Respected Sirs,
I have some question regarding the differentiation of GST charged for readymade Garments below Rs1000/= and above Rs.1000/=. I like to describe some points.
1. When a Retail dealer purchasing one products for a price band of Rs900/= from a Manufacturer / Agent by paying @ 5% GST (i.e, Rs.45/=), then cost of products to the Retail Dealer becomes Rs.945/=.
2. He will add 30% as margin of Profit on the face value of the products i.e., Rs.270/= (As the Retail Dealer will get refund back of the GST which he have paid to the Manufacturer / Supplier), then sale price of the product becomes Rs.1170/= and that product goes in @ 12% GST regime.
3. Now the retail Dealer liable to pay Rs.140.40 as GST. As he had already paid Rs.45/= to the supplier, then he have to pay rest of Rs.95.40 to Government. Till this point everything is OK.
4. As the Retail Dealer had make a profit of Rs.270/= then he is liable to pay on that profit margin. I hope this is correct and then he may pay GST at the highest rate of the Tax on that product. In this case @ 12%. So, he is liable to pay Rs.32.40, but he is paying Rs.95.40
5. Actually the difference Rs.63.00 he is paying from his profit. Actually the Retail Dealer is paying @ 35.33% on his profit. Is it not a glitch of Taxation?
I will be very grateful if anybody clarify me the actual facts.
Goutam Paul
CAclubindia
