posted by Rahul Chimanbhai Mehta Rrg

How SoMoKe's coming GST may reduce income of small businesses . The GST will be 25% (*) . And there will be two types of businesses --- one which will pay 2% on lumpsum revenue . The revenue must be below Rs 50 lakhs or some such limit. . The small trader doesnt get GST he paid as credit. And the GST of 2% he charged cannot be taken as input credit. . . So business of small traders will decrease. Let me explain how. . Say manufacturer M is selling air conditioner at Rs 20000 . His bill will be . Price = Rs 20000 GST = Rs 5000 (25%) Total = Rs 25000 . Say a large retailer LR sells same ac as . Price = Rs 21000 GST = Rs 5250 Total = Rs 26250 . Now consider a small retailer SR.. Say he decides to sell ac at zero profit (I want to show that even at zero profit, he will lose customers to big retailer) . Price he paid = Rs 25000 (because he cant deduct GST of Rs 5000) GST = 2% = Rs 500 Total = Rs 25500 . So his price is lesser than LR = Large retailer. , But a large business LB will buy from LR and NOT SR. Why? . WHY ??? . No psychological reason,. But real material reason

by Rahul Chimanbhai Mehta Rrg



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