In an open letter to finance minister Arun Jaitley, retailers, including Max Standard Retail, SRS Group, V-Mart Retail and Ginesys, have asked for a two-month extension to September 1 for compliance under the impending Goods and Services Tax (GST). “… there are various implications, which were unforeseen and are going to impact the retailers in a big way. Many uncertainties and queries are arising in the minds of retailers and there is no answer to them, so far,” the retailers said.
The retailers have pointed out that issuance of separate invoices for taxable and exempted goods as per Section 31 of CGST Bill will be difficult as only one invoice is issued at present for both types of goods. Enlisting their issues, the retailers said in case there’s an increase in GST rate from the existing VAT rate, what will be the treatment of stocks at retail stores. “…MRP is constant (since already printed) and an increase in the GST rate would reduce profits. How to handle such a situation?” the letter said.
Lalit Agarwal, chairman and MD, V-Mart Retail said: “The biggest factor in retail chain is the rate of tax in GST. We don’t know how the taxes will be determined. The main challenge is to align with the manufacturers and service providers of the unorganised sector in the entire retail chain, for majority of them practice manual billing.”
The retailers also expressed concerns regarding the requirement to show CGST and SGST separately on the invoice. They also sought clarification on applicability of tax on promotional items such as offers of buy-one-get-one free. “As per the law, tax is required to be charged on such items whereas the end-consumer would never like to pay these taxes. This would impact retail business in a big way,” the letter said.
Input credit reversals, on sale of dutiable and exempted goods, are very difficult to calculate as the ratio of sale of exempted items varies on daily basis, it said. The retailers also mentioned that sundry advances are received when gift card, cash vouchers, membership cards are issued to the customers, but at the time of receipt, it is not clear for which goods or HSN number such advances were received.
The retailers said that the extension of timeline is important as order placement has already commenced for the next quarter and they are unable to “accurately forecast” the impact on MRP. “It is imperative that the retail sector is ready with adequate capacity and knowledge to be fully compliant with GST provisions. With the industry at $600 billion, contributing to 10 per cent of GDP and 8 per cent of jobs, it is important that the industry gets minimum time for integration and assimilation of GST provisions,” Prashant Lohia, CEO, Ginesys, said.
Retailers are already apprehensive about the provisions regarding input tax credit for transitional stock, wherein it’s stated that retailers will get only 40 per cent deemed credit of CGST, lower than for many sectors. The retailers may also be able to avail only 40 per cent of the deemed credit, if excise bills issued by manufacturer are not in their name.
The retailers have pointed out that issuance of separate invoices for taxable and exempted goods as per Section 31 of CGST Bill will be difficult as only one invoice is issued at present for both types of goods. Enlisting their issues, the retailers said in case there’s an increase in GST rate from the existing VAT rate, what will be the treatment of stocks at retail stores. “…MRP is constant (since already printed) and an increase in the GST rate would reduce profits. How to handle such a situation?” the letter said.
Lalit Agarwal, chairman and MD, V-Mart Retail said: “The biggest factor in retail chain is the rate of tax in GST. We don’t know how the taxes will be determined. The main challenge is to align with the manufacturers and service providers of the unorganised sector in the entire retail chain, for majority of them practice manual billing.”
The retailers also expressed concerns regarding the requirement to show CGST and SGST separately on the invoice. They also sought clarification on applicability of tax on promotional items such as offers of buy-one-get-one free. “As per the law, tax is required to be charged on such items whereas the end-consumer would never like to pay these taxes. This would impact retail business in a big way,” the letter said.
Input credit reversals, on sale of dutiable and exempted goods, are very difficult to calculate as the ratio of sale of exempted items varies on daily basis, it said. The retailers also mentioned that sundry advances are received when gift card, cash vouchers, membership cards are issued to the customers, but at the time of receipt, it is not clear for which goods or HSN number such advances were received.
The retailers said that the extension of timeline is important as order placement has already commenced for the next quarter and they are unable to “accurately forecast” the impact on MRP. “It is imperative that the retail sector is ready with adequate capacity and knowledge to be fully compliant with GST provisions. With the industry at $600 billion, contributing to 10 per cent of GDP and 8 per cent of jobs, it is important that the industry gets minimum time for integration and assimilation of GST provisions,” Prashant Lohia, CEO, Ginesys, said.
Retailers are already apprehensive about the provisions regarding input tax credit for transitional stock, wherein it’s stated that retailers will get only 40 per cent deemed credit of CGST, lower than for many sectors. The retailers may also be able to avail only 40 per cent of the deemed credit, if excise bills issued by manufacturer are not in their name.
Source : The Indian Express