should i buy machinery after gst or before gst which will be benefit for me

[Asked by Guest]

i want to purchase machinery from other state, should i buy the machinery before gst is implement or after gst is implement.

[Rajagopalan Ranganathan]

Sir,

The provisions of GST Act is yet to be finalised. Therefore non comments can be offered on your query.

[KASTURI SETHI]

Sh.Manohar Singh Ji,

If you can wait for, better option is to purchase the machinery after implementation of GST, especially, in view of expected reduced rate of GST as compared to the present one. Most probably, GST will be implemented from 1.4.17 but there is remote possibility that date can be extended to 1.7.17.

[CSSANJAY MALHOTRA]

Dear Manohar,

IGST is applicable in case of Purchase from Inter-State. Further the same is CENVATABLE and can be set off against IGST, CGST & SGST if final product is taxable.

Important is the business decision as of today, whether you can wait for long as none can predict exact date of Implementation. Present cost is 2% on account of CST but deferring the Machinery would lead to Loss of Revenue which company might earn from sale of products manufactured from machinery.

[Ganeshan Kalyani]

Sir, I fully agree with all experts above. It was first said that GST would be implemented in 2010. Then it was much talked about. But could not happen due to valid reasons. Now the development is good enough but the date of implementation is not sure.

Sir, today if you do interstate purchase, then against Form C you will be paying 2% CST , Excise duty @12.5% and entry tax (depend upon the State, say 4%). Total tax is 18.5%. Out of which cenvatable is 16.5% or 12.5% (without entry tax credit).

In GST the rate of 18% was suggested but now again it is debated to keep somewhere around 21% to 22%. If you purchase in GST, then IGST @ 21% or 22% would be liable to be paid. You will get full credit on intra state sale.

However, as suggested by Sri Sanjay Sir the call is supposed to be taken by the management. The market and profit which you may foresee today may yield you more profit rather than waiting for GST and meantime learn that your competitor has already captured the market. Hence it is purely a business call. Taxation is just one aspect. Thanks.

thanks you sir for u r valuable advice.

i am not in a hurry to purchase , so would wait till gst is implement as said by Ganeshanji , i will get full credit on intra state sale.

[Abhishek Panicker]

Sir,

Obviously you wish to purchase machinery to enhance your manufacturing capacity or start your business. GST or no GST should not affect your decision. All this talk of 'reduction' in rates post GST is a gimmick and world over it is seen that it takes a couple of years for the effect of GST to percolate and bring down the cost of the goods.

When the fact of the matter is that we have only almost made provisions in our Constitution for levying GST, the further path is a long way ahead.

A pragmatic business man does not and should not be swayed by this hype. After all, what you pay as taxes would certainly be allowed to be set off against your tax liability.

regards

abhishek p

[Sahadev Maity]

Dear experts,

I am going to start a new factory, for the I need to buy some machineris from outer state of Rs around 30lacs. Previous CST was 2% but now GST is 18% on purchase of machinery.

So kindly advice me, can I avail the GST credit on purchase of that machinery if yes then how?

I would be very grateful to u all.

Thanks & regards,

sahadev Maity

mob-9654621194

[KASTURI SETHI]

Wait for new GST credit rules.

[Sahadev Maity]

Thank you Kasturi ji. Kindly update after the new rule.

[KASTURI SETHI]

Full credit on capital goods will be allowed. Government is updating daily on all aspects by way of notifications, circulard. Keep watch.

[Sahadev Maity]

Can u provide me the new circular ot article regarding that??

Thanks,

AI Summary

Inter-state tax treatment: IGST applies to machinery purchases, with input tax credit available against GST liabilities.
Implementation timing of GST is uncertain; for inter state machinery purchases IGST will apply and input tax paid is expected to be creditable and set off against GST liabilities where the final product is taxable. Pre GST purchases attract Central sales tax and other duties with limited credit. Full input tax credit on capital goods is indicated under the proposed GST framework but depends on final notifications. The purchase timing decision should balance anticipated tax credits against business needs and market considerations.