Bharat Rakshak

manjgu wrote:aeshyam ...will khakra be raw or processed? though i agree with u that a simpler tax regime is required.. raw/processed is a good way to define. while I applaud the Govt for GST...there is a perception problem...

a) the aam janta thinks tax rates have increased ( rightly or wrongly) since one big item as GST comes in the bill ..which was not so earlier. this is one aspect govt should address ..show taxes have reduced not increased

b) when generally people are paying tazes there is a expectation that the tax money will be used for their welfare ..things like improved schools, hospitals, roads, drainage. But this never happens and so the motivation to do wrong things. there should be perceptible improvement in the services offered to common citizens...

c) a case in point is pollution cess being collected from trucks entering delhi...crores have been collected but not spent on controlling pollution.

vijayk wrote:<Image of a happy customers at high end restaurant>

vijayk wrote:https://twitter.com/rishibagree/status/ ... 1921347584

Rishi Bagree
@rishibagree
10h10 hours ago

Until now we were blaming and brandishing the govt as thugs and looters but the real looters are Restaurant owners and Hoteliers.
They cant hide behind Input credit as most of their raw material are taxed at 0%

putnanja wrote:Mort, you are confusing the issue. The issue is that the restaurants were quick to raise prices when the GST was initially 18%, but now that its reduced to 5%, restaurants should have ideally reduced the prices, but they have raised the items prices itself.

They were blaming the govt so far for increase in prices. Now that govt has reduced prices, they still have retained same price. When a big restaurant like McDonalds does this, no prizes for guessing what the ordinary restaurants that majority go to will do. The smaller independently owned restaurants which were earlier not paying taxes, started charging 18% tax without valid GSTN, as shown earlier in this thread.

If big restaurants are saying they were claiming input credit earlier, need to check if they had reduced prices pre-GST and post-GST. If not, they are just profiteering, and putting blame on govt. The common people feel govt raised the prices, while in reality its these unscrupulous elements fooling people and making money, while blaming govt.

If that's creating wealth, its same as someone cheating you out of money and creating wealth.

Suraj wrote:Mort: please do your bit of google searching to post data you’re interested in, rather than expecting it of others .

Mort Walker wrote: What I was really asking is for a table of the fuel VAT levied by state.

Supratik wrote:I think regular customers do understand what price they paid and what they are paying now. Most customers will be informed that tax has gone down. Unless they form a cartel all over India competition is going to defeat price gougers as there will be many who will pass on the price cut. It is the same logic for all businesses.

A_Gupta wrote:

Mort Walker wrote: What I was really asking is for a table of the fuel VAT levied by state.

Excel file:
https://www.google.com/url?sa=t&rct=j&q ... 56oTrBi0Ek

Supratik wrote:Let price be determined by competition rather than govt dictat. Restaurants that gouge customers will loose in the long run.

JayS wrote:

Supratik wrote:Let price be determined by competition rather than govt dictat. Restaurants that gouge customers will loose in the long run.

Government gave something (effectively, by forgoing some that was due) to people, and some businessmen are taking a part and pocketing it. I see it as exactly like the corruption that babus/govt officials/goons/politicians do - taking a part of govt money meant for people.

Lets not forget, profiteering using the garb of GST is illegal.

171. (1) Any reduction in rate of tax on any supply of goods or services or the benefit
of input tax credit shall be passed on to the recipient by way of commensurate reduction in
prices.
(2) The Central Government may, on recommendations of the Council, by notification,
constitute an Authority, or empower an existing Authority constituted under any law for the
time being in force, to examine whether input tax credits availed by any registered person or
the reduction in the tax rate have actually resulted in a commensurate reduction in the price
of the goods or services or both supplied by him.
(3) The Authority referred to in sub-section (2) shall exercise such powers and discharge
such functions as may be prescribed.

