Goods & Service Tax (GST)

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MehtaRahulC
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Goods & Service Tax (GST)

Post by MehtaRahulC » Fri Oct 06, 2017 3:55 pm

.
All apex leaders in India have supported GST
.
And all political parties' workers are also supporting GST
.
Pls post issues and your opinions about GST.
.

gunjur
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Re: GST (goods and service tax) issues

Post by gunjur » Sat Oct 07, 2017 9:18 am

Hopefully not yet posted on BGR.

Full list of revised GST rates for 27 goods and 12 services
The Goods and Services tax (GST) council on Friday cut rates on 27 items and 12 services, and approved sweeping changes in rules to soothe frayed nerves of millions of small enterprises and exporters that have been battling with procedural irritants, delayed refunds and technical glitches on returns filing.

The Finance Minister Arun Jaitley-headed panel pushed for big changes in its 22nd meeting to iron out rough edges of the new tax system that has been hit by multiple pain points since it was rolled out on July 1.

Here's the full list of revised rates on 27 goods and 12 services.

1) Mango sliced dried
Old rate: 12%
New rate: 5%

2) Khakra and plain chapati
Old rate: 12%
New rate: 5%

3) Food preparations put up in unit containers and intended for free distribution to economically weaker sections of the society under a programme duly approved by the Central Government or any State Government, subject to specified conditions

Old rate: 18%
New rate: 5%

4) Namkeens other than those put up in unit container and, -
> bearing a registered brand name; or
> bearing a brand name on which an actionable claim or enforceable right in a court of law is available [other than those where any actionable claim or enforceable right in respect of such brand name has been foregone voluntarily

Old rate: 12%
New rate: 5%

5) Imposing GST only on the net quantity of superior kerosene oil [SKO] retained for the manufacture of Linear Alkyl Benzene [LAB]

Old rate: 18%
New rate: 18% (Clarification to be issued)

6) Ayurvedic, Unani, Siddha, Homeopathy medicines, other than those bearing a brand name

Old rate: 12%
New rate: 5%

7) Poster Colour
Old rate: 28%
New rate: 18%

8) Modelling paste for children amusement
Old rate: 28%
New rate: 18%

9) Plastic waste, parings or scrap
Old rate: 18%

New rate: 5%

10) Rubber waste, parings or scrap
Old rate: 18%
New rate: 5%

11) Hard Rubber waste or scrap
Old rate: 28%
New rate: 5%

12) Paper waste or scrap
Old rate: 12%
New rate: 5%

13) Duty credit scrips
Old rate: 5%
New rate: Nil

14) Sewing thread of manmade filaments, whether or not put up for retail sale
Old rate: 18%
New rate: 12%

15) All synthetic filament yarn, such as nylon, polyester, acrylic, etc.
Old rate: 18%
New rate: 12%

16) All artificial filament yarn, such as viscose rayon, Cuprammonium,
Old rate: 18%
New rate: 12%

17) Sewing thread of manmade staple fibres
Old rate: 18%
New rate: 12%

18) Yarn of manmade staple fibres
Old rate: 18%
New rate: 12%

19) Real Zari
Old rate: 12%
New rate: 5%

20) All goods falling under heading 6802 [other than those of marble and granite or those which attract 12 percent GST]
Old rate: 28%
New rate: 18%

21) Cullet or other waste or scrap of Glass
Old rate: 18%
New rate: 5%

22) Fittings for loose-leaf binders or files, letter clips, letter corners, paper clips, indexing tags and similar office articles, of base metal; staples in strips (for example, for offices, upholstery, packaging), of base metal
Old rate: 28%
New rate: 18%

23) Plain Shaft Bearing 8483
Old rate: 28%
New rate: 18%

24) Parts suitable for use solely or principally with fixed Speed Diesel Engines of power not exceeding 15HP
Old rate: 28%
New rate: 18%

25) Parts suitable for use solely or principally with power driven pumps primarily designed for handling water, namely, centrifugal pumps (horizontal and vertical), deep tube-well turbine pumps, submersible pumps, axial flow and mixed flow vertical pumps
Old rate: 28%
New rate: 18%

26) E-Waste
Old rate: 28/18 %
New rate: 5%

27) Biomass briquettes
Old rate: 18 %
New rate: 5%

The Council also rationalised GST rates on 12 job work services:

# Job work services in relation to all products falling in Chapter 71 (including imitation jewellery) - 5%

# Job work services in relation to food and food products falling under Chapters 1 to 22 of the HS Code (except packing of processed milk into packets) - 5%

# Job work services in relation to products falling under Chapters 23 of the HS Code except dog and cat food put up for retail sale - 5%

# Job work in relation to manufacture of umbrella - 12%

# Job work in relation to manufacture of clay bricks falling under CTH 69010010 - 5%

# Services by way of printing on job work basis or on goods belonging to others in relation to printing of all goods falling under Chapter 48 or 49, which attract GST @ 5% or Nil - 5%

# Services by way of printing on job work basis or on goods belonging to others in relation to printing of all goods falling under Chapter 48 or 49, which attract GST @ 12% - 12%

# Services by way of printing on job work basis or on goods belonging to others in relation to printing of goods falling under Chapter 48 or 49, other than those covered by (6) and (7) above - 18%

# Services by way of printing in relation to printing of all goods falling under Chapter 48 or 49, which attract GST @ 5% or Nil, where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer - 12%

# Services by way of printing of all goods falling under Chapter 48 or 49 which attract GST @12%, where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer - 12%

# Services by way of printing of all goods falling under Chapter 48 or 49 which attract GST @18% or above, where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer - 18%
# To issue a clarification with regard to classification of printing products/services.

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Re: GST (goods and service tax) issues

Post by SRoy » Sun Oct 08, 2017 7:37 am

1) Mango sliced dried
Old rate: 12%
New rate: 5%

2) Khakra and plain chapati
Old rate: 12%
New rate: 5%
Is this govt. serious?

Singha
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Re: GST (goods and service tax) issues

Post by Singha » Sun Oct 08, 2017 8:16 am

the highest tax rate should imo be 10% under GST and lowest 5%
this will please everyone and improve chances of compliance....+ve push
will take winds out of political oppn
and give less room for NEVER ENDING TINKERING with tax rates

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Re: GST (goods and service tax) issues

Post by SRoy » Sun Oct 08, 2017 8:28 am

On the economy and finances front Modi govt. has lost the war already.

Not just economy, for other departments the interference from bureaucracy has increased. Regulations upon regulations have been heaped upon common people. Back that up by plethora of a broken IT systems, which probably are implemented by one or more among the desi top 5 that have bribed their way in.

Modi also have a penchant for deadlines. Deadline this and deadline that. And when its comes to keeping his side of the bargain, the IT systems fail, leading to date extensions. GST, Aadhar linking for, IT filing, demonetization cut-off, Aadhar linking for mobiles, you name it. People have expended hard earned leaves keeping up with nonsensical deadlines, which Modi and his cohorts extended later. Licking your own spit, as we call in rural idioms.

There are other failures as well, simply not worth dwelling upon when you are burdened with a semi literate overlord.

