geeth wrote: ↑Sat Oct 07, 2017 5:11 am
If the trader dont register, he wont get input. His supplier also wont get input. His supplier's supplier also will not get input. The chain goes back. That is why is is called self policing. Whereever the chain gets interrupted, that is taken as the final consumption point. Further sales wont generate revenue for the govt. No sensible trader will indulge in that, because, in GST it is more profitable trade with bills (both purchase ans sale) than without it. Yes, there are trades who dont register, but charge GST from customers. For them , the arm of the law is long, and once caught, they are at the mercy of the taxman..naa.. Govt, taxmen cant do any help at that stage.
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If it was self policing, then eWay concept would have never come
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Lets say supply chain is A to B to C to D to E
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Now E being user gets NO input credit - he is final buyer who pays GST of say 20%
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So E will ask D "I dont want bill , give me goods at 20% less price". Now of course, some E may want bill while some wont. But many would prefer "no bill no GST". So now D will tell C "some 50% (or 100% or 25% as may be case) of my customers E dont want bill and dont want to pay GST. So give that % of goods without bill and without GST". And so C will start selling on "no bill no GST" basis. And so on
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Finally, we have whole chain which is "no bill no GST"
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Now say a professional has all white income as fees. He sees two ac resturants
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Unregistered , price Rs 100
Registered with 20% GST , price = Rs 100 + Rs 20 = Rs 120
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Now he CANNOT claim GST on resturant food as input credit !! (yes, pls ask any CA --- many GST paid is NOT claimable as input credit like GST paid on resturant food, GST paid on meals, GST paid taxi fares etc. ).
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To force that professional to pick registered resturant, RCM i.e. revsere charge mechanism was introduced. in RCM, that professional will have to pay Rs 20 GST on food he bought from unregisreted resturant !! And he cannot claim that as credit in both cases. But his paperwok shot up if seller is unregistered.
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Now RCM has been suspended
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So professionals will start preferring "no GST" suppliers in cases where input credit cannot be claimed like resturant
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Now many resurtant owners and food suppliers like meal suppliers applied for registration because their clients told them that "we dom want RCM paperwork headache and so pls get registration or we will change". And so meal suppliers etc got registered. They food consumers do NOT get input credit on GST paid food anyway. And now RCM has been suspended. So many food etc suppliers will run to deregister so that they dont have to pay 18% GST !!
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IOW, we will soon see LAKHS and LAKHS of deregitsrations within weeks !!! And all these will run for registration when RCM etc starts in 1-apr-2018 !!!
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In large large number of cases, end users want "no bill no GST" type deals. And that forces all suppliers to operate "no bill no GST". eg in excise days, factory owner will send goods with bills to super=stores and same factory owner will sell goods without bill to small shopkeepers. On bill amount, he will pay excise. And rest, he wont.
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To stop that, eWay bill concept was designed. So that when goods are transported, if eWay bill is not there with truck driver, then truck and goods can be confiscated !! This will force sellers to print eWay bil. And so seller will be forced to pay GST. Now eWay has been suspended. So many many sellers will take "no GST no eway bill , no bill" mode of selling on part of their goods.
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SOLUTION? Solution I propose is to end GST. And instead have wealth tax
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