Gst Paper -1.docx

Implication of GST on consumer electronics Abstract The introduction of Goods and Services Tax (GST) would be a very significant step in the field of indirect tax. The cascading or double taxation effects could be reduced by combing many central and state taxes. Consumer’s tax burden will approximately reduce to 25% to 30% after introduction of GST. After introduction of GST Indian products would became more competitive in the domestic and international markets. This tax would instantly encourage economic growth. This paper gives information about of GST. The study also aims to analyzing the price variation in consumer electronics. Key words : GST, VAT, consumers electronics Introduction Goods and service tax (GST) was first implemented by the France in the year 1954. Later it was estimated that nearly 160 countries have adopted this system in some form or another. Most of the countries with a GST have a single unified GST system, which means that a single tax rate is applied throughout the country. In India, various type of tax systems were prevailing in the past, and during British period there were significant changes in the taxation system. Thereafter many changes took place time to time. To make the Indian tax system more uniform, goods and service tax(GST) has been introduced in India from 1st July 2017. Good and service tax (GST) is comprehensive tax levy on manufacture, sale, and consumption of goods and services at a national level. The government GST regime seeks to replace excise duty, import duties, VAT & service tax regulations, along with other cess & surcharges. With three separated legislations namely central GST (collected by the central government), state GST (collected by the state government) and integrated GST(collected by the central government).GST would be applicable to all transactions of goods and services, and it to be paid to the accounts of the central and states separately. Literature review Recent study conducted by Anand N and Inderpal S (2018), tilted as “A Comprehensive Analysis of Goods and Services Tax(GST) in India” highlighted the background of the taxation system in India, the idea of GST and its significance, and comparison of Indian GST taxation system with other world economies. This paper concluded that GST will bind the entire nation under a single taxation system rate. As forecasted by experts, GST will improvise tax collections and boost up India's economic development and break all tax barriers between Central and State Governments Further, A study by Nidhi Parashar, Deepa Joshi, and P K Chopra in the year 2017, tries to explore the influence of transition to GST on consumer behaviour related to FMCG sector in India. This paper attempts to examine the perception of buyers and sellers of FMCG towards the transition from sales tax to VAT and to GST. Also, found that people were aware about

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the tax they pay on purchase of commodities but are not much interested in giving importance to such tax on their purchase of FMCG. Mala K S (2018), in this research paper on implications of GST on health care sector concluded that at diagnostic level there is no impact of GST and at Pharmacy and Surgical level there is a drastic changes in the rate of GST which varies from 5% to 28% which is burden on patients, where there is a need for thought-provoking. Further impact on impulsive buying behaviour of consumers has changed after the increase in the GST rate by 12% to 18% with respect to apparels and footwear. Very little change has been noticed in prices of apparels and also in the mode and place of shopping (Lakshmi S, )

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Several studies has been conducted in various sectors but hardly few researchers tries to understand about GST and its implications in the consumer electronics sector. Therefore, the current study would look into the following objectives. Research Objective   

To understand the growth and development of consumer electronics in India. To analyze the price variation in consumer electronics before and after implementation of GST. To study the impact of GST on consumer electronics.

Research Methodology This paper completely based on comparative study, and also this paper is prepared by using descriptive research method based on secondary data collected from different journals, internet and study materials. Analysis and Discussions Electronic industry came in 1900s when the electron tube having two elements was invented by John Ambrose Flemming. Till the 1950s the techniques developed were known as ‘radio techniques’ as they were mainly used in the radio applications. It was the 1960s when the analog devices were invented that brought a revolution in the electronics industry. In 1970s the consumer electronics were developed, these years also saw the dominance of the United State of America coming to an end with many new electronics showing their presence. The electronics industry in India took off around 1965. It was followed by consumer electronics mainly with transistor radios, black and white TVs, calculators and other audio products. In 1982 history of television in India, the government allowed thousands of colour TV set to be imported into the country and now growing at a brisk pace. It is currently US$32 billion constitute 0.7 percent of global electronics industry. India is also exporter of vast range of electronic component and products for the following segments  

Display technologies Entertainment electronics Optical storage device

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Passive components Electromechanical components Telecom equipments.

