GST takes big bite out of business across Delhi

Traders across Delhi complained of little business coming their way on Monday, the first working day since the Goods and Services Tax (GST) system was rolled out on July 1, even as they spent the entire day trying to understand the “complex” new tax regime.

“Wheat in loose form is being sold without tax. However, if it is packed in bags by a certain company then it is taxable under GST,” a shopkeeper states while trying to understand GST.

Old stock

The entire chain of national commerce, which has Delhi’s wholesale markets at its centre, has gone kaput with purchasers and customers deciding to halt business for sometime, said Brijesh Goyal, the national convener of the Chamber of Trade and Industry (CTI).

“Delhi is the hub of wholesale markets, which have dried up due to lack of demand and supply. Everyone is trying to understand what to do with the stock they bought before the GST came into effect,” Mr. Goyal said.

Shop owners said they spent their entire Monday taking inventory of old stock and figuring out the changes made to billing procedures.

Some traders got experts to tutor them on the new aspects of selling goods that were purchased prior to the GST coming into effect so they could avoid any “hidden irregularities” that may become a legal liability.

“There are instances where customers want to buy a product that was provisioned by the trader before GST was in place. In such a case, a trader can’t refuse to sell the product, can they?” said Sanjay Bhargava, the general secretary of Chandni Chowk Sarv Vyapar Mandal.

New way of doing things

The traders also have to register for a Goods and Services Taxpayer Identification Number (GSTIN), before they can conduct inter-State purchases from cities such as Surat, Ahmedabad and Mumbai, or sell products across the country. Their customers too have to get a GSTIN.

Chartered accountants said this was a major reason why business was slack.

Chandni Chowk, which is renowned for wholesale clothing, has been hit by GST as most businessmen here were not liable to pay sales tax or VAT till now, but have to pay 5% under GST.

Raj Kumar, who sells blankets and bed sheets in the market, said: “We have faced a drop in sales because of GST. Many cloth merchants are not happy with the government’s decision.”

‘Very complicated’

Traders in east Delhi’s Subash Chowk are not worried about the increase in taxes but are apprehensive about the complexity of the new tax regime, which they find difficult to comprehend and implement.

“We do not have any issue with GST, we have an issue with how complicated it is,” said a wholesaler of spices, dal and groceries.

Under GST, traders will have to file their monthly returns online, but a majority of the businessmen do not have computers or know the process of online billing.

“Some shop-owners cannot even spell the word computer and are not very tech-savvy,” a mobile and laptop dealer said.

A local seller of school uniforms said it will take them around 15 days to comprehend the new tax regime.