Disadvantages of Non-VAT paid Bill?
- Thread starter knoughtyd
- Start date
madnav
Skilled
Hacker said:I dont like my money going into the pockets of crooked politicians. So the patriotic thing to do is not to pay VAT.
but like a good citizen, I pay my two regular taxes, income tax and inflation tax
i think there is a misconception about how VAT works..
it is a Value Added Tax and builds up as the Value is Added to the Base price in the course of selling though the chain...
following example may explain you how it works.
Company A buys raw material, manufactures products..packs then and sells them..
let us consider is as an HDD company as it is in the picture..
low not considering the internal profits of the company etc..only considering the chain which followed to Us, end buyers...
Manufacturer Distributor 1000 1050 unknown
Distributor Retailer 1100 1155 50
Retailer End Buyer 1200 1260 55
unknown is mentioned because it depends upon profit of the manufaturer and it's internal VAT rebates.
as one can see..the Most part of the 'Tax' is already paid during the initial purchase..
the distri pays 50 as VAT to manufacturer and then he gets his 50 back when selling to Retailer..
in this course..he adds value to the product (bought for 1000 sold for 1100).
Total VAT he needs to charge to the next buyer will be 5% on the total amount which becomes 55..
now he gets his 50 back.. and 5 extra is what he would pay the government as VAT...which turn out to be exactly same as 5% of added value (which is 100)..
Thus.. next you pay VAT, you as a customer pay 5% on the total value 'effectively' .. but the Retailer pays 5% of the total value he adds..which is much lower..
and if you think that if your retailer is not charging you VAT..then he himself is making low profit by doing that..which would not be the case..(as VAT is being deducted from his pocket)
so there are only two option why you are 'actually' not being charged VAT... either an illegal import.. OR to reflect loss in their business thereby avoiding other professional TAX which they might be liable to pay.
blr_p
Skilled
..or become a crooked politicanHacker said:
bear in mind the fun only lasts so long as you succeed in being re-elected, all those handouts must cut into the final takeaway I suppose
I was talking to a flooring guy once and he mentioned there used to be a company that made these tiled floor mats, you know the vinyl kind that offices install. The quality of those mats was excellent only needed to be replaced every 10-20 years or so.madnav said:
The problem with buying from this company is they refused to sell without a bill ie full taxes paid. They went out of business as a result (!)
Am I to understand ppl bought inferior stuff from other vendors because they DID sell without a receipt or that the quality was so good that they had no repeat customers anymore :huh:
madnav
Skilled
blr_p said:..or become a crooked politican
bear in mind the fun only lasts so long as you succeed in being re-elected, all those handouts must cut into the final takeaway I suppose
I was talking to a flooring guy once and he mentioned there used to be a company that made these tiled floor mats, you know the vinyl kind that offices install. The quality of those mats was excellent only needed to be replaced every 10-20 years or so.
The problem with buying from this company is they refused to sell without a bill ie full taxes paid. They went out of business as a result (!)
Am I to understand ppl bought inferior stuff from other vendors because they DID sell without a receipt or that the quality was so good that they had no repeat customers anymore :huh:
maybe those other companies never registered for VAT..or used a different company name for purchase and different company name for sales..
have you notices shops and companies changing their titles? some times it is due to VAT and other tax zhols
also..
some shop keepers issue a 'Delivery Challan' instead of 'Tax Invoice' or 'Sales Order' ... They will issue a Delivery challan to customers while they will also make a 'Tax invoice' on their own to reflect lower price and profit to cheat at VAT.
next time when you are at a shop who makes bill on paper which has 'Tax Invoice / Delivery Challan' as header.. make sure to strike off 'Delivery Challan' before tearing off the paper ..
and be ready to get some unusual reasoning form the shopkeeper But as in the example of companies mentioned by you..
a manufacturer can cheat on a whole new level
he can add his unusual expenses to the list to reflect higher manufacturing cost ..leading to less margin on paper..thus less VAT..quality is compromised obviously.
It's funny how the majority of Indians are ready to show their patriotism by abusing politicians on the one hand and then evading taxes, offering bribes to get things done etc. If a citizen cannot be honest, how do you expect his representative to be so? Save your taxes but stop lecturing on the definition of honesty.
