August 03, 2015
https://www.facebook.com/mehtarahulc/posts/10152950306156922
How small business OFFICIALLY lose large clients in VAT / GST regimes
.
Consider folliowing players ---
.
Manufacture = M , his price before VAT = say Rs 10000
,
Wholesaler = W , profit he wants = Rs 1000
.
Small retailer = SR , profit he wants = Rs 1000
.
Large Retailer = LR , profit he wants = Rs 1000
.
Consider Small customer = CS , who doesnt have VAT registration.
.
Consider Large customer = LC , who has VAT registration and pays VAT on whatever he sells
.
Say VAT = GST rate = 20%
.
So manufacturer's bill to wholesaler.
.
price = Rs 10000
vat =20% = Rs 2000
total = Rs 12000
.
====
.
Now wholesaler's bill to small retailer as well as large retailer
.
price = Rs 11000
vat = 20% = Rs 2200
total = Rs 13200
.
vat wholesaler has to pay to govt = Rs 2200 - Rs 2000 = Rs 200
====
.
Now bill large retailer's bill , say he wants profit of Rs 1000
.
price = Rs 12000
vat = 20% = Rs 2400
total = Rs 14400
.
vat large retailer has to pay to govt = Rs 2400 - Rs 2200 = Rs 200
.
===
.
Small retailer's bill to his customer (SAY HE DECIDES TO SELL FOR ZERO PROFIT )
.
price = Rs 13200 .
vat = 2% = Rs 264
total = 13464
.
vat small retailer has to pay to govt = Rs 264
.
====
.
So for small customer , small retailer is profitable
.
But if large customer wants vat deductions from HIS VAT payable, then he will see that large retailer 's net price is "lesser". Why?
.
Because large customer pays Rs 14400 to large retailer, but after that, he can get Rs 2400 deduction from vat he has to pay on his sales. So after savings of vat on his vat payable, the cost of goods to him is Rs 12000 !!
.
Whereas, if large customer buys goods from small retailer, then he gets no vat deductable. So cost to him is Rs 13464 , even if small retailer decides to sell as zero profit.
.
Solution I propose is to abolish VAT / GST / excise etc and use wealth tax. See link in comment for wealth tax/.
.
SoMoKe support GST \ VAT and oppose wealth tax.
.
So pls dump all SoMoKe-andbhagat for good
https://www.facebook.com/mehtarahulc/posts/10152950306156922
How small business OFFICIALLY lose large clients in VAT / GST regimes
.
Consider folliowing players ---
.
Manufacture = M , his price before VAT = say Rs 10000
,
Wholesaler = W , profit he wants = Rs 1000
.
Small retailer = SR , profit he wants = Rs 1000
.
Large Retailer = LR , profit he wants = Rs 1000
.
Consider Small customer = CS , who doesnt have VAT registration.
.
Consider Large customer = LC , who has VAT registration and pays VAT on whatever he sells
.
Say VAT = GST rate = 20%
.
So manufacturer's bill to wholesaler.
.
price = Rs 10000
vat =20% = Rs 2000
total = Rs 12000
.
====
.
Now wholesaler's bill to small retailer as well as large retailer
.
price = Rs 11000
vat = 20% = Rs 2200
total = Rs 13200
.
vat wholesaler has to pay to govt = Rs 2200 - Rs 2000 = Rs 200
====
.
Now bill large retailer's bill , say he wants profit of Rs 1000
.
price = Rs 12000
vat = 20% = Rs 2400
total = Rs 14400
.
vat large retailer has to pay to govt = Rs 2400 - Rs 2200 = Rs 200
.
===
.
Small retailer's bill to his customer (SAY HE DECIDES TO SELL FOR ZERO PROFIT )
.
price = Rs 13200 .
vat = 2% = Rs 264
total = 13464
.
vat small retailer has to pay to govt = Rs 264
.
====
.
So for small customer , small retailer is profitable
.
But if large customer wants vat deductions from HIS VAT payable, then he will see that large retailer 's net price is "lesser". Why?
.
Because large customer pays Rs 14400 to large retailer, but after that, he can get Rs 2400 deduction from vat he has to pay on his sales. So after savings of vat on his vat payable, the cost of goods to him is Rs 12000 !!
.
Whereas, if large customer buys goods from small retailer, then he gets no vat deductable. So cost to him is Rs 13464 , even if small retailer decides to sell as zero profit.
.
Solution I propose is to abolish VAT / GST / excise etc and use wealth tax. See link in comment for wealth tax/.
.
SoMoKe support GST \ VAT and oppose wealth tax.
.
So pls dump all SoMoKe-andbhagat for good
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