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GST - Discussion on all aspects.

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Yagnasri
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GST - Discussion on all aspects.

Postby Yagnasri » 28 Feb 2017 15:29

I have started this thread to have an all round discussion on GST. This is the biggest tax reform since the founding of our republic and will have a profound impact on how not just trade businesses, Industries and service sector is run but also effect centre and state relations are governed. Failure to have a seamless transfer to this system may even result in the present government losing 2019 election. I understand all most all the parties which implemented this kind of system in other nations have lost the next elections.

From what I have discussed with senior service tax officials they entire system is computerised. We also may have to discuss the technical issues of this system.

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Re: GST - Discussion on all aspects.

Postby geeth » 28 Feb 2017 16:32

Over the past few months, one of the tax implication due to GST that I have observed is this:

In the present tax system, a manufacturer who has a turnover more than 1.5 crore per annum pays 12.5 % excise duty to Central Govt. During the initial stages of discussion of GST, it was understood that till the same threshold of 1.5 crores, state GST only will be applicable and above 1.5 crore turnover per annum you have to pat Central GST also.

However reading the notes on recent proceedings of GST council, i understand the threshold for both state and central GST are set as 20 lakhs. The is done apparently to reduce the complications of calucations (on the insistance of central govt.).

My point is, the small manufacturers who had a price advantage by not paying excise will now feel the heat from biggies and multinational. Cocoa cola can sell their products cheaper than the local guys, because of the puchase advantage in large volumes. This effectively kills competion from small and marginal producers and they will become extinct soon.

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Re: GST - Discussion on all aspects.

Postby Yagnasri » 28 Feb 2017 16:39

I am not sure if the small manufacturers are fully exempted from Central excise tax in such manner. Am I wrong? Big and multi-state entities also will have lot more smooth business now. Of course, the small units are in border areas of a state or selling the product in more than one state will also have this additional advantage with GST. Others do not.

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Re: GST - Discussion on all aspects.

Postby A_Gupta » 28 Feb 2017 18:55

http://indianexpress.com/article/busine ... e-4528985/
States have been given the leeway to tweak the criteria for division of taxpayers after “consultation with Centre” in respect of cross empowerment under the proposed Goods and Services Tax (GST).

The minutes of the ninth meeting of the GST Council, held on January 16, record that the states have been given this concession over and above the agreed upon 90:10 division of tax assessees below the annual turnover threshold of Rs 1.5 crore between states and Centre, respectively, and an equal division of assessees for a turnover above Rs 1.5 crore.
....
“…those states wanting a different basis of division could do so in consultation with the Centre; the division of taxpayers in each state shall be done by computer at the state level based in stratified random sampling and could also take into account the geographical location and type of the taxpayers, as may be mutually agreed,” the minutes stated.

The division of taxpayers will be switched between the Centre and the states at regular intervals as per the decision of the Council. For new registrants, the Council has agreed to do equal division between the Centre and the states.

During the course of the discussions, states such as West Bengal and Kerala supported the demand for exclusive control by states on taxpayers below the Rs 1.5 crore turnover threshold, while Gujarat and Maharashtra stated their preference for vertical division with control of two-third taxpayers with states and one-third of the assessees with the Centre.

CBEC chairman Najib Shah was of the view that neither the Central nor state tax administration should be completely ousted from any part of the value chain in order to ensure proper checks and balances. During the discussions, he also stated that there could be cross empowerment for granting tax refund subject to agreement by the accounting authorities.
...
The arrangement between the Centre and the states in the ninth GST Council meeting to break the deadlock on division of control has been seen as a compromise on part of the Centre, as it has lost out on the maximum share of taxpayers under the threshold of Rs 1.5 crore.

Currently, 93 per cent of service tax assessees and 85 per cent of the VAT taxpayers have a turnover below Rs 1.5 crore. Under the proposed GST, taxpayers having a turnover of over Rs 1.5 crore are estimated to contribute almost 90 per cent of the revenue.

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Re: GST - Discussion on all aspects.