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Re: GST (goods and service tax) issues

Post by navik » Sun Oct 08, 2017 9:57 am

The decisions of the current political dispensation in the economic field are not based on ground realities. Whilst the large corporations were able to comply and file GST returns. The small and middle class business have been impoverished and in many cases they may not be able to conduct business operations once the full GST with its daily penal provisions come into force. On top of this the Act is drafted wretchedly. The varying interpretations are going to invite corruption.
The total lack of application of mind whilst implementing GST is worse than in Demonetisation.
The responsiblity for such gross incompetence lies squarely at the door of the top echelons of this Govt. Even now the GST Help Desk is unable to provide any meaningful assistance.
The same goes for the Income Tax help desk. What usually happens is after a call has been unsuccessfully attended to - your queries are entered into some system and your name, address, pan etc is all taken down- no concrete suggestions are made. No update to the error you have made is done to the system. However you get a call on the succeeding day from the call center asking you if your problem is solved and/ or that the issue is under consideration and will be resoved soon

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Re: GST (goods and service tax) issues

Post by AbhishekC » Sun Oct 08, 2017 10:59 am

navik wrote:
Sun Oct 08, 2017 9:57 am
Whilst the large corporations were able to comply and file GST returns. The small and middle class business have been impoverished and in many cases they may not be able to conduct business operations once the full GST with its daily penal provisions come into force.
Destroying the MSME sector so that big corporations can take over their businesses is the real purpose of GST.
navik wrote:
Sun Oct 08, 2017 9:57 am
On top of this the Act is drafted wretchedly. The varying interpretations are going to invite corruption.
This is deliberate. It is called planned chaos, so that real responsibility for the destruction of Indian MSMEs cannot be fixed on to Modi.

MehtaRahulC
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Re: GST (goods and service tax) issues

Post by MehtaRahulC » Sun Oct 08, 2017 11:19 am

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There are following fundamental problems with GST (not there in income tax or wealth tax), which will wreck small /medium business and enable large companies to take over their marker share. And TOTAL production in the process may decrease
.
(1) Missing Trader Problem - solution exists, but not implemented
(2) Double Taxation on Small Traders Problems
(3) GST is more Regressive compared to income tax / wealth tax
(4) Importers' paperwork reduces, while manufacturers paperwork etc shoots up
(5) Reverse Charge Mechanism -- suspended till april-2018, but how it can break small businesses
(6) eWay Bill System -- suspended till april-2018, how it can break whole economy
(7) Massive evasion is possible by resturant owners and many retailers
(8) GST doesnt prevent top to bottom "no bill no GST" supply chains (or subchains) - so massive evasion is likely
(9) Rate juggulary - Ministers can misuse power to change rate from 5% to 12% to 18% to 28% etc
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In this post, I will mention ONLY Missing Trader Problem. I wont discuss solution here. For other problems, I will post sometimes tomorrow or later.
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(1) GST's MTP = Missing Trader Problem, and how MTP will create slaughter of small / middle businesses
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(a) Say a trader/manufacturer B buys goods from A and say they agree for base price of Rs 1000. Say tax rate is say 20%. Then A's invoice will be Rs 1000 base price + Rs 200 GST = Rs 1200 total
.
(b) If B is end user or composite or unregistered, then there is no issue. But say B is a trader or manufacturer who pays GST at 20% rate.
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(c). Say C buys goods from B and say they agree for base price of Rs 1050. Say tax rate is say 20%. Then A's invoice will be Rs 1050 base price + Rs 210 GST = Rs 1260 total
.
(d) B has to make a statement as
GST collected from C = Rs 210
GST paid via A = INPUT CREDIT = Rs 200
GST to be paid = Rs 10
And B has to pay Rs 10
.
(e) But if A doesnt pay Rs 200, then B will have to pay Rs 200 again, for all practical purposes. i.e. input credit of Rs 200 will denied.
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Basically, A is the missing trader. And the event that he didnt pay GST is what I called as "Missing Trader Problem".
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This law, that "buyer shall bear the burden of fradulent or defaulting missing seller" is stated in black and white in Central GST Act, clause-16.2.c (pls download this act)
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And btw, GoI and economists doesnt recognize this as problem !! They say --- buyer has to pick seller wisely or else suffer. In fact, economists and GoI has NOT even given name to this problem. The name "Missing Trader Problem" is given by activists.
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-------
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How MTP will slaughter small /medium businesses?
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Consider a town where there are 1000 small / middle traders and manufacturers , named as as S1 to S1000 and say 10 big traders and manufacturers.say L1 to L10.
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Say S1 to S10 collect GST from their 10000 buyers across India named as B1 to B10000. Say S1 to S10 didnt pay GST. So these 10000 buyers will have to pay GST again. so other sellers S11 to S1000 were honest, but S1 to S10 were dishonest.
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Now say same buyers also bought goods/services etc from L1 to L10. Now each of L1 to L10 will NOT default on GST,. The Large companies will never do such petty white collar fraud. If they want to do fraud, they will bribe Minister and get land for cheap, they will bribe bank CEO and get loans and do NPA, and so on. But they will not do a trackable criminal fraud. Thats because large companies have a lot of asset and they can disappear in month.
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So in short, some 1% small / middle business will do Missing Trader Fraud i.e. will not pay GST they collected. And none of the large seller will create MTP.
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Now every buyer will see than 1 to 3 out of 100 small traders / manufacturers create MTP, while none of the large trader / manufacturer do MTP.
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Because of 1-2 fraud sellers, image of 100s small sellers will worse. "sab chhhite chir hein" ("all small traders are tax evaders and thiefs") image will come up.
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So those who have been cheated by 1-2 small trader / manufacturers will lose faith in ALL small traders / manufacturers !! and they will start dealing with large trader / manufacturer as far as possible.
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So every year, some 0.5% to 1% small traders/manufacturers will do frauds and so some 5% to 10% small traders will loose customers to large traders / manufacturers.
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So within few years, most small/middle manufacturers/traders will end, and their businesses will pass to large.
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But TOTAL manufacturing in this process in economy may reduce, because many times small manufacturers are more efficienct and more cost effective. And pls see, it is NOT open competition which is driving them out. GST law creates distrust in them due to small fraudsters, and so so distrust created by GST law is driving them out.
.
-----------------------
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This problem is NOT there in income tax or wealth tax. If S sells goods to buyer B, and is S doesnt pay income tax or wealth tax S is supposed to pay, then Govt can only chase S and not touch B
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Essentially, income tax and wealth tax are bipartiate i.e. between Govt and party
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GST makes ALL tax collection TRI-PARTIATE i.e. buyer, seller and govt -- three parties are involved in deal. And fault of seller can cost buyer.
.
---
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can any GST law modification reduce Missing Trader Problem ? - will post after admins approve. Or, pls see my SM profile.
.
-----
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Why Govt insisted on Monthly Returns
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To reduce Missing Trader Trader problem, GoI insisted on monthly returns. i.e. each seller must upload all his sales on Govt website EVERY MONTH. This way, buyer can see within 45 days to 60 days whether seller has paid the GST to govt, that seller had collected from buyer. Not that system automatically will help buyer. But at least buyer can take some action within 60 days. But Monthly Return filing broke the back of small / middle businesses. So Govt now took three monthly returns. Now this will increase Missing Trader Frauds because now fradulent seller has 90 days to 120 days to almost 180 days to cheat buyers !!!
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--------------
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Why is GSTN not sending missing trader problem notices, right now?
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Currently, sellers have been told to upload july-2017 sales invoice details by 15-cot-2017. And the date may get extended. So INVOICE MATCHING is not happening right now and so missing trader notices are NOT sent to buyers. Invoice matching - i.e. matching claim of buyer B that "I paid GST to specific seller S" with statement of S that "I yes, I did take that GST amount from that specific B" will start in dec-2017.
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So invoice matching of july-2017 will start in dec-2017 , and so if if seller S has NOT paid GST, then B will get notice in jan-2018 or so. But system will NOT miss him --- buyer B will have to pay within a few months.

