I shall be a First Stage Dealer under the GST regime. I was receiving excisable goods directly from the manufacturer on CST. Under the current tax regime, I was not eligible for credit of CENVAT and CST. However under the GST regime, if I fulfil all the conditions for claiming input credit, I shall be eligible for CENVAT and CST credit totalling to 14.5% on my opening stck. Earlier I was paying VAT of 5% on sales. So my total tax incidence was 5%. Now under GST where I am liable for 28% tax, my tax incidence would be 13.5% (28%-14.5%). So i shall suffer a total loss of 8.5% (net) on my openign stock.
Now my customers who have input on stock at 5%, would be liable to pay GST at 28%. They will suffer a direct loss of 23% on opening stock.
Please clarify if I am interpreting the law incorrectly.
CAclubindia
