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Last updated: 04 Jul, 2017  

GST.9.Thmb.jpg Anti-profiteering, Composition scheme concerns

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Bikky Khosla | 04 Jul, 2014

The long wait is finally over. It all started way back in 1986, when the then finance minister VP Singh put forward a budget proposal for overhauling the excise taxation structure, and after three decades GST was finally rolled out at a midnight joint parliamentary session last week. While the Government celebrated the occasion in a grand manner, businesses across all sectors, in every nook and corner of the country, besides still struggling to manage the transition, are worried that the hastily implemented reform may open up a Pandora's Box of new uncertainties for them, and perhaps their greatest concern is the so-called 'anti-profiteering clause'.

The anti-profiteering clause provides that all gains -- direct (rate reduction) or indirect (input tax credits) -- will have to be passed on to the consumers by way of a commensurate reduction in prices. According to recently released anti-profiteering rules under GST, a five-member National Anti-Profiteering Authority, headed by a secretary-level officer, will be set up to determine the methodology of profiteering and ensure that such gains are passed on to the consumers. If a registered entity is found profiteering illegally, authorities can ask it to reduce prices, return the undue profit to consumers along with 18 percent interest, impose penalty on it, or cancel its registration.

In many countries such as Singapore and Australia, implementation of GST led to spike in inflation, at least in the short-term, and keeping this in mind our policymakers want the Anti-Profiteering Authority to keep a tab on price rises. While this argument sounds logical, what has emerged as a cause of concern for business enterprises is the uncertainty surrounding the clause. The authority is yet to be formed, the rules are yet to be formulated, and it is not at all clear what will be the procedure and criteria to determine profiteering, whether anti-profiteering will happen on a product basis or company basis, how input tax will be calculated, or how one will prove that the benefits are passed on to the consumers . These questions need to be answered.

Meanwhile, concerns abound also about the Composition scheme, under which registered traders, manufacturers and restaurants with an annual turnover of Rs.20 lakh to Rs.75 lakh (Rs.50 lakh for NE states) can pay tax at 1 percent, 2 percent and 5 percent respectively. While this scheme is expected to provide some relief, SMEs view that the benefits, which are applicable only to intra-state supplies, will be limited. Also, under the scheme no input tax credit is available and the benefits are not applicable to suppliers supplying goods through e-commerce. B2B sellers are also concerned that opting for the scheme may result in loss of business as buyers may not get any credit of tax paid in case of B2B transactions.

We would like to hear from you regarding your recent experience with GST.

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Composition Scheme
K Ramamurthy | Thu Jul 20 05:01:25 2017
We are the paper cup manufacturer with one machine. In composite scheme we buy materials with 18% GST. We are paying 2% GST to Govt. So this 18% 2% = 20% GST is adsorbed by us. In the market again without proper GST Invoice our cups are marketed at 2 paise less rate. Under composition scheme 20% GST less 2 paise cup rate is loss to us. Advise. K. Ramamurthy M : 9789009217

Business become waiting room and its have a danger future..
Sirsendu Banerjee | Mon Jul 10 07:16:22 2017
Small business affected as direction not set and many point under doubt and without knowledge mainly.. So businessman are not taking risk they have lost their control key.. No risk no business point gone from market.. Their business mind are under government control key and its the reason of deep thinking..They will stop thinking. One by one new issue better to say political issue are helping our businessman to live under fear factor.. Process implementation also a factor for SME as we have semi-educated and not educated businessman beside educated businessman.. Business people are feeling insecure as direction suddenly changed...

Shankaran | Thu Jul 6 03:01:04 2017
Yes some concerns of SME. Govt can and will tweak some rules to facilitate them in the future. Some fears are unfounded.

Composition scheme
Ghansham Garg | Wed Jul 5 13:24:49 2017
Loss of ITC on items with high GST rate and loss of interstate business and supply to regarding dealer may affect the composite dealer adversely.

S.K.Padmanabhan | Wed Jul 5 13:07:33 2017
Our businesses & public in general are used to delays & delaying tactics all along. So if some wants to stick to the task & implementation we always make a hue and cry. We are very good at this tactics.Even if this is postponed by six months after 6 months cry will be same.

Composition Scheme - Anti Business
Krishan Tomar | Wed Jul 5 12:13:29 2017
Composition Scheme is anti small business, anti One Nation-One Market-OneTax basic concept of government because small businessman is not allowed to the ITC and do interstate business B2B. Means they don't have equal opportunity. Small will remain small and they can't compete and grow because their cost will be higher.

Composition Scheme
K10 | Wed Jul 5 07:46:23 2017
Can a Composition Scheme dealer do interstate purchase? In GST they are using the word Supplies in place of Purchase or Sales. This is confusing.

