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In this article GST: Outcome on Indian Taxpayers & Six Ways for Avoid GST Regd., the author is discussing some of the ways which are most significant to avoid Entry in the world of GST.
The introduction of GST would be a very significant step in the field of indirect tax reform in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. the awareness of GST is still not satisfying. People did not understand about the GST Regime.
Some Presume that GST replaced by all Existing Taxes but here One thing should understand After The GST Implementation Some other Taxes are Also Applicable such as Profession Tax, Stamp Duty, Road Tax and Property Tax. No Doubt in GST comes with Long lasting and Forever outcome which is reflecting on Indian Vendors and Companies, especially for small scale vendors.
Anyway, in one hand People discuss how GST Is Giant-killer for small Vendors but Another hand we did not reject that the GST is a strong weapon for skip tax evasion in the country like India. Where People are More Talented rather Than Government.
GST: Outcome on Indian Taxpayers & 6 Ways to Avoid GST Regd.
Well, in this article, I am also discussing some of the ways which are most significant to avoid Entry in the world of GST.
- Cash transactions: Cash does not leave a trail behind. Hence, vendor or companies have been found to deal heavily in tax so that they can avoid taxes. While several companies are still in the process of implementing GST, it is likely that transactions will go completely electronic.
- Trade in exempted goods: Several products including puja products, khadi, agricultural equipment, earthen pots and local handicrafts are exempt from taxation. GST Tax experts said that entities, especially, in South India, dealing primarily in puja articles and products, have been seen to change the category registration to ‘religious articles’ to avoid taxes.
- Changing product category: One of the mechanisms which some vendors use to avoid paying taxes or cut down on tax is to change the category of product that they manufacture or sell. GST tax rates have been revised for 80,000 items in the country depending on the type of product and the ingredients used in its manufacturing. Hence, chocolate could be categorized as a toffee, cocoa-filled confectionery, candy, biscuit or wafer-coated biscuit.
- Threshold exemption limit: Those with a turnover of Rs 20 lakh or below are exempt from GST. Smaller tax consultants are also seeing a demand for splitting larger businesses into smaller multiple units to claim tax relief. In Addition, also the good relief to vendors in India is that For 1st April 2019 The GST threshold limit increased up to 40 lakh declared in the recent union budget.
- Change registration location: Underdeveloped areas like the North-East have access to tax holidays as an incentive. Companies operating in those areas are also giving tax-breaks to boost their business which is in fact misused by smaller entities to incur zero taxes. Often these ‘registered offices’ are unmanned and exist only on paper.
- Made Inter-state Supply: All those who supply either goods or services from one state to another has to register under the GST. The turnover has no role to play in this. For example, if the income is below 20 lakhs but one is doing an interstate supply, then it becomes essential for you to register under the tax.
Presume, that you are making an interstate supply to Maharashtra from Karnataka, in this case, you can choose to open another entity in Maharashtra. When one registers another entity in Maharashtra and starts supplying goods from there only, then you cease to supply the interstate supply and hence one can enjoy another threshold limit and can skip the GST registration for both Maharashtra and Karnataka.
India is the largest country with 132 crores population. For running smooth administration the segregation is necessary. Before the GST, people were familiar to all existing taxes. When any new thing comes in, they do not match with the expectation immediately as per natural human tendency but when they realize the history and reason behind the decision they automatically accept it. GST is also No Different From This.
By – Nihal Mujawar
Journalist & Law Student, Partner at Sadik Mujawar & Associate