GST - will it make some businesses unviable?
Good point raised by M Guruswamy.
The sports goods industry, which is mostly located in Jalandhar and Meerut directly, employs about half a million persons. The sports goods market in India is valued at US$ 3.6 billion. The market is growing as 35-40 % a year. The growth is expected on account of increasing awareness about health and fitness in the country. India also exported sports goods worth around US$ 400 million as compared to US$ 214.95 million in 2012-13. The major items to be exported during 2013-14 include inflatable balls, cricket bats, general exercise equipments, sports nets and protective equipment for cricket.
Now consider this. All the sports bodies and their members like players and coaches can directly import sports goods without attracting any customs duty. But Indian-made sports goods will entail payment of a GST of 18%. This will effectively remove any competitive advantage they may have. Take the case of table tennis tables made in India. The GST Council’s notification based on its June 19 meeting indicates that under its notification 146/94 government bodies, sports federations or specified sportspersons can import them (mostly from China) without attracting any import duty or IGST. But if the same set of buyers were to buy them from local manufacturers it will entail a GST of 28%. Similarly sporting goods like cricket gear, hockey sticks and soccer balls will become cheaper than Indian manufactures. Make in India will soon become make in China, or Pakistan or wherever, but not here.
Is this what Arun Jaitley wants?
Sachin Tendulkar’s son will be able to import his cricket kit from England, while a middle or lower class kid from Saharanpur or Ranchi will pay more for Indian kits. Is this the new equity? more
The sports goods industry, which is mostly located in Jalandhar and Meerut directly, employs about half a million persons. The sports goods market in India is valued at US$ 3.6 billion. The market is growing as 35-40 % a year. The growth is expected on account of increasing awareness about health and fitness in the country. India also exported sports goods worth around US$ 400 million as compared to US$ 214.95 million in 2012-13. The major items to be exported during 2013-14 include inflatable balls, cricket bats, general exercise equipments, sports nets and protective equipment for cricket.
Now consider this. All the sports bodies and their members like players and coaches can directly import sports goods without attracting any customs duty. But Indian-made sports goods will entail payment of a GST of 18%. This will effectively remove any competitive advantage they may have. Take the case of table tennis tables made in India. The GST Council’s notification based on its June 19 meeting indicates that under its notification 146/94 government bodies, sports federations or specified sportspersons can import them (mostly from China) without attracting any import duty or IGST. But if the same set of buyers were to buy them from local manufacturers it will entail a GST of 28%. Similarly sporting goods like cricket gear, hockey sticks and soccer balls will become cheaper than Indian manufactures. Make in India will soon become make in China, or Pakistan or wherever, but not here.
Is this what Arun Jaitley wants?
Sachin Tendulkar’s son will be able to import his cricket kit from England, while a middle or lower class kid from Saharanpur or Ranchi will pay more for Indian kits. Is this the new equity? more
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Oct 31
As long as cash is accepted in shops, billing can be avoided. Shop keepers will make more money and rob the government. This is a loophole and the dealer / retailer makes more and pockets the money which he never billed collected as tax and will get richer, as the customer is "only" paying MRP. The MRP includes the tax which the trader never billed. The consumer must reduce 4% tax, if bill is not raised before making payment. more
Jul 10
I do hope the following post will help Mr Naveen and other members understand the application of GST better: 1. Introduction of GST will remove the currently applicable taxes such as VAT, service tax, excise duty (?) , etc. 2. GST = CGST (Central Goods and Services Tax) plus SGST (State Goods and Services Tax). GST earned on the sale of a product will be divided in two equal parts, one part will go to the Centre and the other half to the State in which the product is sold. 3. If products manufactured in State 1 are sent to State 2, then an IGST (Integrated Goods and Services Tax) will be paid by the the importer in State 2. This figure will be the same as GST = CGST + SGST. And then the State 2 will charge GST on the sale of goods and hence be compensated for the IGST. In other words, IGST has no real identity, it will be "washed out" when goods are sold in State 2 and they charge GST to the consumers. 4. If only part of the imported volume is sold in State 2 and the rest is transferred into State 3, then the importer in State 3 will pay the IGST and shall recover this when the products are sold in State 3. 5. If goods enter an Indian State from abroad (foreign territory), the importer will pay the IGST (customs duty is not included in this IGST). The importer will charge GST to their clients on sale and hence shall be compensated for the paid IGST. No loss at all to the importer. In other words, imported product shall be subjected to the same GST as goods manufactured in India (today imported goods are levied less taxes than goods manufactured in India). Living the same GST on imported goods as is levied on goods manufactured in India will subsequently encourage "make in India" and discourage foreign imports. A significant change which will encourage/induce foreign manufacturers to "make in India". The reason why this important step can be implemented only after total concurrence of the various States of India is because all States have to agree to share the GST 50:50. Presently, difference Indian States had different taxation modus operandi. Now, everything will come under one hat. Allow me to mention that I have in the past sixty years of my life seen this mode of taxation introduced in Germany and later on in Singapore, and, believe me, all initial skepticism disappears in a relatively short time. We humans have the biggest capability of "adaptation"! Let's hope it works! more
Jul 08
Writing simply without any support data makes no sense and person reading it can not take a call on the correctness of the statements. More difficulty, more problem, less profit, lower sale does not mean any thing unless until supported by data from an authentic source. more
Jul 08
Naveen Goel Ji will U pl. narrate this issue by placing price comparision for same quality Make in India & make in China to understand the real problem, May be Sachin son prefer imported one because of good Quality aspect ,I dont think he may be comparing price. As u rightly said that sports good market in India is valued at US $ 3.6 billion & growing 35-40% per year, may u pl submit the information how much tax was paid by industry against a buiseness of US$3.6 billion after all this is also social responsibility of Sport goods Industry. more
Jul 08
