Industry
• Batuk Consultancy: All About GST on Automobile Industry
• Autocar Professional: CNG Offers Better Operating Efficiencies
• GST Hero: Impact of GST on Automobile Sector in the Post-Pandemic World
• ResearchGate: Impact of GST on Automobile Industry in India
• Economic Times: SIAM Seeks GST Reduction on Two-Wheelers
• ClearTax: GST Impact on Automobile Industry
• Economic Times: GST in Automotive Industry
• Gap Interdisciplinarities: Impact of GST on the Indian Automobile Industry
• EY: Developments in GST Shaping the Automobile Sector
• RenewBuy: GST Implementation Impact on Indian Auto Industry
• Quaderno: What is GST and Which Countries Have It?
• Fonoa: What is a GST and Which Countries Have It?
• SAG Infotech: GST India vs Foreign GST
• ClearTax: GST India and Other Countries Comparison
• NIRDPR Journal: GST India Differs from GST in Other Countries
• Corpbiz: GST India Differs from GST in Other Countries
• PwC: Australia Corporate Other Taxes

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