Bharat Rakshak Forum Announcement

Hello Everyone,

A warm welcome back to the Bharat Rakshak Forum.

Important Notice: Due to a corruption in the BR forum database we regret to announce that data records relating to some of our registered users have been lost. We estimate approx. 500 user details are deleted.

To ease the process of recreating the user IDs we request members that have previously posted on the BR forums to recognise and identify their posts, once the posts are identified please contact the BRF moderator team by emailing BRF Mod Team with your post details.

The mod team will be able to update your username, email etc. so that the user history can be maintained.

Unfortunately for members that have never posted or have had all their posts deleted i.e. users that have 0 posts, we will be unable to recreate your account hence we request that you re-register again.

We apologise for any inconvenience caused and thank you for your understanding.

Regards,
Seetal

GST - Discussion on all aspects.

The Technology & Economic Forum is a venue to discuss issues pertaining to Technological and Economic developments in India. We request members to kindly stay within the mandate of this forum and keep their exchanges of views, on a civilised level, however vehemently any disagreement may be felt. All feedback regarding forum usage may be sent to the moderators using the Feedback Form or by clicking the Report Post Icon in any objectionable post for proper action. Please note that the views expressed by the Members and Moderators on these discussion boards are that of the individuals only and do not reflect the official policy or view of the Bharat-Rakshak.com Website. Copyright Violation is strictly prohibited and may result in revocation of your posting rights - please read the FAQ for full details. Users must also abide by the Forum Guidelines at all times.
chetak
BRF Oldie
Posts: 15845
Joined: 16 May 2008 12:00

Re: GST - Discussion on all aspects.

Postby chetak » 11 Jul 2017 00:28

Gus wrote:It's a free market and prices will settle back at an equilibrium that customer and trader will arrive at when the dust settles. temporary pricing shenanigans like this is part of the game.

if a local population of folks (traders, consumers and everyone) cannot figure out that Rs 77 for a lime juice is too much and somebody is not cornering the market with a Rs 65 juice - then it means people are fine with that price. Both these situations are not the fault of GST.


If its a fresh lime juice, there should be no tax whatsoever. If it is a fresh lime soda, there just may be GST on the soda part.

vivek_v
BRFite -Trainee
Posts: 84
Joined: 03 Apr 2011 08:03

Re: GST - Discussion on all aspects.

Postby vivek_v » 11 Jul 2017 07:25

chetak wrote:If its a fresh lime juice, there should be no tax whatsoever. If it is a fresh lime soda, there just may be GST on the soda part.


Sir, I checked with my local hotels. Their bone of contention is that while most of the items which they buy have no input tax (food items), they are forced to charged @18% GST even if it's a self-service restaurant (AC). Chennai heat means that it's very difficult to eat in afternoons without AC.

Considering that VAT as very low in TN (2.5%) whatever math you do on tax credits, the price seems to increase by 10%. GST of 18% for even self-service in an AC restaurant is potentially killing for everyone, especially for migrant working people. I reduced eating out since I have no interest to pay 18% tax on a plate of Idly and this is causing a chain reaction where even busy hotels are seeing reduced foot falls.

Whatever positive points GST has, for the hospitality and entertainment industry, GST is a huge negative.

srin
BRFite
Posts: 1376
Joined: 11 Aug 2016 06:13

Re: GST - Discussion on all aspects.

Postby srin » 11 Jul 2017 08:39

Does a restaurant get input tax credits for the rent it pays, for the electricity it uses and for the transport of food items ?

JayS
BRF Oldie
Posts: 2614
Joined: 11 Aug 2016 06:14

Re: GST - Discussion on all aspects.

Postby JayS » 11 Jul 2017 09:05

While raw unprocessed food items are tax free, packaged branded food items n processed food items are mostly in 5% bracket. Unless restaurents are buying unbranded raw material, they shud be getting some ITC.

If there is GST being paid on utilities, rent, any input services, all that should be eligible for ITC.

However, AC restaurents were suppose to pay ST of 6% even in previous tax regime. Considering ST + VAT and ICT, the net increase in tax should not be much. This flat 18% tax increase looks like an attempt to make windfall gain under the pretext of GST. Else I fail to see how can there be flat 18% increase. Yes,g non-AC restaurents are seeing steeper increase.

Also not to forget this 18% tax has subsumed not only ST + VAT but also Excise, octrai et al and the bribes to be paid at various nakas, offices. Net net there should not be any large impact on final price. GST is designed to be tax neutral at the receiveing end.

chetak
BRF Oldie
Posts: 15845
Joined: 16 May 2008 12:00

Re: GST - Discussion on all aspects.

Postby chetak » 11 Jul 2017 10:29

vivek_v wrote:
chetak wrote:If its a fresh lime juice, there should be no tax whatsoever. If it is a fresh lime soda, there just may be GST on the soda part.


Sir, I checked with my local hotels. Their bone of contention is that while most of the items which they buy have no input tax (food items), they are forced to charged @18% GST even if it's a self-service restaurant (AC). Chennai heat means that it's very difficult to eat in afternoons without AC.

