The Forgotten Promise

Dear Indian,

68 years ago, all your elders consensually promised each other to abide by a set of rules and regulations. And created me as an embodiment of that promise. After they achieved Independence from British, it was essential to set a few common grounds for better and harmonious society. So, they enacted me, to remind next generations of the grand old promise. To accommodate all the ideologies, religions, races, castes and sex, I was made the largest in the world. I am made up of 448 Articles spread across 25 Parts and 12 Schedules. Of which, only the part III, which consists of Fundamental Rights is mainly reiterated and the rest is almost forgotten. Especially, Part IVA, consisting of Fundamental Duties, is being buried in the ground.

When created, I was considered as a ray of hope for millions of citizens. Celebrations were being conducted all over the country. I was overwhelmed with the respect and love showered upon me. Nevertheless, no one reminds me, except on my Birthday – The so called Republic Day. You cannot walkaway form me, saying and push the responsibility towards you politicians. Every time, when you vote, when you utilize the public resources, when you enjoy the freedom provided by me, do remember that you are obligated to me. The obligation is to abide by the rules written. But, now it’s a latest fad among youth, to Break those Rules. Not to mention the demise of the son of A.P. Educational Minister while he was speeding on a Benz. I feel petty, when you lose your valuable life just for the sake of fun. And pettier when that life is taken away even while clicking selfies.

Unlike your neighbour, who prioritized Islam above everything, you made a right choice by accommodating all the religions. You even made a promise to show compassion for other living creatures (Article 51A(g)). But, some of you shamelessly cut the legs of cattle for easy transportation. And when government tries to mitigate these problems, you again reiterate your Fundamental Rights overlooking all your promises. This is not a matter of religion, just another mistake of humanity. Hope you strive hard to improve your values and thereby the surrounding environment.

I urge you to always remember those words from the most beautifully worded Preamble in the world, “We the people of India, having solemnly resolved to constitute India into a Sovereign, Socialistic, Democratic, Republic and to secure among them all Equality, Liberty, Justice and to promote Fraternity.” It’s your responsibility to keep up this promise.

When it comes to myself. I was assured the protection from The President of India. None of them, except Dr. A.P.J. Abdul Kalam could keep upto my expectations. I miss him.

Yours Sincerely,

Indian Constitution

He Boarded his First International Flight Just To Watch Her Graduate

Rakesh has been waiting for six long years, to cherish this particular moment. Shruti is going to get graduated from University of Melbourne, Australia and it was his dream to see her in the ‘academic attire’. With the help of his friend, Mukund, who was passing out from the same Institute, he found her whereabouts and headed towards her. As the flight started rushing over the clouds, his mind began to rewind all those sweet memories, once again. Had he revised those CSE subjects at least half of the time he thought of her, he would have not dropped out of the college in the second year.

Rakesh still remembers the first encounter with her. As usual, he was engrossed in writing the code on his laptop during the lecture. Suddenly, a beautiful girl stood at the door, asking permission to enter the class. Then he smiled, not at the girl, but at the entire classroom tracking the girl’s movement and then normally went back to the coding. Only thing, that attracted him was coding. Never a girl, dragged his attention. He always wanted to start his own venture without getting distracted. But, God had different plans for him.

Accidentally, they started getting along with each other, thanks to the project that they had to complete together. However, their thoughts and actions were poles apart. But, her aspirations attracted him, her ideas inspired him and her elegance, bamboozled him. Her liveliness, impulsiveness, and craziness got him out of his digital world, a world where only 0’s and 1’s existed. Inadvertently, his emotions took over his intelligence, his routine got in sync with hers. He realigned his entire world to gain her “attention”. All his aspirations were traded for her dreams. He made her, his entire world. He loved her, in all manifestations. She looked adorable in silence, innocent when she cried, intelligent when she spoke, sensible when she argued, cuter when she kipped, hotter when she played and gorgeous when she smiled. Most importantly, she was always beautiful for him, in any of her forms. Not to mention, he loved her profile pics, her status updates, her picture captions and her witty replies. And yes, love is blind and will be blind forever.

He always wanted to propose her. But, how could he? Without being independent, how could he promise her to rely on him? When he is unsure of his career, how could he make a commitment? When his future seemed puzzling, how could he assure her to accompany in her future? Rakesh thought that it’s not a right time to propose and let the time pass by. Amidst all these happenings, he flunked his exams and was debarred from the college. Of course, he never wanted to study that crap taught in the campus. At the same time, he never expected to drop out of college. He began an e-commerce website within two months. As soon as the venture becomes successful, he thought of proposing her.

