The GST Discussion Thread from RC Hobby Prespective

Power_user_EX · July 01, 2017, 01:35:10 AM

Hey guys!

Okay, so few minutes back President and PM officially gave Greenlight to GST. What do you guys think on how this will have an effect on our purchases and Hobbies in general ?

-Regards

saikat · July 01, 2017, 05:16:32 AM

How many sellers have obtained GST regn ? I think only a couple of big ones
whose turnover exceed 10 lakh will need to .

How many of them have allocated HSN to their inventory ?

for us buyers nothing much will change unless the tax slab on some items change.

for me personally I will probably be able to claim some input credit on lipos .

kartp3112 · July 01, 2017, 08:12:42 AM

As far as i know, 18% tax..
Rchyper.com, the prices have risen, so has it on rcbazaar.com, but it isnt that noticeable.
The rest websites are down, for "becoming gst ready"...

Priyanshu@ · July 01, 2017, 09:10:23 AM

Nice topic raised

Even I also want to know about this

And please share about the affect of gst on custom

Power_user_EX · July 01, 2017, 04:38:39 PM

If I am not mistaken, the turnover exemption is upto 25lacs. For 25-75lacs it will be nominal/minor. For 75lacs above it will be completely applicable. (Please correct me If I am wrong)

-Regards

kartp3112 · July 01, 2017, 08:39:24 PM

@Power_user_EX
Thnx for the valuable info..

Balakrishna Reddy · July 01, 2017, 08:43:55 PM

The prices for different RC stuff has changed. The change is not same for all RC products as tax on batteries inCreased from 6% to 28%. But at same time some other stuff prices has gone down. We still have to check out few other websites and they have to come up with statistics of price variations foe various stuff.

Priyanshu@ · July 01, 2017, 09:32:43 PM

On which site the prices goes down

Please inform

Priyanshu@ · July 02, 2017, 09:05:08 AM

Actually on most of the sites the gst on products is showing of 18%

The prices have gone very high

kartp3112 · July 02, 2017, 01:07:34 PM

Yeah @Priyanshu@.. noticed only recently.
Should have bought my motors and batteries earlier...

Priyanshu@ · July 02, 2017, 01:17:14 PM

I agree

vibranthobbies · July 02, 2017, 01:52:12 PM

Dear All
We are GST Registered.
The GST Rate applicable for Lipos, Chargers is 28% which was 14.5% earlier in Tamil Nadu
All remaining items it is 18% which was 5% earlier.

It may look like the Sales Tax has increased from 5% to 18% to the public but it is not true.
The excise duty for the manufactured good was 12.5% and Sales Tax was 5% which total to 17.5%
The excise duty is paid by the manufacturer but it is not known to the public.
Now in GST the excise duty is cancelled and the sales tax is made as 18%

As you are aware RC hobby products are mostly imported and let me explain with respect to import.
Earlier, when we import we pay Basic Customs Duty 10% + Counter Veiling Duty which is equal to Excise Duty 12.5 + Additional CVD + Edu.Cess etc totalling to 29.5% around.

So, landing cost of Rs. 100 product is Rs. 130 (rounded)
Adding Rs. 10 as LHS profit the product sales price is 140 and with tax (5%) it is Rs. 147/- I will pay Rs. 7 as sales tax

Now, after GST
We will be paying Basic Customs Duty 10% + GST 18%

So, landing cost of Rs. 100 product is Rs. 128 (rounded). However, I can claim back the GST paid during import while paying the GST after sales to the public.
Hence, I have to calculate landing cost as Rs. 110.
With Rs. 10 profit it is 120 and with tax (18%) the sales price is Rs. 141.6
We collect Rs. 21.6 as tax from you but will pay Rs. 3.6 only since we paid Rs. 18 already during Import.

As you can see you were paying Rs. 147 earlier but you are going to pay Rs. 141.6 in GST. But, this is applicable for new imports. This is theoretical Edit. there could be some additional duties during import.

For the old stock we have no option to claim back those duties paid and hence you are seeing price increase in products due to increased tax from 5 to 18%.
Please note we are reviewing each item price individually and trying to bring the price as before as possible.

Regarding batteries,
The GST is 28% and there is issue regarding BIS Certification requirement for the batteries.
See this notification
http://bis.org.in/MandatoryProducts/QCOrder/IT%20Goods%20Registration/SO%20No%202905%20(E).pdf
Refer Sl. No. 20. Customs is asking for Lipo Manufacturer registration and certification from BIS to clear shipment.

Hence, lipos price can only go up in my opinion.

The above is my own understanding and I have explained the rules and regulation as in the books and followed by us.
Some other LHS may be doing it differently and selling it cheaper.

