The bank has come under serious liquidity crisis, majorly because of two things happening simultaneously. Firstly, several borrowers of the bank defaulted their payment, and secondly, the public started taking out money from their accounts.

The bank has come under serious liquidity crisis, majorly because of two things happening simultaneously. Firstly, several borrowers of the bank defaulted their payment, and secondly, the public started taking out money from their accounts. Since March 2019, more than Rs. 1 lakh crore has been withdrawn by its depositors which includes Rs. 77,000 crores of Fixed Deposits. On the other hand, loans worth Rs. 17,134 crores have gone bad i.e. the borrowers have defaulted on their payments. Thus, the bank is not in a comfortable position to pay back depositors’ money and thus feeling the heat. However, it is not yet a big crisis but a proactive step to control one. Is the bank running into losses? No, it’s not! But that the depositor’s money is blocked due to loans given by the bank and some of them becoming bad. As per it’s 2018-19 annual report, Yes Bank had public deposits of around Rs. 2.26 lakh crores while the bank has given out loans worth Rs. 2.36 lakh crores. Also read | Potential investor will have to pick up 49% stake in Yes Bank; SBI shown willingness: RBI Currently, the deposits have come down further to around Rs. 2.09 lakh crores, thus making it less than the cumulative loan granted by the bank. This means that, if all the money is recovered, it will have more than what it needs to pay back. Moreover, the bank’s net profit grew steadily from Rs. 1618 crores in 2014 to Rs. 4225 crores in 2018 but plunged to Rs. 1720 in 2019. It is expected to have gone down further but is still positive. How did this happen? Problems which lead to this crisis: Bad Loans/NPAs: The bank has been understating its non-performing assets (NPAs) and RBI has questioned it more than once in the past for the same. In FY’19 alone, it reported a divergence of Rs 3,277 crore in bad loans and Rs 978 crore in NPA provisions. Currently out of the Rs. 2.25 lakh crores loan, more than Rs. 17,000 crores have gone bad i.e. their recovery is very difficult. Poor Management: The corporate governance of the bank and management practices have deteriorated in the past. Several directors have resigned in the past, some blaming its MD & CEO, Senior Group President Governance & Controls and others. On top of it, people started withdrawing money from the bank and it also failed to raise additional money to save it from the crisis. What is the bank’s spread? It is India’s fourth-largest private sector bank in the country with a pan-India presence across all the states and Union Territories in India. Yes Bank has a footprint of 1122 branches and more than 1300 ATMs. It started in functioning in 2004 as a small bank and slowly grew into a full-fledged bank. Its customer base is not very clear but could run around several lakhs or even a few crores. What now? For a depositor of the bank, there is no need to worry as the bank still has more assets than liabilities. Moreover, even if the bank goes bust, as per the amended scheme, your deposits up to Rs. 5,00,000 is insured and the government will pay your money back if the bank is incapable to do so. Also, the State Bank of India is expected to invest Rs 2,450 Crore and take over the management of the bank. This will help Yes Bank recover from the trust deficit which is a major reason for the crisis. Having said so, those who need any amount in excess of Rs. 50,000 from their Yes Bank account could face the constraint since till 3rd April 2020, it would not be possible. However, once the situation is accessed, RBI could issue some relaxation.

Explainer: What is the Yes Bank crisis? 

Star power: How celebrities earn a bomb through advertisements and endorsements

Karnataka election is around the corner and after two days from now, 49.7 million voters of the state will seal the fate of 314 candidates in ballot boxes. But who will be the choice of the people: Siddaramaiah or Yeddyurappa? Congress or BJP? Well, it's a challenging task to judge.

Before arriving at any conclusion, let's look at what works for these parties and what doesn't:

Caste and regional dynamics: Karnataka is majorly divided into five regions - Bengaluru, Coastal Karnataka, Bombay Karnataka, Hyderabad Karnataka, Old Mysuru and Central Karnataka. Each of the regions is dominated by different castes and communities. In 2013, BJP was majorly supported by the middle-class population of Bengaluru where it won 12 out of 28 seats and some Lingayats in Bombay Karnataka where it managed to get hold on 13 seats out of 50. However, maximum number of seats - 31 - in Bombay Karnataka went to Congress. This time, with Yeddyurappa's comeback, who comes from Lingayat community, their support for the party is expected to be much more.

