Information Received from Discountwala website on my mail which I share with you for creating awareness . However to ascertain its truth , you may double check from your reliable sources.
GST basics: Some Misconceptions cleared
The rumour mills have gone on an overdrive mode since the launch of GST.
Here’s a reality check by ET Wealth for both GST supporters and its detractors.
1. Now it’s one nation one tax
Myth : Since GST will replace all other taxes on all goods and services, we are in a single tax regime.
Reality : Though this was the original idea, petroleum products—petrol, diesel—are still outside GST’s ambit and, therefore, their tax rates vary significantly across states.
For example, petrol is still sold in Mumbai at Rs 74.30 per litre (as on 5 July) compared to Rs 63.12 in New Delhi. Similarly, some other items, such as liquor, have also been kept out of GST for now.
2. Small businesses will suffer
Myth : The life of small businessmen will become difficult under GST because of computerised billing, need for Internet connectivity.
Reality : Shops can do manual billing under GST and Net connectivity is needed only at the time of filing monthly return and can be managed from a cyber cafe.
3. Prices will shoot up
Myth : Personal expenses will go up on account of GST making it inflationary because tax rates have been fixed at higher levels—18%, 28%.
Reality : Though the GST rates seem high, it is only because the entire tax is now visible to the consumer. Earlier most taxes—central and state excise, additional excise, purchase tax, etc.—did not reflect on your bill. If one adds up all the taxes, it would have been more for most items (ie effective tax rates will be lower for most products).
4. Corporates may try to profiteer but govt won’t
Myth : Business will try to rob you of the GST benefits, but the government won’t make money at your expense.
Reality : Some state governments are also acting greedy and not passing on the GST benefits to consumers. For example, the Maharashtra government has increased the vehicle registration tax by 2% after auto firms passed on the GST benefit by cutting prices by 2-3%.
5. No tax other than GST is now a reality
Myth : For every good or service that has been brought under GST, there won’t be any additional tax.
Reality : GST only subsumes central and state taxes and the levies charged by local bodies are still outside its ambit. Using this loophole, the Tamil Nadu government has allowed its local bodies to charge 30% tax on movie tickets over and above GST. GST is 18% for movie tickets up to Rs 100 and 28% for tickets that cost more than Rs 100.
But because of local body levies, tax in Tamil Nadu will be 48% for tickets up to Rs 100 and 58% for tickets that cost more. Not surprisingly, the cinema hall owners in the state went on strike. “Action of the Tamil Nadu government is against the spirit of the GST and the GST council should take action against it,” says Amit Sarkar, Partner and Head, Indirect Taxes, BDO India.
6. Economic growth will rise
Myth : GST will push up the economic growth.
Reality : Real economic growth comes from both organised and unorganised sectors. Tax evasion becomes difficult in GST, so cost advantage of unorganised sector goes and this will result in some businesses shifting to the organised sector. So, what happens will not be an in increase in ‘real’ economic growth but an increase in ‘recorded’ economic growth. However, there will be a small uptick in ‘real’ economic growth due to the improvement in the ease of doing business.
7. Pay GST twice for card payments
Myth : GST will be charged twice, if you make payments via credit card.
Reality : There is no additional GST for credit card payments and the confusion arose only because there is GST on additional fees—convenience charges—levied by companies. For example, you make a Rs 10,000 payment and a company charges Rs 50 as convenience fee for helping you make the payment via the credit card, you have to pay 18% GST on that fee too—earlier you paid a 15% tax on it. So the 3% increase is very small—just Rs 1.5 on Rs 50.
Clarification on Sell And Purchase of Old God Given by Mr. Hasmukh Adhia on 12th of July 2017
Selling of old jewellery or bullion will attract a 3% GST on the value realised, Revenue Secretary Hasmukh Adhia said on 12th July 2017
But, if the jewellery is sold and new one bought through the proceeds, the 3% tax paid will be deducted from the Goods and Services Tax (GST) payable on buying new jewellery.
“Supposing I am a jeweller. Somebody comes to me with old jewellery, it is as good as buying gold. You can later claim input tax credit.”
Explaining further Mr. Adhia said a jeweller buying old jewellery from someone will charge 3% GST under reverse charge. So, if old jewellery worth Rs 1 lakh is sold, a GST of Rs 3,000 will be deducted.
If the proceeds from the old jewellery is used for buying new jewellery, the tax paid on sale will be adjusted against GST on the purchase.
However, if an old jewellery is given to the jeweller for some modification, then it would be considered as job works and 5% GST would be levied.
“But, if I am saying that take my old jewellery melt it and give me a new one, then it means that trader is a registered person and it is as good as buying gold in form of old jewellery,”
Under the GST regime rolled out from July 1, tax is levied at 3% on gold, while any form of job work attract 5% levy.
When asked about the tax to be levied on downloading of movies and television shows on Netflix, he said the US company is paying service tax, which will now be replaced by GST.
On advertisements given in website or blogs, Mr. Adhia said if the money is earned by way of providing services then GST would be levied.
However, the ministry would soon clarify various provisions related to advertisements on websites after seeing stakeholder representation.
Mr. Adhia further said businesses and traders willing to avail the composition scheme will have to choose the option by logging into the GSTN portal by July 21.
Whereas, for new registrations, they have to give their own choice at the time of filing up forms for registration.
Besides, as per the rules, account records for GST will have to be preserved for six years.
However, if any case is locked up in litigation, then the records have to be preserved till the litigation gets over.
Small businesses with a turnover of up to Rs 75 lakh can opt for composition scheme in which traders, manufacturers and restaurants can pay tax at 1 per cent, 2 per cent and 5 per cent, respectively.
Businesses opting for the composition scheme will see a lesser compliance burden as they will have to file returns only once in a quarter as against monthly returns to be filed by other businesses.
Prime Minister Narendra Modi on Wednesday gave a deadline to all Chief Secretaries to get all traders registered under the Goods and Services Tax (GST) regime by August 15.
“The Prime Minister urged all Chief Secretaries to work expeditiously towards ensuring that all traders register under the GST regime, and this task is completed before August 15,”
Principal Secretary of Commercial Taxes, Somesh Kumar, warned the service organisations such as the Telecom companies to pass on the Goods and Services Tax (GST) benefits to the customers, else action would be initiated against the violators as per the anti-profiteering provision.
He said the government would not hesitate to question the organisations that are claiming Input Tax Credit but levying 18% GST on the customers.
However, we want to give them some space and time before taking further action.
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