Considering that VAT as very low in TN (2.5%) whatever math you do on tax credits, the price seems to increase by 10%. GST of 18% for even self-service in an AC restaurant is potentially killing for everyone, especially for migrant working people. I reduced eating out since I have no interest to pay 18% tax on a plate of Idly and this is causing a chain reaction where even busy hotels are seeing reduced foot falls.

Whatever positive points GST has, for the hospitality and entertainment industry, GST is a huge negative.


Aren't all food items (unpackaged) out of the purview of the GST??

jayasimha
BRFite
Posts: 400
Joined: 09 Feb 2011 17:31

Re: GST - Discussion on all aspects.

Postby jayasimha » 11 Jul 2017 10:42

https://www.cleanmoney.gov.in/

Nowadays lot of websites are created by Gov of India.

Posting for records.

chetak
BRF Oldie
Posts: 15845
Joined: 16 May 2008 12:00

Re: GST - Discussion on all aspects.

Postby chetak » 11 Jul 2017 11:03

GST effect: How GST will impact your restaurant bill starting tomorrow



Raman Chona, New Delhi, June 30, 2017

The Indian government has come up with a plethora of reforms, in a move to eradicate corruption from the market and add transparency to its operations. No reform in the recent past has generated as much buzz as the Goods and Services Tax (GST).

Its implementation is set to single-handedly abolish all the unnecessary money-charging schemes, earlier adopted by retailers to make easy money. The reform will noticeably reduce the compliance cost for taxpayers, harmonise the tax structure, while transforming operations into a uniform entity across states. Especially for food and beverages, its implications remain progressive. As per the current system of taxation, the restaurant sector is burdened with multiple high-costing taxes, charges and cesses. On each and every food and beverages bill, the diner pays additional VAT as well as service tax and service charge, not to forget the cesses. The range of VAT rate is generally between 12.5-14.5 per cent as per the individual State VAT laws and abatement rate on service tax on restaurant services is 6%.

Thus, the effective tax rate comes to somewhere around 18.5-20.5 per cent that varies for different states.

With the execution of GST, all taxes will form under a single bracket, adding uniformity to a market plagued by unnecessary additional taxes. In context to restaurants, while they are paying tax, a total of VAT at (12.5 per cent)+ Service Tax (6 per cent) + Service Charge (10 per cent) is applied on it.
Under the new system, the restaurants are broadly divided into two areas: non-AC and AC restaurants. Dining out in air conditioned restaurants will attract tax of 18 per cent as against 10.6 per cent charged (including VAT and service tax) now. For low-cost restaurants, the tax rate would be 12 per cent as against 6 per cent now. Non-AC restaurants will charge 12 per cent GST on food bill. 5-star hotels will be even more expensive as the GST rate will be 28 per cent.

Restaurants with Rs 50 lakh or below turnover will go under the 5 per cent composition. Moreover, it will also make it easy for the restaurants to take credit of input goods and services consumed while providing restaurant services. It is expected that GST will marginally lower the overall tax rate however, till the time the final GST rates are announced for this particular sector, no conclusion can be derived out of it.

rahulm
BRFite
Posts: 1121
Joined: 19 Jun 2000 11:31

Re: GST - Discussion on all aspects.

Postby rahulm » 11 Jul 2017 11:50

GST impact on companies: Gloom and doom vanishes, India Inc at ease

Migrating to GSTN was a simple process that only took ten minutes,” Nitin Gupta of Siyaram Bros, a company sells automobile parts to retailers across the country. Gupta said with over `30 crore in annual turnover, his company has had a smooth ride in the first ten days of the new indirect taxation regime, that marks a giant leap towards a one-nation- one-tax regime. Although, businesses have often stated that filing returns in GST would be complicated, Gupta said that most of the processes are similar to what companies were doing under the VAT system.


Gupta, however, added that those retailers the company deals with have been in state of panic largely due to lack of awareness. The company expects smooth flow of input tax credits as it buys from big businesses who are expected to be GST-compliant. “Some of the retailers who we sell to may not be ready, which could impact our sale volume,” Gupta said.


Of the 81 lakh existing taxpayers, 68 lakh have migrated to GSTN while nearly 2 lakh new taxpayers have also registered on the portal at the end of June.

rahulm
BRFite
Posts: 1121
Joined: 19 Jun 2000 11:31

Re: GST - Discussion on all aspects.

Postby rahulm » 11 Jul 2017 11:59

Nepal officials to hold talks with India on GST

According to the traders and freight forwarders, the authority at the Kolkata Port earlier used to impose 15 per cent logistic service charge on goods imported from third countries. With GST coming into effect, that charge has been raised to 18 per cent. “Although the GST should not affect Nepal’s trade,

JayS
BRF Oldie
Posts: 2614
Joined: 11 Aug 2016 06:14

Re: GST - Discussion on all aspects.

Postby JayS » 11 Jul 2017 13:09

chetak wrote:GST effect: How GST will impact your restaurant bill starting tomorrow



Raman Chona, New Delhi, June 30, 2017

The Indian government has come up with a plethora of reforms, in a move to eradicate corruption from the market and add transparency to its operations. No reform in the recent past has generated as much buzz as the Goods and Services Tax (GST).