An issue that has gained attention in the context of implementation of the Goods and Services Tax (GST) is the impact of the tax on prices of goods and services. In fact, concerns about the inflationary impact of value added tax (VAT), a variant of GST, was a characteristic feature of the switchover to this tax in almost all countries (Tait 1988). As a result, both in the run-up to and in the aftermath of the introduction of VAT, most countries have adopted extraordinary interventionist policies not only to limit price revision, but also to prevent any unjustified increase in prices by the businesses.

Contrary to this worldwide experience, when VAT was introduced in India from 1 April 2005, no credible price monitoring and control mechanism was put in place by the government to protect the interest of the consumers. Instead, the Empowered Committee of State Finance Ministers (ECSFM)1 publicised that VAT would have no adverse impact on prices because the VAT system, by way of effectively eliminating the cascading effects of commodity taxation, helps reduce the price level. Also, the changes brought out in the tax rate structure of the commodities by the VAT system involve a reduction in the rates of many commodities compared to the sales tax regime.

Australia leads by example in this respect. Australia introduced GST on 1 July 2000 to replace a number of existing indirect taxes, including the wholesale sales tax (ACCC 2000a). The GST implementation had a three-year transition period from 1 July 1999 to 30 June 2002, during which the national competition regulator and consumer law champion—namely, the Australian Competition and Consumer Commission (ACCC) —was legally entrusted with the responsibility for overseeing the pricing responses to the GST and taking action against businesses that adjust prices inconsistent with tax rate changes consequent to the GST implementation (ACCC 2000a, 2001a).

Towards this end, the government has conferred many statutory responsibilities on the ACCC. Important among them are the responsibility to (i) formulate guidelines about what constitutes price exploitation; (ii) seek information from businesses to effectively monitor the price movements; (iii) issue notice to the businesses in case they indulge in price exploitation; (iv) seek penalties before the federal court for breach of price exploitation provision by businesses and individuals; (v) accept undertakings from the businesses which are enforceable in a court; (vi) investigate complaints and issues of public concern; and (vii) provide information to both businesses and public on price exploitation provisions (ACCC 2000a, 2001a, 2003).

vijayk wrote:Lets say doctor charges 100 for his consultation and avoids IT by hiding income.
Now Govt. is catching him for evasion and force to pay for 30% tax. SO the doctor increases rate to 140.

Everyone in India blames Govt. regardless of doctor was cheating or not. Same goes for GST. It is how it operates in India.

In case of GST, why are hotels increasing prices?

Suraj wrote:Why is GST a 'regressive tax' ? It's not even an income tax for the general progressive vs regressive classification to apply. It attempts - if very crudely at this point, because the rate setting mechanism is still in its infancy - to tax sin/luxury items at higher rates.

If it's regressive in the sense that the larger number of those who previously didn't pay any taxes were merchants selling goods and services to the poor, that's not a reflection on the tax itself, but the social milieu of basically avoiding paying legitimate taxes, that's endemic and particularly so in the informal economy.

Mort Walker wrote:Because GST taxes consumption as opposed to income. It is the poor who spend their entire incomes on consumption. Those merchants who didn't pay taxes until now, have raised prices to compensate for losses due to GST being enforced. It is the poor who bear the biggest brunt of rising prices.

The Cabinet on Thursday set the ball rolling for establishment of a national anti-profiteering authority amid reports that restaurants were not passing on the benefits of reduced goods and services tax (GST) rates to consumers.

The Cabinet cleared the creation of the posts of chairman and members of the authority, which will ensure consumers receive the benefits of reduced prices in the new indirect tax regime.

“This paves the way for immediate establishment of this apex body,” said Union law minister Ravi Shankar Prasad.

“The National Anti-Profiteering Authority is an assurance to consumers. If any consumer feels the benefit of tax rate cuts is not being passed on, he can complain to the authority,” the minister added.

Suraj wrote:

Mort Walker wrote:Because GST taxes consumption as opposed to income. It is the poor who spend their entire incomes on consumption. Those merchants who didn't pay taxes until now, have raised prices to compensate for losses due to GST being enforced. It is the poor who bear the biggest brunt of rising prices.

