Losing to Chinese imports: Why Surat textile traders are unhappy with GST

Traders claim they are confused or unaware about GST

 

 

 

On a rainy July evening in the busy and sprawling Surat Textile Market, Rangnath Sarda received a call from a client, a distributor in Tamil Nadu, to discuss billing details under the new GST regime. Since Sarda did not have a Goods and Services Tax (GST) number, his client would have to figure out how to bill him, transport the goods and pay agents’ commissions.

Business owners across thousands of Surat’s small-scale trading, weaving and dyeing units, which together churn out around 40 million metres of fabric each day, were asking and answering similar questions up and down their supply chains.

Ever since the Government of India introduced the GST regime on July 1, 2017, with the aim of creating a one-tax, one-market nation, Surat’s textile traders have been up in arms–they say GST has struck the death knell for their informal business channels that work largely on cash and afford tiny profit margins.  (economy news)

The traders fear that GST, with its emphasis on formalising businesses by making them register for a GST number–thereby introducing transparency and widening the tax net–will lead to business going to larger, organised traders. They also believe it will increase paperwork and make it difficult to maintain accounting books without hiring accountants, an additional burden for cash-strapped businesses that work on thin profit margins.

Sarda said he had applied for a GST number, grudgingly. With Ganesh Chaturthi round the corner, the festive season would continue well into October and November with Durga Puja, Diwali and Chhath. “Where is the time to protest? We stand to lose business,” Sarda told IndiaSpend, adding that the government was well aware that traders would be in a bind.....(READ MORE)

GST: hotels, eateries overcharging you? How to get the math right

Food served at restaurants attract tax at two rates under GST - 12 per cent and 18 per cent

As consumers, we are hardly aware of the components included in the restaurant bills. Next time do check your bill to see if the proper GST or goods or services tax rate has been levied. The Central Board of Direct Taxes (CBDT) on Tuesday clarified on rates of GST for restaurants.(economy news)

Food served at restaurants attract tax at two rates under GST - 12 per cent and 18 per cent (including both CGST (Central GST) and SGST (State GST)) - depending on whether it is an AC restaurant or whether the restaurant has the licence to serve alcohol.

Understanding your restaurant bill

If you revisit your food bill from the pre-GST fine-dine experience, you’ll find Service Tax, Service Charge, VAT being added over and above the food value.

VAT: This was the tax charged on the food portion of your bill.

Service tax: This was the tax charged on the services provided by the restaurant.

Service Charge: This is a charge applied by the restaurants and not by the government. It is not mandatory to pay the service charge, as per government rules.

However, the rates under GST are vastly different than what you would find before the tax policy change. Let us look at these changed rates below.

GST Rates on Eating Out

* Non-AC roadside eateries (non-alcohol) will charge tax at 12%. This also includes your local delivery restaurants.

* AC restaurants (both those that serve alcohol and those that don’t) will charge tax at 18%

* Non-AC eateries serving alcohol will charge 18%.

* Pre-packed food: The rate of tax on a parcel of pre-packed and pre-cooked namkin sold from restaurants will attract tax at 12 per cent. Also, in case of food parcel cooked as per order, GST rates will be applicable according to service of such food in the restaurant.

* Restaurants up to an aggregate turnover of Rs 75 lakh that opt for the composition scheme will charge GST at the rate of 5 per cent.

* Potable alcohol does not come under GST.

*Upender Gupta, GST Commissioner, explained that if food bill in a restaurant is Rs 500, Rs 1,000 is the alcohol bill, then GST should be levied only on Rs 500

The tax department has reiterated that no restaurant can charge GST at 28 per cent.

The tax department has also clarified that "the actual GST incidence will be lesser due to increased availability of input tax credit." Many input credits which were hitherto not available would be available now to be utilised against GST liability, says Sandeep Sehgal, director-tax and regulatory at Ashok Maheshwary & Associates LLP. (Read more)

GST launch mock drill today: Know how Team Jaitley is preparing for July 1

GST war room is an important element in the government's launch effort

With three more days to go before India's biggest tax reform in decades is implemented, the Narendra Modi-led government is all geared up to ensure that nothing goes amiss on July 1. For this, a mega rehearsal has been planned today in the Central Hall of Parliament. The rehearsal, scheduled to be held at 10 PM, may be supervised by either Parliamentary Affairs Minister Ananth Kumar, his deputies Mukhtar Abbas Naqvi and S S Ahluwalia, or Secretary Rajiv Yadav, official sources told Firstpost.|economy news

Officers from various departments including those from the finance ministry will be part of the rehearsal event, they said.

The GST Feedback and Action Room set up by the Central Board of Excise and Customs (CBEC) is keeping a close watch to ensure all processes are in place for a smooth rollout.

"A special war room has been created to address doubts arising over GST, beforehand," a senior government official told The Economics Times.

It will operate from eight in the morning to 10 in the evening, providing a single window for the resolution of any GST-related issue.

economy policy| GST war room

The war room is an important element in the government's launch effort. It is backed by many government officials. Every ministry and department has created GST cells dedicated to the sectors they deal with.

Custom departments: porters and traders will start filing bills of entry and shipping in the new format aligned with the GST framework starting today.

CBEC has directed field formations to answer any query industry and small businesses may have. Centre has asked officials to respond to those who walk into their offices seeking clarification.

Field officials have been directed to assist taxpayers and businesses with regard to aspects of GST. 

(READ MORE)

GST on gold: Buying and making jewellery to get expensive for customers

It can be said that those who are not computerised and internet savvy have to be out of business

The Goods and Service Tax (GST) Council has been kind enough to provide a special 3 per cent GST to gems and jewellery sector ( the exception being rough diamonds at 0.25 per cent).

Going by the economic survey of India and the hype which was created in the run-up to this meeting, a much higher rate was feared. However, the rate of GST for jewellery is in line with what it was under the old tax regime.|economy news

GST has increased paperwork and lot of compliance. Only time will tell if we as a country or an industry are ready for it.

The immediate impact would be on the investment buying of gold by consumers as the resale value will be down by three per cent. Here' an example:

Mr A bought gold worth Rs 100
Paid GST                                Rs 3
                                         —————
Total cost                            Rs 103

Now, after 6 months he wants to sell this gold and presuming that the gold price remains constant, he will get Rs 100 and the GST amount would be lost at the consumer level.

The transaction impact cost has increased from about one per cent to three per cent.

From the government's point of view, this is in line with their thinking/ planning — don’t invest in physical gold, rather invest in gold sovereign bonds. The consumer will also be better of as there is an interest coupon attached to bonds and it tracks local gold prices.

The exchange business of old jewellery for new ones will also be affected as the cost of 3 per cent will affect the transaction.| economy & policy

Another area which will affect the industry and the consumer is making of gold jewellery out of gold/scrap supplied by the customer. At present, there was no tax impact on the making of jewellery. Labour or making charges of jewellery were exempt from service tax (similar exemption was also under excise rules ). Under GST no such exemptions exist and making charges will be subject to 18 per cent GST. This is an undesired result.

Export from domestic tariff area (other than SEZ ) will be hit on two counts:

One, there is no exemption from GST for gold procured for export purposes. This would mean a higher blockage of working capital.