Its implementation is set to single-handedly abolish all the unnecessary money-charging schemes, earlier adopted by retailers to make easy money. The reform will noticeably reduce the compliance cost for taxpayers, harmonise the tax structure, while transforming operations into a uniform entity across states. Especially for food and beverages, its implications remain progressive. As per the current system of taxation, the restaurant sector is burdened with multiple high-costing taxes, charges and cesses. On each and every food and beverages bill, the diner pays additional VAT as well as service tax and service charge, not to forget the cesses. The range of VAT rate is generally between 12.5-14.5 per cent as per the individual State VAT laws and abatement rate on service tax on restaurant services is 6%.

Thus, the effective tax rate comes to somewhere around 18.5-20.5 per cent that varies for different states.

With the execution of GST, all taxes will form under a single bracket, adding uniformity to a market plagued by unnecessary additional taxes. In context to restaurants, while they are paying tax, a total of VAT at (12.5 per cent)+ Service Tax (6 per cent) + Service Charge (10 per cent) is applied on it.
Under the new system, the restaurants are broadly divided into two areas: non-AC and AC restaurants. Dining out in air conditioned restaurants will attract tax of 18 per cent as against 10.6 per cent charged (including VAT and service tax) now. For low-cost restaurants, the tax rate would be 12 per cent as against 6 per cent now. Non-AC restaurants will charge 12 per cent GST on food bill. 5-star hotels will be even more expensive as the GST rate will be 28 per cent.

Restaurants with Rs 50 lakh or below turnover will go under the 5 per cent composition. Moreover, it will also make it easy for the restaurants to take credit of input goods and services consumed while providing restaurant services. It is expected that GST will marginally lower the overall tax rate however, till the time the final GST rates are announced for this particular sector, no conclusion can be derived out of it.


Service charge is not a tax and should not be included in the tax calculation. Because GST is not gonna eliminate it. Also VAT was state dependent, some states has very low VAT on food and some had as high as 14.5% or more. So the impact on final price is varying.

Also the restaurants were classified as AC and non-AC in ST as well. Not new under GST. But while ST was 0% for non-AC and 6% for AC, the GST rates are 12% and 18% respectively for the two.

While VAT was applicable for all the restaurants it was to be applied on 100% of the food bill, which means it was also applicable on the service component on which GOI was charging ST separately. So basically states were double-taxing 40% of the food bill.

For KA,

for AC restaurants: earlier on bill tax was 14.5% VAT + 6% ST = 20.5% total tax on Total food + service bill.
for non AC restaurants: earlier on bill tax was 14.5% VAT + 0% ST = 14.5% total tax on Total food bill.

Now under GST
for AC restaurants: 18% total tax on Total food + service bill.
for non AC restaurants: 12% total tax on Total food bill.

Add to that Input tax credit. Clearly quite a reduction.

Also note that as the article says, low turnover businesses can opt for Composition scheme where GST would be flat 5%. But they will not be able to get ICT as well. Still its much easier for small businesses from the book-keeping point of view.

JayS
BRF Oldie
Posts: 2614
Joined: 11 Aug 2016 06:14

Re: GST - Discussion on all aspects.

Postby JayS » 11 Jul 2017 18:28

Had lunch in an udupi restaurant. The owner added 12% GST to the sticker prices. I will try to take a snap of the bill and report it to GOI if possible.

Zynda
BRFite
Posts: 1280
Joined: 07 Jan 2006 00:37
Location: J4

Re: GST - Discussion on all aspects.

Postby Zynda » 11 Jul 2017 19:16

^^Been pretty much how most eateries are applying GST. Take the pre-GST MRP and add GST percentage tax to it. As somebody had mentioned it earlier, giving a feeling of instant inflation when purchasing.

srinebula
BRFite
Posts: 113
Joined: 12 Oct 2016 13:36

Re: GST - Discussion on all aspects.

Postby srinebula » 11 Jul 2017 20:10

Subway prices went down by almost 2% post-GST.
OTOH, office food vendor has jacked up prices.
There seems to be huge difference between GST applicable on AC vs non-AC restaurants (5% vs 180%).
What are the relevant provisions distinguishing AC vs non-AC, in grey ares like:
1. Food delivery, and takeaway: Can an AC restaurant charge 5% rate?
2. If a vendor is supplying food in office premises, can they charge 5% rate? They are not really maintaining AC restaurant here.

disha
BR Mainsite Crew
Posts: 6076
Joined: 03 Dec 2006 04:17
Location: gaganaviharin

Re: GST - Discussion on all aspects.

Postby disha » 11 Jul 2017 23:06

For whiners on GST., please follow up the avenues provided by GOI before engaging in a whine.

If the Restaurant is charging taxes *now* and raised the rates., they were not paying taxes before. Report them. Send an email to the tax authority., I have provided the details in my prev. post with the name of the establishment and as much proof as possible.

Second, do not go to those establishments. Nothing wrong in foregoing your lime/lemon/orange joos for the next we weeks. Or your fav restaurant while eating out.

Third., do follow the news http://www.livemint.com/Politics/iy8yztiPm9RpwPWrg2eCQN/GST-Eateries-should-cut-rates-of-food-items-says-Hasmukh-A.html

Eateries must cut cost of food items., for input-tax credit. So start going to those eateries which charge GST but provide it cheaper. Some of those eateries may actually think of raising the profit margin in the short run., but if you cut down on eating out they will be forced to change.

