Arvind P Datar & G Natarajan dates the an, reducion in we rate… tax should be passed on to consumers by ‘commensurate reduction in prices’. But this is not always the case as, paradoxically, reduced tax does not recesse city pos ultie When OST or a final pract air conditioner-falls, the buyer should get a lower price. The difficulty arises when the tax is reduced on inputs used in the manufacture of dutiable final products. For example, GST was reduced from 28% to 18% ce ment, ilmente taxation structura Accounting standards require that taxes paid on inputs do not form part of thefinalunduct’s cost if there input

[21/11, 07:31] Sekarreporter: [21/11, 07:03] Sekarreporter: GST Cuts Don’t Always Cut Prices

GSTCuts

Arvind P Datar & G Natarajan

dates the an, reducion in we rate… tax should be passed on to consumers by ‘commensurate reduction in prices’. But this is not always the case as, paradoxically, reduced tax does not recesse city pos ultie When OST or a final pract air conditioner-falls, the buyer should get a lower price. The difficulty arises when the tax is reduced on inputs used in the manufacture of dutiable final products. For example, GST was reduced from 28% to 18% ce ment, ilmente taxation structura Accounting standards require that taxes paid on inputs do not form part of thefinalunduct’s cost if there input

taxe are er t the ity pa ible the product. If ment sus lin theo, tructio aciale tax pai on the cement will not form part of the cost of the project, because it will be set off against the 18% tax payable on the project. The contractor will not include the tax payable on the cement when fixing his selling price, as the tax paid will be set off.

Se ambe GS. at ere educed AlwaysCut profite ‘ng ile in ctio Ima 1%, out cr fit also is educed id thoracto av to pay is dif nce ir cash wa GST

& G Natarajan

Doi on the rof Wul con ctor quote h elling ic hepr umed that uld be va bleft set off stdupa ableo his

construction services. However, once duty on cement is reduced, the diffe rence between 28% and 18% will have to be paid in cash by the contractor In such a case, reduction in duty on cement will not result in a reduction of the contractual pr

On the ner hand, i the co re com ruc residentia anar inpi tax redit is all wed on paid no nent. In su a case leonent islded to the apartment’s cost. In such cases contractor must pass on the reduced tax on cement to the buyer Reduction of GST on final products will usually benefit the consumer. inputs used by a manufacturer or service provider who doesn’t have to pay tax on the final goods or services will also benefit the customer, as the input cost stands reduced. However, input tax credit, which is entitled to he final product, is never treated as part of the cost of the product.

the actual cost of the raw material and other inputs. If the tax is reduced, the amount available for input tax redit also gets reduced, requiring him to pay the differential reduction in tax. Paradoxically, a reduction in input tax on raw materials or compo-nents used in final products can result in excess cash outflow for the manu-facturer, proportional to the reduction

the input tax rate. In such cases, a lower don in will notoa mensuraty educ on the final Prices en no the x , th tax , the benefit of So, necess for consume to does not necessarily translate into cost reduction for consumers.

If the tax on an insurance policy was 18%, then all taxes paid on inputs and input services used by the insurance company could be set off against such tax, thereby lowering the cost of providing insurance service. Astax on the insurance policy has now become ‘nil’, tax paid on inputs and input services will be a cost to the insurance company and, hence, 18% reduction in premium.

swerereduced
[21/11, 07:03] Sekarreporter: 👍
[21/11, 07:56] Sekarreporter: http://youtube.com/post/UgkxKkm83SIYN7ZKifijvANpJcjP3ZCDGjg9?si=SuEpeybS2qBIjcm5
[21/11, 07:56] Sekarreporter: https://x.com/sekarreporter1/status/1991694657525543323?t=mGmagxm_voslY9uw8mN8Iw&s=08
[21/11, 07:56] Sekarreporter: [21/11, 07:31] Sekarreporter: [21/11, 07:03] Sekarreporter: GST Cuts Don’t Always Cut Prices

GSTCuts

Arvind P Datar & G Natarajan

dates the an, reducion in we rate… tax should be passed on to consumers by ‘commensurate reduction in prices’. But this is not always the case as, paradoxically, reduced tax does not recesse city pos ultie When OST or a final pract air conditioner-falls, the buyer should get a lower price. The difficulty arises when the tax is reduced on inputs used in the manufacture of dutiable final products. For example, GST was reduced from 28% to 18% ce ment, ilmente taxation structura Accounting standards require that taxes paid on inputs do not form part of thefinalunduct’s cost if there input

taxe are er t the ity pa ible the product. If ment sus lin theo, tructio aciale tax pai on the cement will not form part of the cost of the project, because it will be set off against the 18% tax payable on the project. The contractor will not include the tax payable on the cement when fixing his selling price, as the tax paid will be set off.

Se ambe GS. at ere educed AlwaysCut profite ‘ng ile in ctio Ima 1%, out cr fit also is educed id thoracto av to pay is dif nce ir cash wa GST

& G Natarajan

Doi on the rof Wul con ctor quote h elling ic hepr umed that uld be va bleft set off stdupa ableo his

construction services. However, once duty on cement is reduced, the diffe rence between 28% and 18% will have to be paid in cash by the contractor In such a case, reduction in duty on cement will not result in a reduction of the contractual pr

On the ner hand, i the co re com ruc residentia anar inpi tax redit is all wed on paid no nent. In su a case leonent islded to the apartment’s cost. In such cases contractor must pass on the reduced tax on cement to the buyer Reduction of GST on final products will usually benefit the consumer. inputs used by a manufacturer or service provider who doesn’t have to pay tax on the final goods or services will also benefit the customer, as the input cost stands reduced. However, input tax credit, which is entitled to he final product, is never treated as part of the cost of the product.

the actual cost of the raw material and other inputs. If the tax is reduced, the amount available for input tax redit also gets reduced, requiring him to pay the differential reduction in tax. Paradoxically, a reduction in input tax on raw materials or compo-nents used in final products can result in excess cash outflow for the manu-facturer, proportional to the reduction

the input tax rate. In such cases, a lower don in will notoa mensuraty educ on the final Prices en no the x , th tax , the benefit of So, necess for consume to does not necessarily translate into cost reduction for consumers.

If the tax on an insurance policy was 18%, then all taxes paid on inputs and input services used by the insurance company could be set off against such tax, thereby lowering the cost of providing insurance service. Astax on the insurance policy has now become ‘nil’, tax paid on inputs and input services will be a cost to the insurance company and, hence, 18% reduction in premium.

swerereduced
[21/11, 07:03] Sekarreporter: 👍
[21/11, 07:56] Sekarreporter: https://x.com/sekarreporter1/status/1991694657525543323?t=mGmagxm_voslY9uw8mN8Iw&s=08