Goods And Services Tax Research Articles

Does the Indian Financial Market Nosedive because of the COVID-19 Outbreak, in Comparison to after Demonetisation and the GST?

ABSTRACT We investigate the impact of COVID-19 on the Indian financial market and compare it with the outcomes of two recent structural changes of the Indian economy: demonetization and implementation of the Goods and Services Tax (GST). Using daily stock return, net foreign institutional investment, and exchange rate data from January 3, 2003 to April 20, 2020, we find negative stock returns for all the indices during the COVID-19 outbreak, unlike during the post-demonetization and GST phases. Markov switching vector autoregression shows the impact of COVID-19 on stock returns is severe in comparison to that of demonetization and the GST.

IMPACT OF DEMONETISATION, GOODS AND SERVICE TAX & COVID-19 ON INDIAN ECONOMY

The Indian economy is hit by Tragic-Trio in in the last four years. The unexpected and largely unwelcomed trio is Demonetization, Goods and Service Tax (GST) and COVID-19. While demonetization and GST were the part of the government’s policy decisions to strengthen the economy, the COVID-19 is the global pandemic which has shaken all the world economies. The Indian economy has been affected to a great extent by all three of them. The growth of the economy has been on a halt since the demonetization in October 2016 and the economy continues to remain in economic slowdown. The country has suffered a lot due to this tragic trio but it would be unfair to say that they haven’t done any good for the country. Many consequences of the trio have been on the positive side and would be beneficial for the economy and social wellbeing of the people in the long run. This paper is written in an attempt to study the consequences of the trio, both in positive as well as in negative aspect. The researchers have tried to establish the fact that all three have been instrumental in affecting the Gross Domestic Product (GDP) and employment growth of the country.

A Tax Policy Legacy: Tim Edgar's Contributions to Tax Scholarship and Tax Legislation

Tim Edgar's passing in December 2016 dealt a severe blow to tax scholarship in Canada and globally, not to mention being a sad loss for this journal, to which he was a contributor for over three decades. Tim's books, journal articles, and book chapters spanned a wide spectrum of tax policy issues and have played a central role in helping policy makers, academics, and students understand some of the most conceptually and technically difficult areas of tax law. Tim's book on the taxation of financial arrangements, published by the Canadian Tax Foundation, is viewed by policy makers worldwide as the definitive authority on the subject, setting out a principled path to carving out the debt component of financial instruments and subjecting it to neutral accrual taxation. In a closely related area, his detailed analysis of the difficulties confronting policy makers who seek a neutral application of the goods and services tax (GST) to financial supplies is considered to be foundational work in the field, and his proposal to remove the tax from business-to-business supplies has been adopted directly in New Zealand and via an indirect mechanism in Singapore. Tim's work on the general anti-avoidance rule is cited time and again as a key treatment of the topic, while his proposal to extend thin capitalization rules to outbound investment has been adopted in Australia. Tim's comprehensive analysis of the Canadian pseudo-imputation system opens the door to a much-needed reconsideration of the system. The more challenging the subject matter, the deeper Tim investigated and methodically dissected the topic to arrive at reasoned recommendations for reform. Tim's work will continue to be read, cited, and applied in practice for many years.

Coronavirus disease and local government

Coronavirus disease and local government

Do governance quality and ICT infrastructure influence the tax revenue mobilisation? An empirical analysis for India

It attempts to empirically understand the role of Information and Communication Technology infrastructure and governance quality in direct and indirect tax revenues mobilisation for the combined governments of Centre, States and Union Territories of India during the post-liberalisation period of 1990–1991 to 2017–2018. Considering that the recently implemented Goods and Services Tax (GST) is not entirely different from the previous value added tax (VAT) regime in terms of revenue collections at each stages on the value added of manufacturing and sales but an extension of VAT (which existed since 2005 by most of the states and Union Territories until 1st July 2017) by bringing the services into tax net, it tries to assess on the role of institutions/governance and use of modern ICT infrastructures in realisation of greater tax revenues for the combined government. The findings surprisingly reveal that ICT infrastructures and governance quality have no significant positive effect on the overall tax revenue collections. This contrary outcome could be possible when there is greater scope for tax payers to easily escape out of the tax net by carrying out the transactions outside the ICT system or without relying on to the use of ICT infrastructure and leaving no trace behind.

