Businesses start playing with GST: Using Loopholes and Misusing Provisions
Yes, that’s right.
Traders started digging out loopholes to pay less tax or to avoid taxes. Few of them have started misusing the provisions too, made under GST. You talked about any reforms, there are always a loopholes and this is what people have started using to make sure that they are not paying higher taxes or paying very less of it.
It has been understood that garment shopkeepers started selling dupatta separate and not along with the kurta and salwar because a cloth having sold over 1000 rupee would attract 12% GST whereas if the price is below 1000 rupee, it comes under the slab of 5% only. They are billing it as two bills and making sure that the selling price is not going beyond 1000 rupee.
Similarly, when it comes to footwear industry, known sources confirmed that shopkeepers started selling single shoe under one bill and not in pair.
The reason is very similar as if the price of the shoe is below 500, it would attract a GST of 5% only where as above 500 would attract a GST of 18%.
We can’t control using loopholes but selling single shoe in one bill is hilarious. Isn’t?
They are not stopping here because this is only playing with loopholes but recently our sources confirmed that one of very known rice brand is thinking to withdraw their trademark as the provision says that if the product is registered, it will attract 5% GST however; a without registered Rice would come under food items from zero GST bracket.
Even some tax officials are against this model but can’t raise their voice much as this is a big reforms and the bill got full support in the assembly. Seems that whatever is happening has been understood and then been approved.