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Why Dealers need to Sell the Stocks in Discount rate before GST ?

Why Dealers need to Sell the Stocks in Discount rate before GST ?

          


      Why are companies coming up with pre-GST sales?

       The answer lies in tax credits. When retailers buy products, they get tax credit, which can be adjusted against the tax they need to pay when they sell the said goods. Post-GST, the tax they will need to pay on electronics when they are sold will go up, while their tax credit for inventory they already have will remain the same. This means they will end up paying the difference out of their pocket.



Transition process from Pre GST to Post GST ?

 

1.     Whether the Dealer can avail input tax for the Stock before the one year ?

No, the dealer can’t avail the input credit for the stock lying before one year, and if dealer sell the same product after GST he need to bill same on new rate and it will leads to rise in the price but dealer can’t able to sell the product in new price so he need to pay full tax amount from his pocket.

 

2.     Whether the Vat Input credit in Vat A/c will transferred to GST Portal ?

Yes the Input credit will transferred to GST Portal on 1st day of GST implementation.

 

3.     Whether the Vat Input credit in Cenvat A/c will transferred to GST Portal ?

Yes the Input credit will transferred to GST Portal on 1st day of GST implementation.

 

4.     Whether the Input tax of Capital goods will transferred to GST Portal ?

Yes the input credit will transferred to GST portal .

         

5.     Whether there will be any loss on the value of stock which within 12 month and excise invoice available?

No there will be no loss in the value of the stock which is of 12 month as we will get credit for the same.

 

6.     Whether there will be any loss on the value of stock which within 12 months and non availiable of excise invoice,rate of tax more than 18%?


Yes there will be loss in the value of the stock which is of 12 month and we will get only 60% claim on the excise duty,and we need to maintain stock of the same and need to file GST TRAN-1 within 90 days of GST implementation


7.     Whether there will be any loss on the value of stock which within 12 months and non availiable of excise invoice ,and tax rate is less than 18%?

Yes there will be loss in the value of the stock which is of 12 month and we will get only 60% claim on the excise duty,and we need to maintain stock of the same and need to file GST TRAN-1 within 90 days

 

And procedures for claiming the input credits for the goods is lengthy and complicated process for the normal dealers, so better option is to clear the maximum stock before GST .

 

So as per the above conditions it is better to clear the stocks at maximum discount for avoiding the loss after the GST implementaion.

As the seller can’t able to increase the price for the product after implementation of the GST.

 For more details about transition rule click here

For watching the video in malayalam please click on the below link

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