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Re: GST (goods and service tax) issues

Post by geeth » Sun Oct 08, 2017 1:24 pm

Singha wrote:
Sun Oct 08, 2017 8:16 am
the highest tax rate should imo be 10% under GST and lowest 5%
this will please everyone and improve chances of compliance....+ve push
will take winds out of political oppn
and give less room for NEVER ENDING TINKERING with tax rates
IMO higher taxes is a lesser evil than numerous susets within a set of items. Eg., cars of length less than 4000 mm has x rate and above that y rate, y being invariably much higher than x. Instead they should have one rate for most of the items of same category. Here they have just carried over the problems in VAT.

Lower rate may sound attractive, but compliance will be difficult. For eg., if the rate is 5%instead of 18%, both seller and buyer will tend to forego the input credit (small) and indulge in underhand deals, than 18% ( large).

Further, rates calculated on a revenue neutral basis. Even then MOST of the purchases have become cheaper for the MANUFACTURER AND TRADER. BUT THEY ARE NOT PASSING IT TO SELLER/CUSTOMER. And the State/Central Govts are not able to ENFORCE it. GSTN is playing ball and they have to be shown their place. That is all.

Finally, the Govt had promised even before GST was implemented that rates will be revised and brought down as the case may be, once things settledown.

It is a difficult task and deriding the people doesnt help the cause. Tinkering withe rates and rules is going to be a continuous process till the system is perfected.

I have been filing returns for the past 3 months. My purchase cost is much less, tax paid is less, selling price of my products are less, profit margin is more and everything above board. Where is the problem? I haave none and am very very happy. I want to know which manufacturer/trader has problem.

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Re: GST (goods and service tax) issues

Post by MehtaRahulC » Sun Oct 08, 2017 1:26 pm

(2) GST's second problem -- DTSTP (= Double Tax on Small Traders problem) ---- How GST effectively imposes DOUBLE TAX on buyers of small traders and small manufactures !!!
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The word trader includes trades and manufacturers
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The problem will NOT come when everyone in supply chain is a large trader.
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But problem comes when supply chain is mixed i.e. has some small (unregistered OR composite) traders and some large traders
.
----
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In GST, trader has two options ----
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(A) Regular scheme
(A1) pay 18% GST on sales (or 0% to 28% as per goods)
(A2) his buyers can claim GST paid as input credit i.e. they
(A3) subtract input tax paid on purchase, if seller is large vendor !! And subtract zero if seller
.
(B) Unregistered or Composite scheme
(B1) pay "only" 0% or 1% GST on sales
(B2) buyers cannot subtract GST paid on purchases
(B3) vendor cannot claim GST paid to his seller and GST he paid cannot be passed as input credit to his sellers
.
----
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Now please grab a calculator and paper pen (or use excel).
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(OR , see this image - https://www.facebook.com/photo.php?fbid ... 0580526922 or better open this pdf file PC - https://www.facebook.com/groups/Propose ... 969574798/ and pls take its print out.
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And pls open excel or grab a calculator. (If you think that you can understand GST or wealth tax, without calculator (or excel), then imo, you are super genius or a misguided person.)
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---
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We study two sales chain
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(A) OM -> Large Trader -> C - > Final
(B) OM -> Small Trader -> C - > Final
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OM = Original Manufacturer , C = some large vendor , Final is Final buyer
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We take original cost as Rs 9800 and say each vendor takes profit of Rs 200
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(A) Lets calculate total GST and final cost in OM -> Large Trader -> C - > Final
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OM -> Large
cost = Rs 9800
profit = Rs 200
cost + profit = Rs 10000
GST = Rs 2000 (we take GST rate as 20% instead of 18% to simplify)
sell price = Rs 12000 = Rs 10000 + Rs 2000 input credit to Large
.
PLEASE NOTE - In GST, the final price has two components - price and GST. GST amount on bill be nil if seller is composite or unregistered. And the cost too will have two components - raw cost and GST inout credit that can be claimed.
.
Large -> C
cost = Rs 10000 + Rs 2000 , input credit = Rs 12000
GST = Rs 2040 (20% on product cost + profit)
sell price = Rs 10240 + Rs 2040 input credit to C = Rs 12480
GST Large will deposit to Govt = Rs 2040 - Rs 2000 = Rs 40
.
C -> Final
cost = Rs 10400 + Rs 2040 GST input credit = Rs 12480
GST = Rs 2080
sell price = Rs 10480 + Rs 2080 GST = Rs 12480
GST C will deposit to Govt = Rs 2080 - Rs 2040 = Rs 40
.
IOW cost to Final user is = Rs 12480 , of which Rs 2040 is input credit
Total GST Govt collected = Rs 2000 + Rs 40 + Rs 40 = Rs 2080
.
---------
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(B) Lets calculate total GST and Final cost in OM -> Small Trader -> C - > Final
.
OM -> small
cost = Rs 9800
profit = Rs 200
cost + profit = Rs 10000
GST = Rs 2000
sell price = Rs 12000 = Rs 12000 + Rs 0 input credit !!!
gst paid to govt = collected - input credit of OM = Rs 2000
.
Why zero input credit? Because Small is either unregistered or compsoite and so he cannot claim credit or cannot pass input credit !!
.
small -> C
cost = Rs 12000 + Rs 0 input credit = Rs 12000
profit = Rs 200
GST = Rs 0 (0% or 1%, we ignore that small amount)
sell price = Rs 12200 + Rs 0 GST inout credit = Rs 12200
.
The input credit that C will get will be zero because small is either unregietered or compsoite !!
.
C -> Final
cost = Rs 12200 + Rs 0 GST input credit = Rs 12200
GST = 20% of Rs 12200 = Rs 2480
sell price = Rs 12200 + Rs 2480 GST = Rs 14880 !!!
.
IOW cost to Final user is = Rs 14880 , of which Rs 2480 is input credit he can claim.
.
So the final price is say is about Rs 2400 HIGHER , in second sales chain !!
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So moment one unregistered or compsoite trader comes in supply chain, the cost of product to end user will shoot up by about 20% (or 5% or 12 or 18% or 28% as may be the GST rate)
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As a generalized statement is --- if a supply chain SC1 has N regular vendors and K non-consecutive unregistered / composoite vendors, the tax will (K + 1) times compared to supply chain SC2 where all vendors are regular.
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GoI and economists have NOT given any name to this issue in GST
.
The term "Double Tax on Small Traders' Customers" or "Double Tax on Small Traders" Problem aka DTSTP is coined by activists.
========================
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Effect of DTSTP?
.
Buyers will quit supply chains where one or more vendor is unregistered or composite are in supply chain, and they will prefer supply chains where all vendors are regulars.
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So unregistered or composite will get finished unless they switch to regular.
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And if and when they switch to regular, the Missing Trader Problem will finish them !!
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So sooner or later, effect of DTSTP and MTP will be - market share of smaller player will reduce. They will get finished, and new small players will NOT come. And share of large players will increase. And number new players that will enter market will also reduce, as most new players in general are small.
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So production of small companies will decrease and production of large companies will increase. On-book economy will increase but off-book economy will decrease, and total may decrease !! Likewise, on-book employment will decrease and off-book economy will decrease. And total may decrease. The small companies which will shut down will increase unemployment but large companies who business increases will hire more. So off-book employment will decrease but on-book employment will increase. And total employment may decrease.
.
Also, the elders will lose jobs, and the large companies whose business grows will hire mostly younger. So unemployment in middle age will increase and unemployment in youngsters will decrease !! But total unemployment will increase
.
And consider a country like USA which doesnt have GST and country like India which has GST. Then in USA, small existing and small newcomers will be able to grow whole DTSTP or MTP will do a lot of damage to small existing and small newcomers. So USA economy will operate at much higher efficiency than Indian economy.
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The small new employers play critical role in giving skill to less skilled or unskilled less educated or uneducated labor. As small companies reduce, the shortage of skilled workers will increase. The college procedure unskilled diploma holders, and they gain skills ONLY in small companies. The small companies, and NOT diploma giving colleges are giving REAL skill addition and skill related education in India. The colleges are more of timepass, except some elite colleges which only give theoritical knowledge. As number and strength of small companies in market reduce in India, the whole process of skill addition will suffer.
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All in all, GST will worsen USA / India strength ratio. And as strength ratio further reduces, dominance of USUK-elitemen and Missionaries will increase.
.
-----
.
This Double tax problem is NOT there in income tax or wealth tax. Because each one pays tax on his income or wealth only once.
.

