The introduction of the goods and services tax (GST) in July will pose a challenge for the enforcement authorities due to a provision in the GST law that mandates companies transferring goods to a branch outside the state to pay the interstate goods and services tax (IGST). However, if the same company sells goods to customers on approval basis outside the state, it gets six months to pay the IGST.
Many jewellers are growing beyond state boundaries and opening shops across the country while in textiles the grey market is huge and there is no excise on fabric now. The provision of tax on transferring goods to branches outside the state and sale outside state in approval bases could cause compliance issues.
Rahul Mehta, chairman, Indian Clothing Manufacturers Association, said: “The Indian evil genius usually succeeds over government policies and regulations. Under the GST, a single trail found in a chain will be noticed and hence it will not be easy to skip tax sleuths eyes.”
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