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BASIC CONCEPTS OF GST (PART-5)

Goods and Services Tax - GST - By: - Dr. Sanjiv Agarwal - Dated:- 4-2-2016 - Disadvantages / Possible Distortions of Implementation of GST Proposed GST is not a national unitary / centralized tax but a tax to be levied by both, states and the union simultaneously. In GST proposed GST- (a) There is a retrograde move to extend GST to stock transfer by first charging on it and then giving credit. The states have forced their way in this decision which will cause a lot of impairment in work against .....

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s included in the IGST (integrated GST). Charging such higher duty is economically regressive. Government may have to lower the whole rate for countervailing duty which has not been indicated. Following disadvantages and possible distortions are note worthy - Not using the correct accounting method. Incorrectly claiming GST credits on bank fees Incorrectly claiming GST credits on government charges -such as land tax, council rates, water rates. Incorrectly claiming a GST credit on the 'total .....

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as basic food items, exports and some health services. Incorrectly claiming the full amount of GST credits on entertainment expenses where the business has elected for fringe benefits tax purposes to use the 50/50 split method, in which case only 50% of the input tax credits can be claimed. Claiming the entire GST credits on a car purchased for more than the luxury car limit. Sole traders and partnerships are not apportioning input tax credits and making adjustments to expenditure that's par .....

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the Business Accounting Standards. Pre-requisites for GST an Efficient GST A smooth and efficient GST system should possess the following pre-requisites: harmonization of tax base, tax rates, tax laws and procedures avoiding cascading effect by providing credit of total amount of tax paid on inputs levying tax on destination basis ensuring uniformity in law and procedure GST regime should also consider the following to be an effective and efficient tax: the fiscal autonomy of provinces use of t .....

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