---

People whining on sales tax forms are just whining. Even in old system, one had to prepare a state sales tax and a central sales tax form at the end of month and submit it to the dogs at sales-tax office with demand draft in hand every month. No input tax credits. Further no release of B or C or D forms for future tax purposes unless appropriate biscuits are paid. Tax was due in demand draft even if your customer's cheque will bounce - no recourse to state that it was a lost sale until end of the year. Then again you have to go to the sales tax office with dog biscuits in hand to get back the over paid sales tax.

---

To prepare the form, all one needs is basic math skills. You paid tax to your supplier, that is your input tax credit. Quote their TIN/PAN/GSTN number and put in the number - how much you bought from them and how much tax you paid. And then pay up the tax you charged to your customer. The true-up happens at the end of the month.

Of course if you want to do "under ka maal"., then this is indeed #Blow2Modi.

disha
BR Mainsite Crew
Posts: 6076
Joined: 03 Dec 2006 04:17
Location: gaganaviharin

Re: GST - Discussion on all aspects.

Postby disha » 12 Jul 2017 00:31

srinebula wrote:S
What are the relevant provisions distinguishing AC vs non-AC, in grey ares like:
1. Food delivery, and takeaway: Can an AC restaurant charge 5% rate?
2. If a vendor is supplying food in office premises, can they charge 5% rate? They are not really maintaining AC restaurant here.


Food delivery/takeaway is catering (what is the grey area there?). GST rate IMHO is 18% on catering services. Good part about it., you can have restaurant in one area and cater into another area.

However caterers should have jacked rates only by 3%. Prev. I believe it was 15% on catering services. Note that the delivery charge etc should come after the tax is charged. The delivery charge is getting the food to you.

Now here too input tax credits come into picture. I can set up a catering service say "Bhajjis on beach" which sends food packets to all offices from Juhu to Nariman point. I operate out of Vashi. Since I run large scale operations, I pay for the groceries with tax and against each GSTN I log the taxes I paid. I also charge you 18% tax. For the taxes I paid, I get input tax credit (ITC).

I can pocket the ITC., but think about it, you can now start "pakodas on beach" and pass on the ITC and undercut me by substantially.

This is where GST shines through.

Note operating out of Vashi, I can fedex the bhajjis to Surat if need be! In fact, all the caterers to the airline industry have a good way to get into other catering business and undercut the local restaurants.

tandav
BRFite
Posts: 226
Joined: 26 Aug 2016 08:24

Re: GST - Discussion on all aspects.

Postby tandav » 12 Jul 2017 09:12

How can GST registered business called X claim GST input credit for expenses borne by employees of X by way of purchase of services such as food and hotels by GST registered entity Y). The food and board invoices of Y have GST charged but typically Y does not have GST registration number of X. Does the employee need to tell Y that he should file GST as being provided to X and not to himself as an individual??

JayS
BRF Oldie
Posts: 2614
Joined: 11 Aug 2016 06:14

Re: GST - Discussion on all aspects.

Postby JayS » 12 Jul 2017 16:16

tandav wrote:How can GST registered business called X claim GST input credit for expenses borne by employees of X by way of purchase of services such as food and hotels by GST registered entity Y). The food and board invoices of Y have GST charged but typically Y does not have GST registration number of X. Does the employee need to tell Y that he should file GST as being provided to X and not to himself as an individual??

Based on my limited understanding:

I suppose this is only possible when the expenses done by employees of X are valid business expenses such as travelling for business meeting. I hope you mean by this only. Given this is true, the invoicing should be done in the name of X and X's GSTN should be provided to the seller who is issuing invoice. Otherwise I don't think its possible to get ITC. Because Y will not have GSTN anyway. And I don't think ITC is transferrable like this.

(I have been getting emails from OLa/Uber/Broadband etc providers to register for GSTN to claim ITC. But this may not be possible to do always. For ex, if you eat in an Udupi Restaurant, they may not have proper software setup where elaborate invoicing can be done. In one auto spare part shop the guy asked me Adhar card for invoice, else no bill under GST..!! This is absurd. :lol: )

Gus
BRF Oldie
Posts: 7956
Joined: 07 May 2005 02:30

Re: GST - Discussion on all aspects.

Postby Gus » 12 Jul 2017 17:00

Today one poraali (facebook activist) at my feed was ranting about how we should now have a 'vari kodaamai' (not paying taxes) movement to counter the 'vari kodumai' (tax terrorism)

nice play on words, but i was like ..dude do you even understand GST.

tried to explain, but I don't think anything went in.

ragupta
BRFite
Posts: 303
Joined: 01 Jan 1970 05:30

Re: GST - Discussion on all aspects.

Postby ragupta » 12 Jul 2017 19:30

http://economictimes.indiatimes.com/wea ... 559831.cms

Restaurant bill explained in detail.

Suraj
Forum Moderator
Posts: 10932
Joined: 20 Jan 2002 12:31

Re: GST - Discussion on all aspects.

