CA. H.M. Talha Rahman, Partner, Selvarajan & Co., Chartered Accountants, Chennai, speaks at length about what GST might mean for the country’s financial system even as giving a very correct and deep know-how approximately the computation worried for the tour industry.
“There is a large hue and cry approximately GST and people are speculating lots about this. What we fail to apprehend is that it is an aggregate of most of the indirect taxes in a new form, which brings the concept ONE NATION ONE TAX.”
The GST become carried out successfully with the aid of few nations many years in the past. I consider having waited in a queue in Singapore Airport for a refund of GST 15 years ago. At that point, Indians used to store loads in Singapore which become popular for tape recorders, VCRs, perfumes and different fancy stuff. When we buy them in Singapore, the fee of the item comes with an issue referred to as the GST which needed to be paid by means of the local citizens as final patron. But a foreign national could claim the refund of GST paid, through showing the bill and items at the time of departure from u . S .. Hence It is referred to as a consumption tax
NO CASCADING EFFECT:
To put it truly, “Cascading Tax Effect” way tax on tax. Previously while a producer sells his product, he provides Excise Duty together with his selling price and sends the products to the distributor. In turn, when the distributor sells the equal items to the stop person, he provides his profit margin and also prices VAT on the added charges which incorporate Excise Duty. In other phrases, a tax (VAT) is paid on any other tax (Excise Duty), which has cascading tax impact. Now within the GST generation, in this example, both Excise Duty and VAT is clubbed as GST and the GST charged via the producer to the distributor may be adjusted as ITC (Input Tax Credit) as a consequence avoiding the tax on tax.
To provide an explanation for the concept in easy phrases, allow us to anticipate that a distributor referred to as “B” buys 1000 units of a product from a manufacturer known as “A” at a fee of Rs. One hundred in step with a unit. The Invoice by way of A will look like this:
SlNo Description No of Units Unit Price Total Amount
1 Sale of Product a thousand a hundred 1,00,000.00
2 GST @ 12% 12,000.00
3 Total Invoice Amount 1,12,000.00
(In this example, A collects Rs. 12000 from B as GST and pay the entire quantity to the Government)
Now let us again anticipate that B promote this kind of products to a retailer called “C” maintaining 5% as his income margin and his promoting price can be Rs. One hundred and five in step with a unit. The Invoice of B will seem like this:
Sl.No. Description No of Units Unit Price Total Amount
1 Sale of Product a thousand 105 1,05,000.00
2 GST @ 12% 12,six hundred.00
three Total Invoice Amount 1,17,600.00
(Now B Collects Rs. 12600 from C as GST, however, he’ll no longer pay the whole quantity to the Government, rather he is allowed to deduct Rs. 12000/- which he has already paid to A as GST and pay simplest the balance quantity of Rs. 600 to the Government. This credit score of Rs. 12000 is called ITC, Inward Tax Credit). If you notice within the above example, the tax isn’t levied on tax and subsequently, GST will no longer have any cascading tax impact.
INPUT TAX CREDIT (ITC):
One of the greatest advantages of GST is the seamless go with the flow of “enter credit score” (please refer the example above: Rs. 12000 paid by using B towards GST to A is ITC of B) across the chain and throughout us of a. All taxes (GST) paid to a registered dealer for the purchase of products (which includes capital goods) and delivery of offerings may be deducted as ITC from the GST accrued from your bills and the stability tax best need to be paid as tax.
There are few exceptions, for instance, the GST paid on Motor Car or Motor Cycles and so on by using the non-delivery agencies cannot be used as ITC.
Compliances mechanism of GST is going to be a major roadblock for small traders and carrier providers. Every registered supplier has to file 3 returns in a month and one annual return making the whole number of returns to be filed as 37 consistent with annum. These returns are to be filed electronically on a platform known as GSTN (GST Network) and calls for terrific information, accuracy, and skill. It is sincerely difficult, if not feasible for small timers to conform with those necessities on a monthly basis. It is strongly cautioned to apply the offerings of Chartered Accountants or Tax Return Preparers appointed with the aid of the branch
RELIEF TO SMALL TRADERS & SERVICE PROVIDERS:
1. Small Manufacturers, traders, dealers and provider providers whose turnover does now not exceed Rs. 20 lakhs in a financial 12 months are exempt from the registration and charge of GST.
2. Composition Scheme: Those small traders whose turnover exceeds Rs. 20 lakhs but underneath Rs. Seventy-five lakhs can opt for the Composition Scheme which permits them to pay GST at a lower fee to be constant through GST Council so that you can now not be less than 1%. But they cannot avail ITC and they cannot adopt any inter-country transactions.
3. Unfortunately, the small carrier carriers can’t opt for the composition scheme.
TRAVEL & TOURISM INDUSTRY:
Tourism Industry and tour and excursion dealers mainly are dealing with a hard time due to various factors like no fee by way of the airways, direct advertising and marketing of airways, better taxation, terrible tourist infrastructure and so on. Their main resources of income are indexed under:
1. Commission from Airlines, Cruise Companies, Travel Insurance Companies and many others
2. Sale Tour Packages, each inbound and outbound
3. Travel Related Services like Visa, Passport and many others.
Four. Incentives Received from CRS Companies
Now we shall deal how GST is calculated on these objects.
Commission from Airlines, Cruise Companies, Travel Insurance Companies and so on:
1. One has to remember the fact that an airline or a cruise price ticket or the journey insurance policy issued with the aid of insurance companies is a settlement among the airline/cruise/coverage enterprise and the passenger. The tour agent is handiest a facilitator who gets a fee from the organizations. Hence GST on these price ticket/policy will only be fed on via the passenger and the agent can not use them as their input credit.
2. However, the agent has to pay GST at the fee received from the airline/cruise/coverage agencies on the opposite basis. (For Example, if the GST is eighteen% and the agent receives Rs. One hundred as fee, he has to pay simplest Rs.15.25 (100-a hundred/118%) as GST). This amount of Rs. 15.25 ought to not be amassed from the passenger.
3. If the agent collects Service Fee as an extra rate from the passenger and shows it within the invoice one at a time, he can add GST on the service rate inside the bill and accumulate the equal from the passenger.