Restaurant Business ISSN:0097-8043 Vol-118-Issue-5-May-2019 1 Aftermath Effect Of GST On Consumer Purchasing Power S. Thowseaf 1* , Dr. M. Ayisha Millath 2 , Dr. K. Malik Ali 3 1* Research Scholar, Alagappa Institute of Management, Alagappa University. Email – thowseaf786gmail.com 2 Assistant Professor, Alagappa Institute of Management, Alagappa University 3 Assistant Professor, Department of Commerce, S.S.A. College. Abstract Tax is an important source of income for the country. It is through tax; country strengthens its defense system, infrastructure, and government. Hence, tax system plays a predominant role in developing country’s economy. The complication in taxation system and liberty for taxpayers is key factors generating loopholes for corruption. GST is superior taxation system over VAT but, if neither properly implemented nor scrutinized according to the economy, it is people residing get affected. GST taxation system is capable of increasing legal transaction, reducing corruption and complexity that exists in current taxation. India is 166th country to adopt GST and GST taxation slab in India is 0%, 5%, 12%, 18% and 28%. Although average Tax levied is 14.8750% in India, it is 28% tax that is levied for most of the commodities, which are directly or indirectly used in everyday life of common individuals. Despite, GST being favorable to distributor in-terms of profit and government to attain tax by increasing legal transaction through invoice. It is noted that for the same percentage of taxation, the amount does not vary for VAT and GST. The tax slab decreased for 71 commodities and no change in 21 commodities; there has been an increase in tax slab for 60 commodities. 26% taxation was levied for most commodities considered was currently levied by 28% taxation which is greater than before. It was found that average tax percentage reduced was calculated to be 6.07143. The average tax percentage increase was calculated to be 4.7833 percentage for the considered commodities. The overall tax average tax percentage is estimated to be 14.8750% which does not have a significant difference concerning tax levied before GST, which was calculated to be 15.7829% for considered commodities. Therefore, the consumer purchasing power and overall living standard of the individual in India will remain almost same. Keywords: GST, GST-India, Consumer purchasing power. 1. INTRODUCTION Tax is monetary charges imposed by the administrative body of the particular homeland on the tenant, trader and traveler for the infrastructural development, defense strapping and functioning of the governmental bodies in the country. According to evidential report, British initiated taxation during the 1760s in the United States, which lead to American Revolution (wikipedia, 2017). However, taxation is not a new phenomenon, ancient books such as Arthashastra from 4th B.C. illustrates taxation system followed by Chandragupta kingdom (Shamasastry, 1915). The taxation system and structure concerning various countries can be broadly classified into – Business tax, personal tax, income tax, consumption tax, revenue tax, sin tax, regressive tax, proportional tax and progressive tax (Beggs, April,01,2017). On close sight, Indian tax system is much more complicated than any other taxation system. Although the Indian tax structure can be categorized into Direct tax and Indirect tax, Direct tax includes – Income Tax, Capital Gains Tax, Security Transaction Tax, Perquisite Tax and Corporate Tax. While indirect tax includes – Sales Tax, Service Tax, Value Added Tax, Custom Duty & Octroi, Excise Duty, Professional Tax, Property Tax, Entertainment Tax, Education Cess, Gift Tax, Toll Tax & Road Tax, Swachh Bharat Cess, Infrastructure Cess, Entry Tax and even so on (bankbazaar, 2017). Also, the tax levied varies from one state to another within the country, it not only becomes complex for government to manage taxation system but also mounting corruption and loopholes for taxpayers. It is to eradicate before mentioned problem one indirect tax, i.e., G.S.T. was implemented across the country. GST is an indirect tax. It is country - France that first implemented G.S.T. during 1954. The GST commenced to tackle illegal transactions and to have centralized control over tax and tariffs. The success of GST made 165 countries adopt the same taxation system. India is the 166th nation to adopt GST. Despite effort made by Shri Atal Bihari Vajpayee during 2000 to implement GST, it took 17 years for the Indian government to implement GST, Page | 122-131 Copyright ⓒ 2019Authors