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Re: GST (goods and service tax) issues

Post by geeth » Sun Oct 08, 2017 1:40 pm

On the economy and finances front Modi govt. has lost the war already. 
So we can all pack and go home..what is there to talk onlee
Not just economy, for other departments the interference from bureaucracy has increased. Regulations upon regulations have been heaped upon common people. Back that up by plethora of a broken IT systems, which probably are implemented by one or more among the desi top 5 that have bribed their way in.
Kindly enumerate the old and new rules and see for yourself. Ofcourse the bureuocracy will be reluctant..so it is taking more time than anticipated.
Modi also have a penchant for deadlines. Deadline this and deadline that. And when its comes to keeping his side of the bargain, the IT systems fail, leading to date extensions. GST, Aadhar linking for, IT filing, demonetization cut-off, Aadhar linking for mobiles, you name it. People have expended hard earned leaves keeping up with nonsensical deadlines, which Modi and his cohorts extended later. Licking your own spit, as we call in rural idioms.
You are contradicting yourself in the first and second part. Of only, it shows how flexible/willing to listen he is.
There are other failures as well, simply not worth dwelling upon when you are burdened with a semi literate overlord.
It is no different from Rahul Gandhi statement. If it is good Kangress started it. If it is not so good, Modi is a failure.

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Re: GST (goods and service tax) issues

Post by geeth » Sun Oct 08, 2017 1:55 pm

The decisions of the current political dispensation in the economic field are not based on ground realities.
Do you have any data or proof for such sweeping statements? Or is it a general statement after chai-biscoot?

Whilst the large corporations were able to comply and file GST returns. The small and middle class business have been impoverished and in many cases they may not be able to conduct business operations once the full GST with its daily penal provisions come into force.


Do you have any experience in filing returns in either category? If yes pls give details about the problems encountered by you. If not, how did you arrive at such a conclusion?

As mentioned earlier, I am paying less for my purchases, pays less sales tax, have reduced the selling price and my profit margin has increased. This is the case with almost every trader/manufacturer..how? Go figure.

The GST filing can be entrusted to a tax consultant like VAT.
On top of this the Act is drafted wretchedly. The varying interpretations are going to invite corruption. 
The total lack of application of mind whilst implementing GST is worse than in Demonetisation. 
The responsiblity for such gross incompetence lies squarely at the door of the top echelons of this Govt. Even now the GST Help Desk is unable to provide any meaningful assistance.
The same goes for the Income Tax help desk. What usually happens is after a call has been unsuccessfully attended to - your queries are entered into some system and your name, address, pan etc is all taken down- no concrete suggestions are made. No update to the error you have made is done to the system. However you get a call on the succeeding day from the call center asking you if your problem is solved and/ or that the issue is under consideration and will be resoved soon
Whinefest...

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Re: GST (goods and service tax) issues

Post by SRoy » Sun Oct 08, 2017 2:08 pm

geeth wrote:
Sun Oct 08, 2017 1:40 pm
So we can all pack and go home..what is there to talk onlee
You can go home because it will make marginal difference to you. For some it could be life and death issue.
Kindly enumerate the old and new rules and see for yourself. Ofcourse the bureuocracy will be reluctant..so it is taking more time than anticipated.
3 years on? Why there has been no purge? Every other PM in past did it to ensure that the executive is in step with their policies.

Enumeration of rules? Lay off buddy.

Just came from passport office. I will have to make a second trip, due to a stupid rule that has crept in. Just 5 years ago, I had mine and daughters passport renewed on the same day in 2 hours flat. Same office, same people, my address is same, kids passport getting renewed, but there are new rules.

Same with Aaadhar linking, both of my providers apologized because the connectivity to Aadhar service is down. Wasted two weekend afternoons.

If I need a tatkal railway ticket, it is not possible to get one without touts, because the seats disappear within seconds. Granted it is a Congi era mischief, but paying no heed to this problem and harping on bullet train indicates someone lacking basic admin skills to govern a large and complex ministry.

Demonetization. Less said about a government that didn't had the foresight to make digital transactions easier. As on day, cash rules and escapes taxes. It is people like us that despite paying taxes, pay 2% fee for every time we use our credit/debit cards. And then allowing all and sundry to have a run on the banks for deposits and exchanges, while long time account holders like us had to return empty handed after 4 hour wait in the queues.

GST. I'm not a merchant or trader, so cannot comment. But others have.

Since my dad is an ex-armed forces personnel, and that community is unanimous that they have been screwed over with OROP. For serving people, because some of family fall into this category, they have been screwed over for order of precedence and screwed over for pay.
You are contradicting yourself in the first and second part. Of only, it shows how flexible/willing to listen he is.
It only proves he is whimsical. Just like kids who will first throw tantrums and then reluctantly follow what is told when they find no other way out.
It is no different from Rahul Gandhi statement. If it is good Kangress started it. If it is not so good, Modi is a failure.
Seems like you have hot line to Rahul Gandhi's desk.