Funny how not one discussion on crooked and unethical practices leads to a solution or honest initiative. We Indians, it seems, are good only for making excuses and screaming Jai Hind whenever Pakistan comes into the picture.Hacker said:
blr_p
Skilled
I've not come across this, it was either bill or no bill.madnav said:next time when you are at a shop who makes bill on paper which has 'Tax Invoice / Delivery Challan' as header.. make sure to strike off 'Delivery Challan' before tearing off the paper ..
Your implication is less taxes leads to higher quality ? or are you saying the only reason that company could produce high quality only because it paid all its taxes.madnav said:But as in the example of companies mentioned by you..
a manufacturer can cheat on a whole new level
he can add his unusual expenses to the list to reflect higher manufacturing cost ..leading to less margin on paper..thus less VAT..quality is compromised obviously.
The guy who told me the story gave the impresion that doing the deal without a bill can be critical for large customers ie with bill lose business.
In effect you are questioning the entire rationale for VAT here. Is it better than what was there before ?
The way you explained it earlier everyone in the production chain can reclaim it back except the last party.
madnav
Skilled
blr_p said:
No im not implying that there exists a relativity between taxex and quality.
what i want to say is (in case of individual companies) that if a company has put efforts and money into testing and verifying its products to comply with certain standards then the company would rather prefer to pay taxes than looking for foul business..to maintain a certain standard.
no certification,verification etc may lead to less quality control as evident.
im not sure how tiling business works in actual but while purchasing tiles for my new place.. i did observe that there were certain imported stuff from gujrat which was considerably cheaper than actual indian brands like kajaria.. difference being the amount of luster and consistency in size and flatness.
blr_p said:
i'm trying to say that if the dealer has purchased the goods on paper with proper documentation from manufacturer then the most amount of VAT is already paid by him..
there are different ways they can cheat at it..like manufacturer claiming certain stock robbed, dumped due to quality etc etc..which they sell in lack.
which also reminds me that even major brands like johnson come with '2nd' grade material unofficially.. the dealers offer the 2nd grade with differences less than noticeable...which kind of rings a bell... why!!?? because they promote the 2nd grade stuff more than the 1st grade stuff..
blr_p said:
yes.. everyone who is Adding to the Value and reselling it can claim the VAT he paid earlier..the difference has to be paid.. provided that he posses a valid VAT registration.
the last party, as observed, will always be a consumer who is not willing to resale the product at his own end.
See in your Arunachal pradesh where politicans (inclusing CM) used to change from BJP to Congress in every election :rofl:.... in fact AP is one place where student associations
used to do strike for 7 days continous and studion union presidents have resources worth of crores But how politicians can increase our burden just like that ? VAT from 4 to 5%. Petrol raised first 6% then again EURO III another 1% !!! Who is going to pay me more that extra 5% that is in my monthly expense now due to this. Of course they should take some sort of public opinion for that ! I wont pay as long as I am not forced to
I am not here to feed poor people and politicians. Its better not to pay any tax but rather help some poor people directly ! If all corporates decides not to give tax and tell govt that they will contribuye it directly to society India would have been ahead of its time by 10 years at least. What say !
blr_p
Skilled
You say you're not implying a correlation here but it certainly does read like you aremadnav said:
A company or companies adding value to a product have an incentive to declare their taxes because there is no problem recovering those taxes in the first place.
Therefore paying with bill ultimately means that your product is 'better' qualitywise than without. Given that every party in the chain is going to reclaim thier taxes in the white, the reason to do it in the black goes away. If a company is confident they can do business on the strength of their products then the incentive not to declare the bill goes away.
This would jive with the story i heard as that company was very confident in its products and saw no need to do things underhand. I suppose they might have been other reasons for the company to go under, but its seems clear to me now that forcing bills on their customer was not the main contributing cause.
By extension one that has no problem withholding bills is prolly not selling legit goods to begin with. The guy was trying to sell me stuff by not doing a bill saying he would save me the hassle then conjured up this story of the company that did do it the right way.
Man, this is very subtle. Of course the tax mandarins would set it up in such a way that the productive members ie the ones generating the most business have a very good incentive to pay back into the system.
My guess is similar to any company contributing to the building industry. They all have taxes to pay and reasons not to pay them.madnav said:
Exactly and there is no reason to avoid doing a bill in the first place. Unless one is aware of this fact that you highlighted it is easy to get misled.madnav said:
I think what you said earlier applies here...madnav said:
" either an illegal import.. OR to reflect loss in their business thereby avoiding other professional TAX which they might be liable to pay."
