A Project Report on GST

Impact On Logistics Industry

Submitted By
Ranjeet singh Thakur
(Y141805285)
BBA 5th semester
Under the Guidance of:
Mr. Lokesh Uke
(Assistant Professor)

Department of Business Management

Dr. Hari Singh Gour Central University
Sagar (MP), India
Year 2016

GST CONCEPT & STATUS OCTOBER, 2016

Introduction
The introduction of Goods and Services Tax (GST) would be a very significant step in the field of
indirect tax reforms in India. By amalgamating a large number of Central and State taxes into a single
tax, it would mitigate cascading or double taxation in a major way and pave the way for a common
national market. From the consumer point of view, the biggest advantage would be in terms of a
reduction in the overall tax burden on goods, which is currently estimated to be around 25%-30%.
Introduction of GST would also make Indian products competitive in the domestic and international
markets. Studies show that this would have a boosting impact on economic growth. Last but not the
least, this tax, because of its transparent and self policing character, would be easier to administer.

The Constitution Amendment Bill for Goods and Services Tax (GST) has been approved by The
President of India post its passage in the Parliament (Rajya Sabha on 3 August 2016 and Lok Sabha
on 8 August 2016) and ratification by more than 50 percent of state legislatures. The Government of
India is committed to replace all the indirect taxes levied on goods and services by the Centre and
States and implement GST by April 2017.

With GST, it is anticipated that the tax base will be comprehensive, as virtually all goods and services
will be taxable, with minimum exemptions.

GST will be a game changing reform for the Indian economy by creating a common Indian market
and reducing the cascading effect of tax on the cost of goods and services. It will impact the tax
structure, tax incidence, tax computation, tax payment, compliance, credit utilization and reporting,
leading to a complete overhaul of the current indirect tax system.

GST will have a far-reaching impact on almost all the aspects of the business operations in the
country, for instance, pricing of products and services, supply chain optimization, IT, accounting, and
tax compliance systems.
GST has been envisaged as an efficient tax system, neutral in its application and distributionally
attractive. The advantages of GST are:

Wider tax base, necessary for lowering tax rates and eliminating classification disputes
Elimination of multiplicity of taxes and their cascading effects
Rationalization of tax structure and simplification of compliance procedures
Harmonization of center and state tax administrations, which would reduce duplication and
compliance costs
Automation of compliance procedures to reduce errors and increase efficiency
Destination principle
The GST structure would follow the destination principle. Accordingly, imports would be subject to
GST, while exports would be zero-rated. In the case of inter-state transactions within India, State tax
would apply in the state of destination as opposed to that of origin.
Taxes to be subsumed

GST would replace most indirect taxes currently in place such as:

Central Taxes
Central Excise Duty [including additional excise duties, excise duty under the Medicinal and Toilet
Preparations (Excise Duties) Act, 1955]
Service tax
Additional Customs Duty (CVD)
Special Additional Duty of Customs (SAD)
Central Sales Tax ( levied by the Centre and collected by the States)
Central surcharges and cesses ( relating to supply of goods and services)

State Taxes
Value-added tax
Octroi and Entry tax
Purchase tax
Luxury tax
Taxes on lottery, betting and gambling
State cesses and surcharges
Entertainment tax (other than the tax levied by the local bodies)
Central Sales tax ( levied by the Centre and collected by states)

Impact of GST in Indian Economy

Reduce tax burden on producers and foster growth through more production. This double taxation
prevents manufacturers from producing to their optimum capacity and retards growth. GST would
take care of this problem by providing tax credit to the manufacturer.
Various tax barriers such as check posts and toll plazas lead to a lot of wastage for perishable items
being transported, a loss that translated into major costs through higher need of buffer stocks and
warehousing costs as well. A single taxation system could eliminate this roadblock for them.
A single taxation on producers would also translate into a lower final selling price for the consumer.
Also, there will be more transparency in the system as the customers would know exactly how much
taxes they are being charged and on what base.
GST would add to government revenues by widening the tax base.
GST provides credits for the taxes paid by producers earlier in the goods/services chain. This would
encourage these producers to buy raw material from different registered dealers and would bring in
more and more vendors and suppliers under the purview of taxation.
GST also removes the custom duties applicable on exports. Our competitiveness in foreign markets
would increase on account of lower cost of transaction.

The proposed GST regime, which will subsume most central and state-level taxes, is expected to have
a single unified list of concessions/exemptions as against the current mammoth exemptions and
concessions available across goods and services
The introduction of Goods and Services Tax would be a very noteworthy step in the field of indirect
tax reforms in India. By amalgamating a large number of Central and State taxes into a single tax, it
would alleviate cascading or double taxation in a major way and pave the way for a common national
market. From the consumer point of view, the biggest advantage would be in terms of reduction in the
overall tax burden on goods and services. Introduction of GST would also make Indian products
competitive in the domestic and international markets. Last but not the least, this tax, because of its
transparent character, would be easier to administer. However, once implemented, the system holds
great promise in terms of sustaining growth for the Indian economy.