In 2013, BJP performed poorly in Old Mysuru region where it only won four out of 61 seats whereas Congress won 27. Vokkaligas, another major community in Karnataka, is dominant in this region. The votes of this community were divided between BJP, Congress and Janta Dal Secular with JD(S) having a majority. The BJP has tried to play it safe this time by praising JD(S) chief H D Deve Gowda. But will it resonate positively with the Gowdas, only time will tell.

Also, Hyderabad Karnataka region was an area of concern with only five out of 50 seats. This region is dominated by SC/STs and Muslim population. Compared to 2013, BJP is expected to perform better in this area. Also, in the Central Karnataka region, which is dominated by Hindu population, BJP did badly in 2013 by winning just three out of 26 seats but is seen stronger this time as per various reports.

2014 Lok Sabha election: In 2014, BJP won 17 out of 28 Lok Sabha seats in the state which means 61 per cent seats. Going by this logic, BJP might win more than 130 seats in the state assembly in this election. However, the vote share in 2014 was 43.37 per cent, which might not be possible to get this time. But the 2014 election hints towards another important thing - the caste factor. As per a post-poll survey done by Lokniti-CSDS, 62% of upper castes and 63% of Lingayats supported BJP, on the other hand, Muslim, SC/ST and OBC voters supported Congress but not entirely. BJP managed to get 25% of the Muslim votes which forms 12.5% of the state's population. Also, 35% of the SC/ST voters exercised their franchise in favour of BJP which forms around one-fourth population of the state.

Congress, meanwhile, won nine Lok Sabha seats from Karnataka in 2014, 32 per cent of the 28 Lok Sabha seats. The percentage will translate to 72 seats in this assembly election. Going by caste dynamics, the Lokniti-CSDS post-poll survey of 2014 election stated that 68% of Muslims, 58% of STs, 43% of SCs and 44% of other OBCs voted in favour of Congress.

Vote share and polling percentage: The vote share analysis suggests that the Congress has a fixed voter base in the state and there has not been much difference in the 2008 Assembly election results, when Congress won just 80 seats, and 2013 when it won 110 seats. The 2008 vote share was 34.76% as against 2013 when it got 36.59% votes. Also, the 2013 election shows that when people did not vote for BJP, their votes was not transferred to Congress either. Thus, there is a limited scope for Congress to get benefit from their non-traditional voters but BJP has the scope of consolidating the remaining 65% voters which are very unlikely to vote for Congress.

The Narendra Modi impact: The BJP has projected Prime Minister Narendra Modi in a big way. He has addressed a lot of rallies during his campaigning in Karnataka and has also been using the NaMo app to address the voters directly. While the party is confident that 'Modi Magic' will work for it, it is always better to exercise little bit of caution.

Rahul Gandhi and his team: Congress president Rahul Gandhi, though has expressed readiness to become the Prime Minister if given a chance, he has not yet made a strong impact through his campaigning or statements. Moreover, other leaders of his party are risking too much in the poll season with statements like 'Shri Jinnah' and 'Qaid-i-Azam' in honour of the so-called culprit of India-Pakistan partition. These comments do not work well with the people and can cost some seats for Congress in the coming elections.

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

A look at past performances of Congress and BJP and what could work in their favour in this election.