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Re: GST (goods and service tax) issues

Post by geeth » Sun Oct 08, 2017 2:55 pm

You can go home because it will make marginal difference to you. For some it could be life and death issue. 
How do you know what difference it makes to me or others? Life and death issues are not going to be solved by cribbing about it.
3 years on? Why there has been no purge? Every other PM in past did it to ensure that the executive is in step with their policies.
3 years on for what? And what purge are you talking about? We are not living in a dictatorship. Even then for the first time in the history of India, hundreds of IAS officers were summarily sent home. As you can see, this is what he is able to do. Ofcourse, more the merrier..but if you undrstand there are limits, then the tendency to complain will be less.
Enumeration of rules? Lay off buddy. 
Enumerate your complaints.
Just came from passport office. I will have to make a second trip, due to a stupid rule that has crept in. Just 5 years ago, I had mine and daughters passport renewed on the same day in 2 hours flat. Same office, same people, my address is same, kids passport getting renewed, but there are new rules. 
You are not specifying what the new rule is and why you couldnt comply with it..an oversight? Or you didnt know?
Same with Aaadhar linking, both of my providers apologized because the connectivity to Aadhar service is down. Wasted two weekend afternoons. 
Ah! Modi and his Govt is responsible for your inconvenience.
If I need a tatkal railway ticket, it is not possible to get one without touts, because the seats disappear within seconds. Granted it is a Congi era mischief, but paying no heed to this problem and harping on bullet train indicates someone lacking basic admin skills to govern a large and complex ministry.
You are talking nonsense when you first say it is a kangress created problem and then try to link your inconvenice to bullet train. One of the first things Modi Govt did was to increase the bandwidth from 2500 per minute to 7000 per minute. And NO, touts cant do things as freely as they could before.

Bullet train is mostly funded by Foreign loan. For getting train seats, you need more trains and that needs investments which need to be collected through tax, GST included.

We have seen the admin skills of congress for the last 10 years and this is the level of skill of the present Govt. Learn to live with it like you did in the lost decade of Manmohan.
Demonetization. Less said about a government that didn't had the foresight to make digital transactions easier. As on day, cash rules and escapes taxes. It is people like us that despite paying taxes, pay 2% fee for every time we use our credit/debit cards. And then allowing all and sundry to have a run on the banks for deposits and exchanges, while long time account holders like us had to return empty handed after 4 hour wait in the queues.
I am also living in this country and my views are diametrically opposite to that of yours.
GST. I'm not a merchant or trader, so cannot comment. But others have.
I know enough about GST and can say what is being posted about GST is mostly crap.
Since my dad is an ex-armed forces personnel, and that community is unanimous that they have been screwed over with OROP
.

Same people had no complaints when OROP was no where in the horizon, or when their complaints were never entertained..Why it had to be implemented? Because Indira Gandhi removed. I know enough people in the armed forces and none of them have any complaints. Ofcourse the more, the merrier....
It only proves he is whimsical. Just like kids who will first throw tantrums and then reluctantly follow what is told when they find no other way out.
It is nothing but jaundiced view.
Seems like you have hot line to Rahul Gandh
Yes I have. Want to talk to him?

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Re: GST (goods and service tax) issues

Post by MehtaRahulC » Sun Oct 08, 2017 3:48 pm

(3) GST is more Regressive compared to income tax / wealth tax
.
Most economists consider concept of "repressiveness" as useless. Thats why most eco-texts dont even mention this concept.
.
Say a person is earning Rs 200 per day.
Say he takes 1 cup of tea costing Rs 10
Say GST (or excise or whataver) in cup of tea Re 1
Then tax as % of income = 0.5%
.
Say a person is earning Rs 1000 per day.
Say he takes 3 cups of tea costing Rs 10
Say GST (or excise or whataver) in cup of tea Re 1
Then tax as % of income = Rs 3 / 1000 = 0.3%
.
Say a person is earning Rs 10000 per day.
Say he takes 5 cups of tea costing Rs 10. He cant possible take 10 cups a day.
Say GST (or excise or whataver) in cup of tea Re 1
Then tax as % of income = Rs 5 / 10000 = 0.05%
.
So as income increase, GST on tea as % of income falls
.
Same was as income increases, GST on movie tickets, clothes etc will also decrease as % of income.
.
This problem was also there in VAT, sales tax, service tax, entertainment tax, CST etc
.
-----
.
Now a tax is often progressive in one income range and regressive in other income range
.
eg GST on car. A person with low income wont buy car. So GST's burden on him = 0%
/
say a person is earning Rs 400,000 per year
he buys car worth Rs 10,00,000
GST is say 20% = Rs 200,000
So burden is 50% of his annual income (not every year of course)
So burden is 5% of his 10 year income
.
say a person is earning Rs 800,000 per year
he buys car worth Rs 20,00,000
GST is say 30% = Rs 600,000 (bigger cars may have higher % GST)
So burden is 75% of his annual income (not every year of course)
So burden is 7.5% of his 10 year income
.
So in income rage of Rs 0 to Rs 800,000 , the tax is NOT regressive
.
But say a person is earning Rs 1 crore per year
Say he buys car worth Rs 50 lakhs
GST = 30% = Rs 15 lakhs
GST as % of his annual income = 15%
GST as % of his 10 year income = 1.5%
.
So after income of say Rs 20 lakh or Rs 30 lakhs, GST on car becomes regressive
.
----
.
One can take commodity by commodity examples. In all examples, in most examples, one will will see that GST may not be regressive in lower income ranges, but becomes regressive after a point.
.
"Well designed" Income tax doesnt face this regressiveness problem. Wealth tax may be regressive wrt income, because a person with high wealth and low income will end up paying higher % of income tax wealth tax. But wealth tax is never regressive wrt wealth.
.
But income tax too can face regressiveness problem. eg Tax on Mauritus Banks' income in India in 0% to 7.5% !! Whereas if a nomal Indian were to start a bank of NBFC with say Rs 1000 crore, and give Rs 1000 crore as loans, and say income earned is Rs 100 crore. Then defact tax rate will be includied cesses will be 30% to 35%. And if he wants to take remaining Rs 65 crore as dividend to as his personal income, and another dividend distribution tax and then tax on dividend income will apply. So total income tax will be 40% or more. So here there is regressiveness
.
Another source of regressiveness in income tax is -- long term capital gains tax on land is 20% , short term capital gains tax on shares is below 30%, and long term capital gains tax is 0%. Now most super-wealthy have huge portions of income as capital gains, thru real or fake transactions. And so effective tax rate on super wealthy is well below 30%.
.
Also, wealth and incomes of trusts are tax exempt. That makes defacto income tax more regressive. And SEZ income is tax exempt or taxed at lower rates, income from infrastructure is tax exempt and so on and son. IOW, plethora of income tax exemptions have made incoem tax regressive after say Rs 50 lakhs of income per year. i.e. a person earning Rs 50 lakhs ends up paying some 30% of income as tax, but thos earning several crores pay much less %
.
But regressiveness in income tax can be cured by applying same rate on ALL sources of income including so called capital gains.
.
But regressive in GST wrt to income cant be cured, Because GST taxes consumption. and a person with lesser income will be spending higher % of his income as consumption.
,
-----
.
Is regressive tax bad? Is yes, why?[/b]
.
Most economists dismiss issue of regressiveness as "leftist" noise.
.
IMO, regressiveness in taxation reduces upward mobility in society. i.e. a lower class individual with talents is less likely to become part if elite in a society where taxation where more regressive. Because his parents and he himself at early stage in his earning life will end up paying higher % of taxes as income.
.
So consider two nations say A and B. Say taxation in A is more regressive than B. Then lintelligent and talented lower class kids in A will have higher chances of becoming elitemen of A in next generation. And lesser chances in B
.
Reduction in upward mobility reduces TOTAL aggregate level of talent and productivity of society. And so society with more regressiveness in taxation will eventually may face a defeat from a society where taxation is less regressive.
.
But on the whole - "regressiveness in taxation" is a POLITICAL issue.
.
Most leaders across India and across world support regressiveness in taxes, and so do most economists.
.
Only activists oppose regressiveness in tax system.

