Rahul Mehta Gandhinagar LsCandidate
GST's DTSTP - GST's "Double Taxation on Small Traders" problem
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In GST, if there is one small vendor (who is unregistered or composition) in a supply chain of two or more large vendor, then final cost to the end buyer shoots by almost 20% (or 12% or 18% or 28% , whatever is GST rate on inputs).
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(The image has NUMERICAL example to explain DTSTP . Pls download the image. Pls take print out, and then pls read my post tomorrow, which explains the worksheet cell by cell tomorow. For a better image / print, pls download or open PDF at https://www.facebook.com/groups/ProposedLawDrafts/1873091969574798/ )
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So let me repeat - in GST, if there is one small vendor (who is unregistered or composition scheme ) in a supply chain between two or more large vendor, then final cost to buyer shoots by almost 20% of inputs (or 12% or 18% or 28% , whatever is GST rate on inputs).
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So Large vendors will replace their small vendor suppliers with other Large Vendors OR ask Small vendor to switch to ITCS i.e. "Input Tax Credit System". And in ITCS, the small vendor will get finished due to Missing Trader Problem !!
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So either way, GST finishes small businesses and manufacturers !! Their employees become employed. They may later get job in large companies, but overall efficiency of Indian economy will reduce.
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The absence of GST is the MOST important reason why small businesses and small manufactures in USA sprout, grow and are efficient. Whereas, across Europe, Japan and China, wherever GST, the small businesses and small manufacturers start dying the day GST comes
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The small business are training ground for semi-skilled employers. As small businesses collapse, the shortage of semi-skilled workers shoots up, which forces country to import semi-skilled labor. Thats why, France, one of the first country to switch to GST, faces such chronic shortage of semi-skilled labor, that had to import labor from Arab countries. And now 11% of France population is Muslim !! And as small business and manufacturers collapse in India, we too will face shortage of semi-skilled workers, and end up increasing import from Bangladesh.
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All in all, GST , Excise, Service Tax, VAT, entry tax etc all should be ended. And we should have Wealth Tax on land over 3000 sqft per family, minus income tax paid minus 5% of salary paid to employees.
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Pls download this sheet to see how small business lose customers in GST !!!
