We do not advice you to make any cash payment to avoid GST
Hi, We have recently engaged an interior designer for our apartment. The firm is charging an 18% GST on certain services and goods provided. To reduce the GST burden, it has suggested that we can make some cash payments to some carpenters and vendors. If we go ahead with this, we may have to withdraw high amounts from our bank accounts and not get receipts for the same. Is this a doable thing?
1. It is a doable thing, BUT avoidable thing, more so since you would have income tax repercussions since the carpenters /vendors are not your regular employees.
2. You can take signatures of the "individual" persons on Vouchers and pay cash upto 20,000/- each, which will be within income tax limits.
A law abiding person could not give advice in your query. If you think you directly approach some carpenters, then you may give cash for their work without bills. In such a case payment of cash to some carpenters and vendors can be done. The same things also happened in this situation. In such a case you collect vouchers from them to save your Tax problems
My husband has NRI status. if he makes the payments, will the tax implications remain the same?
1. Nobody is exempted for GST & Income Tax, irrespective any criteria or whatever.
2. IF violations are detected, THEN violator becomes liable for prosecution & penalty.,
- NRI is not required only to file Income tax return in India if he has no income arising in India.
- Further , GST Tax Law has defined a 'non-resident taxable person' as any person who occasionally undertakes transactions involving the supply of goods or services, or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India.
- Since, you engaged an interior designer for getting services from him, then that designer company is bound to charge GST on the services , otherwise they will have to face music as per law.
- If your husband is filing an ITR , then in the name of renovation of the self-occupied house, he can claim to the sum of Rs.30,000 a year.
See this practice is common and wrong as firms use it to avoid GST though it is legally wrong. Also in case the company fails to work properly then proof of payment and bills won't be there to file claim against them.
Hi
Yes tax implications will be same for payments by NRIs
You should make smaller amount as payment in cash.
Hello,
You can withdraw the same in parts and make the case payment.
You can also make the payment to vendors directly through cheque to their personal account, if they agree for the same
You can give the NRI Cheque to interior designer. Even though interior designer need to pay the GST for their service on their accepted amount .
you can make the payment in cash against proper receipts but advised to make online/valid payments in the interest and welfare of our nation,
Hello,
If the cash payments are against the valid money receipt then go for it else don't proceed.
Regards
You are the better judge of the situation.
Withdrawing huge amounts from bank should not be a problem, you can make cheque payment in the name of the carpenter thus you can avoid withdrawal of huge amounts.
Since you may have entered into an agreement with the interior designer, you may go through the conditions of payment whether it is inclusive of GST or not, if yes then you cannot avoid paying GST at the prevailing rates.
Whether payment made by your husband or yourself, the applicable GST payments are to be made for utilising the services of the designer firm.
Well, they don't pay taxes on cash and therefore you also save some money. But if you are showing expenses then you may go ahead with this type of arrangement. It generally happens in India.
You may show that you spent the money including gst while you pay the amount minus the gst. The rest is saved. Or you may withdraw what you give and don't evade taxes. Tax implications may differ.