Kumaran

kartp3112 · July 02, 2017, 02:40:20 PM

Quote from: vibranthobbies on July 02, 2017, 01:52:12 PM
Dear All
We are GST Registered.
The GST Rate applicable for Lipos, Chargers is 28% which was 14.5% earlier in Tamil Nadu
All remaining items it is 18% which was 5% earlier.

It may look like the Sales Tax has increased from 5% to 18% to the public but it is not true.
The excise duty for the manufactured good was 12.5% and Sales Tax was 5% which total to 17.5%
The excise duty is paid by the manufacturer but it is not known to the public.
Now in GST the excise duty is cancelled and the sales tax is made as 18%

As you are aware RC hobby products are mostly imported and let me explain with respect to import.
Earlier, when we import we pay Basic Customs Duty 10% + Counter Veiling Duty which is equal to Excise Duty 12.5 + Additional CVD + Edu.Cess etc totalling to 29.5% around.

So, landing cost of Rs. 100 product is Rs. 130 (rounded)
Adding Rs. 10 as LHS profit the product sales price is 140 and with tax (5%) it is Rs. 147/- I will pay Rs. 7 as sales tax

Now, after GST
We will be paying Basic Customs Duty 10% + GST 18%

So, landing cost of Rs. 100 product is Rs. 128 (rounded). However, I can claim back the GST paid during import while paying the GST after sales to the public.
Hence, I have to calculate landing cost as Rs. 110.
With Rs. 10 profit it is 120 and with tax (18%) the sales price is Rs. 141.6
We collect Rs. 21.6 as tax from you but will pay Rs. 3.6 only since we paid Rs. 18 already during Import.

As you can see you were paying Rs. 147 earlier but you are going to pay Rs. 141.6 in GST. But, this is applicable for new imports. This is theoretical/

For the old stock we have no option to claim back those duties paid and hence you are seeing price increase in products due to increased tax from 5 to 18%.
Please note we are reviewing each item price individually and trying to bring the price as before as possible.

Regarding batteries,
The GST is 28% and there is issue regarding BIS Certification requirement for the batteries.
See this notification
http://bis.org.in/MandatoryProducts/QCOrder/IT%20Goods%20Registration/SO%20No%202905%20(E).pdf
Refer Sl. No. 20. Customs is asking for Lipo Manufacturer registration and certification from BIS to clear shipment.

Hence, lipos price can only go up in my opinion.

The above is my own understanding and I have explained the rules and regulation as in the books and followed by us.
Some other LHS may be doing it differently and selling it cheaper.

Kumaran

Does it mean, post-clearance, prices will normalise??

vibranthobbies · July 02, 2017, 02:43:01 PM

Price will normalise for new imports.

Balakrishna Reddy · July 02, 2017, 03:48:42 PM

@vibranthobbies

thank you for taking time to explain about GST. It looks like price of items may go down a little bit. However I do not expect price drop for batteries as GST has been increased very much for it.

vibranthobbies · July 02, 2017, 03:59:42 PM

I missed to highlight one important benefit of GST that is Entry Tax.
Many states were putting Entry tax on our shipments to those states and it varies from 1% to 15%
See the attachment. Randomly our shipment will be held and our shipping partner will pay the entry tax and collect it from us.
Also, many time buyer has to provide the entry tax form to us which is to be sent with the shipment.

This was painful and now in GST this is removed.

Power_user_EX · July 02, 2017, 08:07:56 PM

Quote from: vibranthobbies on July 02, 2017, 03:59:42 PM
I missed to highlight one important benefit of GST that is Entry Tax.
Many states were putting Entry tax on our shipments to those states and it varies from 1% to 15%
See the attachment. Randomly our shipment will be held and our shipping partner will pay the entry tax and collect it from us.
Also, many time buyer has to provide the entry tax form to us which is to be sent with the shipment.

This was painful and now in GST this is removed.

Exactly. Also at Octrois/RTOs many times shipments used to get delayed. No more unnecessary "mass gathering of trucks" (like general body meeting of trucks lol) and lesser wastage of diesel and thereby lower pollution a bit (well in theory!).

Priyanshu@ · July 03, 2017, 08:02:16 PM

Do any one know about GST in reference of custom or import item

Or anything else related to this

Please share your views

Power_user_EX · July 03, 2017, 08:38:46 PM

Basic Custom Duty (BCD) will remain but other taxes like Countervailing Duty (CVD), Special Additional Duty (SAD) will be replaced by IGST i.e. Integrated GST. Additionally there is a refund mechanism under GST for taxes paid during import which the importer can get as credit. This might reduce the final price for various products by a bit if seller keeps his profit margin constant. I may be wrong here, please correct if I am. I still have to read it detail.

vibranthobbies has already given an example about it in detail. Check reply #11.

Check these links :
https://cleartax.in/s/gst-impact-on-import
http://www.bmradvisors.com/bmrmailer/gst/4-gstandcustoms.pdf
https://www.quora.com/How-GST-bill-will-impact-the-import-of-commodities