Wednesday , 27 March 2019

‘The biggest challenge will be to the consumer’

Consumer may have to pay more by way of increased tax rate for non MRP products, says Rajendra N Narvekar* 

We all know that the GST implementation started from July 1 and look forward to accept the same with open arms. The basic idea behind implementation is to have one nation one tax which will subsume all other prevailing indirect taxes like excise, vat, luxury tax, service tax, entertainment tax etc. This will eradicate check posts which will result in free and movement of goods. The biggest advantage as anticipated will be ultimate reduction in prices.

Now since the implementation process started especially of migration of dealers from existing laws the dealers are facing the problem of of loading documents and attaching digital signature. The problem continues even today. This will harm the migration process and even new registrations under GST.

The second problem faced by the dealers is of PAN mismatch with the income tax data base. Several dealers have not received their GST passwords for the purpose of migration. They do not know what to do from today and how to conduct business.

The notifications for GST implementation are still rolling out and the rates have changed so many times. Dealers will find it tough to match up the rates with HCN codes.

Even today 80 per cent of small shopkeepers have not registered under GST taking shelter of basic exemption limit of Rs20 lakhs. The above limit is available per PAN on al India basis and many dealers have started opening new business in their spouses name with different PAN. But most of the dealers are unaware of the reverse charge mechanism wherein if purchases are made from unregistered  dealers they will have to pay the tax on behalf of the seller. This will indirectly eliminate those who are unregistered since reputed business houses will refuse to purchase from them.

The biggest challenge will be to the consumer who will have to pay more by way of increased tax rate for non MRP products. It remains to be seen how the manufacturers/wholesales pass on the reduced cost due to availability of input credit at various stages to the ultimate consumers. In some cases there pile of stocks with retailers with reduced rate of tax who will have to charge the current GST from today.

So in the short run the prices may increase but likely to stabilize over a period of time. So let us hope for a smooth transition and welcome the new regime with open arms.

*The writer is president of the Goa Tax Practitioners Association (GTPA)

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