Postby A_Gupta » 28 Feb 2017 18:57

https://cleartax.in/s/new-turnover-limit-for-gst
Quote:

New Turnover limit for GST

The GST Council had been constituted and a bunch of announcements have been made by the Finance Minister. These are

GST will apply when turnover of the business exceeds Rs 20lakhs (Limit is Rs 10lakhs for North Eastern States). [Earlier the limit was Rs 10lakhs and Rs 5lakhs for NE states.]

Service tax was levied by the central government and states do not have expertise in levying and collecting service tax. Centre will continue administer tax on services during the initial phase of GST. It may be passed on to states later.

States will administer GST for businesses with turnover of Rs 1.5crores or less.

Both States and Centre will administer GST for Businesses with turnover in excess Rs 1.5 crores.

Our view-

While the increase in GST threshold limits is a welcome move for small businesses. They can now heave a sigh of relief. This will also allow the government to focus on the big fish. But businesses which provide both goods and services and have turnover of Rs 1.5crores or less, will have to deal with both state and central administration and that may be a compliance hassle in the initial phase.

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Re: GST - Discussion on all aspects.

Postby geeth » 28 Feb 2017 20:15

Well, I am not arguing who will control small businesses with a turnover of less than 1.5 crores, but tax rate to be paid under GST.

As is well known, there are are two components to GST - SGST and CGST. My understanding is that the rate fixed is combination of both SGST and CGST together in equal parts. For eg.,if the rate is fixed as 16%, it means 8%SGST+8%CGST. Above 20 lakhs turnover limit, everybody pays this rate. My understanding previously was that, above 20 lakhs but below 1.5 crore turnover, the 8% SGST only need to be paid and above 1.5 crores CGST is also applicable. But it seems that is not the case...Below 1.5 crores state pockets all 16% and above 1.5 crore it is shared 50-50 without any consideration for small business.

Pls correct me if my understanding is wrong.

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Re: GST - Discussion on all aspects.

Postby geeth » 28 Feb 2017 20:30

The reason for my confusion is because of the clause that :

SGST refund can be set against SGST and CGST refund against CGST ;
Either SGST or CGST refund can be set against IGST payment.

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Re: GST - Discussion on all aspects.

Postby sudarshan » 28 Feb 2017 21:03

Yagnasri wrote:I understand all most all the parties which implemented this kind of system in other nations have lost the next elections.


That's definitely a worrisome fact, if true. However, demo measures in other countries have been unpopular too, and even failed in Venezuela, whereas Modi came through practically unscathed, and might even have got stronger as a result. Other countries which introduced GST probably didn't have the benefit of an untainted and popular leader at the helm, with even his worst detractors, both in India and abroad, having a hard time denying that he's in it entirely for the nation's sake.

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Re: GST - Discussion on all aspects.

Postby Yagnasri » 28 Feb 2017 21:15

The problems are the implementation of the system and our national past time of not paying the taxes. Increased taxes may not be the problem on its own. The easy tax administration is the key.

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Re: GST - Discussion on all aspects.

Postby M_Joshi » 28 Feb 2017 22:27

Yes. Your consideration is correct.

GST is eagerly awaited and any delay beyond 1/07/2017 will not be good for the industry.
Here's what I've gathered so far:
The good:
1) No need to file different returns for VAT/CST, Excise Duty, Service Tax, Luxury Tax, etc..
2) No need to pay Entry Tax, Octroi, etc..
3) No area based or turnover based exemptions.
4) Seamless credit input from IGST to CGST/SGST & in-between SGST & CGST, vice versa.
5) Very rare chance of fake invoicing & if done so high chances to get caught.
6) Small businesses no longer need to under report their turnover to stay under Rs. 1.5 crore annual turnover so as to avoid being under Excise Duty net.
7) Tax on Services will be offset against Manufacturing Input/ Output tax. Earlier there was a lot of confusion for contractors about the part invoice being Service Tax & part being VAT/CST, thereby increasing tax disputes & harassment.
8) No need to issue C-forms.
9) No need to do hefty CST, VAT & Excise Duty Calculations.
10) With time when businesses adjust to GST prices of some goods will come down(probably).

