Goods and Service Tax Implementation in Kerala An Impact Analysis

International Journal of Pure and Applied Mathematics Volume 119 No. 12 2018, 2545-2558

ISSN: 1314-3395 (on-line version) url: Special Issue

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Goods and Service Tax Implementation in Kerala "An Impact Analysis"

1Anagha Sanil, 2S. Sruthy, 3S. Sreelekshmi and 4T.G. Manoharan 1Department of Commerce & Management, Amrita School of Arts & Sciences, Amrita Vishwa Vidyapeetham, Amritapuri, India. anaghasanil10.1997@ 2Department of Commerce & Management, Amrita School of Arts & Sciences, Amrita Vishwa Vidyapeetham, Amritapuri, India. 3Department of Commerce & Management, Amrita School of Arts & Sciences, Amrita Vishwa Vidyapeetham, Amritapuri, India. 4Department of Commerce & Management, Amrita School of Arts & Sciences, Amrita Vishwa Vidyapeetham, Amritapuri, India.

Abstract

Our society has different opinions, reactions as well as different arguments on the Central Government's decision on implementing Goods and Service Tax (here after it is GST) in India. People have positive as well as negative feedbacks on this revolutionary change in the Indian Indirect Tax structure. Therefore, this study was carried out in order to identify the impact of GST in Middle class society of Kerala. The major objectives behind conducting this study was to identify the level of knowledge among the public about the new Tax regime of our country, to study the Acceptance of GST among the Middle Class Society of Kerala and to

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measure the Impact of GST on the Middle Class Society of Kerala. This study also aimed at finding out the effectiveness of the legal and regulatory framework in controlling the over profit making traders and to find out how much common man friendly our new Tax regime is. The sample comprised of 100 middle class families distributed in different parts of Kollam district (Kerala). The selection of the sample was made randomly. The method adopted in this study was quantitative using questionnaires as the main instrument.

Key Words: Public Economics, Public Finance, Taxation, Goods and Service Tax of India and Middle class society of Kerala.

JEL Classification: H25, H2.

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1. Introduction

Compulsory payments by citizens to the governments are termed as Tax. Tax collection is important because it serves as the main source of revenue to the government. Development activities can be undertaken only with the fund that is obtained from tax. The taxes can be collected directly or indirectly.

In India after 1st July 2017 different classes of indirect taxes were merged and bought GST. It was regarded to be a revolutionary move done to the Indian economy. Thus, we are conducting this study to measure the impact of GST in the middle class families of Kerala.

2. Literature Review

The new tax regime is imposed to the cost of certain goods and services. GST is collected by the business by including the rate of tax with the price of the product. That portion of the rate of GST collected is send to the government. Thus the main aim of GST is to reduce the tax burden from the shoulders of individuals or common people and to give maximum benefits to them. Some of the objectives are

? One country - one tax ? Reduce corruption and tax evasion ? Reduce the cascading effect of indirect taxes ? Increase productivity ? Improving competitiveness of goods thereby increasing GDP. ? Simplify the taxation process ? GST registration, payment and input tax credit is similar in nature. 2.1 GST in India

India initiated its indirect tax system in 1986 by V. P. Singh who was the then Finance Minister in Rajiv Gandhi's Congress Alliance Ministry. As a result of the initiative, Manmohan Singh started discussions on value added tax at the state level in which PV Narasimha Rao was the Finance Minister. Subsequently, GST was proposed during a meeting between the Prime Minister Atal Bihari Vajpayee and his economic advisory panel. A committee was formulated by him headed by the finance minister of West Bengal, Asim Dasgupta. In 2002, a task force was formed to carry out tax reforms under the control of Vijay Kelkar.

As the NDA government loss power, the UPA government came into power in which P Chidambaram was the new finance minister and they moved ahead with the same. Later NDA government came into existence in 2014 under the leadership of Narendra Modi. As a result, the GST bill was introduced by finance minister Arun Jaitely and the deadline was fixed on 1st April.

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A committee of 22-members were formed for the purpose. GST was passed in all state and union territories except Jammu and Kashmir. On 1 July 2017 GST was launched by the President of India, Pranab Mukherjee, and Prime Minister of India, Narendra Modi. This function was boycotted by the opposition parties by saying that it is just an imitation of the previous Indirect Tax regime. Other major argument from the opposition side was that, it would increase the rates of daily goods while reducing the tax of luxury items. This may directly bring its effect on many Indians, especially the middle class. 2.2 Three Prime Model Mechanism of GST in India:

? Central level or Union level GST - Levied by the Central Government. ? State level GST- Levied by the State Government. ? Union and State level GST- Levied by the Central and State

Government.

2.3 Why India Applying GST

GST aims at reducing tax burden which was in the indirect tax form. Its key objectives is to bring single tax for entire nation. A step to reduce corruption. Aims at simplifying tax process and reduces cascading effect. Thereby ensuring higher productivity and uniform input tax credit. 2.4 Legal Framework of GST

CGST Act 2017 is present for collecting central GST. UTGST Act is present for monitoring Union Territories including Andaman and Nicobar Island, Lakshadweep, Daman and Diu etc. The states have their own GST legislature for collecting the SGST. Even if there are more than one GST legislature, the assesse, classification, procedure of collection, valuation etc. remain uniform. Also, GST council was constituted on 12th September 2016 for governing the GST tax structure. 2.5 Regulatory Framework of GST

`GST Council' was set up to monitor its affairs. The Council includes: ? As chairman -The Union Finance Minister, ? The Minister of State in charge of monitoring, Revenue or Finance, and ? The Minister in charge of Finance or Taxation or any other Minister, nominated by each state government.

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All decisions shall be finalised by GST Council by three fourth majority of votes cast; the centre shall have one-third and states collectively would have two- third. 2.6 GST Rates

The 14th GST Council meeting was held on 19th May 2017 at Srinagar, Jammu & Kashmir where the rates of services were finalised and fixed. The Council has approved the GST rates for goods and services at Nil, 5%, 12%, 18% and 28%. The decisions of the GST Council are being communicated for general information and will be given effect to through gazette notifications which shall have force of law.

3. Research Objectives

? To study on the knowledge among public about the new tax regime ? To study the Acceptance of GST among the Middle Class Society of

Kerala. ? To measure the Impact GST on the Middle Class Society of Kerala

4. Research Methodology

4.1 Research Design

Research design used in this topic is Descriptive method as it helps in accurate description of certain terminologies as well as situations. Descriptive analysis helps to understand the opinion of certain predetermined data related to research topic. 4.2 Research Instrument

The main instrument used for this research study was a mail questionnaire. Questionnaire included open ended as well as closed ended questions.

5. Limitations of the Study

Literature review was very difficult due to following reasons: ? It was a newly implemented tax regime. ? Time for conducting the study was limited. ? Level of awareness among the public was low. ? Sample size was 100 due to lack of time. ? Disparities about the perception of GST made the survey hard. ? Survey was hard because of the level of knowledge of the respondents were less. ? The survey was conducted before November 10th2017 i.e. before the 23rd GST council meeting thus there are chances for a slight difference in the responses.

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