Karnataka election is around the corner and after two days from now, 49.7 million voters of the state will seal the fate of 314 candidates in ballot boxes. But who will be the choice of the people: Siddaramaiah or Yeddyurappa? Congress or BJP? Well, it's a challenging task to judge. Before arriving at any conclusion, let's look at what works for these parties and what doesn't: Caste and regional dynamics: Karnataka is majorly divided into five regions - Bengaluru, Coastal Karnataka, Bombay Karnataka, Hyderabad Karnataka, Old Mysuru and Central Karnataka. Each of the regions is dominated by different castes and communities. In 2013, BJP was majorly supported by the middle-class population of Bengaluru where it won 12 out of 28 seats and some Lingayats in Bombay Karnataka where it managed to get hold on 13 seats out of 50. However, maximum number of seats - 31 - in Bombay Karnataka went to Congress. This time, with Yeddyurappa's comeback, who comes from Lingayat community, their support for the party is expected to be much more. In 2013, BJP performed poorly in Old Mysuru region where it only won four out of 61 seats whereas Congress won 27. Vokkaligas, another major community in Karnataka, is dominant in this region. The votes of this community were divided between BJP, Congress and Janta Dal Secular with JD(S) having a majority. The BJP has tried to play it safe this time by praising JD(S) chief H D Deve Gowda. But will it resonate positively with the Gowdas, only time will tell. Also, Hyderabad Karnataka region was an area of concern with only five out of 50 seats. This region is dominated by SC/STs and Muslim population. Compared to 2013, BJP is expected to perform better in this area. Also, in the Central Karnataka region, which is dominated by Hindu population, BJP did badly in 2013 by winning just three out of 26 seats but is seen stronger this time as per various reports. 2014 Lok Sabha election: In 2014, BJP won 17 out of 28 Lok Sabha seats in the state which means 61 per cent seats. Going by this logic, BJP might win more than 130 seats in the state assembly in this election. However, the vote share in 2014 was 43.37 per cent, which might not be possible to get this time. But the 2014 election hints towards another important thing - the caste factor. As per a post-poll survey done by Lokniti-CSDS, 62% of upper castes and 63% of Lingayats supported BJP, on the other hand, Muslim, SC/ST and OBC voters supported Congress but not entirely. BJP managed to get 25% of the Muslim votes which forms 12.5% of the state's population. Also, 35% of the SC/ST voters exercised their franchise in favour of BJP which forms around one-fourth population of the state. Congress, meanwhile, won nine Lok Sabha seats from Karnataka in 2014, 32 per cent of the 28 Lok Sabha seats. The percentage will translate to 72 seats in this assembly election. Going by caste dynamics, the Lokniti-CSDS post-poll survey of 2014 election stated that 68% of Muslims, 58% of STs, 43% of SCs and 44% of other OBCs voted in favour of Congress. Vote share and polling percentage: The vote share analysis suggests that the Congress has a fixed voter base in the state and there has not been much difference in the 2008 Assembly election results, when Congress won just 80 seats, and 2013 when it won 110 seats. The 2008 vote share was 34.76% as against 2013 when it got 36.59% votes. Also, the 2013 election shows that when people did not vote for BJP, their votes was not transferred to Congress either. Thus, there is a limited scope for Congress to get benefit from their non-traditional voters but BJP has the scope of consolidating the remaining 65% voters which are very unlikely to vote for Congress. The Narendra Modi impact: The BJP has projected Prime Minister Narendra Modi in a big way. He has addressed a lot of rallies during his campaigning in Karnataka and has also been using the NaMo app to address the voters directly. While the party is confident that 'Modi Magic' will work for it, it is always better to exercise little bit of caution. Rahul Gandhi and his team: Congress president Rahul Gandhi, though has expressed readiness to become the Prime Minister if given a chance, he has not yet made a strong impact through his campaigning or statements. Moreover, other leaders of his party are risking too much in the poll season with statements like 'Shri Jinnah' and 'Qaid-i-Azam' in honour of the so-called culprit of India-Pakistan partition. These comments do not work well with the people and can cost some seats for Congress in the coming elections. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Opinion: Strengths and weaknesses of BJP and Congress ahead of Karnataka polls

In the MP Sharma case, it was observed by the court that privacy is not a right guaranteed by the Indian Constitution. In the present judgment, the Supreme Court overruled that stance, confirming privacy to be a right guaranteed by the Indian Constitution.

&nbsp;

Article 21 of the Indian Constitution talks about &lsquo;Right to life and Personal Liberty&rsquo;, which is a sub-head of one of the six fundamental rights. The court affirmed that &lsquo;personal liberty&rsquo; is a guarantee against invasion into the sanctity of a person&rsquo;s home or an intrusion into personal security.

&nbsp;

Life and personal liberty are inalienable rights. These are rights which are inseparable from a dignified human existence.

&nbsp;

While life and personal liberty are not creations of the Constitution, these rights are recognised by the Constitution. Thus, privacy is a constitutionally protected right which emerges, primarily, from the guarantee of life and personal liberty in Article 21 of the Constitution.

