THE EVOLUTION OF

GST
REFORMING THE INDIAN TAX SYSTEM
 01 02 03 04
Introduction Direct Taxes Indirect Taxes Need for tax
reforms

05 06 07 08
GST GST Benefits GST Impacts GST Structure

09 10
GST Rates GST Success
INTRODUCTION

Taxation in India :

Taxation is fundamental to India's economic structure,

dating back to ancient times.
Today, it's a vital aspect of governance, enabling revenue
generation and economic development.

Direct and indirect taxes :

Direct taxes are levied on individuals or entities directly, such as Income

Tax.
Indirect taxes, like GST and Customs Duty, are imposed on goods and
services, affecting consumers indirectly.
 DIRECT TAXES
01 Definition of direct taxes:
Direct taxes are paid directly by
individuals or entities to the
government and cannot be shifted to
others.

02 Examples: Income Tax, Corporate Tax

Income Tax: Levied on individual income,
including salaries and investments.
Corporate Tax: Imposed on profits earned by
companies.

03 Historical perspective on direct taxation in India:

Direct taxation in India has evolved over centuries, from

ancient times to modern governance.
It gained prominence during British colonial rule, primarily
to boost colonial revenue.
 INDIRECT TAXES
01 Definition of Indirect taxes:
Taxes on goods and services, not
directly on individuals, ultimately paid
by consumers.

02 Examples: GST, Customs Duty, Excise Duty

GST: Tax on goods and services across India.
Customs Duty: Tax on imports and exports.
Excise Duty: Tax on production of goods.

03 Historical perspective on Indirect taxation in India:

Long-standing tradition of taxing trade and consumption.
Evolved over centuries, significant developments during
British colonial rule and post-independence periods.
 NEED FOR TAX INTRODUCTION TO THE NEED FOR
A UNIFIED TAX SYSTEM:
REFORM Recognizing the challenges of the
current tax regime, there is a growing
CHALLENGES IN THE
demand for a unified tax system.
EXISTING TAX SYSTEM:

Complexity and multiplicity of taxes A unified tax system aims to simplify tax
create confusion and compliance issues administration, enhance compliance,
for taxpayers. and promote economic efficiency.

Lack of uniformity and clarity in tax laws It seeks to streamline the tax structure,
leads to inefficiencies and loopholes. reduce cascading effects, and create a
more business-friendly environment.
 GST
GST is a comprehensive indirect tax levied on the supply
of goods and services across India.
It replaces multiple indirect taxes imposed by the
central and state governments, leading to a unified tax
structure.

Features of GST: One nation, one tax

GST follows the principle of "one nation, one tax," aiming
to create a single tax system for the entire country.
It eliminates the cascading effect of taxes and ensures a
more transparent and efficient tax regime.
 GOALS OF GST
IMPLEMENTATION IN INDIA:

Simplification Economic Efficiency Revenue Neutrality

Integration
To simplify the To enhance tax To ensure that
tax structure by To promote compliance, implementation
replacing economic reduce tax does not lead to a
multiple taxes integration by evasion, and significant loss or
with a single GST. creating a unified improve ease of gain in
national market. doing business. government
revenue.
BENEFITS OF
GST
Streamlining of taxation system:

GST replaces multiple indirect taxes with a single

tax system, streamlining the tax structure.
It simplifies tax compliance for businesses by
reducing the number of tax filings and
procedures.

Promotion of ease of doing business:

GST eliminates interstate barriers and cascading taxes,

creating a seamless national market.
It reduces compliance burdens for businesses by
providing a common tax platform across states.

Reduction in tax evasion:

GST introduces a robust invoice matching system and input

tax credit mechanism, minimizing tax evasion opportunities.
The transparency and digitalization of tax processes under
GST contribute to reducing tax evasion and increasing tax
compliance.
 IMPACT OF GST
Economic impact on different sectors:

GST has had varied effects on different sectors of the economy, ranging from
positive to challenging.
Some sectors experienced initial disruptions due to changes in tax rates and
compliance procedures, while others benefited from reduced tax burdens and
streamlined processes.
Overall, GST aims to create a level playing field for all sectors and promote
balanced economic growth.