Goods and services tax shock on small and medium enterprises working capital in India

Goods and Services Tax (GST) reform introduced by the Indian government in 2017 was considered as the utmost radical and comprehensive indirect tax regime undertaken since independence. The new tax reform had creataed a shock wave among the Indian business houses, especially to the Small and Medium Enterprises short term working capital requirements. This research paper analyzes the working capital constraints created by the implementation of GST on the SMEs. Three research models have been developed by including the major working capital components namely average collection period, average payables period, inventory conversion period and a dummy variable to capture the effect of GST. The mathematical model presented in the paper has been tested using Random effects GLS method. The results of the study reveals that during the sample period the SMEs production capacity had deteriorated, collections and payments were delayed, profit margins were diminished and the credit requirements had escalated. This research outcome will provide an insight to the policymakers and financial institutions in India to implement and revamp strategies that will enable the SMEs to revive from this challenging environment successfully.

Sentiment classification with GST tweet data on LSTM based on polarity-popularity model

One of the biggest issues of Indian economy in 2017 was the implementation of Goods and Services Tax (GST), and the social networks witnessed a lot of opinion contrasts and conflicts regarding this new taxation system. Inspired by such a large-scale tax reformation, we developed an experimental approach to analyze the reactions of public sentiment on Twitter based on popular words either directly or indirectly related to GST. We collected a number of almost 200 k tweets solely about GST from June 2017 to December 2017 in two phases. In order to assure the relevance of our crawled tweets with respect to GST, we prepared a topic-sentiment relevance model. Furthermore, we employed several state-of-the-art lexicons for identifying sentiment words and assigned polarity ratings to each of the tweets. On the other hand, in order to extract the relevant words that are linked with GST implicitly, we propose a new polarity-popularity framework and such popular words were also rated with sentiments. Next, we trained an LSTM model using both types of rated words for predicting sentiment on GST tweets and obtained an overall accuracy of 84.51%. It was observed that the performance of the system has been started improving while incorporating the knowledge of indirectly related GST words during training.

The National Policy of biofuels of India – A perspective

The National Policy on Biofuels (NPB) 2018 was adopted on May 16, 2018 in India to augment the generation of biofuels and to build a sustainable biofuel ecosystem. The Biodiesel Blending programme (BBP) got affected due to lack of sufficient feedstock coupled with an 18% Goods and Services Tax (GST) effective from July 1, 2017. The high GST resulted in the price of biodiesel being higher than that of conventional diesel thereby hindering the blending mandates. Most states in India do not allow free interstate movement of molasses resulting in artificially depressed prices besides derailing the Ethanol Blending Petrol (EBP) programme. NPB 2018 prohibits the import and export of biofuels to other nations resulting in reduced economic efficiency. The use of foodgrains as feedstock for biofuel production hampers food availability to the needy people and adversely affects food prices. The higher funding and incentives proposed to 2G ethanol production in NPB 2018 needs to be extended to 1G ethanol also as majority of the ethanol production happens through 1G. The paper touches upon the key biofuel policies of various nations, features of NPB 2018 and its critical analysis, BBP and EBP programmes and their current challenges and suggests future reforms.

Mainstream and nonmainstream media in Malaysia: Does lack of credibility lead to displacement?

The study examined how Malaysians perceive the credibility of mainstream versus alternative media in reporting on the public interest issue of the implementation of a goods and service tax (GST). Consistent with past research, our study established a positive link between credibility and media use. Further analysis shows an increase in the use of alternative media when the credibility of mainstream media decreases, suggesting support for a significant displacement effect.

Lessons from New Zealand for EU VAT Grouping and Tax Avoidance Issues

This article analyses both the goods and services tax (GST) grouping scheme and GST anti-avoidance measures in New Zealand in order to determine whether the NZ GST system can provide legal alternatives or solutions which could eliminate or minimize problems found specifically within the area of value-added tax (VAT) grouping and tax avoidance in the EU. NZ GST grouping is noteworthy, as it appears to have been infected only to an insignificant level by the risk of tax avoidance. Thus, the article reflects on why NZ GST grouping seems to function so well, and what lessons can be learned from it in respect of EU VAT grouping and the prevention of tax avoidance. VAT, GST, groups, grouping, group of companies, avoidance, abuse, EU, New Zealand