  Re: Composition Scheme
Damodar Gupta Satrasala | Sat Jul 8 23:26:36 2017
In composition scheme you are allowed to purchase from any state in the country. But your sales should be within your state ONLY.

Non registration for businesses under 20 lakh turnover
Guru naij | Wed Jul 5 06:25:31 2017
Really concerned to know how will government keep a tap on these people and how the govt will know as when their turnover cross 20 lakh with GST registrations...

GST-composition scheme
vinay kumar agrawal | Wed Jul 5 05:36:56 2017
I would like to know that is there any composition scheme for very small traders who are engaged in interstate supply of goods and having a very low turnover say less than twenty lacks per annum. If not can you pursue this with the government for launch of such composition scheme for interstate supply of goods. It will help a large section of such small traders who are engaged in interstate supply of goods. It will also increase the tax compliance as currently most of these supplies are made without invoice to get rid of filling vat returns by traders who are opted composition scheme and there interstate transactions are very low. Vinay Mob. 9414216357.

  Re: GST-composition scheme
Damodar Gupta Satrasala | Sat Jul 8 23:29:13 2017
Yes. This is very essential.

Nilesh R.Shah | Wed Jul 5 05:03:18 2017
What about old stock with us the here we have not claimed the payment from our client as per payment terms of getting payment after installation of supplied goods.How the taxes paid will be adjusted in GST. Also we are getting payment after three Month where as the we purchase material one month before billing and GST has to be paid immediately after billing by us to client how can we manage finance as our parties have not paid our bill ok payment since last more than three years.

Kamalaksha Desai | Wed Jul 5 04:43:27 2017
Govt will take the GST as per the rates on all the profits we make , then why they should decide how much profit we should make . It is a competitive market , any overpriced product will lose the market , why government should interfere in this . In case of losses is the government re-reimbursing the losses . This clause should be removed completely .

  Re: Anti-profiteering
Anand Barve | Wed Jul 5 06:58:01 2017
Before GST Price had no of ( almost 17 different ) inbuilt Taxes which Govt has consolidated as GST. So practically after GST Price should go down and then GST should be charged. Chances are, that the Manufacturers or Traders will charge GST on old Price and earn those inbuilt Taxes as additional profit. That's why Govt has proposed Anti-profiteering Law to safeguard Interest of Common Man. Govt has nothing to do with your Profit before you fix a price of Manufactured Goods.

  Re: Re: Anti-profiteering
SJS RAVI | Wed Jul 5 11:17:44 2017
Re.: Anand Barve's comment, It is strange that he feels, the govt is trying to safeguard the interest of common man by the 'Hare Brained anti profiteering clause / Rule' Let me give an example of the things which are being done in the interest of common man. I find that especially in Maharashtra, where moderate restaurants never charged any taxes are now charging 18 % in AC and 12 % in NON AC Restaurants. This is how Govt is trying to put hand in every pocket and extracting penal level taxes (akin to daylight robbery) from every common man in the INTEREST of COMMON MAN! The day is not far off when my wife will produce a bill for my breakfast snack and charge GST on it quoting her Aadhar based GST Number and I will claim reimbursement in the next month quoting my Aadhar based GST Number. Good Exercise for NIL revenue! I have seen poor (may not be monetarily) old widowers visiting Restaurants early in the morning to have a small snack and a cup of tea. It must be truly a shameless Govt. (Reminds me of Mary Antoinette) which likes to extract at least Rs.10/- penalty every time, every day, morning, afternoon and night from such men for letting their wives go 'up' before them and not for learning to cook in preparation of the GST calamity. If the Govt has any sensitivity, this tax on average level restaurants must go or at least be toned down to a moderate level. Hope some sense prevails at least some time.

Suresh | Wed Jul 5 04:29:43 2017
This how this current Govt is working , only they want to impose their thoughts ,but they do not have practical approach . Be it Note ban or GST they show lot of haste and put everyone in problems and they think they are not answerable to any on on the impact of their action . It is pity this Govt had lots of expectations form the public but they are letting them down. Also they talk about corruption free India is it happening even in their own party, what happen to the money stacked aboard. They had talk lot about it when they were sitting in opposition bench -it is now more than 3 years what is holding them up . This government is losing credibility.

GST on Works Contract- Civil
Ananda Theertha | Wed Jul 5 02:34:40 2017
We are Civil Repair and Renovation Contractors. We buy Materials only for that particular projects and execute the same. Some time we buy the fast moving materials in bulk and keep it in our stock for the future use. Our turnover is more than 20 lakhs per annum and how do we bill. What rate under we fall and how do we take the input benefit. Sometimes we also do waterproofing in new projects, in this case how do we bill. kindly let us know.

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