With all these thoughts going on at the back of his mind, he arrived at the airport. Mukund warmly received him. Directly, they headed towards the graduation ceremony. There she was. Wrapped in a yellow coloured silk saree, Shruti looked stunning, as ever. May be the god has bestowed upon her, everlasting loveliness. Rakesh slowly moved to her, wishing her to remember all those sweet memories they had together. Shruti then looked at Rakesh and surprisingly asked, “Hey, Nice to see you. It’s really a long time. I never thought that you would come all the way along to see your friend graduate.” He wanted to say something else, but he lied, “Yes. How could I miss this opportunity, I have been waiting for year to see Mukund graduate.” Then she lovingly looked into Mukund’s eyes, not his, and gave a tender kiss. She then smirked at Mukund and said, “You are lucky to have a great friend along with this beautiful girl.” He hesitatingly smiled. Mukund and Shruti were in relationship for the past two years. And Rakesh was aware of all the happenings.

After the ceremony, Rakesh directly took a return flight to India. Yet again, his thoughts slid into those memories. While pursuing his second year at engineering. He always believed that he was in love with Shruti. But she said, it was a great friendship. Like any other average guy, he never understood the difference. The value he attached to her was million times more than the value she attached to him. After the college, he distantly helped her achieve all she wanted, without letting her know. By the time, he was ready to propose after the success of his venture, he learnt that Shruti was already committed to his friend, Mukund. The love as a verb died on the same day. But, the same love as a feeling, remained forever. Never a day passed by, without praying for her success. It was his dream to see her successful. When all her dreams were coming true, sorry! When all his dreams for her were coming true, how could he stay in India? So, he took his first international flight to see her graduate.

Android O: All you need to know about it

Google unveiled Android O at the Google I/O annual developer conference held on 17-19th May 2017. Google has released the second developer preview of Android O. In case you missed, we have the important highlights for you about the upcoming update:

Battery life has been one of the major concerns for any android customer. Google is trying it level best to limit background activity and maximize battery life. In the latest upcoming update, it has increased the automatic limits on what apps can do in the background in a number of key areas (broadcasts, background services, location updates).

Google is bringing new PiP (picture-in-picture) features that enable users to continue watching videos while working within other apps; apps will be able to put themselves in PiP mode. Something similar you can find in Facebook app, where you can continue to watch a video, looking at other posts.

Google is also introducing new Notification channels that allows to group notifications together by their type. Users can block or change the behavior of each channel individually, rather than managing all of the apps’ notifications together. It will help you things like how a news app notifies us or a music player shows a persistent notification.

Another new feature is notification dots, which are visual indicators on app icons that’ll show if you have any waiting notifications. iOS users maybe familiar with this.

AutoFill API’s will help you remember your pre-filled form, usernames/passwords (in some cases) to quickly be added into apps on your device. A user will be able to choose a source for autofill data, and applications that need to store and retrieve this sort of data no longer will need to act as an Accessibility service.

Android on Chromebooks also indicates that there will be an update to the keyword navigation. Android O focuses on building a better model for arrow and tab key navigation.

With the new updates, Google has also announced Adaptive icons and badges. The feature will enable developers to use different-shaped app icons depending on the manufacturer’s preference. Adaptive icons will be supported in the launcher, shortcuts, device Settings, sharing dialogs, and the app overview screen.

Wi-Fi Awareness will allow your Android O device or app to communicate with other devices and apps in the vicinity over Wi-Fi without requiring an actual internet connection. Sony’s LDAC codec is also part of the update. They are also introducing the AAudio, which could result in improved low-latency audio.

From the latest update, the Pandas feel that the Google is following Nougat’s footstep. The first developer preview will be available on the Nexus 5X, Nexus 6P, Nexus Player, Pixel, Pixel XL and Pixel C devices. Google is concentration more on improving performance rather than just adding features. It’s focusing on strengthening the platform and filling gaps. We are eagerly waiting for the update and probably hear lots more about Android. Google is also yet to name the update – Have any suggestions ? – We would like to hear from you from the comments below

Stay tuned for the updates

Inflation: Part – 2

Video: Raghuram Rajan uses ‘dosa economics’ to explain inflation (Source: YouTube)

Let me continue from where I left. When the government prints excess money, the value of the money comes down. Let us take a real life example. After the World War I, to reconcile from the war and to fight inflation, Austria had run the printing press almost 24 hours, thinking that the offset can be made by just giving hot cash. The prices rose non-linearly, and at one point in time, the inflation had crossed way beyond 100%. 500,000 Crone was a denomination! This is called hyperinflation which is an inflation spiral and everything will be in tantrums. How to resolve the issue of inflation then? The answer is not that simple and has various approaches.