The Goods & Services Tax (GST) has already been implemented in the country, and its impacts on various industries are appearing slowly as we move forward into the new tax regime. The current research paper would help in understanding about the implementation of GST on different electronic items and its impact on the sector.Electronic appliances such as TV, fridge, microwave oven, washing machine, etc are used in almost every household. Therefore, it is important for sellers as well as consumers to know how GST is going to impact the prices and sales of these products. According to the old VAT based system, the tax rates on most household electronic items was around 11-12.5%, except for the excise duty which was charged at the rate of 12.5% on these appliances. Including some other taxes (such as CST and local taxes), the average tax rate was around 25-26% on electronic goods, before the implementation of GST and are given in the Table 1. Table – 1 VAT rate for 2015-16 Product Cell phone air conditioners

VAT rate 6% 26%

Refrigerators Dish washing machines

26% 26%

Product Printer Storage water heater Photocopier Spectacle lens

VAT rate 26% 26% 26% 18.5%

When GST was launched in July 2017, GST tax rate for most electronic appliances such as washing machine, television, and fridge was fixed at 28% rate, which is about 2-3% higher than the previous tax rate. Since 28% GST is reserved for luxury products and services, it won’t be wrong to say that electronic goods are still treated as a luxury in the country. GST Impacts on Consumer Electronics The increased tax rate resulted in an increase in the prices of these electronics products, which is supposed to be borne by the end consumer. This, in turn, resulted in a drop in sales. However, some of the domestic electronics manufacturers have succeeded in keeping the prices in check, mostly by lowering the discounts (being provided to the consumer) and margins (of manufacturers and retailers). The GST has definitely created a stir in the market, but it won’t be totally appropriate to say that it has ruined the market because it hasn’t. GST is actually good for the industry. The manufactures and retailers have the option of claiming input credit on their purchases, so they keep getting good margins on their goods. The consumer, however, may experience a slight rise in the cost of household products. Manufacturers in Mumbai are the one getting the most benefit after GST implementation. Earlier, they had to pay an additional octroi duty at the rate of 5% on electronics goods, in addition to regular taxes (25-26%). All of that has now been replaced by a single GST tax of 28% rate. As per the latest meeting of the GST council, held on Saturday, November 11, 2017, it has been recommended that the tax rate on some consumer goods might be reduced

to 18% from existing 28%. The new rates are not yet been confirmed officially. We will update the same here once officially announced by the council. In 28th GST council gave its approval to slash tax rates on over 100 items that were in the highest 28 % tax bracket under the goods and service tax. GST rates on articles including consumer durables like smaller television sets, refrigerators, washing machine, lithium-ion batteries and more were brought down from 28 %.  Refrigerators, freezer and freezing equipment  Washing machines  Vacuum cleaner  Domestic electrical appliance such as food grinders and mixers and shaver, hair clippers etc  Television (measuring up to 68 cm) Table 2 GST rate as on 2018-19 Product GST rate Cell phone 12% air conditioners 18% Refrigerators Dishwashing machines

18% 18%

Product Printer Storage water heater Photocopier Spectacle lens

GST rate 18% 18% 18% 12%

Working example of the tax collection system in VAT and GST has been shown below in the figure 1.

,

From the above calculation, GST consuming less tax compare to pre GST system. In both calculations value addition is same but tax taxes paid is less in GST. VAT is applicable only on the sale of goods. VAT laws and tax rates were different in each state and each of them kept the whole share of collected tax with themselves. however , under the GST regime, both SGST and CGST is collected from the supply of goods and services and later bifurcated by the central and state governments.

Conclusion Consumer electronics sector has become one of India’s largest sectors both in terms of revenue and employment. The industry is growing at a tremendous pace owing to its strengthening coverage. From the above findings GST consuming less tax comparing existing tax . As per the latest (23rd)meeting of the GST council, it has been recommended that the tax rate on some consumer goods was reduced to 18% from existing 28%. So this system helps to consumers.

Reference Mala.K.S ( 2018 )-Implications Of Gst On Health Care Sector– An Analytical Study With Reference To Hospitals At Malur (Kolar District) A MULTIDISCIPLINARY JOURNAL Lakshmi S (2018)- Gst- Impact On Impulsive Buying Behaviour Of Consumer With Respect To Apparels And Footwear Asma Kulsum- (2018)A Study On The Impact Of The Goods And Services Tax On Micro Service Enterprises In Bangalore Anand Nayyar Inderpal Singh- A Comprehensive Analysis Of Goods And Services Tax(Gst) In India. Indian Journal Of Finance https://www.researchgate.net/publication/323007997 Nidhi Parashar, Deepa Joshi And P. K. Chopra(2017) -Exploring The Influence Of Transition To GST On Consumer Behaviour Related To FMCG In India .Journal Of Management And Development Studies

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