&nbsp;

The recognistion of the Right to Privacy is not an amendment in Constitution and, thus, the court is not interfering in the role of the Parliament to amend the Constitution.

&nbsp;

Privacy includes at its core the preservation of personal intimacies, the sanctity of family life, marriage, procreation, the home and sexual orientation. Privacy also connotes a right to be left alone.

&nbsp;

The meaning of the Constitution cannot be frozen on the perspectives present when it was adopted. Hence, the interpretation of the Constitution must be resilient and flexible to allow future generations to adapt.

&nbsp;

Although &lsquo;Privacy&rsquo; is not an absolute right, an invasion of privacy must be justified on the basis of a law which stipulates a procedure which is fair, just and reasonable. There should be three aspects present when privacy is invaded- 1) Legality 2) Need 3) Proportionality

&nbsp;

Privacy has both positive and negative content. The negative content restrains the state from committing an intrusion upon the life and personal liberty of a citizen. The positive content imposes an obligation on the state to take all necessary measures to protect the privacy of the individual.

&nbsp;

Informational privacy is a part of the right to privacy. The Union Government thus need to examine and put into place a robust regime for data protection.

&nbsp;

How Right to Privacy is a Fundamental Right:

&nbsp;

There are currently 6 fundamental rights, earlier which used to be 7. Right to Property was removed by the 44th Constitution Amendment Act, 1978

&nbsp;

1) Right to equality (Article 14-18)

&nbsp;

2) Right to freedom (Article 19-22)

&nbsp;

3) Right against exploitation (Article 23-24)

&nbsp;

4) Right to freedom of religion (Articles 25-28)

&nbsp;

5) Cultural &amp; educational rights (Articles 29-30)

&nbsp;

6) Right to constitutional remedies (Article 32).

&nbsp;

In each of the fundamental rights, there is more than one article of the Constitution involved which when combined together, guarantees a specific right to the citizens of India.

&nbsp;

The Supreme Court identifies the Right to Privacy as a part of article 21 (&lsquo;Protection of Life and Personal Liberty&rsquo;) which says: &lsquo;No person shall be deprived of his life or personal liberty except according to procedure established by law.&rsquo;

&nbsp;

Thus, recognising &lsquo;Right to Privacy&rsquo; as an integral aspect of personal liberty, the Court has taken the decision of providing a status of Fundamental Right.

&nbsp;

Major Impact of the Decision:

&nbsp;

1) Government&rsquo;s decision on the biometric data-enabled Aadhaar ID for citizens.

&nbsp;

2) Article 377 of IPC which deals with Homosexuality as the court&rsquo;s verdict says &lsquo;Privacy includes at its core&hellip;. the preservation sexual orientation&rsquo;

&nbsp;

3) Section 66A of the IT Act which states that the State can take action against an individual for sharing his thoughts on a social platform. Earlier this particular stand was overruled in 2015 by the Supreme Court.

&nbsp;

4) DNA Profiling Bill, 2017: Bodily right such as the DNA of an individual can be profiled without his consent.

In a historic judgment, the Supreme Court of India confirmed that Right to Privacy is integral to Right to Personal Liberty.