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Re: GST (goods and service tax) issues

Post by MehtaRahulC » Sun Oct 08, 2017 3:53 pm

Singha wrote:
Sun Oct 08, 2017 8:16 am
the highest tax rate should imo be 10% under GST and lowest 5%
this will please everyone and improve chances of compliance....+ve push
will take winds out of political oppn
and give less room for NEVER ENDING TINKERING with tax rates
GST rate was to be adjusted so that income equals income from excise, counter vailing customs, sales tax, vat, service tax, cst and also entertainment taxes and all other indirect taxes GST subsumes
.
Rate below 20% was dismissed --- even cursory calsulations showed that rate has to be at least 22% !!
.
And leving 22% rate on ALL commodities was seemed as politically unviable. And so rates of 5%, 12%, 18%, 28% and (28% + cess) were made.
.
If you say -- make GST rate 10%, then fine
.
Then care to explain how GoI will meet DECREASE in total indirect taxes (i.e revenue from excise, counter vailing customs, sales tax, vat, service tax, cst and also entertainment taxes and all other indirect taxes GST subsumes )
.
Do you propose any new tax? Do you propose increase in deficit? Do you propose reductions in expense? Which expenses?
.
I mean ---- "reduce GST to 10%" may be possible, provided one answers the serious issues such reduction creates.

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Re: GST (goods and service tax) issues

Post by Narasimha » Sun Oct 08, 2017 6:31 pm

Increased compliance with lower rates. Most of the time evasion starts when rates are high

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Re: GST (goods and service tax) issues

Post by Narasimha » Sun Oct 08, 2017 6:33 pm

One thing is this luxury tax slab for high end commodities with 28% should not be done for the simple reason that with these things, evasion starts adn a consumer driven volume demand is better rather niche high price sales.

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Re: GST (goods and service tax) issues

Post by MehtaRahulC » Mon Oct 09, 2017 3:49 am

Fundamental problems with GST not in Income tax or wealth tax
.
(4) Importers' paperwork reduces, while manufacturers paperwork etc shoots up -- A LESS difference making issue, compared to Missing Trader Problem or DTSTP or RCM.
.
Consider a local manufacture. Now a manufacture has to take goods and services from 10s of people and sell it to 10s of people. In GST, he needs to maintain whole paperwork in a format asked by Govt. And that format is quite complex and time pressinge -- monthly uploading of invoices, making sure that all invoice numbers and invoice details match with invoice numbers and invoice details uploaded by his vendors and his suppliers and so on. And manufacturer constantly needs to ensure that vendors from whom he bough goods are paying GST in time. And all this has to be done on monthly basis. (Even now, those with turnover above Rs 1.5 crore need to upload all details monthly ; the three monthly facily is only for those whose turnover is low). In income tax regime the burden reduces --- he only needs to have proof that money was paid to persons from he bough goods. And if so he pays by bank then proof is ensured. If his vendors dont pay income tax, then he doesnt need to check or worry. And in wealth tax regime, he doesnt have to keep any proof of payments either, He only needs to have papers of his own wealth, valuations and taxes paid.
.
Now lets consider importer. Say a chain like WalMart imports container at Mumbai port. There, they can pay customs and IGST. And next, they can ship to their local stores. The local store will sell and collect GST, and pay difference (GST collected minus IGST paid at port). Their paperwork and account keeping becomes simple.
.
Income tax doesnt increase paperwork of importer, but does reduce paperwork of local manufacturer.
.
All in all, this is LESS important factor compared to MTP , DTSTP, RCM, "chains or subchains of non bill no GST". But this small factor will matter, given that local manufacturers in India are already down, facing tough problems against chinese imports and GST has increased their paperwork burden, while GST decreased paperwork burden of importers.
.
=========================================
.
(5) RCM - suspended till april-2018, but how it can break small businesses
.
RCM doesnt mean "Rahul Chimanbhai Mehta". It is sad that RCM stands for a mechanism meant to massacare small business and has same shortform as my name !!! RCM stands for reverse charge mechanism
.
If RCM is kept, small/medium business will collapse. And if RCM is removed, then GST collection will drastically fall and large manufacturers will face the heat.
.
So what is RCM? No leader like MMS or ArKe etc explained RCM in his "Man ki Baat", eh?
.
In GST, in general, when S sells goods of Rs 1000 to buyer B, S has to collect Rs 200 GST and pay to govt. And then B can collect as input credit.
.
In RCM, when S sells goods or services of Rs 1000 to B, B has to pay Rs 200 of GST to Govt and then B may claim input credit. And B has to generate and keep all paperwork.
.
So if B is is unregistered / composite, then he doesnt have to pay RCM. But if B is registered, then he has to pay RCM, as applicable
.
So say an employer tells all his 100 emplyees "you can take meal of Rs 200 day and give me bill, and I will re-imburse". And say each employee goes to a resturant which is unregistered vendor. Then employer's accountant will need to generate 100 RCM invoices and pay GST. But if all employees go to REGISTERED resturant, then accountants paperwork burden will be zero.
.
So tendency of all large companies will be --- they ask all vendors to become registered and ask all employees to take service from registered vendors as far as possible. And so there will be pressure on small vendors too become registered. And if they become registered, then GST revenue rises.
.
So RCM increases revenue collection.
.
If RCM is removed, then revenue collection will fall. HOW?
.
eg Say X is in service business and annual service sale is Rs 1 crore. So he has collected Rs 1 crore + Rs 20 lakhs GST = Rs 1.20 crore from his clients
.
Say X dines at registered regular resturant R where bill is Rs 1000 + Rs 200 GST. X CANNOT get Rs 200 as input credit as resurant GST paid cannot be claimed as input credit.
.
Say he dines at unregistered resturant U where bill is Rs 1000 + Rs 0 GST.
,
If there is RCM, then X has to pay Rs 200. So his cost remains same
.
If there is no RCM, then X doesnt have to pay Rs 200 RCM.
.
So if RCM is removed, then X will find unregistered resturant cheaper !!
.
IOW, if RCM is removed, then many large companies will find unregistered vendors cheaper !!! And burden of paperwork is zero when RCM is removed.
.
So if RCM is removed, then many small vendors will deregister themselves, and switch to unregistered mode. Upto Rs 20 lakhs, one can stay unregistered. So one may divide business into family members , relatives etc. GST (and all indirect taxes) increase business splitting to keep firm revenue below limit, which income tax does to a much much lesser extent and wealth tax does not do at all.
.
Now that RCM is suspended, lets see how many vendors deregister in next 1-2 months. That will give indication about how much revenue loss will come.

