Traders anxious on GST

Kochi: The trade and commerce sector in the state is  apprehensive even as Finance Minister Dr. Thomas Isaac is beaming with confidence about the benefits accruing to the state on account of the Goods and Services Tax (GST) becoming effective from Saturday. The trade and commerce, particularly the lower end of the supply chain, feels a likely supply disruption in consumer goods in the next few days as most retailers are having the bare minimum of inventory levels.

Mr Giridhar Jayant of Fridge House, dealers in refrigerators and other white goods, told DC that  it would take at least two weeks to establish a normal supply mechanism. 

Mr Raja Sethunath, president of Kerala Chamber of Commerce and Industries, said traders in the state did not have a clear idea of the issues that  may crop up with the implementation of GST. “Everything looks fine in theory, but the practical difficulties will be clear only when we actually deal with the issue,”  he said. The small-scale traders would find it difficult to employ or avail of the services of a professional accountant to handle the filing of returns on a regular basis, he said.

A cross section of the merchants and traders is weighing the burden caused by the technology-driven taxation system while Dr. Isaac is banking on expected gains in tax following the implementation of the GST.

The tax authorities are confident of engineering a smooth transition to the new regime bringing a sea change in the tax system in the country with the focus of tax administration shifting to the destination of transaction from the earlier system of origin.

Mr  Pullela Nageswara Rao, chief commissioner of central excise, customs and services tax, Kochi  zone, told reporters that the department was  fully geared for the rollout of the system. “We have set up helplines and people with any difficulty can avail of the services,”  he said.

Apart from this, GST Seva Kendras have been set up in all commissionerates, division offices and ranges as a one-stop solution for tax payers, he added.

Automobile dealers in the state have a mixed feeling towards the GST while potential buyers  hope that the prices of some vehicles may come down with the new tax system.  

 

Mr  Manoj Pathalath, manager of the Kozhikode-based APCO Motors, feels that the  overall impact of the GST will be positive for the consumers. The cost of small cars is unlikely to  change, but  the SUV and luxury segment may see changes, he said. “People looking for SUVs range of cars can go ahead as prices are expected to come down”, he said.

He also ruled out any pre-GST discount sales. In the two-wheeler segment, vehicles above 500CC segment are likely to be more expensive as they come under a higher tax bracket.  Mr P. Ratheesh, a dealer of Royal Enfield in Kozhikode, said Royal Enfield Classic 500 and other vehicles under that category will be expensive from Saturday onwards. The new pricing, however, will be known only after a couple of days.

Coir industry, a traditional sector in the state, is apprehensive of the five  percent GST for coir products.  Mr Sajan B. Nair, secretary-general, Federation of Indian Coir Exporter’s Association, feels that the five percent tax can be set off as input credit. “We are told tax is effectively refundable. But there is no clarity on the delay in the process. If the taxes are levied at each point in the value chain and the exporter has to pay all this and wait for months or years for refund,  that will put a huge burden on the cash flow. The industry will come to a standstill,”  he said.  A major challenge faced by the industry in Kerala is the collection of husk. In GST regime realistic schemes should be worked out for collection of husks, he said.

Mr M.A. Yousuf Ali, UAE-based businessman and promoter of Lulu brand of retail chains, sees  compliance as a challenge for implementing GST. Expressing confidence in the success of the system,  he said the problems will ease over a period of time as the government has promised ample support to adapt to the new tax regime.