Differential Tax Levy under GST

Differential Tax Levy under GST: Food Firms May De-Register Trademarks

The government’s Move to charge on trademark food brands is leading several rice, wheat, and cereal manufacturers to consider de-registering their product trademarks.

 

Irked by the June 28 central government notification fixing a 5 per cent goods and services tax (GST) rate on food items packaged in unit containers.   Registered brand names, the industry has made several representations to the government to reconsider the differential tax levy, which these players say is creating an unlevel playing field within these highly-competitive and low-margin industries.

 

 

Sources say that the move has affected the packaged rice industry the hardest and allowed the unregistered market leaders, India Gate and Daawat, to gain the advantage as compared to other registered brands such as Kohinoor and Lal Qilla.

 

Smaller players are even more worried about this enhanced rate of tax (against the otherwise ‘nil’ rate) on registered brands, which they claim results in a severe loss of competitiveness. Reacting to the situation, many of these manufacturers are even taking the drastic step of re-registering their trademarks to place themselves on the favorable side of the playing field, much to the dissatisfaction of the rice lobby.

 

The Body has lodged a formal complaint with the Ministry of Finance and the GST Council over rice exporters and traders de-registering their trademarks to escape the GST dragnet.

 

Differential tax treatment between registered brands vis-a-vis brands

 

What makes the difference even starker is the fact that the enhanced tax rate will apply to only those brands with trademarks in force and not others.

 

The differential tax treatment between registered brands vis-a-vis brands for which registration applications are pending, brand names which are registered outside India or unregistered brands which spend substantial amounts on brand building and operate at similar commercial levels may lead to unequal treatment of equals, without any intelligible differentia.

 

Prior to the GST regime, branded food products were charged a standard central excise tax, regardless of whether they had trademarks. Sources say that this classification was not acceptable to the GST Council as it taxed even micro-brands, to the disadvantage of smaller manufacturers.

 

GST affected Rice Manufacturers

 

To rectify this, the council decided to levy a tax only on trademark products. However, instead of providing an advantage to these smaller players, the distinction has led to severe uncertainty in the market and also raised issues of constitutional irregularity, note experts.

 

Although these affected manufacturers are said to be looking at alternate possibilities, any applications for deregistration of trademarks will be at the discretion of the trademark registry, according to Section 58 of the Trademarks Act, 1999. The request could also take a considerable amount of time as no time-period is prescribed to process the application. Until the registry confirms the request in writing, the mark will continue to remain as registered within the meaning of the Act and as a result, could continue to be liable for the higher rate of GST, adds Dutt.

Trademarks are representative of quality and origin

According to Dev Robinson, national practice head, IPR, Shardul Amarchand Mangaldas, trademarks are representative of quality and origin.

 

The government’s decision to tax registered and unregistered brands differentially seems counterintuitive to developing brand worthiness in these highly competitive markets.

 

Experts have also raised health and quality concerns associated with deregistration of trademarks. Although the Food Safety and Standards (Food Products and Food Additives) Regulations 2011, which lay down safety standards for food products, do not differentiate between trademark and non-trademark goods, it could become harder for the authorities to ensure compliance with these requirements for non-trademark and imitation products.

 

Registration of trademarks is also a prerequisite for recorded before customs, which tackles issues of counterfeit import and export. Deregistration of a trademark can hamper such activities. If the government’s intent was to impose taxes, it should have been on brands per se but not targeted on registered marks.

 

Companies having registered trademarks abroad who choose not to obtain trademark registrations in India would also have stronger protection in case of such passing off actions.While experts are in agreement that the present scenario poses a unique challenge for the government and the affected industries, they also highlight that establishing an alternative approach may prove difficult. All eyes are on the Saturday GST Council meet in the hope of finding a viable solution to the issue.

Beware! After GST, Be Selective for your Vender

Beware! After GST, choosing a wrong vendor can kill your business

With GST, there has been an essential move in how your books are kept up. Till now in the whole assessment administration, the main adaptation of the fact of the matter was the way you kept up your books. Every one of your filings spilled out of that.

 

 

GST Be Aware

GSTN as a typical database units

In the GST time, there is one arrangement of detailing that you are doing, however, there are a few gatherings who are revealing what their exchanges with you are. GSTN as a typical database units and has brought together perspective of what your business is. It likewise has associations with the traditions, keeping money channels, salary duty et cetera. What’s more, it gives the taxman a full perspective of what you are answering to every element.

What this in the long run implies is that it was simpler to be a rebellious prior. I could depend on my contracted bookkeeper and let him know, “Approve, this year I need to pay this much expense, please set up my books appropriately.” But, now this would turn out to be extremely troublesome in light of the fact that others have answered to GSTN and henceforth assess specialists know every one of the points of interest.

One of the major moves that organizations require is to guarantee that the books of record that they keep up are completely in a state of harmony with GSTN has and they are reconcilable to an outer outsider. Each exchange that streams into your bank ought to be adjusted to some other exchange which is accounted for by another person.

Past the documenting and the IT a player in things, it is vital that you know your provider and your client well. On the off chance that your provider has not paid their assessment you won’t get input credit. For instance, let us take an extremely straightforward three gathering exchange between A, B, and C.