In the MP Sharma case, it was observed by the court that privacy is not a right guaranteed by the Indian Constitution. In the present judgment, the Supreme Court overruled that stance, confirming privacy to be a right guaranteed by the Indian Constitution. Article 21 of the Indian Constitution talks about ‘Right to life and Personal Liberty’, which is a sub-head of one of the six fundamental rights. The court affirmed that ‘personal liberty’ is a guarantee against invasion into the sanctity of a person’s home or an intrusion into personal security. Life and personal liberty are inalienable rights. These are rights which are inseparable from a dignified human existence. While life and personal liberty are not creations of the Constitution, these rights are recognised by the Constitution. Thus, privacy is a constitutionally protected right which emerges, primarily, from the guarantee of life and personal liberty in Article 21 of the Constitution. The recognistion of the Right to Privacy is not an amendment in Constitution and, thus, the court is not interfering in the role of the Parliament to amend the Constitution. Privacy includes at its core the preservation of personal intimacies, the sanctity of family life, marriage, procreation, the home and sexual orientation. Privacy also connotes a right to be left alone. The meaning of the Constitution cannot be frozen on the perspectives present when it was adopted. Hence, the interpretation of the Constitution must be resilient and flexible to allow future generations to adapt. Although ‘Privacy’ is not an absolute right, an invasion of privacy must be justified on the basis of a law which stipulates a procedure which is fair, just and reasonable. There should be three aspects present when privacy is invaded- 1) Legality 2) Need 3) Proportionality Privacy has both positive and negative content. The negative content restrains the state from committing an intrusion upon the life and personal liberty of a citizen. The positive content imposes an obligation on the state to take all necessary measures to protect the privacy of the individual. Informational privacy is a part of the right to privacy. The Union Government thus need to examine and put into place a robust regime for data protection. How Right to Privacy is a Fundamental Right: There are currently 6 fundamental rights, earlier which used to be 7. Right to Property was removed by the 44th Constitution Amendment Act, 1978 1) Right to equality (Article 14-18) 2) Right to freedom (Article 19-22) 3) Right against exploitation (Article 23-24) 4) Right to freedom of religion (Articles 25-28) 5) Cultural & educational rights (Articles 29-30) 6) Right to constitutional remedies (Article 32). In each of the fundamental rights, there is more than one article of the Constitution involved which when combined together, guarantees a specific right to the citizens of India. The Supreme Court identifies the Right to Privacy as a part of article 21 (‘Protection of Life and Personal Liberty’) which says: ‘No person shall be deprived of his life or personal liberty except according to procedure established by law.’ Thus, recognising ‘Right to Privacy’ as an integral aspect of personal liberty, the Court has taken the decision of providing a status of Fundamental Right. Major Impact of the Decision: 1) Government’s decision on the biometric data-enabled Aadhaar ID for citizens. 2) Article 377 of IPC which deals with Homosexuality as the court’s verdict says ‘Privacy includes at its core…. the preservation sexual orientation’ 3) Section 66A of the IT Act which states that the State can take action against an individual for sharing his thoughts on a social platform. Earlier this particular stand was overruled in 2015 by the Supreme Court. 4) DNA Profiling Bill, 2017: Bodily right such as the DNA of an individual can be profiled without his consent.

Why has the Supreme Court ruled Right to Privacy as a fundamental right of Indians?

On 8th November 2016, when the Prime Minister of India Narendra Modi announced the demonetisation of Rs. 500 and Rs. 1000 currency notes, the whole country was put in a state of shock. The move which caused great inconvenience to more than a billion citizens of the country was, however, hailed as a crusade against the black economy. The supporters of demonetisation argued that it would significantly impact the amount of fake currency in circulation within India. But if it actually stopped the circulation of counterfeit currency remains a question.

According to the recent figures, which the government presented in the Lok Sabha, a counterfeit currency of more than INR 93 million was seized in the period following demonetisation over the period between 1st January 2017 to 30th June 2017. In the period of 9 months before demonetisation, from 1st January 2016 to 30th September 2016, the counterfeit currency of around similar value was seized.

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Fake money seized before and after demonetisation (WION)
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Which fake currency is being seized the most?

Fake notes of all denominations were seized post-demonetisation, including Rs. 2000 notes. Around 11,000 fake notes of Rs. 2000 were seized in the first six months of 2017, amounting to more than Rs. 22 million. It is surprising that so many thousands of 2000 bills got seized, particularly because it was stated that the new currency is so meticulously printed that it could not be faked. Apart from the 500 notes, around 42,000 counterfeit currency of Rs. 500 were taken into custody. On account of all these seizures, 145 people were accused.

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Fake notes post demonetisation (WION)
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Which are the top States of Seizure?

In the post-demonetisation phase, 5 states in India have been the prime source of all these seizures. Of the total value of counterfeit currency seized from all over India, more than 96 per cent came from these states. Moreover, Delhi has been the hub of the seizures in the country where counterfeit notes of more than Rs 62 million were taken into custody in the first 6 months of 2017. Gujarat stood second on the list with seizures worth Rs. 15.61 million in 2017.

