NOTE ON GST (Goods and Services Tax)
After the wrong implementation of the GST by the BJP Government, several items shall become dearer to the common man. The incidence of tax and examples of some of the sectors which are going to be affected, are listed hereunder:
- Charitable institutions such as hospitals, schools, colleges etc.
In general, these institutions are not liable to pay any tax but in case even if a very small activity such as renting of a small shop from the premises of the institution is done, the entire school or hospital shall come under the net of GST. These organizations shall have to pay GST on all its expenses made through small unregistered suppliers (which they were earlier not required to pay) UNDER REVERSE CHARGE and the institution shall also not be able to claim any input (set of tax) benefit of these taxes paid out its own pocket, which will ultimately result in an increase in the cost to these institutions and finally the burden of additional costs will be passed on to the common man.
In the concept of GST, all businesses are entitled to claim input benefit of the taxes paid to its suppliers and adjust the tax paid to the suppliers from his liability. If after adjustment, there is any balance the businessman has the option to claim refund.
For example, in case of woven fabrics, if there is any balance tax left with the businessman after adjustment of his liability from the taxes paid to his supplier, he has not been allowed to claim refund of these taxes, which will ultimately result in increased costs to the businessman and he will be forced to charge “TAX ON TAX” from his customer.
This will not only result in increased expenses to the common man but this provision also defeats the very purpose of implementation of GST and makes the businessmen charge TAX ON TAX.
Where in the earlier laws, the builders were able to purchase different items such as tiles, wires and other materials from excise-exempt zones without payment of any tax, now all these items have been taxed at a much higher rate of 28 %. This policy of taxation shall hit the common man directly; for example if a flat was priced at Rs 20 lakh before implementation of GST (including all taxes), now because of the steep rise in the cost of raw materials, the prices will have to be revised and the burden of all these high taxes shall ultimately fall on the common people.
- Sale/purchase of old vehicles
In the earlier laws, before the implementation of GST, when a businessman sold his old vehicle there was no tax at all on this sale. After implementation of GST, every fixed asset, including vehicles sold by any person registered under GST (including a person earning only rental income) shall have to pay a very high rate of tax that is 43 per cent (specifically in the case of old vehicles). This will not only result in heavy taxes on general public, but will also incur huge losses to the business, the brunt of which shall ultimately be faced by the public in general.
- Tractor parts
After implementation of GST, in general, all the tractor parts have been taxed at 28% except four types of parts which are taxed at 18%. Because of this heavy taxation, repairs and maintenance of a basic machinery, which is primarily used for agricultural purposes by farmers, shall become significantly higher and result in losses to already suffering poor farmers.
Rent paid by small businesses shall go up as the tax rate has gone up from 15% to 18% after implementation of GST. The Government via its Twitter account has confirmed that if a person in Delhi owns a property in another State and even if he is earning a very small amount of let us say Rs 5000 per month as rent, it shall be treated that the owner of the property has made inter-State supply and he shall have to get registered with GST (even if his turnover is less than 20 lakh), pay tax and file all the 37 returns (three for every month and one annual return at the end of the year) with maintenance of all records under GST.