GST provision may lead to closure of branches & formation of shell firms

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. Surendra Mehta, secretary, Indian Bullion and Jewellers Association (IBJA), said: “This provision will lead to branches closing down, and start shell companies at branch locations to defer the payment.” Customers in India and their advisors look for ways to find loopholes to reduce, delay, or avoid tax payments. Jewellery, textiles, and other industries in which the tax burden is likely to be higher than the ones prevailing now, or those in the chain not paying tax currently will come in the tax net once the GST comes into force. In all these industries unorganised trade and the grey market had always operated.  Financial Astrology Tips