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States with maximum amount seized (WION)
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Counterfeit currency which managed to enter Banking Channels:

The most alarming fact is, where the value of counterfeit currency seized is so large, fake notes of much higher value are being circulated through the banking channels. As per data provided by Reserve Bank of India, in the first six months of 2016, Rs 150 million of fake currency went through the banking system of the country. The circulation has been on a rise since 2013, and there was an increase of 16 per cent in 2015 as compared to 2013. Though the data for the post-demonetisation period was unavailable, the seizure data is enough to indicate that there would have been no significant fall in circulation of counterfeit currency in the banking channels. Thus, the concerned government agencies need to put in an extra effort to ensure that demonetisation is successfully putting an end to the circulation of fake notes in India.

&nbsp;

In the first six months of 2016, Rs 150 million of fake currency went through the banking system of the country, says RBI

On 8th November 2016, when the Prime Minister of India Narendra Modi announced the demonetisation of Rs. 500 and Rs. 1000 currency notes, the whole country was put in a state of shock. The move which caused great inconvenience to more than a billion citizens of the country was, however, hailed as a crusade against the black economy. The supporters of demonetisation argued that it would significantly impact the amount of fake currency in circulation within India. But if it actually stopped the circulation of counterfeit currency remains a question. According to the recent figures, which the government presented in the Lok Sabha, a counterfeit currency of more than INR 93 million was seized in the period following demonetisation over the period between 1st January 2017 to 30th June 2017. In the period of 9 months before demonetisation, from 1st January 2016 to 30th September 2016, the counterfeit currency of around similar value was seized. Fake money seized before and after demonetisation (WION) × Which fake currency is being seized the most? Fake notes of all denominations were seized post-demonetisation, including Rs. 2000 notes. Around 11,000 fake notes of Rs. 2000 were seized in the first six months of 2017, amounting to more than Rs. 22 million. It is surprising that so many thousands of 2000 bills got seized, particularly because it was stated that the new currency is so meticulously printed that it could not be faked. Apart from the 500 notes, around 42,000 counterfeit currency of Rs. 500 were taken into custody. On account of all these seizures, 145 people were accused. Fake notes post demonetisation (WION) × Which are the top States of Seizure? In the post-demonetisation phase, 5 states in India have been the prime source of all these seizures. Of the total value of counterfeit currency seized from all over India, more than 96 per cent came from these states. Moreover, Delhi has been the hub of the seizures in the country where counterfeit notes of more than Rs 62 million were taken into custody in the first 6 months of 2017. Gujarat stood second on the list with seizures worth Rs. 15.61 million in 2017. States with maximum amount seized (WION) × Counterfeit currency which managed to enter Banking Channels: The most alarming fact is, where the value of counterfeit currency seized is so large, fake notes of much higher value are being circulated through the banking channels. As per data provided by Reserve Bank of India, in the first six months of 2016, Rs 150 million of fake currency went through the banking system of the country. The circulation has been on a rise since 2013, and there was an increase of 16 per cent in 2015 as compared to 2013. Though the data for the post-demonetisation period was unavailable, the seizure data is enough to indicate that there would have been no significant fall in circulation of counterfeit currency in the banking channels. Thus, the concerned government agencies need to put in an extra effort to ensure that demonetisation is successfully putting an end to the circulation of fake notes in India.

Indian banks are being used to circulate fake notes in the country

Currently, anyone manufacturing a product, from a car to a bottle of deodorant, they have to pay the &lsquo;Central Excise Duty&rsquo; to the Central Government. Moreover, when the product is sold, a State tax called &lsquo;Value Added Tax&rsquo; (VAT) is to be paid too. There are also certain cess and surcharge which needs to be paid to the Central Government in addition to the Excise Duty. On the other hand, &lsquo;Service Tax&rsquo; is to be paid on provision of services, such as hotel stay, cab service, travel through train or flight, gym subscription etc. But, after the advent of Goods and Service Tax (GST), all these taxes and more will be subsumed under its ambit

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GST different from indirect taxation. (Others)
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Taxes that will cease to exist after GST

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Taxes that will cease to exist after GST (WION Web Team)
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How does GST impact a consumer?

