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GST First Discussion Paper shows the same symptoms of VAT. This is not suitable for any improvement in trade in India.

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  • GST First Discussion Paper shows the same symptoms of VAT. This is not suitable for any improvement in trade in India.

    Even when several people raised doubts regarding the APVAT law, the
    Government did not listen to them. Ambiguous elements in the law will
    only be misused. I wish these mistakes do not repeat in GST.

    1. I do not see the point why the traders must be divided in to three
    categories as per turnover. (Threshhold ) Below 10 lakhs turnover
    traders do not need to register and pay VAT. But, doubts like these
    :- will he (small dealer) be able to supply material with waybills? There is no
    answer. If he makes sales, will the tax people allow him to sell with
    out waybills? After the law is made, they began saying waybills will
    not be issued to those people. If he can not supply material to the
    buyer what is the point in doing business.
    If the population is more the small traders will also be more. The
    argument that the number of small traders is high and hence can not be
    managed is not correct. The definition of sale does not have these
    kind of limitations. Ideally,a buyer will not have to inquire whether
    the seller is able to deliver the goods if he belonged to a different
    city or state.

    2. Traders with turnover below 50 lakhs (compounding scheme) have to
    collect and pay Tax @ 1%. But, he is forbidden from buying material
    from outside the state and selling material to outside the state
    people. Why is this partiality? How will the person paying tax
    @14.5% be able to compete with the person paying tax @1%? When people
    asked about this partiality, they were of the opinion that the small
    trader should be saved from the harassment of the Commercial Taxes
    Department staff. But, is it OK if they are able to harass the VAT
    traders of good turnover? Here also the definition of sale is
    constrained by practice.

    3. In my view the idea of three different registration status is not
    good for the economy. A person would be able to know his turnover
    after he establishes the business. It should be made mandatory for
    everybody to take registration. However, provision can be made to
    exempt small tax amounts. For example, You can exempt a trader from
    paying VAT if the amount payable is less than Rs.1000/-
    That would bring more clarity.

    4. Definition of Schedule V in APVAT act states that if the item does
    not appear in other schedules it is chargeable at 12.5% (now made as
    14.5%). But, that kind of definition is better given to 'Exempted
    items'. We have difficulty in understanding that every item is
    taxable at the highest rate.

    5. Having a separate (dual GST model) state GST and central GST is
    again a process difficult to understand for the trader. In my view
    the tax authority must be only one through out the country. In the
    tax so collected, the respective share of each state where the sale
    started is sent by the authority to the state. Central Government can
    take around 40% and State Government can take 60%. There will be only
    one GST account(ofcourse input GST and output GST) for the trader to
    worry about. Cross utilization of Central GST and State GST infact
    should be allowed and is an excellent benefit for the trader. Having
    only one tax authority simplifies several details. Rather than
    information sharing between different authorities, there is only one
    organization that is big. Moreover, this will effectively bring in
    almost everybody in to taxation. Taking one PAN card is effective and
    simple process to start a business. Government will also have a lot
    of data about every citizen and his business transactions which will
    also be useful to calculate and integrate income tax. When every
    detail is available with Government, Central Government can generate
    their income tax return automatically.

    6. Purchase tax is another bad idea.

  • #2
    hello sir,

    i agree with u in all aspect.

    GST has to be in simple form,it has to be one window tax system.


    sameer palan-mumbai