CA Umesh Sharma

CA Umesh SharmaArjuna (Fictional Character): Krishna, Government has levied the GST on cloth. Due to this the cloth merchant have to take admission in the school of GST. Please give the information regarding cloth merchant going in the GST School.

Krishna(Fictional Character) : Arjuna, Earlier no VAT and Excise Duty was levied on cloth but now GST is levied on it. Readymade cloth merchant was already paying indirect taxes. Cloth merchants not even admitted in the school of Indirect Taxes. But now they will have to take admission direct in higher education in GST School. So subjects of GST school will be very difficult to cloth merchants. The little kid is feared, about to cry, tensed at the time when he going to school at first time, the same situation is of cloth merchant now. They are doing strike, movements for not to take admission in GST School.

School of GST

Arjuna : Krishna, What cloth merchant should do to take admission in the GST School ?

Krishna : Arjuna, If the turnover of the cloth merchant in a financial year exceeds Rs. 20 Lakh then it is compulsory to obtain GST registration within 30 days. Similarly if the turnover in the financial year does not exceeds Rs. 20 Lakh then the registration is not compulsory. It means if turnover is up to Rs. 20 Lakh then it is discretionary to take admission to that student (Merchant). If the merchant wants to do interstate sale and his turnover in the financial year does not exceeds Rs. 20 Lakh then also it is compulsory to take registration.

Arjuna : Krishna, After taking admission in the School of GST, how the cloth merchants suppose to pay the tax?

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Krishna : Arjuna, Taxpayer should levy the GST on sales and he can take Input Tax Credit on the purchase. It means every merchant should pay tax on value addition. Merchant will get ITC of GST paid on Input services also. The merchant will have to file monthly return and make the payment of GST. It means that merchant have to give exam of sales and purchase monthly.

Arjuna : Krishna, What if cloth merchant choose an option of composition scheme?

Krishna : Arjuna, If the turnover of cloth merchant is below Rs. 75 Lakh then he can register in composition scheme. Composition tax payer will not get Input Tax credit of tax paid on purchase and he cannot levy GST. According to the composition scheme, he have to pay 1% tax on turnover. But that merchant cannot sale outside the state. If merchant is registered under composition scheme, then he have to submit quarterly return. It means student who opt for composition scheme have to give exam for every three months.

Arjuna : Krishna, What the cloth merchant should do of the things which are in closing stock?

Krishna : Arjuna, At the time of sale of things which are in closing stock, they should sale it by levying  5% GST. Similarly, if readymade cloths are below Rs. 1000 then 5% and if above Rs. 1000 then 12% GST will have to be levied.

Arjuna : Krishna, What if the cloth merchant does not follow the provisions of the Act?

Krishna : Arjuna, if the cloth merchant does not follow the provisions, then his case will go to the officers of Central Excise or Sales Tax department and they can do inspection, seizure, etc. It means these officers are headmasters in the school of GST.

Arjuna : Krishna, what lesson a cloth merchant should take from this?

Krishna : Arjuna, cloth merchant should take a decision according to type of his business whether to choose composition scheme or not. In GST old bill books are not allowed. So, as per the provisions of GST new bill books or computerized bills should be prepared. Do trade according to the provisions of GST, otherwise the principal can cancel the admission and can levy the penalty. After that doing trading will be difficult. So, trader should walk ahead by studying the GST.

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18 responses to “Cloth Merchant- The new tensed kid in the school of GST”

  1. BEHARA SATYANANDAM says:

    SIR YOU HAVE WELL EXPLAINED IN THE CASE OF CLOTH MERCHANTS. HOW THE GST WILL EFFECT KIRANA AND PROVISIONAL TRADERS WHO IS HAVING MORE THAN 75 LAKHS TURNOVER . WHAT HE HAS TO DO WITH THE STOCKS AS ON 30TH JUNE 2017 ?

  2. Amol Bhutada says:

    What about cotton cake

  3. Amol Bhutada says:

    Cattle feed cotton cake what is gst

  4. FARUK MEMON says:

    nice lesson

  5. CA. S.C.Podder says:

    Good.

  6. GANDHI MOHAN BHARATI says:

    Well all small time cloth merchants even in Tier 99 towns if there is on such Tier may necessarily wind up business.
    Input Tax credit is only for the merchant and not passed on to consumers. Less the chain of transaction, cheaper will be the goods.
    So on line business will grow by leaps and bounds and big shops will flourish at the cost of small ones losing their livelihood. Jai Ho

  7. Jignesh Vadodaria says:

    sir it is compulsory to issue computer generated bill only ??????

  8. vinod says:

    I am dealing in textile/cloth business in Punjab and my turnover in the financial year 2016-17 is Rs 50 lacs. Now I want to opt for composition scheme under GST. I have a stock of Rs. 40 lacs in my shop as on 30/06/2017, out of which about 20 lacs of stock was purchased from Haryana. I want to know (1) can I opt for composition scheme, with ref of provision that stock, should have been purchased from Regd Dealers, stock was not purchased inter- state (2) weather I am to deposit tax on stock of Rs 40 lacs. (3) can I claim cenvat on Stock.

  9. Vinod Kumar Gulati says:

    Excellent, first lesson!

  10. Rohit says:

    Rahul ji …he have to pay tax on sale only …not on lying stock

  11. RAKESHDIDWANIA says:

    WHAT HAPPENS IF A NEW BABY WHO DONT KNOW ABCD IS GIVEN SYLLABUS OF 10TH STANDARD

  12. Girish says:

    The Style of explanation is awesome

  13. M arora says:

    The issue is not of simply paying the taxes but beyond that, the new kid on the block will have to generate form for export from home state and also generate way bill for the importing state, and he would be unable to do so and then nave to bribe the class teacher to condone his mistakes, the principal has set a syllabus which is beyond the capabilities of the new kid

  14. CMA Girish GR says:

    Sir,

    You are amazing in narrating Professional Geetopadesha.

    Thanks,

  15. CA Rahul Kumar Jain says:

    Dear Sir
    If Existing Cloth Merchant having Closing stock as on 30th june and no registration under VAT. Now in GST he choose to Composition Scheme, hence first he need to pay tax on goods lying on appointed day than again sale under composition Scheme ?????

    Please Suggest

  16. CA Rahul Kumara Jain says:

    Dear Sir
    If Existing Cloth Merchant having Closing stock as on 30th june and no registration under VAT. Now in GST he choose to Composition Scheme, hence first he need to pay tax on goods lying on appointed day than again sale under composition Scheme ?????

    Please Suggest

  17. Thakur Kuldeep Singh says:

    Very well explained.

  18. VIRAL CHHEDA says:

    EXCELLENT

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