Postby Suraj » 12 Jul 2017 20:02

tandav wrote:How can GST registered business called X claim GST input credit for expenses borne by employees of X by way of purchase of services such as food and hotels by GST registered entity Y). The food and board invoices of Y have GST charged but typically Y does not have GST registration number of X. Does the employee need to tell Y that he should file GST as being provided to X and not to himself as an individual??

GST taxes the value addition . Strictly speaking , food and beverage expenses, as well as travel costs are final consumption expenditure . Where's the value add here ? 'It took me somewhere, gave me energy and let me do work' is not really value add for which you're entitled to a tax refund - if it were so, then private individuals should also be able to claim refund for taking metro to mall to eat vada pav :)

Businesses do reimburse such costs to the employee. It don't get a tax refund for it . It's a business expense for them .

tandav
BRFite
Posts: 226
Joined: 26 Aug 2016 08:24

Re: GST - Discussion on all aspects.

Postby tandav » 12 Jul 2017 23:07

Suraj wrote:
tandav wrote:How can GST registered business called X claim GST input credit for expenses borne by employees of X by way of purchase of services such as food and hotels by GST registered entity Y). The food and board invoices of Y have GST charged but typically Y does not have GST registration number of X. Does the employee need to tell Y that he should file GST as being provided to X and not to himself as an individual??

GST taxes the value addition . Strictly speaking , food and beverage expenses, as well as travel costs are final consumption expenditure . Where's the value add here ? 'It took me somewhere, gave me energy and let me do work' is not really value add for which you're entitled to a tax refund - if it were so, then private individuals should also be able to claim refund for taking metro to mall to eat vada pav :)

Businesses do reimburse such costs to the employee. It don't get a tax refund for it . It's a business expense for them .


In most consultancy firms where the final product is services being billed at 18% GST the expenses such as employee travel to client sites including hotel and food are significant part of the project billing value upto perhaps 20-30%. It makes eminent sense to take input credit for the services that the the employee avails while doing their job as it is nearly 30%*18%=5.6% saving 5.6% as input tax credit is a significant fraction. Heck providing food to employees via office canteen gets ITC.

Suraj
Forum Moderator
Posts: 10932
Joined: 20 Jan 2002 12:31

Re: GST - Discussion on all aspects.

Postby Suraj » 13 Jul 2017 00:11

Just because it's a significant business expense doesn't imply it is due any tax benefit . I'm not a tax consultant but it doesn't strike me that food is a value add input . Catering services yes . But the food itself ? Not sure that makes sense . An individual can claim the same thing : they spend 30% of income on food at home so they're due an input tax credit since they work and generate revenue.

rahulm
BRFite
Posts: 1121
Joined: 19 Jun 2000 11:31

Re: GST - Discussion on all aspects.

Postby rahulm » 13 Jul 2017 15:14

GST: How companies are gaming the system


Many companies, especially those with a turnover of between Rs 50 crore to Rs 200 crore, are creating shell companies specifically to take advantage of GST. These shell companies would be used to take credit in an interstate transaction and would accumulate input credit, only to be shut a year later before the tax audit comes


The company would first sell outside the state through a shell company and claim 18% GST with the government. The promoters plan that they would stop paying GST after a couple of transactions," a person in the know said


Others are planning to rig the system by outrightly lying about the products.If a Mumbai company sends goods that are at high GST rate of say 28% to a New Delhi company but the invoice shows they are transporting food grains, which are at 5%. The buyer in New Delhi would never show sales of the goods and never pay GST," a tax expert said.
I had alluded to something like this happening.

These shell companies, after the GST credit transfer, can go back to being dormant and may not get caught if the avoidance per company is around Rs 5 crore," a person in the know said

Yagnasri
BRF Oldie
Posts: 9157
Joined: 29 May 2007 18:03

Re: GST - Discussion on all aspects.

Postby Yagnasri » 13 Jul 2017 15:27



While is possible to game the system it may not be possible to get anything out on long term basis. Now companies can not be formed without any KYC etc and people behind every company can be traced. They need to open bank accounts etc which also require further KYC checks and records.

The other thing is the data analytics which GoI may use to track these kinds of games. If caught these people will be out in open. The entire chain will be exposed.

rahulm
BRFite
Posts: 1121
Joined: 19 Jun 2000 11:31

Re: GST - Discussion on all aspects.

Postby rahulm » 13 Jul 2017 16:03

All that is true and agreed.

Given the extent of evasion pre GST, historically, the State has not shown the will to,prosecute to the fullest. Laws existed pre GST.

There are reports of,profiteering coming in. Don't know the extent of then issue (inside or outside the proverbial bell curve ) but besides occasional noise I haven't seen any action or inquiry against the alleged offenders to serve as a warning shot across the bows of the profiteers.

How many reports of profiteering should a good number be to galvanise the machinery ?

It may be, they are simply waiting for competitive forces to kick in and stabilise the system, in the meanwhile some may laugh merrily to the bank without a mask, with a Pavlovian lesson reinforced. Viz it pays to be dishonest the State isn't going to do anything.

At the end of it all, regardless, the nation would have got the GST, a good thing and the profiteering may be just collateral damage in the larger scheme of things (not good ).

