OBJECTIVE OF THE STUDY:

(1) To understand the concept of Goods and service tax.

(2) To understand the advantages of Goods and service tax.

(3) To understand challenges of Goods and service tax.

RESEARCH METHODOLOGY:

The study is focus on secondary data, collected from books, Articles of various newspapers, National and international journals, publication from various websites and Government reports.

INTRODUCTION OF GOODS AND SERVICE TAX:

A modern Goods and service tax (GST) would do much to aveviate the problems of India’s current Indirect tax and furthers economic growth. The Goods and service Tax is basically an Indirect tax that brings most of the taxes imposed on most goods and services, on manufacture, share and consumption of goods and services under a single domain at the national level. Goods and service Tax is a consolidated tax based on a uniform rate of tax fixed for both goods and services and it is payable at the final point of consumption. At each stage of share or purchase in the supply chain, this tax is collected on value added goods and services, through a tax credit mechanism.

The proposed model of goods and service tax and the rate:-

Goods and service tax system is planned to be implemented in India as proposed by the committee under which the goods and service tax will be divided into two parts:-

(1) State Goods and service tax.

(2) Central goods and service tax

Both are State goods and service tax and Central good and service tax will be levied on the taxable value of transaction. All goods and services leaving aside a feel will be brought into goods and services tax and there will be no different between goods and services. The goods and services tax system will combine central excise duty, additional Excise duty, service tax, State Vat, entertainment tax under one banner.

The goods and services tax rate is expected to be around 14-16% the State and Central Government will decide on the state goods and services tax and Central goods and services tax.

Many benefit s of GST in India because present situation in India, currently indirect tax is not able to increase economic growth. This example shown how to effect of GST in different ways.

Let us suppose that GST rate is 10% this table shown in the condition of GST the overall burden of GST on the goods is this much less.

Table

Stage of Supply chain	Purchase value of Input	Value Additional	Value at Which Supply of Goods and service made to Next stage.	Rate of GST	GST on Output	Input Tax cr.	Net. GST
Manufacture	100	30	130	10%	13	10	13-10=3
Whole seller	140	20	160	10%	16	13	16-13=3
Retailer	160	10	170	10%	17	16	17-16=1

GST is a tax on goods and service with comprehensive and continuous chains of set of benefits form the produce. point and service provider’s point up to retailers level. It is essentially a Tax only on value addition each state, and a supplier and each stage permitted to set off, through a tax credit mechanism, The GST paid on the purchase on goods and service tax available from set off on the GST to be paid on the supply of goods and services.

Value added tax (VAT):

VAT is system of indirect tax which has been introduced in lieu of sale tax. It is the tax paid by the producer and that is ultimately passed on the consumer.vat has been introduced in India to ensure a fair and uniform system of taxation. Vat was introduced in the Indian taxation system from April 1, 2005 in an effort to address the problem associated with the earlier sales tax. The Vat system is definitely an improvement over the earlier on in the sense that it is more transparent and curbs tax evasion to some extent, thus more generating revenue for the Government. But despite its advantages, a number of drawbacks of vat have become apparent, both at the central as well as the state level. A major problem with vat is the way it taxes input and output. Another problem is the number of exemptions.

Advantages of Good and Service Tax:

Introduction of a GST is very much essential in the emerging environment of Indian economy.

(1) GST helps to build a transparent and corruption free tax administration. Presently a tax is levied on when a finished product moves out from factory which is paid by manufacturer, and its is again levied at the retail outlet when sold.

(2) This will help in removing economy distortions and bring about development of a common national market.

(3) GST makes possible that taxation burden to be split equability between manufacturing and service.

(4) This will also help boost to exports

(5) As multiple taxes on a product or service are eliminated and a single tax comes into place, the tax structure is expected to be much simpler and easier to understand

(6) When the cost of production falls in the domestic market Indian goods and service will be more price Comparative in foreign markets.

(7) GST will eliminate all other forms of indirect taxing, this will effectively mean that the tax paid by the final consumer will come down is most cases.

(8) Goods and service tax the master key to growth. Implementation of goods and service tax could help government raise tax revenue and reduce fiscal deficit.

CHALLENGES OF GOODS AND SERVICE TAX;-

Presently, the tax structure of India is very complex .looking to the global developments and tax structure of developed countries, GST is the need of the hour. There are many challenges for its successful implementation these are as under.

1- Passing of bill in Rajya Sabha:- Central government is not having sufficient majority in the Rajya Sabha, that is a very big issue .how to agree passing the bills by Raja Sabah .

2- Robust IT Network:- Government has already incorporated goods and service tax Network (GSTN) GST portal which Ensure Technology support for registration , return filling , tax payment IGST settlement etc. All should be a Robust backbone. several question need to be addressed up front and acceptable found. Firstly, at whole level should the tax be levied exclusively by the centre or only by the state, or by both. If by both, what should be its design, the base and the rates and the system of implementation?

3- Improvement in banking sector, improvement IT infrastructure, and effective credit mechanism also very big challenges for GST. Training of tax administrators and assess. How will the system be harmonized, in the case is levied at more than one level?

4- Extensive Training to tax administration staff. GST is absolutely different from existing system. So centre and state staff both Administration to be trained properly in terms of concept, legislation and procedure

5- Poor quality of tax return, double registration system is also big issue for GST implementation.

CONCLUSION:

Tax structure, tax policies are very important role play on the growth of our economy. A good tax system is generate revenue and support government development policy. The advantages of GST are well known and the economy needs this boost if it is to take advantage of global demand. but there are fears that states may lose some revenue because of the Introduction of GST. The bill allows for compensation for revenue loss to states for a period of 5 years. Currently indirect taxes are not able to increase the economic growth. A goods an service tax is master key of is an improvement over vat and at service tax. At present the bill is going through parliament. This is major changes and will have a significant impact for all business and individuals. There are practical complications on the GST besides implementation issues. Hopes from economic reform are justified. Every economic reform brings its benefits and shocks. GST will be extremely good for the economy and our business will benefit a lot.

REFERENCES:

1. Joshi, Suhasini (2013, Aug. 2013) goods and service tax –A step forward the Economic Times.

2. Ministers, T.E., (2009) First discussion paper on good and service tax of India, New Delhi.

3. www.taxmanagementindia.com

4. http://en.wikipedia.org/wki/GOODS AND SERVICE TAX(INDIA)accessed on 15 Jan - 2014

5. http://www.thehindubusinessline.com/todays-paper/tptaxation/artical 2286103.ece

6. Kelkar, Vijay, et al (2004), Report on implementation of the fiscal Responsibility and Budget Management Act 2003, Ministry of finance, Government of India, New Delhi

7. Khan,M.A , and Shadab N, Goods and Service Tax (GST) in India: Prospect for states

8. Garg, Girish (2014) “Basic concept and features of GST in India”.

9. http://www.ficci.com

Received on 20.09.2015 Modified on 08.10.2015

Int. J. Rev. & Res. Social Sci. 3(4): Oct. - Dec., 2015; Page 153-155