What is GST?

[sgars]

Originally Posted by razzrhino

18- 28% sales tax - come on... that is crazy... why should it be so high ? most developed countries including US don't charge more than 7%

Checked 2 European countries VAT

20% in UK and 25% in Norway. Nanny state Norway also has some 40 % income tax.

[sgars]

Tax rates across the globe

http://www.ey.com/gl/en/services/tax...--country-list

[Sane Less]

Originally Posted by Bhidubhai

...

Most of the outrage not because taxes are higher but taxes re to be paid and cannot escape. Earler they could evade, now they cant. So for someone who could get away gaming the system with zero tax any number >0% is bad. That is what is happening with traders, be it the textile guys in Surat or a bong slling rashmolai in kolkatta or a real estate guy in Mumbai.

Question (seriously) on this comment... how exactly will GST ensure that taxes are paid What is different that those who always paid cash will suddenly also include GST in their cash payments

[raniraja]

I am still not very clear about the nuts and bolts of how GST works, but from what I understand, here goes :

GST is being defined as a "consumption based tax" by the government. Basically, all the shopkeepers are supposed to upload their invoices to the relevant government website explaining the details of sales and the taxes.

There are basically 3 types of taxes - CGST (Central GST), SGST (State GST) and IGST (Inter-state GST). Each has 5 tax slabs of 0%, 5%, 12%, 18% and 28%.

If a shopkeeper has purchased something for Rs. 100 per unit + 18% tax (Total Rs. 118), and wants to sell it at Rs. 102 + tax, his sale price will be Rs. 102+18.36 = 120.36

So, his tax liability will be net Rs. 0.36 (he gets "input credit" for the tax already paid).

There are many questions the department is facing from the shopkeepers e.g.
- If I buy 50kg branded rice from the wholeseller (taxed at 12%) and sell it in loose form (unbranded rice - 0%). What is my tax calculation in this case ?

- How to adjust for wastages/damages/expired goods ?

- What is the tax liability for the "sale" or "discount" schemes the retailer offers ? Suppose I keep a sale of 10 + 1, will my tax liability be for 10 units or 11 units ?

etc..etc..

Being new, its a bit of muddle right now, but will get ironed out in due time.

My personal opinion is that as long as the government controls corruption in the tax system, the inefficiencies/ shortcomings will get taken care of.

Originally Posted by Napolean

Can someone explain how is it going to benefit India as a country? Also, is it going to somehow reduce tax theft?

Originally Posted by Napolean

Thanks Bhidu.

The wayh whatspapp forwards are coming up , it seems GST is going to put a heavier load on consumers. How much truth is there in that?

Originally Posted by Sane Less

Question (seriously) on this comment... how exactly will GST ensure that taxes are paid What is different that those who always paid cash will suddenly also include GST in their cash payments

There is a carrot and stick approach. According to the government, they know the flow of goods from raw material --> factory stage, and from there to the shops. Unless the end sale is accounted for, no one gets any "input credit". So your supplier is going to ask for your GST details for his own benefit.

[raniraja]

Originally Posted by Aashika

We had GST here for more 15 years now in Canada. Bhidu is right, the black market concept can be reduced with this.
There is also this rule where the basic groceries are GST exempted. For example, milk bread, meat etc are exempted. However, meat given to pets is not exempted (don't ask me why).
Also, if you own a personal business, you can actually claim some refund (will need a big detailed explanation).

Here too, all the raw foods are exempted. So all the fruits and vegetables and raw milk and meat etc are exempted (eggs too, I think). Don't know what is the effect on Amul and Mother Dairy and Aarey milk.

Also, there is a concept of "input credit" against which a vendor can adjust his tax liability.

I think all this is similar to the concept of "advance tax" for Income tax.

[Bhidubhai]

Originally Posted by Sane Less

Question (seriously) on this comment... how exactly will GST ensure that taxes are paid What is different that those who always paid cash will suddenly also include GST in their cash payments

Because a chain is created now starting from the raw material to the end consumer. All the links in the chain are reporting. It's easy to find who breaks the chain. If end consumer pays in cash then that sellers output and input will not match. So it becomes imperative that they all follow the rules or break them together

However, I do have a feeling that there is a broader agenda to this GST than catching the culprits.

[Bhidubhai]

Originally Posted by raniraja

I am still not very clear about the nuts and bolts of how GST works, but from what I understand, here goes :

GST is being defined as a "consumption based tax" by the government. Basically, all the shopkeepers are supposed to upload their invoices to the relevant government website explaining the details of sales and the taxes.

There are basically 3 types of taxes - CGST (Central GST), SGST (State GST) and IGST (Inter-state GST). Each has 5 tax slabs of 0%, 5%, 12%, 18% and 28%.

If a shopkeeper has purchased something for Rs. 100 per unit + 18% tax (Total Rs. 118), and wants to sell it at Rs. 102 + tax, his sale price will be Rs. 102+18.36 = 120.36

So, his tax liability will be net Rs. 0.36 (he gets "input credit" for the tax already paid).

There are many questions the department is facing from the shopkeepers e.g.
- If I buy 50kg branded rice from the wholeseller (taxed at 12%) and sell it in loose form (unbranded rice - 0%). What is my tax calculation in this case ?

- How to adjust for wastages/damages/expired goods ?

- What is the tax liability for the "sale" or "discount" schemes the retailer offers ? Suppose I keep a sale of 10 + 1, will my tax liability be for 10 units or 11 units ?

etc..etc..

Being new, its a bit of muddle right now, but will get ironed out in due time.

My personal opinion is that as long as the government controls corruption in the tax system, the inefficiencies/ shortcomings will get taken care of.






There is a carrot and stick approach. According to the government, they know the flow of goods from raw material --> factory stage, and from there to the shops. Unless the end sale is accounted for, no one gets any "input credit". So your supplier is going to ask for your GST details for his own benefit.

You make a good point about wastage. Till now factory owners have been able to under declare their income and avoid IT by using this aegument of wastage and stealing ( labor intensive and poor unskilled labor) They say that their output doesn't match when encountered by the dept with raw material invoices because of wastage of raw material and also stealing of finished goods. So they sell less and hence make less money. They have gotten away with such in the past.