It is almost 6 months, when I wrote, GST is good for Medium and Big Companies, But it will kill small businesses. Last few days, I met with traders from Gandhi Nagar, Karol Bagh, Mayur Vihar, Kashmeri Gate etc. Business is almost stopped. Why?
If any RD purchases any goods from URD and pay GST under RCM, He can avail credit in the same period. No Mis-Match Tension, Only have to keep separate records, not a big deal. Then Why?
I tried to analyse, Reason is not compliances but cost. In any business chain, if any URD enters, the whole chain gets broken and all taxes paid till that point added into cost of the item.
e.g. If there is chain of 5 dealers, one manufacturer (A), 4 traders (B, C, D & E). In first case if D is URD, the taxes he paid to C will become part of his cost, as he can not avail ITC. E will have to pay GST on RCM, but since D can’t avail ITC, so cost of the item would be more in comparison of the cost, D might charge if He would be registered dealer.
Unregistered dealers are left with no option but to get themselves registered voluntarily. Hope Govt will do needful in the interest of small traders and provide some relaxation.
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