GST impact on Agriculture Industry

The impact on the agriculture industry will affect people living in all sections of the society. However,
taxing the food could hold more impact on the poor. But, the exception of food can shrink the tax
base as well. As we know that Agriculture is the root of the Indian economy and government has
always kept it as its top priority. Food includes various different items such as meat, fish, poultry,
grains, cereals, dairy products and milk, confectionary, snacks, candy, etc. In India, many of the food
items have been exempted from the CENVAT, while cereals and food grains are liable for the state
VAT of 4 percent. While the other unprocessed food such as meat and eggs, coarse grains, fresh fruits,
and vegetables come under the restricted state VAT category.

It is expected that after the implementation of the GST, the prices of the agricultural products and
services will rise but the products will be able to reach places via trucks in a better way. The
implementation of GST will also favor the National Agricultural Market on merging all the different
taxations on agricultural products. The ease of transportation of the agricultural good will improve the
marketing and improve the virtual market growth.
The application of GST in the food and agriculture industry is into high consideration and the public
is hopeful to witness various fruitful reforms in this sector. GST has been the long awaited 122nd
constitutional amendment bill, which has been passed by both upper and lower house and will
become law by the next year. There are many hopes with the GST and its impact on all sectors. We
have already covered its impact on the lives of common man and oil and gas sector. With the
unification of the taxation system, many sectors will be benefited only if things go as per the bill.

The impact on the food industry will affect people living in all sections of the society. However,
taxing the food could hold more impact on the poor. But, the exception of food can shrink the tax
base as well. As we know that Agriculture is the root of the Indian economy and government has
always kept it as its top priority. Food includes various different items such as meat, fish, poultry,
grains, cereals, dairy products and milk, confectionary, snacks, candy, etc. In India, many of the food
items have been exempted from the CENVAT, while cereals and food grains are liable for the state
VAT of 4 percent. While the other unprocessed food such as meat and eggs, coarse grains, fresh fruits,
and vegetables come under the restricted state VAT category.

It is expected that after the implementation of the GST, the prices of the agricultural products and
services will rise but the products will be able to reach places via trucks in a better way. The
implementation of GST will also favor the National Agricultural Market on merging all the different
taxations on agricultural products. The ease of transportation of the agricultural good will improve the
marketing and improve the virtual market growth.
The main issue in the application of GST to food is the impact it would have on those living at or
below subsistence levels. For those at the bottom of the income scale, it doubtless accounts for an
even higher proportion of total expenditures and incomes. Taxing food could thus have a major
impact on the poor. By the same token, a complete exemption for food would significantly shrink the
tax base.

Food includes a variety of items, including grains and cereals, meat, fish, and poultry, milk and dairy
products, fruits and vegetables, candy and confectionary, snacks, prepared meals for home
consumption, restaurant meals, and Beverages. in India, while food is generally exempt from the
CENVAT, many of the food items, including food grains and cereals, attract the state VAT at the rate
of 4%. Exemption under the state VAT is restricted to unprocessed food, e.g., fresh fruits and
vegetables, meat and eggs, and coarse grains. Beverages are generally taxable, with the exception of
milk.

In the rural sector, the predominant distribution channel for unprocessed food would be either a direct
sale by the farmer to final consumers or through small distributors/retailers. Even where food is
within the scope of the GST, such sales would largely remain exempt because of the small business
registration threshold. Given that food is currently exempt from the CENVAT, the GST under a
single-rate, comprehensive-base model would lead to at least a doubling of the tax burden on food
(from 4% state VAT to a combined GST rate of 8%).The alternative of exempting food altogether (or
zero rating) would not be any better as it would have an adverse impact on Revenue Neutral Rate.

Thus, prices of the agricultural items and services are expected to rise after the implementation of the
GST, although the overall inflationary impact of the proposed indirect regime will be negative.

Conclusion
The output of agricultural sector is mostly exempt from tax, and inputs in agricultural
sector like power and fertilizer are heavily subsidized for this sector, and will continue
to be subsidized.
As such there might not be any appreciable change in this sector on account of GST.
However a final analysis can only be made when Actual GST acts are passed.
National Agricultural Market in the light of GST In order to achieve National Market
in agriculture, there is need for harmonization in the provisions of APMC Act, EC Act
and WDR Act. The implementation of GST is expected to facilitate the implementation
of National Agricultural Market on account of subsuming all kinds of taxes/cess on
marketing of agricultural produce as well as it would ease interstate movement of
agricultural commodities which would improve marketing efficiency, facilitate
development of virtual markets through warehouses and reduce overhead marketing
cost. Agricultural commodities are perishable in nature in varying degrees therefore
trade is influenced by the time required for transportation. The Economist (Nov 8,
2014) reports that long distance trucks in India are parked for 60 per cent of the time
during transportation. The simple uniform tax regime is expected to improve the
transportation time, and curtail wastage of precious food. The present system many
times, makes it difficult to implement tax support provided by the centre for an agricommodity due to heterogeneous policies adopted by the different states. The
implementation of GST is expected to bring uniformity across states and centre which
would make tax support policy of a particular commodity effective.

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