Feedback Here

fbook  tweeter  linkin YouTube
Global contents also translated in Chinese

GST will net tax evaders

GST has put micro, small and medium enterprises in a spot of bother.  In the earlier tax regime, entities with a turnover of Rs 1.5 crores per annum were exempt from payment of excise duty. That threshold has been lowered to Rs 20 lakhs under GST. Furthermore, job work units, which were previously not liable to pay taxes, have been brought under the GST net, leading to a disruptive impact on industries such as textiles and gems and jewelry where job workers are an integral part of the supply chain.

Two provisions most likely to hurt such enterprises are the reverse charge mechanism that makes a purchaser liable to pay taxes on procurement from unregistered suppliers and the matching principle wherein ITC can be claimed only when the purchase invoice matches with the sales invoice uploaded by the supplier and GST has been paid by the supplier.

Sectors surviving largely on the basis of tax evasion, such as micro units in steel sector, plywood sector, and a section of traders, are likely to find the going tough.

In textiles, given the imposition of taxes on value addition at each stage of the manufacturing process, as well as job work, organized, integrated players are likely to gain at the expense of decentralized units undertaking a single activity.