1. Here is how traders are avoiding tax post GST in India

Here is how traders are avoiding tax post GST in India

Businesses are already coming up with innovative ways to ensure that their products remain exempt or at lower rates under the goods and services tax (GST). How are they making it possible? Here's a look

By: | New Delhi | Updated: July 10, 2017 1:34 AM
gst, gst regime, how traders are saving tax post gst, post gst, gst imapct, life after gst, effect of gst, gst effect, impact of gst, gst rollout, gst effect on traders, gst hacks, gst tricks, economy news, latest news At the midnight of June 30 when GST was rolled out in India at a grand event in the historic Central Hall of the Parliament. (Source: PTI)

At the midnight of June 30, GST was rolled out in India at a grand event in the historic Central Hall of the Parliament. At the event, Prime Minister Narendra Modi had said that only will GST help us create One Nation, One Tax but will also help in bringing more transparency and end corruption. A week into the implementation of the Goods and Services Tax, traders in India have already found a way to avoid tax and save money. According to a report by ET, businesses are already coming up with innovative ways to ensure that their products remain exempt or at lower rates under the goods and services tax (GST). How are they making it possible? Here’s a look:

Under the GST regime, footwear below the price of Rs 500 are being taxed at 5% while above that at 18%. So to save the tax, shopkeepers have started to make a separate bill for each shoe of the pair, as per the report. Similarly, in clothing, apparel under the price of Rs 1000 is taxed at 5% while above it will be charged at 12%. So, the sellers have decided to sell different parts of a garment on different bills. So, if a shopkeeper gives you separate bills for your kurta and pyjama, don’t be surprised.

Another loophole is that branded rice is taxed at 5% while unbranded rice is exempted from it. India Gate, which is the largest selling rice brand in the country is already trying its best to exempt from paying goods and services tax (GST) as it didn’t get its brand name registered under the Trade Marks Act 1999. “This is to further clarify, declare and certify that ‘India Gate, Indian Farm, Lotus and Unity’ brands are owned by KRBL Ltd but since they are not registered in Class 30 under ‘Trade Marks Act, 1999’ hence ‘NIL’ GST rate is applicable on it,” KRBL Ltd, which sells India Gate packaged rice, said in an internal communication dated 3 July, as per a report by Livemint.

This scope of avoiding tax or paying fewer rates became possible because the government decided multiple rates under GST. While few products are exempt from tax, others are charged at 5%, 12%, 18%, 28% and 28% plus cess. Also, the tax will be divided between the state and the Central governments.

