by Raman Swamy
Frontier | July 12, 2017
It has been a week since GST came into force. Many big industrial houses have quickly adapted to the game-changing new tax regime and some have even issued statements welcoming it.
A significant number of prominent players, trade organizations and individual legal pundits, economists and chartered accountants have gone one step further by congratulating the government for bringing in such a bold and historic reform to galvanize the Indian economy, attract foreign investment and enable the country to achieve its potential to become an economic super-power.
The other side of the picture is that there are crores of common citizens, whether involved in small and medium scale trade, commence, manufacturing, retailing or services, for whom the last seven days have been full of stress and strain. Some of them are determined to master the challenges posed by the new GST regulations come what may – they have rolled up their sleeves and girdled their loin cloths with grim resolve, humming the words of the inspirational song “We shall overcome”.
For crores of less equipped citizens of the country, the week gone by has been what the Americans call a “face-palm moment”.
A face-palm is the physical gesture of slapping your forehead with the palm of your head. There are many variations – one can simply place one’s hand across one’s face or lower one’s face into one’s hand. It depends from person to person and the extent of emotion or helplessness.
Whatever it may be, the first week of the teething troubles of GST has been a face-palm moment for consumers, traders and a whole range of commoners who cannot afford to hire accountants and computer typists. Life and livelihood has all of sudden become very complicated and quite distressing.
Judging by the numerous reports in the vernacular press in various parts of the country, it is not just tradespeople and small businessmen who are feeling utterly confused about which GST slabs they come under and how to cope with the changed situation.
For instance, customers at several stores are being presented with bills claiming random GST rates. The consumers are themselves unaware how their credit card bills are going to look like. For actual tradesmen, things are a little more serious – they face two key grey zones – one, the pricing scheme for the stock they bought before GST; two, the eligibility criteria to register for GST.
Some traders had been worried that they will make losses post-GST because they thought that the inventory bought before July 1 would now carry different prices. This was before the government announced on Thursday that a three-month time waiver, till September 30, will be given to traders.
This was a temporary relief but the other aspects remain – many are still unclear about the registration process. Every businessperson is liable to pay tax and with the new tax regime, every taxable person has to re-register or register under GST.
Most traders are also unaware of the eligibility criteria. According to a report, Revenue Secretary Hasmukh Adhia said in his first of six GST Masterclass sessions — an initiative he undertook to clear every one’s doubts on GST — that even a businessperson who has a turnover below Rs 20 lakh and is involved in an inter-state business has to register with GST.
This was a useful clarification – except that it contradicted his earlier claim. Earlier he had said: “Those with a turnover below Rs 20 lakh need not file any return. Their life will not change at all after July 1″.
If the government keeps adding specifications later, traders may fear being held against the law for evading taxes. Especially since stern warning are being issued every day that those who default would be prospecuted and could even be sent to prison.
Not everybody is a trader. What about those engaged in charity and social service? The Shiromani Gurdwara Parbandhak Committee pleaded for exemption for all purchases made for ‘langar sewa’ (free community kitchen) from the Goods and Services Tax (GST) regime.
Indeed, the SGPC has said that it will have to bear an additional financial burden of Rs. 10 crore annually if GST is applied to its purchases and procurements. “All purchases for langar by the SGPC at Darbar Sahib (Golden Temple) in Amritsar, Keshgarh Sahib in Anandpur and Damdama Sahib in Bathinda used to be exempted from Value Added Tax system,” SGPC chief secretary Harcharan Singh said. “We receive money from offerings, which we spend on the free kitchens and other social causes… we should be exempted from GST too”.
Then comes political support. NDA partner and Union Food Processing Industries Minister Harsimrat Kaur Badal has urged Arun Jaitley to look into the matter. She said SGPC spends around Rs. 75 crore annually to purchase food items such as ‘desi ghee’ , sugar and pulses. “But with GST, it will have to bear an extra financial burden of Rs. 10 crore on these purchases as they come under the 5% to 18% GST bracket” she said. Not surprisingly, even the radical Sikh outfit Dal Khalsa has supported the demand.
Down South, the humble Erode Handloom Cloth Merchants Association are keen to meet the Finance Minister to plead for withdrawal of the 5% GST on textile goods. “Otherwise”, they say, “we will go on an indefinite stir”.
Here again, political support is forthcoming. No less a personage than Union Labour and Employment Minister Bandaru Dattatreya has raised his voice in support of not only textile workers but beedi workers too. “I will request Jaitleyji to positively take into account their genuine problems”, Dattatreya has said, adding he would also apprise the Finance Minister about the astonishing 28 per cent GST tax slab on beedi manufacturing industry.
Meanwhile, the Federation of Indian Export Organisations has said that unless exporters are exempted from payment of GST it will adversely affect export profitability by 2 per cent.
Similar cries of anguish and pleas for mercy have come from dozens of other sectors, including the agricultural produce marketing agencies.
In other words, it seems a major crisis has gripped various sections of the economy, especially those without direct links to political or business lobbies. How long the face-palm trauma will continue is anybody’s guess.