Input tax credit not available after December
On 1st July,2017 when the GST came into force, there was a provision which said businesses who bought goods without corresponding invoices before GST was implemented are not entitled to claim transitional credit after 6 months.
In other words, if businesses are still holding the stock they will not be able to set off taxes paid on it after December 31.
Sale to clear old stock
Consumers can be enjoying huge discounts on the unsold stock. Branded products can be sold at big discounts, discounts can go as high as 50-70%.
Slow sale in Diwali season this year
Businesses were expecting stock would be cleared by Diwali but due to slow growth in sale number they are still left with the Pre-GST stock. Slow growth of sale can also be because of consumers are not sure about the prices of the product after GST and they are also looking for GST to stabilize before buying big things. From the consumer point of view they have to spend their hard earned money and no one would like to spend their hard earned money without being sure about it.
What happens if the deadline extends?
If the deadline is extended then the business in that case businesses will get a relief from selling the goods at discount. We might see the discussion on this problem in the upcoming council meeting on November 10 but till then businesses have to be prepared to clear their stocks in December. They will definitely wait for the November month to clear the stocks also for any remedy by GST council.
Writ petition for the issue
Country's two top retail chains are looking to file writ petition in Delhi High court on the issue.(Source: ET)
Views from Tax practitioners on this matter
Such provision may infringe fundamental rights to businessman.
Question raised here is that can any law set the time frame to sell the products. Looks like we all will have to wait till the next meeting on 10th Nov. to see what will be the real situation.
Author is a practising Chartered Accountant with around 6 years of Post qualification experience. Currently working as a partner with RGNL and co., providing consultancy to corporate clients on GST.