But GST is not a new tax. It's just a replacement structure in place of several cascading taxes and duties, that arguably lowers the net tax burden . The very fact that states are trying to ensure they stay revenue neutral implies there's no substantially greater tax burden being applied. The number of tax assessees has risen substantially, but the projections for tax revenue increase do NOT correspond to the rise in assessees, indicating that the tax burden per person is lower.

The problem right now is an enforcement one pertaining to profiteering. Everyone's been paying taxes before GST when it comes to largescale produced goods. The problem is that many traders at the customer facing end have been collecting but not actually remitting tax, instead keeping it as profit margin while operating under the radar. Now that they *have* to pay it due to the self-enforcing nature, they're simply collecting extra.

This is a situation where GoI needs to give teeth to an enforcement agency. It will also lead to quite a few businesses being hurt, because that non-payment of tax was what gave them the minuscule margin to survive. Any business model operating on such wafer thin margins that depended on tax evasion to remain solvent is about to be hurt significantly.

Suraj wrote:The timing of this article is perfect - written today just as we're talking of this:
Cabinet clears setting up of GST anti-profiteering body

The Cabinet on Thursday set the ball rolling for establishment of a national anti-profiteering authority amid reports that restaurants were not passing on the benefits of reduced goods and services tax (GST) rates to consumers.

The Cabinet cleared the creation of the posts of chairman and members of the authority, which will ensure consumers receive the benefits of reduced prices in the new indirect tax regime.

“This paves the way for immediate establishment of this apex body,” said Union law minister Ravi Shankar Prasad.

“The National Anti-Profiteering Authority is an assurance to consumers. If any consumer feels the benefit of tax rate cuts is not being passed on, he can complain to the authority,” the minister added.

Mort Walker wrote:I'll give you the example of some food items such as ghee, milk cream, yogurt, cheese, and condensed milk that has anywhere from 5%-12%, 18% GST.

Suraj wrote:

Mort Walker wrote:I'll give you the example of some food items such as ghee, milk cream, yogurt, cheese, and condensed milk that has anywhere from 5%-12%, 18% GST.

That's not an example of a regressive tax. Processed foods are taxed higher than unprocessed foods. That's the basic concept. GST is a value added tax.

Mort Walker wrote:

Suraj wrote: That's not an example of a regressive tax. Processed foods are taxed higher than unprocessed foods. That's the basic concept. GST is a value added tax.

Come on, Suraj. These milk products have been in use in India since the beginning of time mentioned in the Vedas and requires the minimal of bronze age household tools. To say these items are processed is ridiculous. In that sense, the GST is regressive.

putnanja wrote:

Mort Walker wrote:
Come on, Suraj. These milk products have been in use in India since the beginning of time mentioned in the Vedas and requires the minimal of bronze age household tools. To say these items are processed is ridiculous. In that sense, the GST is regressive.

These items were taxed earlier too before GST. It was under excise tax and state tax. And the MRP price covered all such taxes and people weren't aware of tax rates given the multiple taxes (central excise, state taxes, local levies, octroi where applicable etc). MRP would usually include the highest taxes in the country, which meant the traders would profit in lower tax states.

Now under GST, with tax rates published, people are coming to know of the GST rates. But majority don't understand that the GST rates applied to these items were similar to combined taxes that was being levied earlier to make it revenue neutral for govt, and not to increase prices for consumers.

However, now that there is higher awareness, people now stand up and shout that govt shouldn't tax this or that, or reduce something else.

Suraj wrote:Sorry, 'regressive' isn't a definition you make up as you go along, cherrypicking items that suit you.

More importantly, the rationale for the upgrade cites two of his most destabilizing measures of the past year -- demonetization and a national goods and services tax -- as ingredients of a reform program that may have upset the economy temporarily, but should improve its shock-absorption capacity eventually.

Mort Walker wrote:

Suraj wrote:Sorry, 'regressive' isn't a definition you make up as you go along, cherrypicking items that suit you.

I disagree. Income and wealth should be taxed. Taxing essential items for living is regressive whether it is sales tax, VAT, or GST. Clearly cost of essentials has gone up.