A consumer will get affected by GST due to 3 major changes:

1) &nbsp; &nbsp;Elimination of double taxation i.e. tax on tax&nbsp; 
2) &nbsp; &nbsp;Common Input Credit System&nbsp; 
3) &nbsp; &nbsp;Change in overall tax rates&nbsp;

Let us understand these points with some simple examples:

1) &nbsp; &nbsp;Double Taxation- As explained earlier, when a good is manufactured, Excise Duty is paid on it. Now when it is offered for sale, it is further taxed with VAT. This VAT is applied on the amount which is achieved after adding Excise Duty. Thus, the taxed portion is again getting taxed. Let&rsquo;s take an example to understand this better.

Example: Mohan is a car manufacturer who sells cars directly to the customer. To simplify, let&#39;s take Excise Duty to be 10 per cent and VAT to be 10 per cent and GST to be 20 per cent.

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Old system verses GST system (Others)
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In this example, on the manufacturing cost of car i.e. Rs. 3,00,000, 10 per cent&nbsp;Excise duty is applied, and then when it is sold to the customer, another 10 per cent&nbsp;VAT is applied on the cost. Imposing Excise duty along with VAT on a single item makes it a classic case of double taxation.

Now, in the GST system, since there will be a single tax on both the manufacture and sale of goods, the problem of tax on tax or double taxation will be eliminated.&nbsp;

Thus, as we can see in the above example, even when the total tax rate remains constant at 20 per cent&nbsp;&nbsp;in both the cases, under the GST system the final cost of the Car is Rs. 3000 lower than the old system.&nbsp;

2) &nbsp; &nbsp;Input Credit- If a manufacturer has paid tax (excise or service tax) on the purchase of raw material to make a product, he can deduct it from the tax he will pay for the finished good.

Eg: Mohan buys an engine for making the car for Rs. 1,00,000 which includes&nbsp;Rs. 10,000 as excise duty. Now he can use this credit of Rs. 10,000 and only pay Rs. 50,000 instead of Rs. 60,000 as he needed to do in pre-GST times.

Under the old system, &lsquo;VAT&rsquo; is a State Tax while &lsquo;Excise&rsquo; and &lsquo;Service Tax&rsquo; are Central Taxes and credit of Central Tax and State Tax cannot be used against each other.&nbsp;

Thus, in&nbsp;the example below, Mohan cannot use the Rs. 10,000 excise duty paid on engine to pay less VAT.&nbsp;

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Old system verses GST system (Others)
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Here, when a car engine is purchased, Rs. 10,000 is paid as Excise Duty and while the benefit of the same could not&nbsp;be used in the old system, under the new system it can be utilised, resulting in a lower cost to the customer.&nbsp;

Thus, as we can see in the above example, even when the total tax rate remains constant at 20 per cent&nbsp;in both the cases, under the GST system the final cost of the car is Rs. 10,000 lower than the old system.&nbsp;

3)Change in overall tax rates - The GST rates which are fixed by the Indian government are not sum of all the taxes as shown&nbsp;in the above examples (10 per cent&nbsp;Excise+ 10 per cent&nbsp;VAT does not mean that GST rate will be 20 per cent). However,&nbsp;though a balance has been&nbsp;be maintained, prices ought to come down or go up from previous levels as VAT rates are different from state to state.

Thus, for instance, where a movie ticket can become cheaper in Mumbai as an entertainment tax of 45 per cent&nbsp;will be replaced by GST of 28 per cent, it will become dearer in Delhi where entertainment tax is only 20 per cent.

Some goods and Services getting cheaper or dearer

The overall impact of GST is expected to lower the price of most goods and services; however, the impact of the price will be different in different states of India.&nbsp;

Under the current system, states have the power to fix the taxes on certain goods and services as per their economic policy. A very common example of the same is the different prices of the same vehicle in different states. But under the GST system, the price of almost all goods and services across states will become the same and, thus, lead to a change from the previous levels. There is a list of items and the impact on their prices with the application of GST.

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Impact on prices (WION Web Team)
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Impact on prices (WION)
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The overall impact of GST is expected to lower the price of most goods and services, however, the impact of the price will be different in different states of India.

