GST: Connaught Place traders worried, clueless ahead of rollout

Connaught Place

Anxiety and worry was the byword among traders in Connaught Place (CP), New Delhi’s toniest business district, hours before India’s switchover to goods and services tax (GST) that seeks to stitch together a common national market.

CP, which otherwise hums with life, wore a relatively deserted look on Friday, still smarting under a three-day bandh to protest against GST.

Most of the retailer that Moneycontrol spoke to said they are yet to fix new prices as ambiguity hung over the new tax rates.

“We have no idea how to go about it,” said staff at Wenger’s, a popular bakery in CP. “Our accountant is yet to intimate us about the system… Prices will vary but we don’t know how”.

GST will overhaul India’s indirect tax system by consolidating an untidy patchwork of local and central duties such as VAT, central excise and octroi into a single levy, make the tax administration more efficient and turn India into a unified market by removing fiscal barriers among states.

The organised sector appeared indifferent towards the shift, waiting for things to unfold.

“All the previous taxes, if added, will equate to the new GST rate so there is not much difference,” said a staff member at United Coffee House, a restaurant in CP, on the condition of anonymity.

He added that though the system was yet to be made GST-compliant, the impact can only be analysed once the system is in place.

“Prices shall remain same… Our system has been updated and will tax as per GST from tomorrow,” said B.D Sharma, a staff member at Embassy restaurant.

Apparel showrooms are yet to make their systems GST-compliant and were likely to charge older tax rates for the next couple of days.

“We have no idea about it (new prices) at the moment… we’ll get new prices within two-three days…,” said Manish, assistant manager, at a Levi’s store, a denims brand. “Right now, we are charging extra VAT (value added tax) on the previous merchandise”.

Retailers, however, were not happy with the proposed mechanism.

“It will become cumbersome for us… we have 37 returns to be filed as against a count of four previously...,” said an owner of a handicrafts shop, wishing not to be named. “We have become bonded labour (of the government)”.

“Someone who doesn’t know how to use computers will have to hire accountants and workers for digital work… this will add to our operating cost,” said the owner’s father.

He said that the new system has nothing special expect for “change of name”. “We were paying Central sales tax (CST) earlier for inter-state sale, now it is called CGST… it’s just a change of alphabets”.

He anticipated price rise and said that the customer will have to bear it; the result of which, he added, was the empty shop he was facing.

Traders operating outside the organised network were, however, worried.

“Our prices are likely to rise… our profit margins will dip,” said Rakesh, a roadside vendor.

When asked about why they prefer previous tax regime, the sellers smile obliquely hinting that tax evasion was possible at various levels in the existing system.