Is VAT Also a Corporate Tax? Untangling Tax Burdens and Benefits for Companies

The Great Financial Crisis has increased concerns about whether corporations are paying a ‘fair’ amount of tax in different countries. This begs the question of what a ‘fair’ amount of tax is. The question is complicated by the continuing lack of clarity about the economic incidence of corporate income tax. Recently, it has been argued that the location of the sales revenue (turnover) of a corporation is relevant in determining the fair allocation. Of course, in many countries there is already a tax based on sales, value-added tax (VAT), also called goods and services tax (GST). This paper explores an illustration, arising from a series of cases before the European Court of Justice, of how VAT can impose a burden on corporations. The illustration raises issues of principle for VAT, but also offers lessons about how we tax corporations, particularly given proposals such as for digital sales taxes in the EU and the idea of a destination-based cash-flow tax included in legislative proposals in the US in 2016. This article explores the puzzles raised by the illustration and shows how it can throw light not only on the nature of VAT but also on the incidence of corporate income tax.

Impact Assessment of Goods and Services Tax (GST) on Shopkeepers

India has got a well-structured and simplified taxation system, where authoritative segregation has been done among the Central government, state governments and local bodies. But with the implementation of GST, the harmonization of tax rules, regulations, rates, processes and procedures across the states was expected to improve the ease of doing business in India. The removal of cascading of taxes and transaction costs associated with inter-state transactions was also expected to encourage investment and therefore, the economic growth of country. With the objective of the impact assessment of Goods and Services Tax on shopkeepers the present study was carried out. The study was conducted in Hisar city of Haryana state where the findings highlighted that shopkeepers had highly increased tax burden and legal compliances, followed by increase in workers hiring capacity and no impact on ease of doing business, no loss and transparency in business. Further, results also showed that there was decrease in profit as they have to pay taxes more than 6 times in a year. With the implementation of GST, shopkeepers were having constraint in filing GST as now is getting a complicated process and due to changing GST rates they were facing high competition amongst the market.

GST in Play Alters the Taxation Rules for the Indian Business Game

With the dream to be positioned as the most preferred global destination for investment, Indian Government made one of the most significant reforms in the country’s history in the midnight of June 30, 2017, through the implementation of the new indirect tax regime GST (Goods and Service Tax) from July 1, 2017, after a thirteen-year journey, overcoming many administrative and political hurdles. GST started with a slogan of ‘One Nation, One Market, One Tax’. GST promise to change the manner in which business is carried out and bring a predictable tax regime which is at par with other developed economies. GST is not simply a tax change, but a business change that will affect most functional areas. Each industry needs to understand the impact and opportunities offered by this crucial indirect tax reform. This paper includes the basic changes involved in the taxation structure fundamentals in business.

The Discourse of Nation Building in the Goods and Services Tax (GST) Malaysia Info Web Portal News Articles

This paper explores the choice of language employed by the Malaysian mainstream media to construct the former Barisan Nasional government’s role in nation building in transforming Malaysia from a developing country to a fully developed country by the year 2020 as envisioned by Vision 2020. In particular, this paper focuses on fourteen curated news articles on the GST Malaysia Info web portal set up by the former government to educate the public on the benefits of the Goods and Services Tax (GST) to the country and the people by analysing lexical words with experiential values. The data collection, categorisation and analysis entail the use of simple corpus linguistic tools and close reading of the data based on the researchers’ interpretative resources or “member’s resources” (Fairclough, 2001). The analysis of this study utilising a qualitative approach shows that the people are not only persuaded to ‘buy’ the idea of the new GST tax regime but also to buy into the ideology and discourse of nation building from the introduction of a more efficient way of tax collection. It uncovers how the manipulation of an educational campaign on the GST into a political discourse of nation building produces a positive portrayal of the government with an efficient economic development plan. Drawing on Fairclough’s (1989, 2001, 2015) three-dimensional Critical Discourse Analysis framework with a focus on different values of formal linguistic features , this study offers insights into the interplay between language, politics and nation building. Keywords: Goods and Services Tax (GST); mainstream media; Critical Discourse Analysis; nation building; experiential value of words

Impact of GST on Textile Shops in Ernakulam District.

