Rahul Mehta Gandhinagar LsCandidate
How SoMoKe's VAT / GST law-drafts will motivate many sellers / buyers to switch back to cash within 2 months
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NaMo's VAT-law-draft in Gujarat says that if turnover is above Rs 10 lakhs, then he must register and pay at least 2% VAT on revenue taxable items. And if turnover is above Rs 50 lakhs, then he must claim input credits applicable, but pay 5% to 15% VAT on sales revenue.
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ALL CMs have printed similar such VAT law-drafts. SoGa \ Arke have supported these laws. And
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And now NaMo has printed GST which says same. And if turnover is above 50 lakhs, then the trader / manufacturer has to fill 60 returns a year !!! Almost 1 return every year !!!
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Now traders / manufacturers escape these requirements by simply by taking cash and not giving bills. And then they will make a bill book which shows lesser sales.
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And customers to avoid 5% vat or 15% vat (and now 20% GST) also prefer traders without bill.
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Due to cash crunch, many traders have now installed card readers ir use PayTm and so on. But this creates a record of their sales. And f it goes on for months, then many who have not registered with VAT will now have to register with VAT departments and many will have to become fll vat dealer from lumpsump.
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So by jan-2017, most will come back to cash
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Now cant they consitue with card and go on?
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Well, the big players get many advantages such as they get low interest rate loans (which they convert into NPAs, writeoffs, and also waivers). Also, in coming GST law-draft, as manufacturer or trader with over rs 50 lakh turnover will have file 60 returns a year !!! A large vendor can keep 1 full time accountant. But small business cant. and finally, many large players get advantage of mauritius treaty etc and pay almost 0% income tax , by converting income into loan repayments and several such means. The small players cant get away from paying income tax on recorded sales.
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Give the large tax benefits and low interest bank loans that the large players get , the small players function in VAT / GST net.
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So most small / middle players will remove cards and PayTm by feb-2017
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SOLUTION?
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Solution I propose is to remove GST / VAT / Excise etc and instead use wealth tax. But SoMoKe are pro-GST , anti-WT.
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So activists who want less cash driver society and more e-payments of more cheque payments should work to ceate alternatives to SoMoke and CoBhAp, and also publicize merits of Wealth Tax and demerits of GST / VAT .