One way is by Government intervention. During inflation, there is an underlying excess of money circulation. To plug that the Government raises the deposit rates. So instead of spending, people would intend to save. Another approach is to control the prices of other commodities in the basket. In our example of a pen, let us say the price of food grains has come down substantially. So, the increase in the price of wheat can be transferred to the price of other food grains which have fallen below the expected value. The above solution could only be possible, if both the grains that are being are in surplus with the host country and both are complementary. The above solution is complex and hence would be avoided in most cases. There are two indices for the measurement of inflation called CPI and WPI, which will be dealt separately. Someone now may ask, what if the Government does not intervene and allow the market to stabilize on its own. This will be in the third article separately.

Another major problem, of inflation is that the supplier/manufacturers would not be able to gauge the markets to a large extent. The fluctuations can also take them on a ride and inventory management would be a difficult task. The instability will penetrate to the bottom of the economy with great viciousness.

The other major issue of inflation is the fall in exports. This is very futile and the Current Account can go for a toss. Note: Current Account Surplus/Deficit= +_ (Exports – Imports). The Current Account value may not sound impactful to some of you. Let me elaborate. The Governments borrows money from other governments for various purposes such as investments and bonds. One of the main indicators of the same is the Credit Ratings. The more instable the country is, the more hopeless the credit rating. Inflation can be a curse and hence the investments to the home country can reduce. This causes a cut down in growth and job opportunities go bust and entire economy comes to a standstill. No FDI and FII. The magnitude of the problems due to inflation is unimaginably impactful.

Dr. Rajan used “Dosanomics” (YouTube link provided below) to explain inflation to help people understand the gravity of the issue. Inflation is measured YOY (Year on Year) and this impacts the calculation of GDP. Let me not get too technical to bore further!! The main question of whether the Government has to intervene or not? Consequences of the same? Will be discussed in the last article on inflation.

Inflation: Part – 1

The colloquial term, Inflation, has creeping into our lives since the beginning of school. I will be introducing the topic inflation in this article and the subsequent article will delve deeper into the topic. Let us take a simple example of a pen. I am referring to a normal pen affordable by almost 99.9% of the population.

Let us say, the price of a Pen today is Rs.10. and there are 1 million of them in the country. Let us consider, the buyer is earning 100 rupees per month as salary. At the current price level, with your current salary limits, you can buy 10 pens. Now, fast forward one year from date. The demand has seen a surge in the market. So, the supplier is now unable to meet the excessive demand and hence, the price of the pens tend to go up. This is logical, isn’t it? More you’re willing to pay, you will get a fairer chance of buying/owning the pen. Now say, the price of the pen has thus rose up by 10% to Rs.11. Your salary of 100 is not enough for buying 10 pens, but now you can afford only 9. This is the simplest explanation for demand side inflation, which on the other hand is also referred to as pull inflation as well. Now, some of you might be thinking as to, “Why is this Dumbo not considering the raise in salary levels?” I will comment on this later.

Let us see the other side of the same coin. What happens if the prices of the raw materials of the pen rise? Raw materials may be plastic, ink prices, cess on supply chain or any other supply constraints such as taxes. Now, the manufacturer can no longer sell the same pen at Rs.10, as his margin would get affected. The price again goes up by 10% (assume). Now, with the 100 rupees, the consumer can buy only 9 pens (100/11). This is due to supply side effect and hence it is referred as push inflation.

What is actually happening in the process? The value of (your) money is getting de-valued as the price is going up. Is it not so? The same quality pen which was 10 rupees is now 11 rupees with no change in specs or aesthetics. This is called erosion of capital which is by far the largest impact factor of inflation. This is at a micro level. Apply the same logic to dal prices, phone prices or any other commodity used daily.

To compensate for the above, what happens if excessive money is printed to offset the prices? This will be discussed in the next article, as the explanation is quite lengthy and involves macroeconomics concepts.