Initial challenges faced by businesses:

Businesses initially faced challenges in adapting to the new GST regime,

including understanding and implementing new tax processes and technologies.
Transition issues such as inventory management, software upgrades, and
compliance requirements posed significant hurdles for businesses, especially
small and medium enterprises (SMEs).
Long-term benefits for the economy:

Despite the initial challenges, GST offers numerous long-term benefits for the
economy.
It promotes transparency, efficiency, and compliance in the tax system, leading
to increased government revenue.
GST fosters a conducive business environment by reducing tax barriers and
promoting interstate trade, ultimately driving economic growth and
development.
 GST STRUCTURE
Overview of GST structure: CGST, SGST, IGST
GST is structured into three components: Central Goods and Services Tax (CGST),
State Goods and Services Tax (SGST), and Integrated Goods and Services Tax
(IGST).
CGST and SGST are levied by the central and state governments, respectively, on
intra-state transactions.
IGST is applicable to inter-state transactions and is collected by the central
government.

Explanation of input tax credit mechanism

The input tax credit mechanism allows businesses to claim credits for taxes paid
on inputs used in the production or provision of goods and services.
Under GST, businesses can offset taxes paid on inputs (CGST, SGST, or IGST)
against their output tax liability, reducing the overall tax burden.

Registration and compliance under GST

Businesses engaged in the supply of goods or services exceeding specified
turnover thresholds are required to register under GST.
GST registration involves obtaining a unique GSTIN (Goods and Services Tax
Identification Number) and complying with periodic tax filings and compliance
requirements.
Non-compliance with GST regulations may result in penalties and legal
consequences, underscoring the importance of adherence to GST registration
and compliance procedures.
 GST RATES

Classification of goods Role of GST Council in Impact of GST rates on

and services under determining tax rates: consumers and
different tax slabs: businesses:
The GST Council, comprising
Goods and services under GST GST rates directly influence
representatives from the
are classified into different the prices of goods and
central and state
tax slabs based on their services consumed by
governments, plays a crucial
nature and perceived value. individuals and businesses.
role in determining GST tax
The GST tax slabs include 5%, Higher tax rates may lead to
rates.
12%, 18%, and 28%, with increased prices for
It evaluates various factors
certain essential items consumers, while lower rates
such as revenue implications,
attracting lower rates or or exemptions can make
industry demands, and
exemptions. products more affordable.
consumer welfare before
deciding on tax rates for
different goods and services.
GST SUCCESS STORIES

Case studies of successful GST implementation:

Example 1: The FMCG Sector in India
Before GST: FMCG companies faced multiple state-level taxes, leading to complex supply chains and
high logistics costs.
After GST: Implementation of GST streamlined logistics and distribution networks, resulting in cost
savings and efficiency gains for FMCG companies. This led to improved profitability and market
competitiveness.

Example 2: Maharashtra's Manufacturing Industry

Before GST: Maharashtra had a complex tax regime with various state-level taxes and octroi duties,
hindering interstate trade and industrial growth.
After GST: GST implementation simplified tax compliance and reduced barriers to interstate trade. The
manufacturing sector in Maharashtra experienced increased investment, production, and exports,
contributing to economic growth and employment generation.
CONCLUSION
Recap of key points discussed:
Throughout this presentation, we have explored the evolution of GST in India, from its
inception to its implementation and impact.
We discussed the structure of GST, its benefits, challenges, and success stories,
providing insights into its significance as a tax reform measure.
Importance of GST as a landmark tax reform in India:
GST represents a monumental shift in India's tax landscape, aiming to create a unified
national market and streamline indirect taxation. BORC
Its introduction has simplified tax compliance, reduced tax evasion, and promoted
economic integration, making it a landmark tax reform in India's history.
Outlook for the future of Indian taxation:
Looking ahead, GST is expected to continue playing a pivotal role in shaping the future of
Indian taxation.
As GST implementation matures, further reforms and enhancements may be needed to
address emerging challenges and optimize its benefits.
The evolution of Indian taxation will likely be guided by the principles of simplicity,
transparency, and efficiency, with GST serving as a cornerstone for future reforms.