I am not sure this lack of will to prosecute has changed in the post GST epoch. I'll keep an open mind since it's early days yet but history may prove itself,right, yet again. Hopefully, I am wrong.
Last edited by rahulm on 13 Jul 2017 16:17, edited 1 time in total.

JayS
BRF Oldie
Posts: 2614
Joined: 11 Aug 2016 06:14

Re: GST - Discussion on all aspects.

Postby JayS » 13 Jul 2017 16:17

Suraj wrote:Just because it's a significant business expense doesn't imply it is due any tax benefit . I'm not a tax consultant but it doesn't strike me that food is a value add input . Catering services yes . But the food itself ? Not sure that makes sense . An individual can claim the same thing : they spend 30% of income on food at home so they're due an input tax credit since they work and generate revenue.


Suraj, since the ST act and now GST explicitly omits services provided by employee to employer as non-taxable service, there is no question of any tax on that or someone claiming any credit for tax on anything that goes as input to create that service.

As you must be aware, many small businesses, particularly personal businesses show all and sundry expenses as company expenses to save income taxes including beauty parlour bills, personal clothing bills and what not. Some of it is legit business expense such as travel/food bills for employees on business trips (paid over and above normal salary), or food bills for some business lunch/dinners, subsidized food canteen or transport facilities for employees which could be in the form of reimbursement. Some of these, if not all, definitely fall in the category where a business can argue that its an expense which goes into creating value/services/goods and get ICT. But I suppose there has to be an audit in place linking these expenses to the output created directly, on which final GST is being paid. But yes, this seems to be a gray area. Atleast I don't see there is clear directive saying food eaten by employee which was paid by company, over and above his salary, should or should not get ICT

chetak
BRF Oldie
Posts: 15845
Joined: 16 May 2008 12:00

Re: GST - Discussion on all aspects.

Postby chetak » 13 Jul 2017 17:08

rahulm wrote:All that is true and agreed.

Given the extent of evasion pre GST, historically, the State has not shown the will to,prosecute to the fullest. Laws existed pre GST.

There are reports of,profiteering coming in. Don't know the extent of then issue (inside or outside the proverbial bell curve ) but besides occasional noise I haven't seen any action or inquiry against the alleged offenders to serve as a warning shot across the bows of the profiteers.

How many reports of profiteering should a good number be to galvanise the machinery ?

It may be, they are simply waiting for competitive forces to kick in and stabilise the system, in the meanwhile some may laugh merrily to the bank without a mask, with a Pavlovian lesson reinforced. Viz it pays to be dishonest the State isn't going to do anything.

At the end of it all, regardless, the nation would have got the GST, a good thing and the profiteering may be just collateral damage in the larger scheme of things (not good ).

I am not sure this lack of will to prosecute has changed in the post GST epoch. I'll keep an open mind since it's early days yet but history may prove itself,right, yet again. Hopefully, I am wrong.



no body escapes.

Those who do not pay "officially" are paying "unofficially".

The tax guys do not let go even a single naya paise,

the cops take care of the rest including the street hawkers.

JayS
BRF Oldie
Posts: 2614
Joined: 11 Aug 2016 06:14

Re: GST - Discussion on all aspects.

Postby JayS » 13 Jul 2017 17:52

chetak wrote:
rahulm wrote:All that is true and agreed.

Given the extent of evasion pre GST, historically, the State has not shown the will to,prosecute to the fullest. Laws existed pre GST.

There are reports of,profiteering coming in. Don't know the extent of then issue (inside or outside the proverbial bell curve ) but besides occasional noise I haven't seen any action or inquiry against the alleged offenders to serve as a warning shot across the bows of the profiteers.

How many reports of profiteering should a good number be to galvanise the machinery ?

It may be, they are simply waiting for competitive forces to kick in and stabilise the system, in the meanwhile some may laugh merrily to the bank without a mask, with a Pavlovian lesson reinforced. Viz it pays to be dishonest the State isn't going to do anything.

At the end of it all, regardless, the nation would have got the GST, a good thing and the profiteering may be just collateral damage in the larger scheme of things (not good ).

I am not sure this lack of will to prosecute has changed in the post GST epoch. I'll keep an open mind since it's early days yet but history may prove itself,right, yet again. Hopefully, I am wrong.



no body escapes.

Those who do not pay "officially" are paying "unofficially".

The tax guys do not let go even a single naya paise,

the cops take care of the rest including the street hawkers.


+1
:rotfl: :rotfl:

ragupta
BRFite
Posts: 303
Joined: 01 Jan 1970 05:30

Re: GST - Discussion on all aspects.

Postby ragupta » 13 Jul 2017 19:15

Digital transactions volume "leapfrogged" by 3 years post-November 16

Read more at:
http://economictimes.indiatimes.com/art ... aign=cppst

ragupta
BRFite
Posts: 303
Joined: 01 Jan 1970 05:30

Re: GST - Discussion on all aspects.

Postby ragupta » 13 Jul 2017 19:36

Petrol pump theft caught in Yogi Adityanath crackdown in Uttar Pradesh had chips imported from China; mastermind caught in Karnataka
http://www.financialexpress.com/india-n ... ka/762210/

Suraj
Forum Moderator
Posts: 10932
Joined: 20 Jan 2002 12:31

Re: GST - Discussion on all aspects.