IT Job cuts in India

The recent jab by major IT Companies has stirred up the Indian Job Scenario. The expected cuts in IT jobs might reach 100,000 in the next two years if expertise in automation sets into the fray. The major problem is not “Protectionism” from the developed countries, but it’s the underlying demand for cutting the costs to extreme levels.

According to a study, India has 1.5-1.6 million engineers passing out every year out of which only 7-8% are employable. The growth of IT sector has been persistently around 6% and it contributes almost 10% to the GDP (According to NASSCOM). But are there 1.5 million jobs for 100% Placements? Where are we going wrong? Let us see the macro conditions, where improvements could be made.

  1. The structural reforms in the field of education. Online learning has grown impressively in the last half decade. But the question how many are using this to obtain renaissance from the rote learning process? Virtual learning is only used by private institutions like Byju, but why not in Engineering Courses?1. The structural reforms in the field of education. Online learning has grown impressively in the last half decade. But the question how many are using this to obtain renaissance from the rote learning process? Virtual learning is only used by private institutions like Byju, but why not in Engineering Courses?
  2. The number of engineering colleges have increased to almost 6200 in the country. But the main question is how many are providing the right form of education? The pattern of examinations, viva-voce and practical evaluation is definitely not upgraded to obtain the relevant preparedness in the current scenario.
  3. One of the major causes of Great Depression in 1929-1930s amidst the strong growth in US was the mismatch of supply-demand of educated youth. India is also growing at a rapid pace, but this issue of “Quality” needs to be addressed immediately to prevent lakhs of job cuts.
  4. Lack of awareness about the subjects that need to be opted by the students is another cause. Media Firms such as TOI, Hindu Group and Deccan Herald have started conducting workshops, but is it reachable to the last-mile, i.e., to the students in villages? The government has to initiate the same.
  5. The measurement of growth using GEI, i.e., the Gross Enrollment Index needs to be modified to accommodate the output productivity and employability of the student. GEI is useful in the under-developed stage, where awareness is not the current issue on hand. A GEI of 20.4 in Higher Education is not an indication of the true quality of engineers or professionals.

Karl-Marx approach towards macroeconomics might just prove right in this case. Capitalism in Technology education (Especially Engineering) has no impact on quality, as compared to quantity. The IITs and IISC are still ranked above the private colleges in the global rankings. Are we really increasing the quality by allowing private ownership or have we meddled enough with quality already to increase only the quantity?

If financing is a problem, PPP could be one way out. The focus on this is vital as it should have been prevented in the first place as automation threat was known globally. Hope Government comes with strong measures with this, considering the abysmal employability in this segment. Thus, another thought could be given in order to stop thinking that software has a considerable amount of “Factor of Safety”. Hope enrolment is seen in other fields too and hope people realize that only engineers cannot make up a country!! (Ironically, this is written by an engineer)

WannaCry 1.0: All you need to know about the cyber-attack

On 12th April 2017, a large-scale cyber-attack called WannaCry affected more than 230,000 computers in 150 countries around the world. The attack has been described by Europol as unprecedented in scale. Let’s have a look into the cyber-attack and its implications:

What is WannaCry ? It’s a ransomware program targeting Microsoft Windows operating system. It works by encrypting most of the files on a computer and then the program demands that a ransom be paid in order to have the files decrypted.

In the case of WannaCry specifically, the software demands that the victim pay a ransom of $300 in bitcoins at the time of infection. If the user doesn’t pay the ransom within three days, the amount doubles to $600. After seven days without payment, WannaCry will delete all of the encrypted files and all data will be lost.

WannaCry is believed to use the EternalBlue exploit, which was developed by the U.S. National Security Agency (NSA) to attack computers that run Microsoft Windows OS. It was leaked by the Shadow Brokers hacker group on 14 April 2017. A patch via security update MS17-010, was released by Microsoft on 14th March 2017 to remove the underlying vulnerability for supported systems (Windows Vista and later operating systems) but delays in applying security updates and lack of support by Microsoft of the older versions of Windows left many users vulnerable to the attack. Microsoft also had to release patch for unsupported OS in order to protect the users.

The attack affected many National Health Service hospitals in England and Scotland. Nissan Motor Manufacturing UK in Tyne and Wear, England halted production after the virus infected some of their systems. Renault also stopped production at several sites in an attempt to stop the spread of the ransomware. In India, the virus affected government bodies including the Andhra Pradesh Police, Government of Kerala & Government of West Bengal.

