AN EVALUTION OF THE EFFECT OF INDIRECT TAXATION ON CONSUMPTION IN INDIA

ABSTRACT Far from just filling state coffers, India's system of indirect tax shapes how people buy, live, and share resources. Examining GST, excise charges, and import fees reveals shifts in spending habits among varied home economies throughout the nation. Looking at how the move from older, disconnected taxes to a single system changed where tax costs land across production lines. Although meant to stop layered charges and make pricing clearer, having several rates, constant updates, and inconsistent adjustments along supply routes muddies outcomes for family budgets. Data shows increase in levied amounts appear fast on store shelves; yet cuts tend to get held back somewhere before reaching buyers - tilting benefits unequally. This imbalance reshapes who gains or losses when policy shifts occur. What stands out in the study is how indirect taxes tend to hit poorer families harder. Though some essentials are technically exempt, these households spend more of their income on items that carry tax - like energy, groceries, or basic healthcare - making the overall load unequal. People working outside formal employment arrangements deal with even sharper disadvantages; most operate without eligibility for tax offsets. Since nearly all Indian workers fall into this informal category, they end up shouldering hidden costs passed down through supply chains, leaving less room for personal spending. Through a blend of quantitative and qualitative techniques, the study uses NSSO household surveys alongside GST Council updates, CPI measurements, and firsthand information gathered from informal homes - then applies regression models to gauge how responsive demand is within various spending areas. Looking at legal aspects too, key rulings including Mohit Minerals (2022) and Safari Retreats (2024) come under review to assess their effect on taxation oversight and protections for buyers. Starting differently each time, one finds India’s GST compared with those of Australia, Singapore, the EU, Brazil, and South Africa. Though complex, the examination highlights clearer rate structures elsewhere. Where simplicity matters, some nations perform better. Equity-focused fund flows stand out in certain designs. Compliance aided