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Arjuna (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.

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?

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.


Published by

CA Umesh Sharma
Category GST   Report

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