Currently, anyone manufacturing a product, from a car to a bottle of deodorant, they have to pay the ‘Central Excise Duty’ to the Central Government. Moreover, when the product is sold, a State tax called ‘Value Added Tax’ (VAT) is to be paid too. There are also certain cess and surcharge which needs to be paid to the Central Government in addition to the Excise Duty. On the other hand, ‘Service Tax’ is to be paid on provision of services, such as hotel stay, cab service, travel through train or flight, gym subscription etc. But, after the advent of Goods and Service Tax (GST), all these taxes and more will be subsumed under its ambit GST different from indirect taxation. (Others) × Taxes that will cease to exist after GST Taxes that will cease to exist after GST (WION Web Team) × How does GST impact a consumer? A consumer will get affected by GST due to 3 major changes: 1) Elimination of double taxation i.e. tax on tax 2) Common Input Credit System 3) Change in overall tax rates Let us understand these points with some simple examples: 1) Double Taxation- As explained earlier, when a good is manufactured, Excise Duty is paid on it. Now when it is offered for sale, it is further taxed with VAT. This VAT is applied on the amount which is achieved after adding Excise Duty. Thus, the taxed portion is again getting taxed. Let’s take an example to understand this better. Example: Mohan is a car manufacturer who sells cars directly to the customer. To simplify, let's take Excise Duty to be 10 per cent and VAT to be 10 per cent and GST to be 20 per cent. Old system verses GST system (Others) × In this example, on the manufacturing cost of car i.e. Rs. 3,00,000, 10 per cent Excise duty is applied, and then when it is sold to the customer, another 10 per cent VAT is applied on the cost. Imposing Excise duty along with VAT on a single item makes it a classic case of double taxation. Now, in the GST system, since there will be a single tax on both the manufacture and sale of goods, the problem of tax on tax or double taxation will be eliminated. Thus, as we can see in the above example, even when the total tax rate remains constant at 20 per cent in both the cases, under the GST system the final cost of the Car is Rs. 3000 lower than the old system. 2) Input Credit- If a manufacturer has paid tax (excise or service tax) on the purchase of raw material to make a product, he can deduct it from the tax he will pay for the finished good. Eg: Mohan buys an engine for making the car for Rs. 1,00,000 which includes Rs. 10,000 as excise duty. Now he can use this credit of Rs. 10,000 and only pay Rs. 50,000 instead of Rs. 60,000 as he needed to do in pre-GST times. Under the old system, ‘VAT’ is a State Tax while ‘Excise’ and ‘Service Tax’ are Central Taxes and credit of Central Tax and State Tax cannot be used against each other. Thus, in the example below, Mohan cannot use the Rs. 10,000 excise duty paid on engine to pay less VAT. Old system verses GST system (Others) × Here, when a car engine is purchased, Rs. 10,000 is paid as Excise Duty and while the benefit of the same could not be used in the old system, under the new system it can be utilised, resulting in a lower cost to the customer. Thus, as we can see in the above example, even when the total tax rate remains constant at 20 per cent in both the cases, under the GST system the final cost of the car is Rs. 10,000 lower than the old system. 3)Change in overall tax rates - The GST rates which are fixed by the Indian government are not sum of all the taxes as shown in the above examples (10 per cent Excise+ 10 per cent VAT does not mean that GST rate will be 20 per cent). However, though a balance has been be maintained, prices ought to come down or go up from previous levels as VAT rates are different from state to state. Thus, for instance, where a movie ticket can become cheaper in Mumbai as an entertainment tax of 45 per cent will be replaced by GST of 28 per cent, it will become dearer in Delhi where entertainment tax is only 20 per cent. Some goods and Services getting cheaper or dearer The overall impact of GST is expected to lower the price of most goods and services; however, the impact of the price will be different in different states of India. Under the current system, states have the power to fix the taxes on certain goods and services as per their economic policy. A very common example of the same is the different prices of the same vehicle in different states. But under the GST system, the price of almost all goods and services across states will become the same and, thus, lead to a change from the previous levels. There is a list of items and the impact on their prices with the application of GST. Impact on prices (WION Web Team) × Impact on prices (WION) ×

Find out how GST impacts you

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Zee News Rajasthan

Editor

Saurabh Goenka

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