Goods and services tax (GST) is an indirect tax charged on the supply of various goods and services. It principle of destination based taxation consumption. This study looks into the effect of GST on textile shops in Ernakulam District, Kerala, India. In India, this tax system plays a significant role not in the ground of textile sectors but also in the field of many other sectors that deals with money matters. The study is done by way of data collection. 50 questionnaires were issued for the collection of data in different textile shops. The conclusion of the study is that there is a makeover in sales volume with respect to GST and a great impact in the cost of textile products after thearrival of GST. At the same time there is a slight change in the profitability of textile shops.

Sectoral Responses, Macroeconomic Impact and Household Welfare: GST Policy for Malaysia Economy

Goods and services tax (GST) has been a controversial topic in Malaysia when it was first implemented. This study examines the impact of the GST on the Malaysian economy from three major perspectives. First, it investigates the consequent changes in sectoral responses, including output and prices for 15 main sectors. Second, the study presents the results of GST impact on seven macroeconomic variables, namely, consumption, investment, government revenue, government expenditure, export, import, and gross domestic product. Third, the results of household welfare are discussed. A computable general equilibrium model is utilized to simulate GST impact on the Malaysian economy, and a simple comparative static model is performed. The results prove that the higher the GST rate, the higher is the impact on each sector. The sectors most affected by GST are communication and ICT, and the electricity and gas sectors. By contrast, agriculture, forestry and logging, and the petroleum and natural gas sectors are the least affected. Consumption and investment receive the largest negative effect, whereas government revenue and expenditure show the largest positive effect. The study likewise finds that by lowering GST rate, the welfare loss was minimized and the higher-income groups were affected more than the lower-income groups.

Goods and services tax, cascading, and revenue performance: Analyzing Indian commodity taxation market

Indian economy has finally introduced an improvised value‐added tax commonly known as goods and services tax (GST) with an explicit focus to target cascading. Cascading is by far the most serious issue of a tax structure as it leads to many other challenges like opaqueness, complexity, evasion besides deadweight losses. GST is a fiscal policy reform aimed at integrating and harmonizing the Indian tax structure and hence reduce the incidence of cascading. This study is an attempt to empirically analyze the possible impacts of GST on the cascading and hence revenue collection in the Indian economy. The study has employed a simple but representative simultaneous equation model representing the commodity taxation using time series data from 1990 to 2017. This study finds that reduced cascading under GST will enhance the revenue efficiency of the Indian commodity tax structure. The findings are corroborated by the post‐GST revenue performance of Indian states and the central government.

Trends in affordability of tobacco products before and after the transition to GST in India

ObjectiveTo estimate the trends in affordability of bidis, cigarettes and smokeless tobacco (SLT) in India and examine the impact of transition from the earlier indirect taxation system to the new...

Carbon Price Impacts on the Chinese Tourism Industry

This study simulates the short-run effects of an Emissions Trading Scheme (ETS) and two auxiliary policies on the Chinese tourism industry. The results show that the ETS alone will increases energy prices and have significant adverse impacts on China’s economy. The adverse impacts are relatively stronger on the energy sectors than they are on tourism. Two auxiliary policies—a tourism subsidy and a reduced goods and services tax (GST)—are examined as policy options to soften the negative impacts of the ETS. Results show that the tourism-subsidy policy is more effective than the GST reduction policy.

Estimation and Projection of Petroleum Demand and Tax Collection from Petroleum Sector in India

Taxes from the petroleum sector constitute a significant share in indirect tax collection of the union as well as state governments in India. Understanding prospective revenue from petroleum taxes could help governments in better public finance management. The importance of revenue from the petroleum sector has increased after the introduction of Goods and Services Tax (GST) in India, as fiscal autonomy of the governments (both federal and provincial) to augment tax collection through unilateral policy changes has been curtailed with harmonisation of the tax system. Revenue mobilisation from petroleum taxes is dependent on consumption (sales) of petroleum products, and, therefore, understanding consumption of petroleum products is important to understand prospective revenue from the petroleum sector. The objective of this article is to estimate the petroleum consumption function and revenue (tax collection) function. Based on the estimated functions, we project the petroleum demand and tax collection for the period from 2017–18 to 2024–25. JEL Classification: H25, Q41, Q47