Has the attack stopped ? Nope, but it has slowed down. A 22-year-old security researcher named Marcus Hutchins slowed the spread of the virus when he registered a domain name hidden within the virus’ code in an attempt to track the spread of WannaCry. You can read more about it from this blog at How to Accidentally Stop a Global Cyber Attacks

How to protect yourself from the virus ? Install any and all available security updates immediately regardless of the operating system that you use. We recommend that you backup all the data in a hard disk. If you are already, affected with the virus, then sadly there is no fix available at this time. Security experts and anti-virus companies around the world are working hard to find a way to tackle the situation and decrypt the files.

The Pandas feel that the attack could have been much worse or could get worse if the cyber-security experts fail to discover a solution to it. Imagine, if the virus affected systems in a nuclear power plant, dams or military facilities. The results could have been catastrophic. The attack’s impact could have been much worse if there was no kill-switch built in by the malware’s creators. The attack also demonstrates the degree to which cybersecurity has become a shared responsibility between tech companies and customers. It also shows us why stockpiling of vulnerabilities is a problem especially by the government. It should be a wake-up call for the government all around the world to stand united against cyber-attacks in future.

Are we ready for GST ?

As GST is to be implemented from coming July, it is indeed necessary to evaluate if all the stakeholders are geared for the implementation. To bring in synchronisation among Central and state governments, SMEs, large corporations and other business Goods and Service Tax Network (GSTN) is put in place. GSTN is a non-profit public private organisation formed to develop IT network for the implementation of the GST. It involves design of portals for tax payers along with Revenue departments for both Central and state governments. The success of GST is determined mostly by the effectiveness of GSTN. It is the technological backbone of the upcoming reform.

Till date, the progress is at snail’s pace bereft of the efforts put in by the GSTN team. Only 34 companies were approved to provide GST interface and the shortlisting of remaining companies is still under progress. Corporates are not yet equipped with the required interfaces and most of them are in testing phase. As the systems are not in place, training of the organization’s employees is beyond the possibility. So, even if the interface is ready by mid-June, training could not be completed by the beginning of July. For the same reason, the tax departments of the government are not ready for the GST. This is also evident from the fact that few provisions related to the taxation in certain sectors are not yet clarified.

That being said, government’s aspiration to implement GST from 1st July is commendable. No doubt there would be a wide range of issues raised with respect to process and the products involved. There is a need for Tax related-issue resolution system put in place under GSTN to resolve the errors in the system. It should contain different teams to handle various issues raised by stakeholders. Automated phone answering systems should be deployed in every state to resolve any major issues pertaining to that specific state. The team should be aware of all the happenings in the GSTN and coordinate with state and central governments. As a smooth implementation of GST is out of question, atleast grievance redressal mechanisms are to be put in place to avoid protests from taxpayers.

A mere utterance of the word TAX gives headache to corporates. If the compliance is made more complicated, then India not only losses reputation but also lose out potential investments.

Impact of GST on Automobile Industry: Is the GST implementation worth a wait to buy a car?

The most hailed reform of the decade may be valuable for many Indians, but it would be a bitter pill for few car lovers. The impact of GST on automobile sector is multi-fold. Though the law is vague on this sector, the impact on passenger vehicles, three wheelers and two wheelers may be positive. Car prices may come down as the imposed GST would be less than combined tax (CENVAT+ State VAT/CST) paid till date. According to ICRA, the effective tax on these vehicles would be 33% less than that of tax under current regime.

However, taxes on Sedans and SUVs may be higher. Presently, around 45-50% effective tax is imposed on them. And GST would be higher than the present tax as Sedans and SUVs come under luxury goods. Nevertheless, improvement in operational efficiencies will nullify the counter effects of GST. Savings in the form of tax credit will substantially decrease the costs. Earlier, Central Sales Tax (CST), imposed during inter-state transfers was not eligible for tax credit. So, the costs used to surge due to cascading effect. And also the uniform tax rate across the states and better tax compliance would radically improve operational efficiencies.

Automobile sector is growing at the rate of 8 to 9% year on year and is one of the promising sectors for investments in India. Red-tapism, complicated tax structure, low quality of suppliers, high import duties and environmental regulations were major challenges for the industry growth. With aggressive government intervention, the overall environment for operations is improving. Entry of automobile giants such as Isuzu motors, Kia Motors Corp, BMW motorcycles etc., are good signs of progress. Not only the surging demand but also the tax reforms are attracting these players.

