Tax Expert Explained The New Tax System
As we all know that the India is going to acquire a new tax system from 1st of July 2017 known as GST or goods and services tax.
It is an indirect tax which is subsumed of central and state taxes.
Tax expert explained that local consumers will get the benefits in terms of reduction of the tax burden on goods.
And the businesses will get the benefits in terms of reduction in multiple of taxes and get rid of the hectic process of tax submission process.
The businessman will get a much simpler tax payment path with fewer rates and several exemptions.
Yet, people (local consumers or businessman) have many doubts and query related to the implementation of GST.
So, if you want to know about the GST and its effects on you and your business then you should read the below highlights of an interview with the Tax Expert.
If a distributor manufactured a product in one state and sold it in another state.
How much input tax credit can distributor avail and how with 28 % product Tax rate?
Expert Reply: GST is a destination based tax. As per above question, there is a movement of goods (from one state to another),
Therefore it will come under integrated goods and services tax (IGST) that replaces the central sales tax.
IGST is set against any IGST liability, then it will set for CGST (central goods and service tax) and finally for SGST (state goods and services tax).
Hence, the distributor gets the full credit for the entire 28 % input tax for above order.
Before GST, a management consultant was paying 15 % service tax.
Now, from 1st of July 2017 with GST implementation, what will be the GST rate for him?
Expert Reply: Now, a management consultant need to pay 18 % Tax under GST Rate
How GST implementation affects the prices of mobile phone and TV (Up or down)?
Expert Reply: After GST implementation, ex-excise duty on mobile phones manufactured in India will be available for set off.
Therefore, low-end mobile phones manufactured in India are likely to be cheap.
Earlier, excise duty was not available for the set-off. High-end mobile phones are still importing dependent,
So the expansion the basic customs duty (BCD) remains constant and is not available for the set against the GST.
Therefore, the expansion of high-end smartphones can be expensive.
A dealer/distributor (Karnataka to Uttar Pradesh, Andhra Pradesh and Delhi) of fresh vegetables and ginger, whose turnover per annum is more than Rs. 60 lakh.
All distributed products are exempt from GST. So, does he need to register for GST?
Expert Reply: If a Dealer is dealing is exempted goods, then the question of registration does not arise, even if dealer business is worth Rs. More than 60 lakhs.
A person sells products or items through online platforms with the maximum turnover of Rs. 1,000 per month. Online e-tailers ask them to submit GST TIN (Tax Identification Number). What should that person do?
According to news reports, the tax deducted at the source (TDS) from E-tailer’s payment to its suppliers has been deferred for now.
Therefore, 1% tax collected at the source (TCS) has been deferred which was in the plan.
So, that person should write back to the e-commerce compliance team.
How GST affect a home buyer? Under old tax system, the buyer was paying 4.5 % service tax for the stamp duty during registration/ documentation. Now what?
Previously, input tax credits were not available to developers for building materials such as cement, steel etc.
Now, there is a relief that developers can claim input tax credits and can settle it against the last GST liability.
Therefore, it is expected that developers will pass the buyers for a profit.