Deregistered your Brand to Get Rid of GST? Is it Worth?

GST Council has released a statement were it has mentioned that registered companies that sell branded cereal, pulses and flours are bound to pay taxes even if they have de-registered after May 15, 2017. Here is detailed report along with ways to avoid tax.

Statement from the GST Council Regarding Brands Selling Food Grains

The GST Council on its 21^st meet in Hyderabad on September 09, 2017 has issued notification regarding sale of food grains. The council stated that companies that sell branded flour, cereals, and pulses are bound to pay taxes even if they have deregistered themselves after May 15, 2017. The notification came when many branded companies started deregistering themselves after GST rate of 5% was levied on branded food grains. The brand registered under the Copy Right Act of 1957 shall also be considered to be pay 5% GST if it is registered as on May 15, 2017.

This notification is also valid for international companies that were registered till May 15, 2017 even if they have unregistered themselves later. They too will have to pay 5% tax. The other important point in the notification was the claim that companies make on their logo, symbol or name. If they do so, then 5% tax is levied on the product they sell.

Ways by which Branded Company will Avoid 5% Tax

The notification also mentioned that branded companies can be exempted from paying 5% tax if they forego their intellectual or property claim on the brand name, print, symbol or logo. For this the companies will have to file an affidavit in which they declare that they are voluntarily foregoing the intellectual or property right claim on their brand with the Commissioner of Central or State Tax Department or the Jurisdictional of Union Territory Tax. The company will also have to mention that they are voluntarily giving up their prints in indelible ink both in English and regional languages.

Consumers of branded products always pay MRP (maximum retail price) of the goods at super marts or individual kirana stores therefore, the traders should not loose their intellectual property worrying about GST. Instead of avoidance exercise, traders should invest this time and energy on their sales growth.