Challenges:
1) Internet connectivity required to upload the invoice at the time of dispatch of material(for manufacturing, not sure about Services)
2) No input can be claimed if the supplier has not filed that invoice in the return or uploaded the invoice onto the GSTN network.
3) Huge IT backbone & internet connectivity is required to support such seamless data transfer, securely.
4) Businesses, especially MSMEs will need to be trained in assign GSTN.
5) MSMEs <1.5 crore turnover will not be Excise Duty exempt & will have to compete with the big guys in the same tax bracket.

Issues:
1) States are lobbying to have E-permits flashed by the vehicles at the inter-state checkpost barriers. This defeats the whole purpose of GST. Hope it does NOT happen.
2) Central Tax Officers are not happy to share their assesses with there State Govt. colleagues (worried about the sharing of hafta wasooli).

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Re: GST - Discussion on all aspects.

Postby KarthikSan » 01 Mar 2017 11:46

I'm working on a food processing project and having some difficulty coming up with MRP. What is the current sales tax/central excise rate for food products and how will this change with implementation of GST? When they say 5% tax rate for daily essentials, does processed food for e.g. ready to eat stuff like frozen foods etc. come under this?

One OT question. Any FMCG experts here? Could you throw some light on what typically is the margin given to stockists, distributors and retailers in this biz?

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Re: GST - Discussion on all aspects.

Postby Lilo » 08 Jun 2017 10:02

Up
The rate fitment both for goods and services was along expected lines, maintaining rates closer to existing indirect tax rates, with a focus on socio-equity. The idea was to keep mass consumption sectors either exempt or at reasonable rates and continue with existing exemptions in services to cushion inflation. An exercise of this magnitude where several stakeholder concerns are involved is complex and has expectedly resulted in a multiple rate structure for goods and services with price points used for rate differentiation for the same goods or services which is far from ideal. The hope is as GST matures, we will move to a two- or maximum three-rate structure over the next few years.

Sectors like fast-moving consumer goods (FMCG) and others have expressed their concern on higher rates on goods of mass consumption, that need to be addressed and treated on par with other such goods at lower rates to maintain parity. There are concerns of sectors like aviation and shipping where credit rules need to be tweaked to avoid cascading, while GST on imports of relevant goods needs to be exempted to avoid significant costs. The impact of increase in rates for services like telecom and financial services which have a wider consumption remit will have to been seen as we go along. The telecom sector believes and rightly so that GST credit efficiencies may not be enough to cushion increase in rates, while the government believes otherwise.

http://www.livemint.com/Opinion/Qw2coki ... -time.html

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Re: GST - Discussion on all aspects.

Postby rahulm » 08 Jun 2017 10:22

1) States are lobbying to have E-permits flashed by the vehicles at the inter-state checkpost barriers. This defeats the whole purpose of GST. Hope it does NOT happen.


This is indeed a concern and will create more of the same I.e delays and queues at interstate borders.

E-permits with different time validities are being proposed by states. A 24 hour permit is being proposed. What happens if the goods can't be moved within 24 hours due to floods, driver sickness, truck ankle,break downs etc ?

This will,lead to hassles and corruption and is in no way streamline the flow of goods. Anybody have any Idea what's in it for the states with this e-permit ?


Why do we even need checklists at state borders. We are one country. Border checposts are between countries.

We need a constitutional amendment to enshrine 'freedom of movement' of citizens, goods and services as a fundamental right. :mrgreen:

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Re: GST - Discussion on all aspects.

Postby JohnTitor » 08 Jun 2017 13:02

I'm guessing states want a way to fleece money from people. This is essentially a way to continue corruption. If the centre gives in, india has no hope of being anything other than a third world country. It is shameful that these people wouldn't mind the country being left in the stone age as long as they get their cut. Disgusting.


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Re: GST - Discussion on all aspects.

Postby tandav » 09 Jun 2017 09:47

How services tax exempted via mega exemption notification 2012 change?

http://www.cbec.gov.in/htdocs-servicetax/st-notifications/st-notifications-2012/st25-2012

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Re: GST - Discussion on all aspects.

