GST Chaupal: Traders in Mumbai's Kumbharwada get their queries answered

There's lot of confusion about the Indian government's upcoming goods and services tax (GST) among businessmen, what changes it will bring into the current tax structure, what tax they have to pay, among others. 

Zee Business held one-on-one discussion with traders in Mumbai's Kumbharwada area in order to learn about what they think about the GST tax in presence of panelists like additional commissioner of service tax Raju Shekthivel and partner at ELP Rohit Jain, among others.

It began the discussion by asking the traders about their concerns on GST and made an attempt to resolve their queries.

Here are excerpts of that panel discussion on GST:

1. I belong to Timber and plywood industry and I am concerned with the E-way that we have read the any product that is being transported worth Rs 50,000 and above need a E-way bill,  E-way bill will be a bid headache of inter-state and intra-state transaction also, so we would request within the state it should be removed...

Rohit Jain-Yes, this is correct as par the draft rules, any goods movement Rs 50,000 above be it intra-state or inter-state you have to collect -way bill and have to send via transporter, and both seller and buyer have to keep a tab on the movement of good and vehicle. I understand this is a harsh one and become a problem in easy implementation of GST. But many industries have made presentation to GST council and the council at its May 18-19 meeting will consider this and will make it trader friendly and can introduce it step by step by introducing inter-state first and later will increase the limit, this will help in easy implementation of GST.  

ALSO READ: Is gems & jewellery trade fully ready for GST roll out from July?

2. I represent metal industries, our problem is regarding job work, I want clarity  post GST what will be the job work rules and which tax will be levied? First, there was no tax then service tax was levied which reduced our excise problem, this entire market brings in material in scrap condition  and that material is further cut in circles and other shapes, what will be the effect of GST we want clarity?

Rohit Jain- You are right today trader cannot do job work, because he was not registered under excise, if he has not registered under excise he cannot take job-work and pass on sin-vat, then if job worker converts scrap into metal then excise duty will be levied then he will take back, all these complications are in current system.

Post GST everyone all who deals in goods and services will b considered as supplier. This means that there is not difference between trader and manufacture. What a manufacturer does now a trader can do then. If a manufacturer does a job work, post GST even a trader can send material for  job worker and can get the material back GST free, which is a big relief and big change. Because currently traders cannot send material to job workers, but this will change post GST as no tax will be levied if the material is back from job worker within 180 days.

3. Metal industry, If we have inventory as of June 30  which is excise paid, post July 1  if we claim refund, will we get it?

There can be two types of buyer one is manufacture and other is trader. As per current indirect tax law there are different rules for manufacturer and trader, if he is a manufacturer excise is applicable and there are different set of rules for traders.

If he has paid excise duty, even today he gets credit and on  the closing balance of June 30 he will get credit carry forward.

But the big problem is of trader, in current situation trader buys goods from manufacturer on which excise dutie  is levied, and if he imports goods then the basic custom duty Counter Vailing Duty (CVD) and Special Additional Duty of Customs (SAD) he pays but a trader doesn’t get any credit on excise duty nor the CVD and SAD paid. 

If trader has some stock in inventory on which he has paid exicse duty or CVD and SAD, post GST if he sells the stock he will have to pay full GST what every will be the rate. That means it will be a case of double taxation, which is not possible hence in GST law it has been clearly mentioned with a specific provision that trader ko b jo exic duty paid material hai  wo excise duty ka credit milega usko GST ke against adjust karna hai.

ALSO READ: GST will have a macro economic impact, says RBI 

But for that what a trader has to do he has to maintain proper records like

1. What is the closing stock as on June 30th
2. From where i had purchased the goods
3. Proper document of the goods purchased, whether the goods purchased are from manufacturer or importer...
4. Excise duty, CVD and SAD paid proof

All these documents one has to submit within three months from when the GST is implied to government and based on these document one can claim the credit.

4. Exemption limit is Rs 20 lakh for small traders so how will the reverse charge  mechanism (RCM) workout?

Rohit Jain- All traders whose turnover is below Rs 20 lakh he will not pay forward charge nor revere charges.

If the turnover of trader is above Rs 20 lakh and if he has purchased good from a unregistered dealer then under reverse charge mechanism he has to pay whatever will be the GST rate and he will get the credit for that as well. So RCM will only come into function if you are a registered SSC and you have purchased goods from an unregistered dealer then you have to pay 18% GST on which you will also get a credit.

ALSO READ: Should you voluntarily register For GST?

5. I belong to non-ferrous metal sector and my registration is in Maharashtra and I purchase material from Gujarat and also sell in Gujarat so what is my tax liability?

Location of supplier and place of supply is important. If location of supplier is in state A and place of supply is state B then this will be inter-state. If location of supplier is state A and place of supply is state A the it will be called intra-state.

In your case there is a rule in place of supply,  if the supply is from the third party then third party location will be considered and place of supply. In this case although goods are moving within Gujarat place of supply but since you belong to Maharashtra, place of supply will be considered as Maharashtra hence for A Gujarat goods purchase you will have to pay IGST in Maharashtra and then you raise a invoice in Maharashtra and will levie IGST on Gujarat buyer, even though goods are moved within sates.

If seller sells goods to buyer post GST buyer can take credit of GST but if buyer did not pay seller within 180 days which is a credit period they buyer have to pay the amount with interest. Hence, the buyer has to pay seller within 180 days...

If seller have not uploaded returns uptill then buyer will not get his credit. Hence one has to ensure that your supplier is uploading his returns.

6. I represent stainless pipes industry,  we import we pay excise custom, VAT and take refund from purchaser and there is one additional duty which we claim and get the refund in 4-6 months from government? So post GST what will be status of our refund on additional dutie?  

Now, today you pay additional duty on import.  When you import goods you pay basic custom duty CVD and additional duty. CVD and SAD will be subsumed in GST and on import you have to then pay basic custom duty and IGST and when you will import and sell the stock you will pay GST and then take credit of IGST then there is no stress of any refund nor any additional duty will be levied. 

So in short on import IGST will be levied take credit and put GST and sell stock. 

ALSO READ: GST: No surprises while fixing tax rates, promises FM Jaitley