• Paying cash 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?
Asked 4 years ago in Taxation

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22 Answers

We do not advice you to make any cash payment to avoid GST 

Ajay Sethi
Advocate, Mumbai
94689 Answers
7526 Consultations

5.0 on 5.0

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.

Hemant Agarwal
Advocate, Mumbai
5612 Answers
25 Consultations

5.0 on 5.0

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

Ajay N S
Advocate, Ernakulam
4072 Answers
111 Consultations

5.0 on 5.0

Yes you need to explain the same in scrutiny if your return comes in scanner. 

Prashant Nayak
Advocate, Mumbai
31930 Answers
179 Consultations

4.1 on 5.0

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.,

Hemant Agarwal
Advocate, Mumbai
5612 Answers
25 Consultations

5.0 on 5.0

- 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.

Mohammed Shahzad
Advocate, Delhi
13211 Answers
198 Consultations

5.0 on 5.0

GST is payable for payment made to interior designer 

Ajay Sethi
Advocate, Mumbai
94689 Answers
7526 Consultations

5.0 on 5.0

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.

Shubham Jhajharia
Advocate, Ahmedabad
25514 Answers
179 Consultations

5.0 on 5.0

See GST shall be applicable it is applicable on the service not the resident status.

Shubham Jhajharia
Advocate, Ahmedabad
25514 Answers
179 Consultations

5.0 on 5.0

Pay him online, through account or thru upi id or gpay

Aveek Bose
Advocate, Kolkata
1222 Answers
9 Consultations

4.7 on 5.0

Hi

Yes tax implications will be same for payments by NRIs

You should make smaller amount as payment in cash.

 

Rahul Jatain
Advocate, Rohtak
5365 Answers
4 Consultations

4.8 on 5.0

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 

Anilesh Tewari
Advocate, New Delhi
18078 Answers
377 Consultations

5.0 on 5.0

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 .

Ajay N S
Advocate, Ernakulam
4072 Answers
111 Consultations

5.0 on 5.0

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,

Suneel Moudgil
Advocate, Panipat
2381 Answers
6 Consultations

4.8 on 5.0

Hello,

If the cash payments are against the valid money receipt then go for it else don't proceed.

Regards

Swarupananda Neogi
Advocate, Kolkata
2964 Answers
6 Consultations

4.7 on 5.0

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.

 

T Kalaiselvan
Advocate, Vellore
84890 Answers
2190 Consultations

5.0 on 5.0

Whether payment made by your husband or yourself, the applicable GST payments are to be made for utilising the services of the designer firm.

 

T Kalaiselvan
Advocate, Vellore
84890 Answers
2190 Consultations

5.0 on 5.0

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.

Rahul Mishra
Advocate, Lucknow
14088 Answers
65 Consultations

5.0 on 5.0

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.

Rahul Mishra
Advocate, Lucknow
14088 Answers
65 Consultations

5.0 on 5.0

it is illegal we do not advice you.. 

Mohammed Mujeeb
Advocate, Hyderabad
19299 Answers
32 Consultations

4.7 on 5.0

GST Rate for Services. As per the GST Council, 18% of GST applies. 

Mohammed Mujeeb
Advocate, Hyderabad
19299 Answers
32 Consultations

4.7 on 5.0

1. It is not advisable to pay cash for services to avoid GST.

2. You may have to face scrutiny from tax departments once large cash withdrawals come under their knowledge.

Mohit Kapoor
Advocate, Rohtak
10687 Answers
7 Consultations

5.0 on 5.0

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