Applying GST to textile machinery is a good idea. It will give manufacturers the right incentive to keep the machinery at par with the current system of GST implementation. This will mean lesser service charge for the same merchandise.
GST will bring in an increased textile machinery GST rate that can be levied on the part of a manufacturer. This will mean a better sales volume and quality. Existing textile machinery products should not be affected by this change as it is small-scale manufacturing where only a few units are used and where the margins of profit are small. As the textile machinery products are sold worldwide, the extra revenue can be kept as profit as there is little, if any change in the existing system.
As mentioned above, higher rates will have an impact on the margins. However, the bigger the profit margin, the greater will be the incentive for a manufacturer to keep his business within the GST range. It is also a good idea to keep the machinery at par with the current GST rate so that it can have more scope for sales, as the revenues are not affected adversely.
GST does not affect services of a manufacturing unit in a major way. Hence, its impact will be limited to the business cycle. It will not cost the company much in terms of time, but will reduce its costs in terms of service charge as it makes it difficult for the manufacturer to claim tax credits on services it provides.
In case of a trade and service tax system, service charge is deducted from the goods before they are offered for sale. In the case of a GST system, the taxes are levied on the same product at the point of sale. In fact, the full value of the service charge is subtracted from the price of the product and the rest goes to the service provider. The provider has to pay the remainder amount to the government.
As in the case of a trade and service tax system, service charge is charged to all consumers who purchase the product. Therefore, the same amount will be charged to every consumer and no company can claim the benefits of deductions from service charges, as it is not given out.
If the government gives out more tax breaks for the service providers, then the industry will lose out as the service provider can benefit more from the breaks than the manufacturing unit. Although it may seem like a good idea to keep the machine at par with the system, there is a disadvantage in that the company will have to pay the service provider more. So the supply side in this scenario might shift towards providing higher service charges to the customers, which is a disadvantage.
The textile machinery not rate can also be brought down by reducing the volume that is purchased. Less purchases will mean lower service charges, but the smaller units will cost more to maintain. But a manufacturing unit should know the purpose of the purchase and whether it is a small-scale operation or not, so that there is no extra expenditure.
An available market for the machine should also be considered as the supplier can try to keep the price down by reducing the volumes. If the market is saturated, then there is less scope for small manufacturers to use a machine and the prices will have to be hiked up.
In this scenario, the GST will help in reducing the textile machinery gst rate. It will also mean a reduction in the manufacturing costs, which will make it possible for the manufacturer to sell his unit in the market and not just keep it as a financial asset. Further, it will help him sell his units at lower rates to other manufacturers.
Any manufacturer wishing to get rid of excess inventory and sell his units at the lowest rates can go in for the GST exemption. These will include capital goods, furniture, tools, and electronic devices.
GST will bring in an increased textile machinery GST rate that can be levied on the part of a manufacturer. This will mean a better sales volume and quality. Existing textile machinery products should not be affected by this change as it is small-scale manufacturing where only a few units are used and where the margins of profit are small. As the textile machinery products are sold worldwide, the extra revenue can be kept as profit as there is little, if any change in the existing system.
As mentioned above, higher rates will have an impact on the margins. However, the bigger the profit margin, the greater will be the incentive for a manufacturer to keep his business within the GST range. It is also a good idea to keep the machinery at par with the current GST rate so that it can have more scope for sales, as the revenues are not affected adversely.
GST does not affect services of a manufacturing unit in a major way. Hence, its impact will be limited to the business cycle. It will not cost the company much in terms of time, but will reduce its costs in terms of service charge as it makes it difficult for the manufacturer to claim tax credits on services it provides.
In case of a trade and service tax system, service charge is deducted from the goods before they are offered for sale. In the case of a GST system, the taxes are levied on the same product at the point of sale. In fact, the full value of the service charge is subtracted from the price of the product and the rest goes to the service provider. The provider has to pay the remainder amount to the government.
As in the case of a trade and service tax system, service charge is charged to all consumers who purchase the product. Therefore, the same amount will be charged to every consumer and no company can claim the benefits of deductions from service charges, as it is not given out.
If the government gives out more tax breaks for the service providers, then the industry will lose out as the service provider can benefit more from the breaks than the manufacturing unit. Although it may seem like a good idea to keep the machine at par with the system, there is a disadvantage in that the company will have to pay the service provider more. So the supply side in this scenario might shift towards providing higher service charges to the customers, which is a disadvantage.
The textile machinery not rate can also be brought down by reducing the volume that is purchased. Less purchases will mean lower service charges, but the smaller units will cost more to maintain. But a manufacturing unit should know the purpose of the purchase and whether it is a small-scale operation or not, so that there is no extra expenditure.
An available market for the machine should also be considered as the supplier can try to keep the price down by reducing the volumes. If the market is saturated, then there is less scope for small manufacturers to use a machine and the prices will have to be hiked up.
In this scenario, the GST will help in reducing the textile machinery gst rate. It will also mean a reduction in the manufacturing costs, which will make it possible for the manufacturer to sell his unit in the market and not just keep it as a financial asset. Further, it will help him sell his units at lower rates to other manufacturers.
Any manufacturer wishing to get rid of excess inventory and sell his units at the lowest rates can go in for the GST exemption. These will include capital goods, furniture, tools, and electronic devices.
Tags:
MACHINERYS