What is not clarified by the government is the amortisation and tooling costs. Generally, automobile manufacturers buy equipment for their vendors. The equipment is used to produce raw materials specifically to the manufacturer. Presently, GST laws specify that the tax credit could be obtained only on the capital goods present in the manufacturing state. So, this may hamper the cost reduction process of the corporates if not readily addressed by the government. Also the freedom of the manufacturer to locate their warehouses based on operational efficiencies will reduce the costs. At present, warehouses are located based on the state tax laws.

Though GST, in its present form, is not a revolution but is sure going to improve Ease of doing business. All the indirect taxes, such as Excise duty, State VAT, Central Sales Tax (CST), Special Additional Duties (SAD), are going to be subsumed under GST. Also, the goods and services are taxed only on the value addition. So, a common tax is imposed eliminating complexity and cascading effects of the previous regime. Making it easier for domestic and foreign investors to comply with the law. Thus, the costs of manufacturing a car come down reducing the end price. Especially the small cars.

GST – Why? What? Where? How? Who? When?

Most hyped reform of the decade is ready to be implemented from this July, Central government, state governments, Corporates and small businesses are gearing up their systems to comply with the 101st Constitutional Amendment Act. On these side-lines, let’s make our basics clear.

It’s extremely difficult for a huge Corporate, operating in various states of the country, to comply with all the state tax laws. A common tax law is inevitable. Also, to prevent cascading effect of taxes. Right now, CENVAT and State VAT are levied on most of the dutiable products. Companies are eligible to claim tax credit on the taxes paid to their vendors. This avoids cascading effect on taxes and thereby imposes tax only on Value addition. Let me demonstrate with an example. Suppose, A is a supplier in Tamil Nadu selling goods to car manufacturer, B in same state. B sells cars to a dealer C and then to customer D.

Case 1: Before the introduction of CENVAT/ State VAT:

Cost of goods for A: Rs.100
CENVAT @ 10%: Rs.10
State VAT @10%: Rs.10
Total amount paid by B: Rs.120
Cost of goods for B: Rs.220 (Value addition is Rs.100)
CENVAT @ 10% : Rs.22
State VAT@10% : Rs.22
Total amount paid by C: Rs.264

Case 2: After the introduction of CENVAT/State VAT:

Cost of goods for A: Rs.100
CENVAT @ 10%: Rs.10
State VAT @10%: Rs.10
Total amount paid by B: Rs.120
Cost of goods for B: Rs.200 (Value addition is Rs.100)
CENVAT @ 10% : Rs.20
State VAT@10% : Rs.20
Total amount paid by C: Rs.240

But, here, B pays only Rs.10 to the Central government and another Rs.10 to state government instead of Rs.20. Since, Rs.10 can be claimed as tax credit as it has already paid to A while buying the supplies.

Case 3: GST regime:

Above procedure is followed even in case of GST. If, there were other duties such as Special Excise duty, Additional Cess etc., then they would subsume into GST. Real impact of GST is visible when the goods are sold out of the state. Say, A is from Tamil Nadu and B is in Andhra Pradesh. Now, let us consider two cases

Case 3.1: Before GST (Inter-state):

Cost of goods for A: Rs.100
CENVAT @ 10%: Rs.10
CST @2%: Rs.2.2
Total amount paid by B: Rs.112.2
Cost of goods for B: Rs.212.2 (Value addition is Rs.100)
CENVAT @ 10% : Rs.21.22
State VAT@10% : Rs.21.22
Total amount paid by C: Rs.254.64

Note: CST is applied only on Cost of Goods+ Excise Duty. Let us consider that C is also in same state of B.

Here, B could get credit of Rs.20 but not for the Rs.2.2 paid as CST. This amount cascades and effectively act as burden on the customer. GST solves this problem.

Case 3.2: After GST (Inter-state)

Cost of goods for A: Rs.100
IGST @ 12%: Rs.12
Total amount paid by B: Rs.112
Cost of goods for B: Rs.200 (Value addition is Rs.100)
CGST @ 10% : Rs.20
SGST@10% : Rs.20
Total amount paid by C: Rs.240

Under GST Rs.2 paid to A, is credited back to the account of B while selling the product to C. Which will eventually eliminate cascading effect of taxes. How the Rs.2 will come back to B is a complicated process and I can discuss if demanded.

GST is managed both by Central government and state government with the help GSTN (Goods and Service Tax Network). GSTN is IT platform for GST implementation managed by public and private sector. More about GSTN will be discussed in the upcoming article.