Give us a chance to state they are executing and An offers Rs 1 crore worth of merchandise each month and B takes a shot at it assist for Rs 1.2 crore and the following party C offers it at Rs 1.5 crore. At an 18% assessment rate, the general expense obligation for the legislature would be 18% of Rs 1.5 crore. In any case, in the middle of if B defaults, at that point A has officially paid his 18%, which is Rs 18 lakh assessments to the legislature, yet B is not ready to pass that credit to the following party in chain, which is C. In this exchange, C who was prior required to pay just 18% of the esteem he was including, that is 18% of Rs 30 lakh adding up to Rs 5.4 lakh, will now wind up paying duty on the whole Rs 1.5 crore, which implies an outpouring of Rs 27 lakh. Also, the dubious part with GST is that C will become more acquainted with about B’s default just two months down the line.

For this situation, if B has defaulted, his credit might be turned around following two months, which implies C is as of now executing with him for two months post his default. In the event that there are further defaults by B, an outpouring of about Rs. 40 – 50 lakh extra could conceivably execute a business. This implies it turns out to be vital to know who your merchant is, the means by which well agreeable they are and on the off chance that they are not consistent then you have to change your seller.

This likewise implies you as an entrepreneur need to guarantee that you have adequate credit consistently. On the off chance that you are maintaining your business on a tight spending plan, which most SMEs do, it might be a great opportunity to reexamine how you maintain your business. In the event that there is ever a circumstance where rather than Rs 5.4 lakh your assessment risk all of a sudden progresses toward becoming Rs 27 lakh you require enough headroom to hack up that add up to remain GST consistent.

On the off chance that you are not consistent, your GST evaluations will endure. At the point when that happens, you will in the long run not have the capacity to discover new purchases or your existing purchasers will make tracks in an opposite direction from you.

HSN Number for GST

HSN Number for GST

What is HSN Number for GST

The full form of HSN means Harmonized System Nomenclature.

HSN code number is broadly utilized as a part of numerous nations to order products for tax collection reason, asserting advantages and so on. Fit System of Nomenclature number for every item is acknowledged by the greater part of the nations and the said HSN code stays same for all products. In any case, HSN number utilized as a part of a portion of the nations changes nearly nothing, in light of the idea of products characterized.

HSN Code for GST

HSN code is not linked with Tax Rate

  •  HSN code is not linked with tax Rate till everybody understands HSN code. And for Turnover below 1.5 Cr. No need to mention HSN code in the invoice, from 1.5 Cr. – 5 Cr only mention 2 digits of HSN code and above 5 Cr mention only 4 Digit of HSN code.|

    •  

  • For the invoice, No format and No color are Specified by the department. You can design your own invoice. The only thing to keep in mind is that some details are mandatory is to mention in Invoice.

    •  

  • If our supplier registers under composite scheme (below turnover of 75 lacs) he could not take credit of GST or he could not pass GST credit. He has to pay only 2% of turnover as GST if he is a manufacturer and 1% if He is Traders. And 5% if he is the restaurant.

    •  

  • If our GST input is more than GST output (ie for E-rickshaw industries most of the items input credit of 28% and output GST is 12%) in that case after every month return files person can apply for refunds (RDF1)  and that refund will be obtain within 60 days  otherwise departments is liable to pay interest on it. and refund application can be done up to 2 years. So worries of a Capital block is removed.

    •  

Anti-Profiteering Rules

     

  • There are Anti-Profiteering Rules. –  Everyone is can take mod vat credits of Excise, Services Tax, VAT, Octroi, Entry Tax on its stock items and it has to pass to customers. For example, If I am buying today an iron pipe at Rs.62 per Kg plus 5% VAT ( which included 12.5% excise, 2% CST and 3.5% Octroi.) but after 1st July supplier can credit of all the tax and he has to reduce its basic price. He can not charge Rs 62 + 18% GST but he has to reduce its price by tax amount and decide the new base price, if any supplier is not abiding by it then we can complain against him and the department will penalize on such suppliers.

    •  

 No need of E waybill till next 6 months.

     

  • If we do not receive payments in 60 days from customers then we can claim for GST amount charged on it. So most people worried removed if customers fail to pay us then we lose our Tax amount also. And if customers pay after six months then we can again pay GST which we have taken back as credit.

    •  

  • All people worried there are 37 Returns in the year. And there is no revised return. But it’s not 100% truths. Every month we have to files our output ( sales or services) we add our invoice day to day base to GST portal. And save it. we can edit also that invoice. On 10th or before 10th we just have to upload all edited sales invoice. Since we have edited invoice before uploading no need of revised return.  Until 15th you can check all your purchase and verified (no need to files return its only verification) on 20th you just need to update your final return after correction if any.  And if there is any mistake found we can be rectified that mistake in next months returns So it becomes more simple than before.

    •  

Thus GST is very easy and it removes all headache of Form C, Deals with different departments like Excise, Sales Tax, Octroi, Entry Tax and many others. So we all should welcome GST open heartedly.