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GST Im­pact on North-East IT Traders

GST will con­vert North­east In­dia into one uni­fied mar­ket and will bring uni­for­mity to the tax struc­ture and trans­parency. As al­ready men­tioned above, this move is cru­cial to im­prove ease of do­ing busi­ness in North-east In­dia and ad­dress the am­bi­gu­i­ties of the cur­rent in­di­rect tax land­scape, prov­ing ben­e­fi­cial for the econ­omy, at large. It can fa­cil­i­tate seam­less move­ment of goods across in­ter-state bor­ders en­abling bet­ter ef­fi­ciency and spurring growth of the (e-Com­merce) sec­tor. With var­i­ous start ups be­ing ini­ti­ated in the North­east­ern re­gion, the up­com­ing en­trepreneurs will get a boost to their start-ups.

Stock Trans­fers

In the present regime, in case of stock trans­fers, the deal­ers are re­quired to re­verse cer­tain per­cent­age of in­put tax credit. How­ever, no such re­ver­sal would be re­quired un­der the GST. On the other hand, presently, stock trans­fers does not at­tract any tax since these are trans­ferred against Form F. Un­der GST, how­ever, the per­son shall pay tax on such trans­fer on the trans­ac­tion value.

Some of the salient fea­tures of GST are: Regis­tra­tion:

GST Regis­tra­tion thresh­old is pro­posed at Rs 4 Lakh for NE states + Sikkim, and Rs 9 Lakh for Rest of In­dia. How­ever, the li­a­bil­ity to pay tax will be only af­ter cross­ing the thresh­old of Rs 5 Lakh for NE states + Sikkim and Rs 10 Lakhs for Rest of In­dia. Ap­prox­i­mately 7-8 mil­lion busi­nesses are likely to be reg­is­tered un­der GST. Small deal­ers with turnover be­low Rs 50 Lakh have the op­tion of adopt­ing the Com­po­si­tion scheme and pay flat ~1 to 4% tax on turnover.

Im­pact on busi­ness in­vest­ment

The deal­ers will have to pay full IGST on all in­ter­state trans­ac­tion at the time of sale and all stock trans­fers. Hence, traders will re­quire an ad­di­tional work­ing cap­i­tal for in­vest­ment in tax.

In­put tax credit

Traders will also get in­put tax credit (ITC) for taxes paid on in­put ser­vices. To this ex­tent traders will be ben­e­fited which they can pass it on to cus­tomer and thus, mak­ing their goods cheaper. List of non cred­itable goods will also have ma­jor im­pact on the deal­ers. Shorter the list higher would be the gain.

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