KOCHI: The small and medium retail traders and merchants are likely to bear the brunt of the initial technical and logistical problems associated with the implementation of Goods and Services Tax (GST) Saturday. Problems in adopting the required software, confusion over the carryover stocks and supply chain logistics are some of the key issues worrying the small and medium traders.
“I feel that many of the small and medium retailers are unlikely to open shops on Saturday,” said K.M. John, secretary of Kerala Merchants Chamber of Commerce and vice-president of All Kerala Distributors Association. According to him, most retailers have opted for a policy of minimum inventory for the past few days to avoid complications connected with the carryover stocks.
The Kerala Rice Miller’s Association, drugs and pharmacists and many others have expressed apprehensions over the impact of the GST. Rice millers are mainly worried about 5 per cent GST for the branded and packed rice. “The cost of a 10-kg pack is likely to be up by Rs 25,” it said. It has requested the state government to prevail upon the Union government to drop the idea given the specificities of Kerala.
All Kerala Chemists and Druggists Association has warned of a shortage of medicines in the state due to the GST rollout. The drug retailers are worried about the rates coming under the 12 per cent slab. According to A.N. Mohanan, president of AKCDA, the wholesale traders will suffer a loss of 8 per cent and retailers 10 percent due to the GST while selling carryover stocks after June 30.
“The carryover stocks bought with 5 per cent VAT at the first stage of the sale will now attract a 12 per cent GST,” he said. He says there was no move on the part of the manufacturers and the government to resolve this issue so far. In such a situation the wholesalers and retailers have no option other than returning the carryover stocks to producers and get fresh stocks as per the new rates. “A delay in this transaction can lead to an acute shortage of medicines in the state,” Mr Mohanan said.
According to Mr John, although the rollout of GST from July 1 was talked about in the official circles, the seriousness of the matter was realised by the traders only ten days ago. “VAT was introduced in 2005 after 2-year long preparations from 2003. So the transition was without problems. But the same cannot be expected now,” he said.