Iow words surplus ie low quality.madnav said:
This has serious implications if one were building a house say. You'd want the best materials you could get, its tempting to think not getting a bill here or there along the several materials to be bought is saving money, but in reality its the opposite
Hacker
Skilled
Not a big fan of sarcasm, I see.Naga said:
I dont know what they teach in schools in Arunachal but its obvious that you were not taught about Indian, French and American history.
Search google on taxation wrt to the countries mentioned above and how it was one of the cause of revolution.
But according to your logic we should pay all our taxes obediently even if we go bankrupt and all those patriots who fought against the british taxes were dishonest.
hyeah:You and many others in this thread have been brainwashed with the goverment propaganda that you are loyal citizen only if you pay all your taxes. Can you give me some links which shows the balance sheet, cash flow statement of the goverment of India and I will show you that 50% of our taxes go into wasteful spending.
Btw please dont reply with "why dont you change the system then"
Peace
Hacker said:Btw please dont reply with "why dont you change the system then"
Peace
And you seriously saying that the VAT/ Tax structure in India is anywhere near as restrictive as in all those European, American histories that you seem to have read about? Or is it that famous sarcasm of yours at play here? I mean, I've seen movies about rebels without causes but to overthrow a flawed but working democracy over 4/5 % VAT is like the ultimate rebellious cause ! If anybody should rebel (and some of them are like the Marxists), it would be the poor and marginalized. They are not in the tax paying bracket and they depend on the 50% of the TAX that you say the Govt does spend. That same 50% pays for whatever infrastructure we have.
I'll tell you what I learnt in Arunachal Pradesh. Until 20/30 years back, my state was mostly in-accessible with zero infrastructure. I'm talking about my father walking 97 kms over real hills to reach the nearest school. We were mostly illiterate with no sources of sustenance except for hunting and the little cultivation that we could do in our inhospitable terrain. It's from the 50% of taxes that the rest of India paid that we have schools, hospitals, roads and of course the medium of internet through which we are having this discussion. It's partly from that money that I can now earn a honest and quite plentiful living and pay taxes myself so that some one else gets the benefit. How could I be anything else but a believer in affirmative action?
I wasn't gunning for you. I was gunning for all the folks who post intermittently about corruption, lack of infrastructure, unscrupulous trade practices etc. etc but are happy to profit themselves without a thought to social responsibility/ legality or ethics. Forget about changing the system, they don't change themselves
!I do pay bribes sometimes in my business cos there's no way I would survive otherwise. And I've also been known to grease some wheels once in a while. It's the "system" at work. But I try to go straight wherever I can cos I can't take the risk of trying to change the system. I love my lifestyle, my wife, kids, my everything too much to risk it for a bunch of thieves hiding behind other thieves. The whole point is that if you were to crib all the time but still do your part, I would understand. Shirking from our own responsibilities making excuses that the other person is irresponsible :no:.
You do realise that a country is the sum of it's citizens? Crooks are often ruled by bigger crooks.
Addendum edit: How did your education system forget to teach you that the rulers in your history lessons were autocrats not elected by the common people and the laws they enforced were not the people's will? Next election, choose the person you think is right. If you do vote. Most righteous people don't.
Supra said:See in your Arunachal pradesh where politicans (inclusing CM) used to change from BJP to Congress in every election :rofl:.... in fact AP is one place where student associations
But it's the same politicians most of the time in both parties. Arunachal being a state with no industries except the now burgeoning hydro projects, the ruling party is whatever is in Delhi (for central funding/ support). Most of our people vote for a candidate, not a party. As for the strikes, the obvious stated reasons were very very altruistic (against govt irregularities and such). Now why the strikes stopped without exposing the culprits is another story. As for people having crores, yup, we're quite high on the corruption index. Doesn't justify you trying to imply my integrity is suspect along with the state's , though. Btw, the richest people in our state are not the politicians, but are from the business community. The scenario's more or less the same all over India.
Supra said:
Do you? If yes, I applaud you. And might I inform you that your taxes are also spent on you and not just the poor? Who do you think built the road outside your house and where do you think he got the money for it? I dunno why everybody confuses taxes as charity? It's not. You are paying for the roads, electricity, water, the National Parks,the Govt schools and colleges, the incentives to small scale industries which grow up to become Amul, the researches that lead to Green Revolutions, the security provided to you by the police (however meager) and the armed forces and tons more. You do much more than feed the poor by paying taxes.