Postby Suraj » 13 Jul 2017 20:09

JayS wrote:
Suraj wrote:Just because it's a significant business expense doesn't imply it is due any tax benefit . I'm not a tax consultant but it doesn't strike me that food is a value add input . Catering services yes . But the food itself ? Not sure that makes sense . An individual can claim the same thing : they spend 30% of income on food at home so they're due an input tax credit since they work and generate revenue.


Suraj, since the ST act and now GST explicitly omits services provided by employee to employer as non-taxable service, there is no question of any tax on that or someone claiming any credit for tax on anything that goes as input to create that service.

As you must be aware, many small businesses, particularly personal businesses show all and sundry expenses as company expenses to save income taxes including beauty parlour bills, personal clothing bills and what not. Some of it is legit business expense such as travel/food bills for employees on business trips (paid over and above normal salary), or food bills for some business lunch/dinners, subsidized food canteen or transport facilities for employees which could be in the form of reimbursement. Some of these, if not all, definitely fall in the category where a business can argue that its an expense which goes into creating value/services/goods and get ICT. But I suppose there has to be an audit in place linking these expenses to the output created directly, on which final GST is being paid. But yes, this seems to be a gray area. Atleast I don't see there is clear directive saying food eaten by employee which was paid by company, over and above his salary, should or should not get ICT

Thanks for the tax law gyan. And yes I don't think any claims of beauty parlor bills, food bills and travel bills will pass the audit smell check.

Yes, what previously qualified as simply receiptgiri doesn't work anymore. There will of course be attempts. But the input-output linkage has to be established. To get and keep the input tax credit, your tax needs to be shown as paid, and the seller's tax needs to be shown as paid. The other person's payment makes up your input credit. When everyone's fudging, the simple result is everyone ITC goes down too. There isn't really any free lunch here.

The bottom line is that any input tax credit comes out of someone else's tax payment. It's not obtained just by claiming it. The other guy has to pay too. They don't pay and you claim it -> you're on the hook for fudging paperwork too.

IndraD
BRF Oldie
Posts: 6470
Joined: 26 Dec 2008 15:38
Location: भारत का निश्चेत गगन

Re: GST - Discussion on all aspects.

Postby IndraD » 13 Jul 2017 20:21


JayS
BRF Oldie
Posts: 2614
Joined: 11 Aug 2016 06:14

Re: GST - Discussion on all aspects.

Postby JayS » 14 Jul 2017 12:46

Suraj wrote:
JayS wrote:
Suraj, since the ST act and now GST explicitly omits services provided by employee to employer as non-taxable service, there is no question of any tax on that or someone claiming any credit for tax on anything that goes as input to create that service.

As you must be aware, many small businesses, particularly personal businesses show all and sundry expenses as company expenses to save income taxes including beauty parlour bills, personal clothing bills and what not. Some of it is legit business expense such as travel/food bills for employees on business trips (paid over and above normal salary), or food bills for some business lunch/dinners, subsidized food canteen or transport facilities for employees which could be in the form of reimbursement. Some of these, if not all, definitely fall in the category where a business can argue that its an expense which goes into creating value/services/goods and get ICT. But I suppose there has to be an audit in place linking these expenses to the output created directly, on which final GST is being paid. But yes, this seems to be a gray area. Atleast I don't see there is clear directive saying food eaten by employee which was paid by company, over and above his salary, should or should not get ICT

Thanks for the tax law gyan. And yes I don't think any claims of beauty parlor bills, food bills and travel bills will pass the audit smell check.

Yes, what previously qualified as simply receiptgiri doesn't work anymore. There will of course be attempts. But the input-output linkage has to be established. To get and keep the input tax credit, your tax needs to be shown as paid, and the seller's tax needs to be shown as paid. The other person's payment makes up your input credit. When everyone's fudging, the simple result is everyone ITC goes down too. There isn't really any free lunch here.

The bottom line is that any input tax credit comes out of someone else's tax payment. It's not obtained just by claiming it. The other guy has to pay too. They don't pay and you claim it -> you're on the hook for fudging paperwork too.


Of coarse its assumed that invoice is prepared and the seller has linked the GSTIN of the company which is intending to claim it. If they claim ITC and the original seller has not paid the GST, he is caught by the system with pants down. But if he has filed GST then the company has valid link in the system to GST paid by the seller. As an example, if a company has bought air-ticket for its employee on business trip, and has given its GSTIN to airline, and Airline has paid GST, the company should be able to claim that no..??

If travel was not a legit business expense eligible for ITC, why are we getting emails and sms from Airlines and Cab aggregators to register our GSTIN for claiming ITC..?


Suraj
Forum Moderator
Posts: 10932
Joined: 20 Jan 2002 12:31

Re: GST - Discussion on all aspects.

Postby Suraj » 14 Jul 2017 17:27

JayS wrote:Of coarse its assumed that invoice is prepared and the seller has linked the GSTIN of the company which is intending to claim it. If they claim ITC and the original seller has not paid the GST, he is caught by the system with pants down. But if he has filed GST then the company has valid link in the system to GST paid by the seller. As an example, if a company has bought air-ticket for its employee on business trip, and has given its GSTIN to airline, and Airline has paid GST, the company should be able to claim that no..??

