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Impact of GST on manufacturing and trading process

Goods and Services Tax - GST - By: - atul rathod - Dated:- 24-9-2016 Last Replied Date:- 26-9-2016 - Background:- As we all know Model law of GST has come in public domain and bill has been passed in Rajya Sabha and expected to get effective from 01.04.2017. The purpose of this article is to give overview on impact of GST on manufacture and Trader due to change in Indirect tax structure. Positive Impact on Manufacture One Tax: In Present structure of GST, there is various kind of taxes such as e .....

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may become cheaper marginally which a good sign for manufacture to compete with international market. However, it may lead in opposite way if the excise duty and Value added tax is levied at shorter rate on some goods like small cars etc. The Impact of rate of tax depends on industry wise, but mostly it is beneficial. No Concept of Manufacture: In Non-GST Regime the biggest litigation and issues are whether the transaction amount to manufacture or not. The interpretation related to term Manufact .....

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ime of tax there are numerous issues on classification of goods due to separate rates on different goods and exemptions on certain goods. But in regime of GST there shall be minimization of classification issues due to uniform rate and less expected exemptions. Speedy Movement of Goods: In GST Regime of tax structure there will be minimization of trade barriers, such as filing of way bills/entry permits, Compliance under Entry tax will be abolished. There is much compliance in current regime on .....

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ll as IGST (Earlier CST) on the purchases. There will be seamless flow of Credit in GST. Valuation of Samples: In Current law Goods removed on Sample basis, tax needs to paid by adopting the nearest aggregate value. However, In GST Regime, time up to six months is granted to decide whether the good sold on sample basis has been approved or not which beneficial thing for manufacturer. However, after 6 months tax needs to be paid if the same is still in process of approval. State Wise Registration .....

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parate authorities for VAT, Service Tax, Central Excise, CST, etc. In GST Regime it is expected that assessment will be done by State authorities for SGST, Central Authorities for CGST, and Interstate authorities for IGST. Electronic Mode for Forms: In current Regime of tax there is very much manual filing of documents such as initial declaration, Numbering of Invoices etc. But in GST Regime there will be less manual filing of documents and more through electronic mode. Further, the communicatio .....

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urer is eligible for SSI Exemption upto ₹ 150 lakhs if the turnover of previous year does not exceed ₹ 400 Lakhs. But in GST there is Threshold limit given only Upto ₹ 10 Lakhs which biggest impact for manufacturer who was availing SSI Exemption earlier. Further, It is to be noted that No specific threshold limit is given for Jeweler that means SSI exemption for Jeweler Comes down from ₹ 8 Crore to ₹ 10 Lakhs. In this case we have to see for further Notification. In .....

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istic Sector etc. Introduction of Reverse Charge on Goods: In Current Regime Of tax structure there was reverse charge on specified services but in case of GST even the reverse charge will be applicable on goods. Post supply Discount: If the Discount has to be given post supply than it must be known to both the parties at the time of supply or pre-supply and the proof of being known is the clause of discount must be there either in contract or agreement or offer etc. Matching Concept of Returns: .....

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ST Regime if the goods have been purchased from the register person then only Credit will be given otherwise the Credit will not be allowed. No Compliance of C and F Forms: As stock transfer has been made taxable in GST Regime hence Concept of F Forms is no more relevant and IGST has been levied on all inter-state purchases or sale and Credit will be allowed, hence No Concept of form F is relevant. Increase in Compliance-burden : There is going to be huge Compliance burden in GST Regime such as .....

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. However, net impact is neutral, on either of them needs to pay GST. Composition levy Increased: In Current Regime of taxation the limit under Composition Scheme is ₹ 40 lakhs where as under GST it is increased upto ₹ 50 Lakhs. It is beneficial as ₹ 10 lakhs in turnover is a big thing from trader point of view. But currently it is 1% but in GST Regime it will be minimum of 1%, it could be more than that. Credit of Excise Duty and Service tax: In Current Regime of taxation then .....

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f Credit on goods sent for stock transfer: Currently as stock transfer is not liable to Vat as well as CST hence, credit pertains to goods sent to stock transfer needs to be reversed. However, in GST Regime stock transfer got made taxable, hence No reversal of Credit is required. Credit of CST: In Current regime of tax, on inter- state purchases CST paid became the cost to the trader as the Credit was not available where as under GST Regime it will be available as IGST Credit. Negative Impact Ra .....

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urrent Regime of tax, on being made available the Form C, CST rates charged at the rate of 2% instead of 14.5% which is local tax rate, however in GST Regime interstate will be taxed at standard rate i.e IGST. Goods sent to job work are taxable: In Current GST Regime of tax, the goods sent for job work are not liable to CST on being made available of Form H whereas in Current GST Regime it became taxable. Compliances: Instead of 12 Returns A Trader needs to file 37 returns in year and much more .....

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chal - The Reply = Respected Experts, In Present Law various type of concept for levy of excise duty, Like manufacture & deemed Manufacturer liable to pay excise duty on manufacturing of finished goods. Then non registered Traders purchased brought out material with duty payment but do not take credit for the same, also do not take any manufacturing or deemed manufacturing activity on brought out material, and brought out material cleared/sale without payment of excise duty with adding profi .....

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t not appeared in the returns, like in case of litigation, many assesses paid duty/service tax under protest Amount paid against conditional stay, Pri-Deposit at filling commissioner appeal as well as tribunal appeals, also in case of disputed service, assesses take credit and revert the duty/service tax under protest in the sane month to minimize litigation & Interest liability. How above type credit/balance we have carried forward in records & last returns before implementation of GST .....

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