Goods and Services Act will unleash a tax regime that will make India One nation, one tax, one market.
But everyday, I read in newspapers, many business associations, many traders associations are protesting on one issue or another relating to this new tax regime, GST is going to be implemented in India on July 1, 2017.
Most of the mental panic translated into protests and complaints by business community relates teso impact of GST on business. To clear this myth and mental mist, I am explaining the impact of GST on business. ju
Generally, there are 3 steps that a product takes to reach the final consumers. Ultimate burden of tax is to be born by the consumers - industrial or domestic.
Now the impact under simple Sales Tax Act and Goods and Services Tax:
A product is manufactured in a factory and its manufacturing cost is Rs. 100/- and profit added at every level is 10%
Under Sales Tax (Tax Rate 15%) Under GST (Tax Rate 28%)
1 Cost Ex-Factory 100 100
2 + Profit 10% 10 10
2 + Tax @15% on 110 17 31 (28%) A
3 Ex-Factory Price 127 141
4. + Profit 10% 13 14
4. +Tax @15% on 140 21 43 (28%) B
5. +Profit 10% on Rs. 110 11 11
6 Total 172 209
7 Less: Input credit 0 28 A
8 Ex Distributor Price 172 181
9. + Profit @10% on 123 12 12
8 + Tax @ 15% on 184 28 54 (28%) C
10 Less: Input Credit 0 43 B
11 Ex Wholesaler Price 212 205
12 + Profit @10%on 135 14 14
13 + Tax @ 15% on 226 34 61 (28%) D
14 Less: Input Credit 0 54 C
15 Price for Retailer 260 226
16 + Profit@10% on 226 22 17
14 +Tax @15% on 226 34 68@28%
15 Less: Input Credit 0 61 D
16 MRP 316 250
Note: This table and calculations may not mathematically correct. But the message is that under GST, the merchandise will be cheaper.
In earlier system, there was also input credit system but it was too cumbersome and tax evasion was enormous. But now, governance through degitalization will make the tax evasion very very difficult and punishable under law.
Conclusion: Clear your mental confusion. In earlier system, the product that had manufacturing cost of Rs. 100 with 15% sales tax rate reached with MRP of Rs. 316 with the end consumer. In the new GST regime, thought the rate is about doubled i.e. 28% will cost the end consumer Rs. 250. So, why are the business associations protesting the GST regime is merely lack of proper knowledge.
Moreover, in this example, no excise duty, no custom duty, no service tax has been levied which are now completely merged into GST.
Note: Any newspaper, media or other source that wishes to spread this vital information may use this article "FREE of COST". No copyright claim will be lodged. This is for the service and help of the people in India and around in the world. World gave me many things. I am thankful.
जी एस टी को लेकर बहुत भ्रांतियाँ , डर और शक हैं। क्या होगा जी एस टी, कैसा होगा जी एस टी ? तो एक ही लाइन में समझ लें की जी एस टी से आम आदमी का बहुत भला होने बाला है। जो बस्तु पहले 15 % टैक्स लगकर फैक्ट्री से 100 रूपए में बनती थी बह आप के हाथ में 210 रूपए या इस से अधिक में आप के हाथ में पहुंचती थी। यह मूल्य बिना सेंट्रल एक्साइज , बिना कस्टम ड्यूटी और कई टैक्स के है।
अब जी एस टी लगने के बाद यही 100 रूपए की चीज़ 124 रूपए मेँ मिलेगी यानि लगभग 100 रूपए की खरीद पर 40 रूपए का लाभ पहले के मुकाबले। इंस्पैक्टर राज़ ख़तम होगा। पक्के धन की बढ़ोतरी होगी। जिससे आम जनता अधिक टैक्स देगी। अधिक टैक्स का मतलब अधिक देश और देश बासियों कि अधिक प्रगति होगी।
आओ खुले मन से जी एस टी का स्वागत करें।
But everyday, I read in newspapers, many business associations, many traders associations are protesting on one issue or another relating to this new tax regime, GST is going to be implemented in India on July 1, 2017.
Most of the mental panic translated into protests and complaints by business community relates teso impact of GST on business. To clear this myth and mental mist, I am explaining the impact of GST on business. ju
Generally, there are 3 steps that a product takes to reach the final consumers. Ultimate burden of tax is to be born by the consumers - industrial or domestic.
Now the impact under simple Sales Tax Act and Goods and Services Tax:
A product is manufactured in a factory and its manufacturing cost is Rs. 100/- and profit added at every level is 10%
Under Sales Tax (Tax Rate 15%) Under GST (Tax Rate 28%)
1 Cost Ex-Factory 100 100
2 + Profit 10% 10 10
2 + Tax @15% on 110 17 31 (28%) A
3 Ex-Factory Price 127 141
4. + Profit 10% 13 14
4. +Tax @15% on 140 21 43 (28%) B
5. +Profit 10% on Rs. 110 11 11
6 Total 172 209
7 Less: Input credit 0 28 A
8 Ex Distributor Price 172 181
9. + Profit @10% on 123 12 12
8 + Tax @ 15% on 184 28 54 (28%) C
10 Less: Input Credit 0 43 B
11 Ex Wholesaler Price 212 205
12 + Profit @10%on 135 14 14
13 + Tax @ 15% on 226 34 61 (28%) D
14 Less: Input Credit 0 54 C
15 Price for Retailer 260 226
16 + Profit@10% on 226 22 17
14 +Tax @15% on 226 34 68@28%
15 Less: Input Credit 0 61 D
16 MRP 316 250
Note: This table and calculations may not mathematically correct. But the message is that under GST, the merchandise will be cheaper.
In earlier system, there was also input credit system but it was too cumbersome and tax evasion was enormous. But now, governance through degitalization will make the tax evasion very very difficult and punishable under law.
Conclusion: Clear your mental confusion. In earlier system, the product that had manufacturing cost of Rs. 100 with 15% sales tax rate reached with MRP of Rs. 316 with the end consumer. In the new GST regime, thought the rate is about doubled i.e. 28% will cost the end consumer Rs. 250. So, why are the business associations protesting the GST regime is merely lack of proper knowledge.
Moreover, in this example, no excise duty, no custom duty, no service tax has been levied which are now completely merged into GST.
Note: Any newspaper, media or other source that wishes to spread this vital information may use this article "FREE of COST". No copyright claim will be lodged. This is for the service and help of the people in India and around in the world. World gave me many things. I am thankful.
जी एस टी को लेकर बहुत भ्रांतियाँ , डर और शक हैं। क्या होगा जी एस टी, कैसा होगा जी एस टी ? तो एक ही लाइन में समझ लें की जी एस टी से आम आदमी का बहुत भला होने बाला है। जो बस्तु पहले 15 % टैक्स लगकर फैक्ट्री से 100 रूपए में बनती थी बह आप के हाथ में 210 रूपए या इस से अधिक में आप के हाथ में पहुंचती थी। यह मूल्य बिना सेंट्रल एक्साइज , बिना कस्टम ड्यूटी और कई टैक्स के है।
अब जी एस टी लगने के बाद यही 100 रूपए की चीज़ 124 रूपए मेँ मिलेगी यानि लगभग 100 रूपए की खरीद पर 40 रूपए का लाभ पहले के मुकाबले। इंस्पैक्टर राज़ ख़तम होगा। पक्के धन की बढ़ोतरी होगी। जिससे आम जनता अधिक टैक्स देगी। अधिक टैक्स का मतलब अधिक देश और देश बासियों कि अधिक प्रगति होगी।
आओ खुले मन से जी एस टी का स्वागत करें।