Postby jayasimha » 09 Jun 2017 11:37

http://pib.nic.in/ndagov/economyStory/eco65.pdf
GST to be 'biggest achievement' of Modi government: Assocham

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Re: GST - Discussion on all aspects.

Postby chetak » 12 Jun 2017 16:21

when negotiations are done from a position of weakness, this is the result

rapacious states have fu(ked the centre, jointly and severally and in turn, they have raped the Indian public.


Image

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Re: GST - Discussion on all aspects.

Postby rahulm » 12 Jun 2017 16:38

Too much power rests in the hands of states. I don't think the makers of our Constituion ever imagined autonomy to states will become an albatross around the nations growth and governance neck.

This devolution of power and states being able to set their destiny stuff is all good and nice but in practice, Since indepedence this power and autonomy has been used by the elected Exexutive as personal kingdoms and fiefdoms to enrich a few at the expense of most.

The complex 4 (actually 5 if you count 0% ) GST structure is a consequence of and a response to our unique economy and even more unique (populist) mostly political considerations. Hopefully, with the passage of time, the structure will have fewer slabs eventually in some future life time of the nation merge into 1 slab.

The GST structure is not what the centre could get but what the states could get away with and they got away with a lot of the kit and kaboodle !!

Ease of doing business ? Errr what's that. It's a Westphalian concept and a western construct solely designed and meant to degrade india and show,us in a bad light. Down with it!

It's actually very easy to business in India. I mean, really, seriously. Brown envelope model. Works every time.

You centralise for effectiveness and decentralise for efficiency. We are neither effective nor efficient to the degree we should be.

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Re: GST - Discussion on all aspects.

Postby rahulm » 12 Jun 2017 17:05

e-way bill lacking software, may miss GST deadline

Ostensibly, the purpose of this e-way bill is to check tax evasion. Has anybody understood how this e-way bill will check evasion and why and how the Rs 50,000 limit.

What happens if I relocate from Jhumri tallaiyya in MP to Gol gaddha in UP and have more than Rs 50',000 worth of my personal goods being moved by Vailankanni Movers and Shakers (We shake your stuff till you are moved [to tears] ?

Do I need a e-bill if so how do,I get one ? Or
Does Vailankanni Movers and Shakers need the bill
Whose responsibility is it to get this e-way bill ?
is there a fee for this bill? If yes, do,I have to go to a smelly,leaky pan stained SBI branch in some untraceable part of the city and pay in cash only at Counter number 3A next to a big 'Digital India - go cashless' sign and get it counter signed by Additional GST inspector (special goods) Grade II 50 kms away in some other untraceable,part of the city ?

I thought one of th objectives of the GST was to make life simpler. I think the GOI meant the babus life simpler whereas all along I thought it was to make my life simpler Foolish and naive me.

Ok, maybe I can mark my AC's as 'Katraj doodh shetkari sangtahan' fresh milk and claim a lower GST rate. Jai brown envelope.
Last edited by rahulm on 12 Jun 2017 17:16, edited 1 time in total.

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Re: GST - Discussion on all aspects.

Postby chetak » 12 Jun 2017 17:15

rahulm wrote:Too much power rests in the hands of states. I don't think the makers of our Constituion ever imagined autonomy to states will become an albatross around the nations growth and governance neck.

This devolution of power and states being able to set their destiny stuff is all good and nice but in practice, Since indepedence this power and autonomy has been used by the elected Exexutive as personal kingdoms and fiefdoms to enrich a few at the expense of most.

The complex 4 (actually 5 if you count 0% ) GST structure is a consequence of and a response to our unique economy and even more unique (populist) mostly political considerations. Hopefully, with the passage of time, the structure will have fewer slabs eventually in some future life time of the nation merge into 1 slab.

The GST structure is not what the centre could get but what the states could get away with and they got away with a lot of the kit and kaboodle !!

Ease of doing business ? Errr what's that. It's a Westphalian concept and a western construct solely designed and meant to degrade india and show,us in a bad light. Down with it!

It's actually very easy to business in India. I mean, really, seriously. Brown envelope model. Works every time.

