Clueless In GST Country

The teething period of the new tax regime begins on a chaotic note, cornering several traders

- Lola Nayar

With the rollout of the long awaited Goods and Services Tax (GST) having become a reality, teething pains have begun for businesses, both big and small. Those having a computerised system for maintaining records are facing less hassle in transitioning to the new system, about which the awareness is still lacking. For the average consumer, the change is pleasing, with lower prices for some products, even though there are complaints of consumers having to pay more for services they don’t recall paying earlier for. For instance, some small restaurants that earlier did not mention any tax in their bill, are charging more with the implementation of GST.

For traders, a large number of whom were earlier maintaining ad hoc records and getting away without paying any or only part of the taxes, the new system seems too intrusive as it requires rec­ords of each and every movement of goods. Last few days have seen protests in an increasing number of cities, start­ing from Surat, Varanasi, Bhopal and Coimbatore, among others, mostly by textile traders. These are traders who work with very little capital, take goods on credit and take credit risks. Tax has hit them for the first time. Most of them did not maintain books, so there was no transparent reporting. Only once a year would they sit with their chartered accountants and sort out their finances and file returns, if at all.

The GST necessitates transaction­wise record, something they have no prior experience in. “In Surat, most weavers buy yarn and sell fabric. They will no longer be competitive due to the dif­ferential tax on man­made yarn (18 per cent) and finished fabric (5 per cent). This will only affect small power loom units, not the big integrated ones,” states Mayank Jain, an IITian and tex­ tile trader who has served on the central executive committee of the Federation of Indian Micro and Small & Medium Enterprises (FISME).