Supra said:
Who do you think is the real source of all corruption? Politicians? As an example, the parents of most of the politicians in AP grew up half naked in the jungles. How do you think they learnt the intricacies of the business that corruption is in such a short time?
I wonder who is stopping the corporates to open free schools, run orphanages or build roads from the huge profits they make? Outside of this particular thread, most everyone have been lambasting the likes of the Tatas, the Bhartis etc for their broadband policies and their greed. Has anything changed that you would vouch for them to contribute for society? I mean, in spite of the highly restrictive taxing in India, some of the top richest ppl in the world are in India. Fancy that! The poor get poorer and the rich get richer. But wait, it's the politicians, you see. The rich are barely managing to become tons richer because of the high taxes! I like this line of theory, I do!
On a serious line, though, the people have more to fear from corporates than the average elected representative. Remember the Dell 2408 GO I had arranged? Dell was selling for 25k to it's employees what it was selling the common consumer for 45~50k! How much of the price difference do you think was due to taxes? You can always vote out your corporator/ MLA/ MP and he can't obviously charge you sky high prices for his services. Flawed it might be, but this is the only delivery system we have.
Shameless plug for my blog post: I voted. | veracity
blr_p
Skilled
Little quibble in an otherwise solid post. I'm hoping you get some response tho knowing these one-rant-wonders, am expecting them to melt away after your stiff responseNaga said:
The green revolution is all due to one man, Norman Borlaug. His initial goal was to improve wheat yields in Mexico and he got started on that with the help of the Rockefeller foundation with the US govt lending political support. It was only after success in Mexico did our govts. seek to bring him over to replicate it with rice, and he did so in Pak & India. The result was going from famines to grain surplus inside of a decade (the 60s), actually five years, despite a war in between.
Yes, taxes are being used to fund research in agriculture but it took a private foundation to kick start it. I doubt the next green revolution will come out of taxes, most likely from a prvate corp hoping to make a profit.
@ Naga---- Sorry just saw ur reply now Very correct but why so much taxes burgeoning on the middle class ? Any excuses for that. We middle class should not be feeding the govt and BPL ppl. The corporates are making 100s of SEZ to take tax benefits when they earn 1000 crores. Why beacuse politicians are petty thiefs and fall into the prey of the corporates just for that 10% ( 100 crores )...because afterall its money
Why cant we have just one tax !! Why give so much trouble to citizens of ur own country rather than the ones who come from abroad and start business and make millions. It should be capped like 90% tax for corporated after 100 million turnover :rofl:
Who doesn't want the Ambanis to become bust....I for one want them to bite the dust...they are bloody monopolists who with their power will take over all India and someday may be whole world. After all they are the WORLDs best Banias :rofl:
Very correct but why so much taxes burgeoning on the middle class ? Any excuses for that. We middle class should not be feeding the govt and BPL ppl. The corporates are making 100s of SEZ to take tax benefits when they earn 1000 crores. Why beacuse politicians are petty thiefs and fall into the prey of the corporates just for that 10% ( 100 crores )...because afterall its money Why cant we have just one tax !! Why give so much trouble to citizens of ur own country rather than the ones who come from abroad and start business and make millions. It should be capped like 90% tax for corporated after 100 million turnover :rofl:
Who doesn't want the Ambanis to become bust....I for one want them to bite the dust...they are bloody monopolists who with their power will take over all India and someday may be whole world. After all they are the WORLDs best Banias :rofl:
taxing is not bad...but double taxing like the one who doesnt pay pay indirectly ...but what about genuine tax payers.......why should he pay double first income tax and than why food other service and vat(indirect tax)...this brings wrong doing...
All people who pay income tax are tax robber unfortunately else they cant survive thats the truth
All people who pay income tax are tax robber unfortunately else they cant survive thats the truth
blr_p
Skilled
How many years do those tax benefits last for ?Supra said:
Govt falling prey to corporates ....in India... :lol:Supra said:Why beacuse politicians are petty thiefs and fall into the prey of the corporates just for that 10% ( 100 crores )...because afterall its money
We did that for 40 years and ended up bankrupt ! We did better actually, we grabbed private business in the 70s and nationalised it (!)..this is why I laughed earlier.Supra said:
Best part was tax evasion then was 1000x more rampant than today, and yes even the common man was at it. Result is govt had no revenue and corruption was the simplistic, knee-jerk answer for that one.
So is it just the Ambani's you want to go bust or every other successful business as well ?Supra said: