GST on sale threads?

[blackhorn]

What is this unnecessary trouble you speak off?
Let's call it your business @dafreaking just for example sake.
Now you keep on buying ram at 10k plus 18% GST , which you will claim this input GST credit back (all 1800 of it) costing you just 10k in home.
Now you sell it off at TE, OLX for let's just say 11k or 10 or 9k whatever, showing a loss of atleast 800 to another seller who paid all 11.8k of it .
To the world you are selling at a 800 loss where as it a 1000 profit for you. And that's just what you do for every upgrade you do. Now let's take it to another scale and start selling 3090's. You can see where this is going.
I'm aware of this as this was done by so many firms(in GST's infancy) who would show these as expenses by the company incurred in crore of rupees which brings down their profit hence less tax(not to mention the 50% depreciation one claims on computer peripherals in the first year), bringing down the total cost of the item way,way below the market and simple sell it on TE/OLX.
So you have taken the initial GST components which belongs to the government, then you showed it as an expense and still reduced the tax payable to the government, then you claimed 50% depreciation on the item, then even if you resold it at 80% of the bill value you are in plus,plus,plus.
If I'm wrong, take this as free business advise, start a few companies and make millions.

Just to add to this because I try and manage my accounts myself. Its not as easy to do that, because firstly when a person is doing this on a repeated basis, you are entering the HSN of the item you are buying. The only way one can do this, (claiming input tax credit) for an expense is to keep it below 5k (if my memory serves right) other wise what will happen is, that by entering and doing this on a repeated and blatant basis is that you acrew ITC(input tax credit will go up for that particular HSN) and you can keepon doing that if you want a visit from the GST inspector, it can immediately become apparent to someone if they know what they are looking for. Because when you do file your returns, you are also giving a complete working up on the HSN details of your sale, and consequently so is your buyer. That's why you can game some with this particular model, but its certainly fairly limited. And if someone doesn't want a headache dealing with these guys, its certainly advisable not to indulge in such pratices.

 

[Mann]

Just to add to this because I try and manage my accounts myself. Its not as easy to do that, because firstly when a person is doing this on a repeated basis, you are entering the HSN of the item you are buying. The only way one can do this, (claiming input tax credit) for an expense is to keep it below 5k (if my memory serves right) other wise what will happen is, that by entering and doing this on a repeated and blatant basis is that you acrew ITC(input tax credit will go up for that particular HSN) and you can keepon doing that if you want a visit from the GST inspector, it can immediately become apparent to someone if they know what they are looking for. Because when you do file your returns, you are also giving a complete working up on the HSN details of your sale, and consequently so is your buyer. That's why you can game some with this particular model, but its certainly fairly limited. And if someone doesn't want a headache dealing with these guys, its certainly advisable not to indulge in such pratices.

Bro I appreciate your input but you are referring to you individual case. Let's talk about a call center, or an obsolete internet cafe. They will have a lot of computers and it's their business to have so many of them. Will there be enquiry about HSN CODE?

 

[blackhorn]

it can, because you declare you nature of business when you apply for GSTN

 

[Mann]

If by "it can" you mean that it's probability is not zero, I agree. But so is the probability of the moon disappearing from the solar system before I press "post reply" on the thread.
And natural of business is what I was talking about.

 

[blackhorn]

Well you see its related, lets say you own an internet cafe(particular case reference) and you say I have 15-20 computers, and you show them as not your purchase but as your capital/asset base. Since they are a direct expense of a service you are offering. The HSN you will be using will be to show your sale as a service corresponding to the service you are selling. So if there is any discrepency between what you declared you were going to do, and what you're actually doing, you 'can' be asked to explain that activity.

No one can 'make' anyone follow the law, you have to do it of your own volition.

 

[Mann]

If by "it can" you mean that it's probability is not zero, I agree. But so is the probability of the moon disappearing from the solar system before I press "post reply" on the thread.
And natural of business is what I was talking about.

Hey I thought we were in agreement on both of your concerns.

No one can 'make' anyone follow the law, you have to do it of your own volition.

 

[dafreaking]

Also if profit or loss doesn't matter kindly donate these drives rather than selling them.

My last "2 pasia" in a discussion where not even one qualified CA has actually made any direct input.

Read what I said carefully. Profit or loss doesn't matter. If as a business one is selling on something that they have purchased then they have to charge GST on the entire sale amount.

 

[Mann]

Read what I said carefully. Profit or loss doesn't matter. If as a business one is selling on something that they have purchased then they have to charge GST on the entire sale amount.

How is this relevant from what I have been saying? All I said was that the GST input claimed has to go back to the government.
Do people just dive into conversations just for the sake of it?
With harsh words like:-

That's where it's a murky situation.

you post this incoherent babble, which again, makes no sense.

Yes that's all baloney. Almost seems like someone trying to create unnecessary trouble.

People please
Read, understand, reply.
Read, understand, reply.
Read, understand, reply.

 

[rdst_1]

What is this unnecessary trouble you speak off?
Let's call it your business @dafreaking just for example sake.
Now you keep on buying ram at 10k plus 18% GST , which you will claim this input GST credit back (all 1800 of it) costing you just 10k in home.
Now you sell it off at TE, OLX for let's just say 11k or 10 or 9k whatever, showing a loss of atleast 800 to another seller who paid all 11.8k of it .
To the world you are selling at a 800 loss where as it a 1000 profit for you. And that's just what you do for every upgrade you do. Now let's take it to another scale and start selling 3090's. You can see where this is going.
I'm aware of this as this was done by so many firms(in GST's infancy) who would show these as expenses by the company incurred in crore of rupees which brings down their profit hence less tax(not to mention the 50% depreciation one claims on computer peripherals in the first year), bringing down the total cost of the item way,way below the market and simple sell it on TE/OLX.
So you have taken the initial GST components which belongs to the government, then you showed it as an expense and still reduced the tax payable to the government, then you claimed 50% depreciation on the item, then even if you resold it at 80% of the bill value you are in plus,plus,plus.
If I'm wrong, take this as free business advise, start a few companies and make millions.

See, that is why I am asking you to go through the rules. Just read that link I've provided above through Cleartax.
It clearly states, that for capital assets, useful life is considered 5 years and in your filings, you have to claim ITC on a monthly basis.
So in this example of yours, if I were to buy a HDD worth 10k and then pay 18%GST on it and then sell it off after 1 year, I will be only able to claim ITC for that 1 year period which will come to 360 bucks. Also it states in that article itself, that if I had claimed depreciation on the GST component itself, then I will have to reverse that as well.
So, I am sorry, but your above mentioned scenario doesn't work in reality, because that is not how GST is filed and the govt has already thought of these scenarios beforehand.
If I was a seller of these products, then I will anyway be charging the buyer GST and claiming the full ITC and paying thr govt the extra GST that needs to be paid.

 

[Mann]

Boss I'm not a CA. My understanding of the law is very limited. I have specialist who I listen to. Just like if I have a headache I go to the doctor and pay him. I don't look online and assume that it's a brain tumor because it is one of the things Google said I have.

 

[rdst_1]

Boss I'm not a CA. My understanding of the law is very limited. I have specialist who I listen to. Just like if I have a headache I go to the doctor and pay him. I don't look online and assume that it's a brain tumor because it is one of the things Google said I have.

I understand that and that is the correct way. But when you are having a discussion about some topic online, then it would be better if you could at least educate us with valid links. Just saying that my CA has said that isn't enough as GST laws can be very convoluted and not every CA understands them properly even today.Here is another one on how ITC is calculated and reversed in case of capital goods.

ITC Rules for Capital Goods under GST

Input Tax Credit on Capital Goods: We shall give you our guide on ITC Rules for Capital Goods under GST as per formula, reversal and ITC for goods send on job work under GST.

cleartax.in

 

[dafreaking]

Boss I'm not a CA. My understanding of the law is very limited.

 

[Mann]

Hey do you know what selective hearing does to to you?

Or reading one line out of context?

Start from 1.50.

 

[dafreaking]

LOL.. I has typed out an entire reply but it just showing me "selective quoting" you is better. Any way....

 

[sanjeevram]

I have started my own business 3 months back, As far as I have learned till now.
Whenever I buy something I pay price + gst on it, and if I am selling it on a markup along with gst it would mean Price + profit + gst. if bill is not made for the resale then the gst is already paid for when I bought the item and it goes from my pocket.
So suppose I buy something for 100 rupees then Total is 100+18%=118 and if I sell it again with gst bill for a profit of 10 rupees then it becomes 128+18%= 151.4 as I have already paid 18₹ as gst when I bought it I will be paying a gst of 1.8₹ on my profit of 10 rupees.
if I sell it without the bill there is no gst refund as GST is already paid for when I bought it. Any extra GST at the end of the month is calculated as gst credit which can used to pay your gst for the upcoming month you dont get cash refund.

I have looked it up. Can you show me any rule which says the input GST credit has to be returned if I am selling off something I bought and used for my business. Have you done that for your business? And how do you file that? Under which section in which form?

I would say a no on that. Since whatever you bought u paid the gst beforehand, now you would be selling it secondhand without a bill. so you are not selling a product or a service but selling a asset.

 

[iPwnz]

Man...all these GST discussion is making me regret not taking my commerce class more seriously lol.

I remember selling my MSI GTX 1060 6GB for 13.5k(Just bcoz I had already committed) to @Krato$ 3months ago Even after people offering upwards of 16-17k on PM. He is yet to post the feedback and does not reply to pm's anymore.
"Honesty is a big virtue not to be expected from cheap people." Even @iPwnz knows about it.

Yeah, deep inside my mind I personally thought that you were drunk when you agreed to it. I was shocked. The other guy was definitely lucky. I just hope his intention was not to resale it for a profit since he was also looking for more gpus to buy.

I would say a no on that. Since whatever you bought u paid the gst beforehand,

I think this is true since you cannot buying anything without tax.

 

[Mann]

Brother businesses get that GST back.
So there was no tax. That is what we have been discussing.

 

[iPwnz]

Brother businesses get that GST back.
So there was no tax. That is what we have been discussing.

I know that. I also know that business make profit from such methods. And that consumers not asking for invoice only leads to more profit for business since the business don't give their due money to the govt. But consumers are charged for such "tax" in full whether they get invoice or not.
Am I wrong?
I once asked someone about it who told me that it's unethical but not illegal if consumers don't demand invoice. No wonder many of these business owners are rich as shit.

 

[Mann]

Absolutely
I have been fighting for the government's share

 

[dafreaking]

I'll do you one better. Some big businesses want you (in this case a service provider/contractor) to deposit and file your gst returns before they actually pay you the GST amount owed to you.

Also. You don't get "GST back". It's only input credit where you pay the amount you are liable to. That is how GST works. At the end of the day, the final user/customer, etc is the one that actually pays the tax.