You centralise for effectiveness and decentralise for efficiency. We are neither effective nor efficient to the degree we should be.


if you count gold, there are already 5 rates.

not to mention sub state GST rates when you go into it at the state level GST

God only knows how many actual rates we will eventually land up with finally.

did we actually end up making any progress, especially when inflation determining items like petroleum products are controlled by the states, not to mention daru.

why should bangalore pay high petrol prices when they are close to ports and refineries at chennai and mangalore and dilli, cashmere pay low rates when transportation costs are far far higher??

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Re: GST - Discussion on all aspects.

Postby rahulm » 12 Jun 2017 17:25

The part that makes me smile is it will increase tax compliance and as a tax compliant chap that really makes me feel better.

Now Proprietor of Jai Sai Ram' Misthan Bhandar (we have no other branches anywhere) Cash only is ashen faced these day and I am having a jolly good time looking at his sorry face every day.

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Re: GST - Discussion on all aspects.

Postby chetak » 12 Jun 2017 17:46

rahulm wrote:The part that makes me smile is it will increase tax compliance and as a tax compliant chap that really makes me feel better.

Now Proprietor of Jai Sai Ram' Misthan Bhandar (we have no other branches anywhere) Cash only is ashen faced these day and I am having a jolly good time looking at his sorry face every day.


you have to understand that far, far more effort, goes into writing in hidden loopholes to various laws than the effort put into actually drafting the laws themselves.

politicos and baboo(n)s who administer these laws in all their glorious nitty gritty details use their legal interpretation to thus make money from individual file notings and orders, use these means to make money by milking folks who have run afoul of the law or are plainly seeking relief by obtaining a kinder interpretation of the said law as applied to them.

thus middlemen, chaacha, bhajitha, niece, son in law et al are all guranteed enduring prosperity and a sure shot startup business with a niche market.

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Re: GST - Discussion on all aspects.

Postby srin » 12 Jun 2017 19:06

What's the big deal about having 5 rates for goods ? What are the serious economic consequences of it ?

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Re: GST - Discussion on all aspects.

Postby rahulm » 12 Jun 2017 19:10

What joining GST will cost?

The infographic is credited to private players so I suspect these costs are optional.

I would be very surprised if the sarkar charges Rs2,500 for GST registration.

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Re: GST - Discussion on all aspects.

Postby Sachin » 12 Jun 2017 19:27

I-T's just a click away; Tax scrutiny reply set to get easier
Also remember reading about a new provision using which the investigating officer may not be from the usual jurisdictional IT office. The files for scrutiny gets assigned to random officials, with the name & address of the suspect with held. They just go with the data available, and decide the next steps. Another set of superior officers also watch the decisions taken by these officers (to see if there is any trend in the actions of an officer).

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Re: GST - Discussion on all aspects.

Postby chetak » 12 Jun 2017 19:33

twitter

30 VAT replaced by 30 SGST. Excise, CST & Service tax replaced by GST, IGST & 5 UTGST. More Returns & complications. Where reforms in #GST?

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Re: GST - Discussion on all aspects.

Postby srin » 12 Jun 2017 19:41

rahulm wrote:What joining GST will cost?

The infographic is credited to private players so I suspect these costs are optional.

I would be very surprised if the sarkar charges Rs2,500 for GST registration.


The Rs. 18K and Rs. 54K for GST software is Tally single user and multi user price. But most of the time, businesses spend some 2K-5K pm to give invoices to CA and let the CA handle it. The CA buys the software and DSC dongle (for returns filing) and amortizes it over multiple customer.
Even in the GST realm, this concept is enshrined as Tax consultant or Tax Return Preparer (TRP).
Very few traders - only big ones - have their own accountant, and then, even these would have already paid for the tax/accounting software. So, no/not much incremental charges.
Very small guys can just use the GST portal to upload returns.

So take those numbers with a pinch of salt.

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Re: GST - Discussion on all aspects.

Postby rahulm » 12 Jun 2017 19:43

I can't say for sure, but possibly the only benefit of GST maybe increased tax compliance due to input tax credits. This e-way business is effectively a challan or gate pass and ensures that inter state checkpoints and the associated corruption and delays continue. No change here. More of the same. Sad.