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Re: GST (goods and service tax) issues

Post by MehtaRahulC » Mon Oct 09, 2017 4:18 am

geeth wrote:
Sun Oct 08, 2017 1:24 pm
Further, rates calculated on a revenue neutral basis. Even then MOST of the purchases have become cheaper for the MANUFACTURER AND TRADER. BUT THEY ARE NOT PASSING IT TO SELLER/CUSTOMER. And the State/Central Govts are not able to ENFORCE it. GSTN is playing ball and they have to be shown their place. That is all. .... I have been filing returns for the past 3 months. My purchase cost is much less, tax paid is less, selling price of my products are less, profit margin is more and everything above board. Where is the problem? I haave none and am very very happy. I want to know which manufacturer/trader has problem.
.
Whether traders and manufacturers will pass the decrease in purchase costs to customers or add to their profits not depends on competition. There is not much law can do. And if law tries to do that, then corruption will only get more rampant and there will be very little change. Law can handle select cases of over pricing such as medicine, basic food items etc. But there are millions of commodities in market. And only competition can achieve cap on profiteering.
.
So question is --- which tax system GST vs income tax vs wealth tax increases / decreases competition? A separate question from GST. But Govts wont be able to control profiteering on individual commidity basis.
.
That apart, it may be that you experience with GST is fine. But methinks that so far you have not start invoice matching i.e. you arent sure that all people from whom you bought goods have deposited GST, that you paid to them, with Govt. GSTN has definetly not started detailed invoice matching. If your vendors are all honest, then you wont face problems. But if and when one of your vendors decides not to pay the GST to govt (the GST that you paid to me), the Govt will cancel your input credit i.e. defacto you will have to pay that GST amount again. Thats when problems start. Just see how much decrease will be there in your profits, if say 1% of suppliers fold up. NOTHING PERSONAL.
.
So real mess in GST will start when GSTN starts detailed invoice matching and starts cancelling input credit. That will happen in jan-2018 , for the month of jul-2017.
.
Also, you are computer savvy and so you are able to file invoices, GST returns etc. Most people in India are not and depend COMPLETELY on CA. CAs are charging fingers and toes, if not arms and legs. And many people dont know how to scan invoices and send to CA by email. So they have to hire a person to do that. So many of such PC-illiterates, even though they do know how do their business / manufacturing, will get pushed out of market. And sale of PC-saavy persons will increase. Now NOTHING PERSONALLY for / against you. But tax laws pushing out people who know how do their business but not how to use PC/net is NOT good for national economy.
.
Now income tax created and creates LESSER burden on business. At the end of the year, he has to add all his sales, subtract all recipets, deduct all expenses, tally with his bank and file return. This is done once a year, and done within 120 days after 31-march. And his errors or deliberate evasions will in general not effect his suppliers or vendors. So income tax is much much less simpler and LESS harmful to honest people. And in Wealth tax, compliance is even simpler. Just add wealth you have on 31-march and and pay applicable taxes, and keep proof of taxes paid for say 7 years.

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Re: GST (goods and service tax) issues

Post by geeth » Mon Oct 09, 2017 4:55 am

Mehta,

Pls dont repeat the same thing again and again. This invoice matching is there ever since VAT was implemented (or even before, manually-inefficient). In VAT it was done by the salestax dept PEOPLE. Now it will be done electronically when the system is operational. The advantage is that human interface is removed in GST and so lesser corruption.
No amount of arguments against it is going to change facts.

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Re: GST (goods and service tax) issues

Post by geeth » Mon Oct 09, 2017 4:56 am

Repeat -deleted

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Re: GST (goods and service tax) issues