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  1. K
    Jul 23, 2017 at 8:43 pm
    Recently I went to RMC Market in my city. To my surprise, most of the items are moved through Delivery challan and not invoice. Most of payments are preferred in cash and payments by card attract additional 1 or 2 . People know how to go below the matt??!!
    1. S
      Jul 15, 2017 at 9:05 pm
      Compare to GST paying countries. What benefits do we Indian profited. Our Government have only plans how to squeeze middle class people. Day by day jobs growth is decreasing and essential commodity prices roaring. It's nothing a blind love. Hope not take our hard earned money.
      1. R
        Jul 15, 2017 at 4:20 pm
        Guys, please note an important point you all must not be knowing, That more then 90 of total tax collected by Central and state govt are came from businesses and only 10 or a little less comes from Individual as Income tax. You will be surprised to know that only 80lac people are paying these 90 , and this is the vary fact that Modi govt realized and they could take the decision like Demonitisation or GST. They dont bother if not a single businessmen out of these 80 lac gives vote to him, his govt will still intact, so they will squeeze these business to any extent they like.
        1. V
          V Sehgal
          Jul 14, 2017 at 9:57 pm
          Innovative Indian businesses, they know how to create money, wealth without adding a pie to the exchequer. Pl consider one rate of tax across the board that is payable irrespective of range, type or kind. This will necessarily help contribute to the cause of GST and it's success.
          1. V
            virender ruhil
            Jul 13, 2017 at 11:03 pm
            It is not clear how many in Central and state Govts are sincere on GST. In Gurgaon shops are now not accepting payment through cards. Sorry to say honesty is the rarest quality in besinessmen and consumers alike. Major markets should have supervisors to attend complaints on the spot. Alternately there should be a mobile number where information of tax evasion can be given. Eventually people have to be honest.
            1. Shibu Nath
              Jul 13, 2017 at 10:52 pm
              Beautifully explained
              1. G
                Jul 13, 2017 at 9:07 pm
                The product - Shoe, Garments, B ed rice - would have suffered GST at the time of purchase by the retail seller. Only if he accounts for it and properly bills he will be eligible for input credit. Else he will have to remit the entire tax collected by him. Hence the above reported ideas will work against the traders only
                1. D
                  Jul 13, 2017 at 7:48 pm
                  When the rules are stupid and allow for loopholes, people will naturally exploit the loopholes, nothing wrong. Govt should use sense while framing rules and tax rates.
                  1. Aditya Mittal
                    Jul 15, 2017 at 8:48 am
                    I don't see trying to claim a b ed item as a nonb ed item as a rules loophole, rather I see it as a fraud. The rice company should be sued in court for fraud, and an appropriate penalty should be applied. There is a separate line here in stores for ten items or less so that people with fewer items can get through without waiting for people with lots of items. But an Indian lady tried to fight the cashier saying that the cashier to put her 60 items as six separate receipts. That's not finding a loophole, that's simply being unethical and stupid. If it was up to me, I would make her go back to school and take a class in general ethics for being a moron and wasting everyone's time. A good society is made of people with a good conscience not by finding and listing every exception to every rule.
                    1. K
                      Oct 21, 2017 at 2:09 pm
                      You cannot sue the company. We are not living in Ramayana era of ethics. Ethics start from king and percolate down to ordinary people. In this only 2 crore out of 128 crore people pay income tax. Does it mean that the rest live below poverty line or they don't have taxable income or how are they living? On pavement??!!
                  2. A
                    Amit kumar agarwal
                    Jul 12, 2017 at 8:48 pm
                    When an Indian consumer can buy shoe with an mrp of Rs 90 or Rs 120 for a much higher price, since these are Chinese goods. Then why to blame the government. We Indians never complain for frauds and if we try to complain with the police, they also pretend to be deaf. So our system is rotten and we have to live with this fact.
                    1. Dr Pritam Raj
                      Jul 12, 2017 at 6:11 pm
                      The whole idea was to get maximum tax collected from the individuals or firm but in order to make people willingly pay taxes u need to give them some benefits, in india the irony is the that the tax paying individuals are harassed more than the non tax paying ones , if something needs to be changed it is this ,?i think our current prime minister mr Modi is high in talks and low in action
                      1. Z
                        zoeb zoomkhawala
                        Jul 13, 2017 at 5:27 pm
                        A buyer who. Has. Paid taxes how. Is. He. Liable. If. The. Seller. Has. Not. Paid. The. Same. This is. Against. Natural. Justice
                      2. Rajinder Verma
                        Jul 12, 2017 at 9:07 am
                        Looks cool ...... but once the regime stabilises I am sure all these loopholes will get addresses. ... gradually we will have two Tax rates and they will be taxed at the convenience of collecting tax also!!!!! Tax on clothes below Rs 1000/- is frankly not a good idea !!!!!!
                        1. Sath Ish
                          Jul 11, 2017 at 11:50 pm
                          Misinformed crowd, the limits only apply to an item , not the bill value. Am I wrong?
                          1. Mahe Talat
                            Jul 12, 2017 at 2:35 pm
                            Yes the limit does apply to an item, but you are missing the point here. Say I buy salwar suit worth Rs.1000 it will attract 12 GST so my bill will be 1120 !!! However the shopkeeper can keep the bill down by billing parts of my salwar kameez dupatta set as separate items. So, salwar will be Rs. 400, kameez will be 500 and dupatta will be 100 :) Problem solved. Don't you love #IndianJugaad ?
                            1. LAMBERT ALVARES
                              Jul 13, 2017 at 2:09 pm
                              Only dumb F.M did not know. by the way all tax collected goes into pockets of our political class along with their chamchas....
                          2. D
                            Dinesh kamath
                            Jul 11, 2017 at 3:55 pm
                            Ingenuous ideas were bound to come up. Aberrations are bound to remain, specially for us Indians who have prided ourselves in avoiding taxes and short-changing the system. Moreover these will not only be isolated cases (specially billing each shoe separately), thru don't sound credible. But doubt that they would have any impact, as these seem more exception than norm
                            1. Somanna Patrapanda
                              Jul 11, 2017 at 7:14 am
                              Thanks for the enlightenment on GST. The tax evading people can be troubled by the government.
                              1. Askander Mirza
                                Jul 11, 2017 at 7:13 am
                                The concept is good. But wrongly and hurriedly implemented. Like Demonetisation this too is bound to fail.
                                1. Vineet Aggarwal IN
                                  Jul 10, 2017 at 10:43 am
                                  There are lot of ambiguities with are yet to be resolved. In my opinion the lower tax slab should have been for individual item below a particular value and not the value of bill. But problem is there - how about grocery bills where every almost every individual item would be below Rs.1000/- and again the limit is for per kg rate or purchase value etc etc etc... kkeipl
                                  1. G
                                    G K Singh
                                    Jul 9, 2017 at 8:40 pm
                                    Before cursing the govt instead the customer should ask why 2 different bill i want all in one bill. Instead helping them to evade tax to save ur pocket help govt to collect tax from them it will come to you in some or other way. It may a step wise process to come truely one india one market anf one tax (one tax rate).
                                    1. DrRam Rajesh
                                      Jul 11, 2017 at 12:53 pm
                                      save ur pocket help govt to collect tax from them /and invest in Swiss banks :P or build useless statutes in crores of rupees in India
                                      1. A
                                        Jul 12, 2017 at 6:24 pm
                                        Or distribute to minorities...
                                        1. D
                                          Dr Joel
                                          Jul 12, 2017 at 6:55 pm
                                          Nicely said Sir
                                      2. G
                                        gourhari mondal
                                        Jul 9, 2017 at 4:52 pm
                                        our PM is a great actor. he first told to bring blacl money - but failed. he banned old currency of Rs.500/- Rs.1000/- stating to stop fake currency. till date he is unable how much fake currency were rolled in. and now GST. being CM of gujrat his statement was that GST could not solve the problem. " achhe din" that was gone to Indian Ocean.
                                        1. Asokan Ponnusamy
                                          Jul 9, 2017 at 2:15 pm
                                          MOdi ko ep chappal bejdo. Thoosra arun jetli ko bejdo. Problem solved
                                          1. karpakarajan
                                            Jul 9, 2017 at 10:40 am
                                            as experienced in kerala, my home state, it appears that the minister himself is not clear on the implications. how can common man be expected to have clarity. vulnerability to cheating is wide!
                                            1. Edward Nixon
                                              Jul 9, 2017 at 7:34 am
                                              GST the jokes of selling new cakes.
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