Much like possibly the only positive descenible outcome of 'Swacch Bharat Abhiyan'. was a massive nationwide toilet building programme not a cleaner rubbish free India.it should,probably have been better called Pradhanmantri Universal Sulabh Sauchalya Yojna. I won't abbreviate the acronym here, I will,leave it to,you all,to figure out. :rotfl:

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Re: GST - Discussion on all aspects.

Postby M_Joshi » 13 Jun 2017 00:47

rahulm wrote:e-way bill lacking software, may miss GST deadline

Ostensibly, the purpose of this e-way bill is to check tax evasion. Has anybody understood how this e-way bill will check evasion and why and how the Rs 50,000 limit.

What happens if I relocate from Jhumri tallaiyya in MP to Gol gaddha in UP and have more than Rs 50',000 worth of my personal goods being moved by Vailankanni Movers and Shakers (We shake your stuff till you are moved [to tears] ?

Do I need a e-bill if so how do,I get one ? Or
Does Vailankanni Movers and Shakers need the bill
Whose responsibility is it to get this e-way bill ?
is there a fee for this bill? If yes, do,I have to go to a smelly,leaky pan stained SBI branch in some untraceable part of the city and pay in cash only at Counter number 3A next to a big 'Digital India - go cashless' sign and get it counter signed by Additional GST inspector (special goods) Grade II 50 kms away in some other untraceable,part of the city ?

I thought one of th objectives of the GST was to make life simpler. I think the GOI meant the babus life simpler whereas all along I thought it was to make my life simpler Foolish and naive me.

Ok, maybe I can mark my AC's as 'Katraj doodh shetkari sangtahan' fresh milk and claim a lower GST rate. Jai brown envelope.


As far as I understand the Rs. 50,000 limit is for the invoice value. Since if you relocate from Jhumri tallayya to Gol gaddha & just transporting your personal goods, you will not be making an invoice in your name, thus an E-way bill is NOT required. E-Way bill is required when the 'goods' above the value of Rs. 50,000 is being transported on the basis of an invoice from one 'Business' to another business/customer.


I can't say for sure, but possibly the only benefit of GST maybe increased tax compliance due to input tax credits. This e-way business is effectively a challan or gate pass and ensures that inter state checkpoints and the associated corruption and delays continue. No change here. More of the same. Sad.


Today the vehicles at checkpoints have to stay at hours/days possibly too. There is no limit. It just depends upon the whims of the local Tax Officer. Now if the vehicles are standing for more than 60 minutes, then the Officer has to go online & explain the reason for the stoppage of the vehicle. Secondly, the checkpoints will be random & will not be on state borders specifically.

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Re: GST - Discussion on all aspects.

Postby rahulm » 13 Jun 2017 07:45

Too complex. This whole inter state check post business. Even conceptually, the idea of having inter state boundary checkpoints is dated and archaic.

I am reasonably well travelled and so far, have never, seen permanent inter state check points in any country. Even in Kenya, I travelled from Nairobi to Mombassa by road and didn't see a single check point. Maybe, I missed it.

Effectively, we need a visa for our goods to cross state borders. We are not the only country that has states with different tax laws. I know, we are special and unique but its stupid in this day and age.

If I buy brand new goods in Jhumri talayya,get overnight transfer orders, load them into a truck still in original packing what happens? Since, I have the receipts from Basarmal Todimal Vanganmal and Bros I suppose I should be ok.

Still, this whole,business of sarkari people poking, prodding and questioning my personal stuff is not a good feeling.

How does one determine if te truck has been stopped for more than sixty minutes. It's is GSAT19 with a laser beam from space, the tax inspectors Rolex which was conveniently gifted to him or the truck drivers word ? Who decides which clock and when it's starts counting and when it stops. It seems all too discretionary to me.

Ok what is preventing BJP sates in declaring we don't beilieve in this e-waybill and check point business and are getting rid of both.? Corollary, why can't the AS NM duo impose their writ on BJP governed states in this matter ?Let Didi, XxxRamaih's, Behenji's et al have e-waybills and checkpoints. Businesses will shift to states where it's easier.

Heck, why can t the famous and much talked about Gujarat set an example in this regard ?

Why can't BJP create a border less and e-waybill free region covering Goa-Maharashtra-Gujarat-Rajasthan-MP. It's the one government with an unified vision, purpose and objectives at the Centre and in these states. ? Idhaar kya takleef Hai?
Last edited by rahulm on 13 Jun 2017 08:18, edited 4 times in total.

chetak
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Re: GST - Discussion on all aspects.

Postby chetak » 13 Jun 2017 07:50

Interstate "check points" are where crores upon crores are made every day and all in cash onlee. Its the blackest of the black cash.

Its also how and where all political parties earn their daily bread.

JayS
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Re: GST - Discussion on all aspects.

Postby JayS » 13 Jun 2017 17:14

I see that GST itself is a big mess with too many slabs, too many divisions in states, central taxes, some cess et all. Only advantage I see it its replacing 17 taxes and myriads of complicated laws and will bring everything under one system. So simplifying it further should be easier later. Another advantage is it gives incentive to show everything on invoices. Its not ideal but a good start nonetheless.

As always state governments are hurting the nation by their greedy and corrupt nature and not allowing GST to come in its full intended form. Similarly other such reforms have also been struck down or watered down by states. I am of the opinion that the state governments' powers should be clipped to large extent. Keep all those things which affect pan-India with centre.

chetak
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Re: GST - Discussion on all aspects.

Postby chetak » 13 Jun 2017 17:36

JayS wrote:I see that GST itself is a big mess with too many slabs, too many divisions in states, central taxes, some cess et all. Only advantage I see it its replacing 17 taxes and myriads of complicated laws and will bring everything under one system. So simplifying it further should be easier later. Another advantage is it gives incentive to show everything on invoices. Its not ideal but a good start nonetheless.

As always state governments are hurting the nation by their greedy and corrupt nature and not allowing GST to come in its full intended form. Similarly other such reforms have also been struck down or watered down by states. I am of the opinion that the state governments' powers should be clipped to large extent. Keep all those things which affect pan-India with centre.



GST is a central affair. Why did they not retain full control over the GST network as well as the powers to legislate??

they have left themselves wide open to the rapacious manipulations of states, especially commie states like KAR and WB and any other rogue states.

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Re: GST - Discussion on all aspects.

Postby rahulm » 13 Jun 2017 18:51

I am on a slippery slope here but don't the states have some sort of constitutional authority to,levy taxes ?

The Centre may well had no option but to negotiate with the States. The fact that even BJP states are part of the mess,is probably an indicator that behind the scenes, away from public gaze, they are,somewhat reluctant participants in NaMos vision and purpose.

I am of the view, based on past performance States should only be empowered in the following :
Gauraksha, animal husbandry including fodder, kavi Sammelans, arts and crafts inc handicrafts khadi gram udyog until we achieve some semblance of governqnce p, performance and accountability.

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Re: GST - Discussion on all aspects.

Postby JayS » 13 Jun 2017 19:50

rahulm wrote:I am on a slippery slope here but don't the states have some sort of constitutional authority to,levy taxes ?

The Centre may well had no option but to negotiate with the States. The fact that even BJP states are part of the mess,is probably an indicator that behind the scenes, away from public gaze, they are,somewhat reluctant participants in NaMos vision and purpose.


Correct.

Chetak saar, this is the reason Centre could not take it over completely. They would have to amend the constitution for that and it would never happen when majority states will have to ratify that amendment. GST itself is amendment in constitution that's why Centre is on its knees in front of the state governments. In ideal world this system was designed to stop concentration of too much of power at one place. But this is not an ideal world. Basically the issue is the state politicians do not want to let go the source of income from their own hands (from which they can syphon off as much as they want). Otherwise they should not have any issue if all the taxes are collected by the centre and redistributed to states. But then there is a catch, in real world, there is a possibility that say a Congress govt in Centre might favour only congress governed states while redistributing and stymieing others from funds for political reasons. So whether it is good to leave states completely to whims and wishes of Centre is also a question. Some sort of middle path needs to be found wherein, centre can retain power to legislate without undue interference from states for the pan-India matters, while states be not left to Centre's mercy completely.

Land reforms, RERA are another good examples of how states sabotaged the good reforms from the Centre. Centre should atleast have an authority to impose laws/rules without letting states to dilute them. But In fact is NaMo is giving more power to states. Probably this is from his experience as GJ CM.

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Re: GST - Discussion on all aspects.

Postby rahulm » 14 Jun 2017 06:55

Centre nixes speculation of delay in GST rollout

Some villagers with businesses here are coming to me for GST advice :rotfl: . I explain turnover thresholds, input tax credits and then ask them to consult a good CA.

I have a query - if I have a retail business, say a shop and my turnover is less than Rs 20 lakh/year then I am exempt from GST. If my distributor's (the chap I buy from) turnover exceeds the threshold he will (should) charge me GST.

In such a scenario, even though my turnover is below the threshold won't I have to charge my customers GST and file a return if I want input tax credits ?

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Re: GST - Discussion on all aspects.

Postby Schmidt » 14 Jun 2017 12:47

rahulm wrote:Centre nixes speculation of delay in GST rollout

Some villagers with businesses here are coming to me for GST advice :rotfl: . I explain turnover thresholds, input tax credits and then ask them to consult a good CA.

I have a query - if I have a retail business, say a shop and my turnover is less than Rs 20 lakh/year then I am exempt from GST. If my distributor's (the chap I buy from) turnover exceeds the threshold he will (should) charge me GST.

In such a scenario, even though my turnover is below the threshold won't I have to charge my customers GST and file a return if I want input tax credits ?

----------------------------------------------------------
^^^

No need

You simply absorb your suppliers GSt as part of your total COGS and price your product accordingly

You wont get input credit as you wont be charging output GST either

The benefit to your customer is that they wont be paying GST on your value addition part ( diff between your SP and CP )

rahulm
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Re: GST - Discussion on all aspects.

Postby rahulm » 14 Jun 2017 13:15

Makes sense. Thanks

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Re: GST - Discussion on all aspects.

Postby JayS » 14 Jun 2017 15:07

How is GST gonna affect the RE..??

For KA the current taxes on construction values are 4.5% ST + 5% VAT = 9.5%. Some developers charge 6% ST depending on which type of license they are registered with under the ST law. But this effective rate of 4.5% or 6% is due to rebate on 60% or 70% of contract amount (depending on type of contract). As of now GST prescribed 12% tax replacing both ST and VAT. So the overall rate goes up slightly assuming that GOI will not issue any notification for abatement. Now in theory the developer is suppose to get tax credit on input cost and thus effective tax liability to get reduced from 12% minus input tax credit. Majority component of input tax credit is excise duty. (For ST/VAT the developers get tax credit even now under CENVAT, so I am neglecting that). But even now developers do not pass on the benefit of the CENVAT tax credit to consumers directly. They still charge owner full amount even though they might be paying government only a part of it (the remaining being offset by CENVAT credit). Now there can be an argument saying since they have paid the input tax from their pocket they have the right to pocket this difference between the amount taken from owner and the amount paid to govt finally. But then in this case no benefit is passed on to the purchaser. But similar thing can happen to the input tax credit now as well. The developer definitely will choose not to pass on the benefit directly to the purchasers. Yes, he can reduce total cost while keeping his margin same but that not how RE really works always. In summary as per my understanding, the total tax is increasing for RE purchase for aam aadmi. For a 1Cr property it could mean anywhere between ~50k-2lakh (depending on how the developer split cost between construction cost and land cost. Only construction cost attracts taxes.)

Even if the developers decide to pass on the benefit of tax credits to consumers, at least initially for 1-2yrs its not gonna happen for already under construction properties as a lot of input cost might have been paid before GST comes giving no credit on them. So as per my understanding, GST will increase tax burden for home owners in short term definitely and most likely in long term as well.

Anyone has any better/more definite idea..?


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