If travel was not a legit business expense eligible for ITC, why are we getting emails and sms from Airlines and Cab aggregators to register our GSTIN for claiming ITC..?

I don't know actually . I have not read the rules . I'm working from basic principles . The end consumer does not get a credit , end you buy food , you pay tax but don't get a refund from the sellers taxes paid, i.e. your rate is already 'net'. Another basic principal is that you are due a credit on your inputs only if you pay a tax on your output .

So... I don't know whether business travel is a classifiable input as such . Its a business expense an employee can be reimbursed for, but the company receiving a tax credit ? I don't know and don't think so...

geeth
BRFite
Posts: 1192
Joined: 22 Aug 1999 11:31
Location: India

Re: GST - Discussion on all aspects.

Postby geeth » 14 Jul 2017 20:35

For Any expenses you have incurred for the purpose of furthering your business, you can claim refund of the tax paid ..for eg., if you buy a pencil for Rs 2/-, for business, you claim refund of tax paid. If you have bought pencil without paying tax and entered the expense in your books, then also you have to pay tax ( reverse charge). Reverse charge has to be paid separately and cannot be adjusted against sales tax to be paid. But it will be adjusted in subsequent month.
What is applicable for pencil is applicable for hotel bill, travel or any other businesz expenses.

jayasimha
BRFite
Posts: 400
Joined: 09 Feb 2011 17:31

Re: GST - Discussion on all aspects.

Postby jayasimha » 15 Jul 2017 16:25

http://pib.nic.in/newsite/PrintRelease. ... lid=167446

Provisions related to registration under GST regime; Traders are requested to register now without waiting for the last date i.e. 30th July, 2017.

As per the GST laws, one is required to take registration on or before 30thJuly, 2017. All traders are requested to register now without waiting for the last date.

If one is carrying-out any business and have an Annual Aggregate turnover in the preceding Financial Year exceeding Rs. 20 lakh (Rs. 10 lakh in Special Category States), you need to register in all the States/Union Territories from where you are making taxable supplies. However, one need not register if one is engaged exclusively in the supply of exempted goods or services or both.
----------------
For table check the link above
-----------




Taking registration in GST is a very simple process, and the comfort of the taxpayer has been kept in mind while designing the procedure. You can take registration from the comfort of your home by filing an online application on the common portal https://www.gst.gov.in/. All one need is a valid PAN, email id and a mobile number. Once these 3 details are verified, one will be required to furnish other details relating to his/her business. There is no need to submit any physical documents (unless a query is raised and documents asked for) and all necessary documents can be scanned and uploaded. If there are no queries, one will receive his/her registration online within 3 working days from submission of online application.



It’s simple. But what will happen if one doesn’t get registered?

More than anything, getting registered is for one’s own benefit. If one is liable to take registration but don’t get registered, one will not be able to enjoy the benefit of input tax credit. Not only he/she, but any registered person, purchasing from him/her may not be able to get the input tax credit. Not obtaining registration, though liable to do so, would also attract penalty.

Getting registered would lead to growth in one’s business. Prospective buyers, who are registered under GST, will prefer to buy from suppliers who are also registered under GST, as this would entitle them to the input tax credit. This also means that one is contributing his bit towards nation building, by ensuring that appropriate taxes are collected and paid to the Government. Therefore, traders are requested to register under GST immediately without wasting any more time.

.

*****************
DSM/SBS/JKW

JohnTitor
BRFite
Posts: 1271
Joined: 11 Aug 2016 06:14

Re: GST - Discussion on all aspects.

Postby JohnTitor » 15 Jul 2017 22:59

I get the feeling that the price rises attributed to GST is a lie. Some food shops are actually under reporting revenue by as much as 50% to lower tax incurred. I've seen this in 2 shops in bangalore

So if they buy 100 kg of food, they ask the supplier for an invoice of 50kg and pay for the other 50kg in cash thus keeping it off book.

I am not sure that the tax base will substantially increase

Lisa
BRFite
Posts: 799
Joined: 04 May 2008 11:25

Re: GST - Discussion on all aspects.

Postby Lisa » 15 Jul 2017 23:13

^Supplier will eventually have problems if he is asked to explain variance his stock, ie difference between his purchases, sale and stock at hand.

Suraj
Forum Moderator
Posts: 10932
Joined: 20 Jan 2002 12:31

Re: GST - Discussion on all aspects.

Postby Suraj » 16 Jul 2017 04:44

JohnTitor wrote:I get the feeling that the price rises attributed to GST is a lie. Some food shops are actually under reporting revenue by as much as 50% to lower tax incurred. I've seen this in 2 shops in bangalore

So if they buy 100 kg of food, they ask the supplier for an invoice of 50kg and pay for the other 50kg in cash thus keeping it off book.

I am not sure that the tax base will substantially increase

And you've done your civic duty and reported them both to the government, right ? You have no excuse not to do so.


Return to “Technology & Economic Forum”

Who is online

Users browsing this forum: nash and 12 guests