Post by MehtaRahulC » Mon Oct 09, 2017 5:16 am

Fundamental problems in GST (not in income tax or wealth tax)
.
(6) eWay Bill System -- suspended till april-2018, how it can break whole economy
(7) Massive evasion is possible by resturant owners and many retailers
.
---
.
(6) eWay Bill System -- suspended till april-2018, how it can break whole economy
.
eWayBill system was supported to start from 1-nov-2017. It would have brought whole economy to still !! And it was visible to whole GST council that eWayBill finish economy within weeks !! And so finally, when detailed specs came, almost all in GST council decided to defer its implementtaion till 1-apr-2018 !!
.
Old excise system had excise inspectors who used to check whether factory is paying all taxes. VAT and sales tax etc had checkposts at state entry points to collect VAT, CST.
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In eWay bill, before a seller sends hos goods out by ANY means truck or loading riksha or even manual rikshaw or his man on bycyle], if goods are worth over Rs 50000 AND distance is more than 10 km, then seller has first print eWayBill !! How? He needs to log on to GSTN !! He has to input ALL the details of goods and buyers and all that. And then AFTER GSTN records the shipment, GSTN will send a PDF. The seller has to print that PDF and give it to his transport. Now all these specification were proposed. None has been implemented now. And implementation will start from 1-apr-2018.
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The inspectors will catch truck or loading riskshaw etc at random anywhere in state , not just as checkpost. The checking was supposed to be random. Then officer will verify that bill details match with what is in the truck. If not, then fines will start. Will truck get impounded? Not decided now. Will all the goods get impounded? Not decided now. But fines were to be 100% of GST "evaded" and plus more. And eWay bill is valid for 1 day or few days, when distance is more than 100 km. If truck is delayed, then seller has to generate new eWay bill and send it to the trucker. Now all that is being re-reviewed.
.
Now what if a person is sending goods from his office to godown 10 km away? Will it need eWay bill? CAs differed in opinions, but most CA has that "eway bill will be needed even if goods are shipped within warehouses 10 km away" !! The opinions differed because eWayBill was at proposal stage only, and different CAs interpreted proposals differently.
.
Now how many shipments are there in WHOLE India everyday? Lakhs per day? Over a crore? How many invoice lines each shipment will have? Twenty on average? Enter all that in GSTN, wait till entries are confirmed and wait till PDF comes and then give PDF printout or electronic version to trucker or your supplier on bicycle !!! It would have been lots of fun !! That fun would have generated a lot of entertainment tax --- just kidding. Now all that fun has been postponed till 1-apr-2018 !!!
.
So why did Govt decided to have eWay bill at first place?
.
GST is supposed to be "automatic" i.e. "ok go ahead and sell with no bill no GST mode and you wont get input credit back", and this mantra is sufficient. Then why ask supplier to enter all supply details when he ships
.
reality is GST is autopolicing 2 out of 10 evaders when ONLY when 8 out of 10 people in whole supply chain decide to pay taxes, But if all 10 of LAST 6 or LAST 8 people decide to evade GST, there is NO "automatic" system in GST. Then an army of foot officers is needed to stop that. And eWaybill was to assist that army of officers who would check trucks and loading rikshaws.
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So I next, will explain how whole end to end "no bill no GST" supply chains can come in GST, in absence of eWayBill. So if eWayBill and checkposts are removed, then we have massive GST evasion. And eWayBills are kept, then we have massive increase in compliance burden, massive fines on errors in logistics, and collapse of businsses. Like everything in GST, you fix one thingm and end up breaking two more.
.
So I will explain how "large chains or subchains of no bill no GST" comes in GST law, next
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Pls note that income tax or wealth tax doesnt need such eway bills. Checkposts in previous regimes in India could have been stopped by making USA like law that "state can tax sales within state, but cannot tax goods on entry inside tax" except goods like petrol, liquor, tobacco etc. But that system was NOT fixed so that GST can be brought as solution. Basically, it was like a doc, who doesnt give medicine so that operation can be justified.
.
======================================
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(7) Massive evasion is possible by resturant owners and many retailers
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Say a resturant serves 1000 customers and prints 1000 bills each saying -- Rs 500 + Rs 100 GST, totaling Rs 500k + Rs 100k.
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Now resurants dont have to enter each sale recipet in GSTN. They have to enter ONLY daily total. So nothing stops them from entering half the amount, except payments made digitally. And a resturant can go in composite mode or unregistered mode, and put a "credit card machine not working" sign.
.
Same problem will come in income tax. But wealth tax reduces this problem. Because property value of the resturant will be high. And so he cant escape tax.
.
Even ordinary retailers who are paying GST on inputs can reduce GST they have to pay, not the GST they have already paid to supplier
.
eg consider
Purchase price = Rs 1000
GST paid on purchase = Rs 200
Sale price = Rs 1100
GST collected on sale = Rs 220
.
Now customer will get bill of "Rs 1100 + Rs 220 GST".
.
But internally , system will store "Rs 1010 + Rs 202 GST" !!! Unless, when payment is made digitally !! Or, when customer has asked that he wants customer's GSTN ID on the bill.
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When seller has sold without GSTN ID, he has to input ONLY Total sales, and NOT each individual sale.
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So unless a foot officer does checking at store, the GSTN cant "automatically" prove the theft.
.
So only solace is that retailer cant avoid Rs 200 GST he paid to his vendor. But he can when large chains of "no bill no GST" comes.
.
----
.
Wealth tax reduces the problem, because property of retailer's property will be high. So when he is asked to pay tax on that property, based on value, he cant evade much. Now there can be undervaluations. But that can be reduced by three year appraisals, comparing with market sales in near by areas and so on.

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Re: GST (goods and service tax) issues

Post by MehtaRahulC » Mon Oct 09, 2017 5:48 am

(8) GST doesnt prevent top to bottom "no bill no GST" supply chains (or subchains) - so massive evasion is likely
.
And to stop that evasion, Govt introduced eWayBill system, so that every supply can be tracked. But eWayBill syatem turned out to be monster and so had to be deferred. So now there is NOTHING to stop long "no bill no GST" chains from showing up
.
The chains work as follows
.
Say supply chain is
.
A -> B -> C -> D - > E -> F -> G -> H -> I -> J -> FINAL (10 levels)
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Say value starts with Rs 0 and each persons adds value of Rs 100, and final value is Rs 1000. And so GST govt gets is Rs 200, Rs 20 at each level.
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Now conversion between J and FINAL will be
.
J : price is Rs 1000 + Rs 200 GST = Rs 1200
FINAL : Give me without bill for Rs 1000 or else I go to J2
J : I have paid Rs 900 + Rs 180 GST. So most I can do without bill Rs 1180, but no less
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Now FINAL will see that all J are telling same story. So he will settle for Rs 1180 ( or may not and pay full).
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But now J will ask I "many of my customers want no bill no GST. So give me 50% of goods or 100% of goods or X% of goods for no bill, no GST. Or else, I will buy from I2".
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Like that, the chain from bottom up will start demanding "no bill no GST".
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Now say that all D in markets refuse, but many E to J agree to do business on "no bill no GST basis".
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So now first half of chain will collect GST, but tail half of chain will not fetch much GST.
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And there will be pressure and motive for each supplier to adjust to "no bill no GST basis" PARTLY if not wholly.
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So to stop that, Govt was to create eWay bill system. So that before a supplier sends shipment out, he has to enter all bill details GSTN. And once that is done, he has to pay GST within 60 days. And if a truck is caught without eway bill, then serious fines will apply.
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Without eway bill system, tendency of all people in chain to go "no bill no GST" increases.
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Typically, such supply subchains first come in no-go areas (like minority areas) where tax officers desist from entering (and they get regular hafta for not entering). And then there is no stopping - such "no bill no GST" subchains start popping everywhere, except posh areas.
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So lets see whether markets in India manage to create such "no bill no GST" supply chains. Or whether GST's automatic mechanism works. The final word is to be seen.
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But pls note that in income tax, this problem is LESS and in wealth tax this problem is ZERO. In income tax, one can hide the sale, and hide the income and evade tax. But to expand, he will need to buy land. And when he goes to buy land, he will end up paying income tax because he has to show income to buy land (cash in land be reduced to below 10% using TRIVIAL laws printed in Europe). And in wealth tax, one can hide his sales, one can hide his income, but one cant hide his whole shop or factory land or office. So evasion of wealth tax is not possible by "hiding" wealth. Of course, one can hide gold --- but thats it. He cant hide lands, offices etc.

MehtaRahulC
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Re: GST (goods and service tax) issues

Post by MehtaRahulC » Mon Oct 09, 2017 6:02 am

This invoice matching is there ever since VAT was implemented (or even before, manually-inefficient). In VAT it was done by the salestax dept PEOPLE. Now it will be done electronically when the system is operational. The advantage is that human interface is removed in GST and so lesser corruption.
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in Gujarat VAT, came in 2007 (different years in different states).
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In early years of VAT, the rule was "Govt will bear the burden of missing trader"'
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Only on 1-apr-2013, Gujarat printed law that "henceforth, buyers shall bear the burden of missing traders" !!
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And same with other states --- all had "Govt will bear burden of missing trader" in early years.
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And later around 2013, all states switched to "buyers shall bear the burden of missing traders".
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Service tax always had rule -- ""Govt shall bear the burden of missing traders".
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So invoice matching in VAT was zero penalizing till 31-mar-2013. And after that, Govt did not do it rigorously, and came up with many settlement schemes. And 60% of GDP is services, where invoice matching was NOT done and resulted in zero penalties.
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Also, in VAT regime, many many traders and manufacturers were outside VAT / excise, or were "lumpsum VAT" because of lower turnovers. So they never did any invoice matching and nor did their buyers or sellers. Now many many more suppliers are "registered and non composite".
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So invoice matching will now grow many folds.
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Lets see what happens when GSTN starts invoice matching.

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