as consumer ,how do i know that i am not being charged excess taxes?for office purchases does the office need to file any report to state sales tax dept?
The examples are excellent, however has some typo/miscalculations.
Can some one show with SAMEe example on how taxation work NOW ? How it impact/benefit State/Central govts? This would be a good comparison on post and pre VAT era.
The explanation is worth it. But the consumer will have to lose more money in this way. The system should be more consumer friendly which i'm afraid its not.
This is to bring to ur knowledge certain fact about composite dealers problems with respect to Maharashtra Vat act 2005.Composite dealers business will be restritricted in many ways
a) Earlier under salestax system a retailer having main business as retail,
b) could be a manufacturer side by side of small items or could purchase goods from other states, if he could locate goods cheaper or better in other states.
But now under vat, he has to be in composite scheme because of his retail business and he can not be a manufacturer or purchaser from other states. Thus this again is a restrictive trade practice, as he is deprived of his right to grow and by pass wholesaler and distributors of his state. Thus he is forced to buy from middleman, and because of profit of middleman and vat tax collected by this middleman, cost of goods increases, which ultimately is born by poor consumer.
A retailer will have to chose to be a composite dealer because A retailers business has huge flow of business at any given point of time in our country because of huge population and it may not be possible to issue receipt and collect tax for each and every transaction which are at times are as small as a rupee or so, especially during festival season. Also they may not have manpower to keep records and file returns in time. Most of the retails have just few people working together and in some cases it is one man show. Abroad, countrys which have opted for vat system hardly have any pity small retails and in these countries major retail business is done by malls which can afford to keep all records and file return in time.
c) Since a composite dealers bill will not show tax collected separately, a manufacturer will restrain himself from purchasing goods of pity nature used in his manufacturing process because he can not claim set off on tax paid on such goods. Thus a composite dealer will loose his business to a vat dealer.
d) Where as, center has passed the limit of Rs. 10 Lacs as minimum limit for entry into vat as composite dealer, maharahtra state has reduced this limit to Rs. 5 Lacs. So it wise for center to keep such pity small retailer out of net of vat but maharashtra government by reducing this limit from 10 Lacs to 5 lacs , have brought small traders in net of corruption and highhandedness of officers.
e) .) Where as, center has imposed 0.25% tax on gross profit for dealers falling into composite dealer scheme, maharahtra government has exorbitantly hiked this tax to 8% of gross profit, which could again be cause of dispute between dealer and officials with respect to percentage of gross profit calculated, as a officer can always dispute about manubilation , giving him enough chance for corruption, bribery and injustice. Also this 8% on gross profit tax increases many times, as compare to simple 0.25% on turnover. For example a dealer anywhere else outside maharashtra has annual turnover of Rs. 10 lacs, than at the rate of 0.25% of turnover his liability to pay tax is only Rs.2500/-, but the same dealer under maharashtra vat act shows gross profit of Rs. 2 Lacs in 10 Lacs turnover, than his tax liability at 8% of gross profit becomes Rs. 16000/-, which is more than 6 times the tax as per centers proposal. This liability is to be added in cost of the goods.
f) because of vat cost on gross profit a composite dealer will find it difficult to compete with an unregistered dealer.
g) It is not very clear under section 6(1) where a composite dealer also can purchase from an unregistered dealer (URD ) purchase.
h) lastly, Corporate exploitation of small traders. Many of the FMCG companies like Godrej locks, Fevicol (Pidilite industires ltd), etc, have taken advantage of reduction of taxation under vat act and have increased their basic price to increase their profit instead of passing this gape to the dealers and distributor, who are now under the liability of paying tax under vat act. In both these cases earlier the tax was 15.3% plus ½% turnover tax and now vat act tax is 12.5%. In over country there is no law which control on basic price decided by any company. This lack of law gives immense chance of profiteering by market leaders in deciding any price for their products. This chance is possibly given to these companies in return for monetary favors received by political parties during election at the cost of poor consumers. The monopolies and restrictrice trade practice act, hardly shows it presence in todays system and never any case is heard where government have taken action against any corporate in present time.
i) Lack of education, lack of unity, selfishness and lack of proper representation to the government and authorities by proper associations of small dealers , all this makes them easy pray for exploitation and extortion. This also leads to lack of media attention towards this neglected lot of society. Most of these traders find difficult to make the ends met even by working for almost 14 hours a day.
YOu should have also shown to the readers what happens to the CST, so collected by the seller from other state, Is it treated as out put tax ?
What happens to the 1% compounding Tax Paid by the buyer from dealers of 5--50 lakh T.O. Can this 1% be treated as Input Tax ?
Why the article is so silent by about the legal powers of the assesseing autharities? I beleive the legality is more stringent and more harrassing. The govt and the public already know that there is lot of Black money invested in products sold . THe sales is white only up to a certain point. After that traders change hands but no recorded sales. Post VAT this will not be possible due to the link of previouse sales/ Purchase.
There is a problem of the margin ---which will be "Actual" post VAT. Underinvoicing will not be posssible. Hence more margin--more Gross Profit--more net profit---more IT ! How to prepare for that? Does the govt provide any cooling period to adjust to teh "Cascading" effect of accumalted margin ?
Where will the balck money go? Do the politician and goondas will accept cheque payment as donation/ransom ? There is hardly any diff between the two.
Full Marks For Kul Bhushan For Creating Such Documentation. But i think traders will deliberately put overhead on customers and earn more money. Take these cases 1. Soft drink costs 6/8 rs as per label but we are charged 7/10 rs respectivly. 2. Many of medicals in mumbai atleast take 8% more money on total purhase under the name of service tax. Even photograpers took 8% more money. etc
what you people think about this. govt make rule for something which is put on our head only.
As Kul Bhushan says traders are not aware of this fundas. Do you really think being a trader they lack knowledge???????????? I don't think so they want to earn money and its we who are made BAKARA.
Bad thing is that i have heared that some of traders as i mentioned above in examples, charge us double tax service tax and vat. So item costing 100 rs costs us about 112-115 rs.
Good work by Kul Bhushan, but this needs to be followed by people of all kind. People should avoid and complaint against traders who are charging more money. Also there should be consumer oriented fast track courts which will punish such illiterate or greedy traders.
