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GST Will Not Impact Demonetisation Way: Retailers
In November last year, Government of India demonetised the Rs 500 and 1000 denomination notes. This led to a huge crisis in the retail sector and also impacting other sectors as well
Photo Credit : Reuters
In November last year, Government of India demonetised the Rs 500 and 1000 denomination notes. This led to a huge crisis in the retail sector and also impacting other sectors as well.
A new uniform tax reform is going to roll out from July 1st, 2017. This new tax reform ‘GST’ Goods and Service Tax is highly anticipated and has major concerns about its implications.
The previous move of the government left the customers in pain and this new step GST is creating chaos among the traders. There is a sense that it may create a demonetisation like an impact or at least something close to that.
When asked, Rakesh Biyani, Joint Managing Director, Future Retail, will GST impact the sales like demonetisation did? He found it difficult to comment on something unique that is happening in the nation. But he was upbeat about the change. He said, “Every change comes with the challenges and opportunities and we are ready for it.
GST will definitely cut the various tax regimes and one country one tax will make the sales and purchase process easy and smooth. This announcement from the Modi government has left all the leading traders unclear and unsatisfied.
Sharing his thought, if GST will be as bad as demonetisation, Adesh Gupta, CEO Liberty Group & Chairman CFLA ( Council for Footwear Leather & Accessories), feels the challenge is more in the distribution and supply chain.
He said, “Consumer is not going to lose anything because it is the dealer distributor and the whole chain of supplier need to strengthen themselves from GS regime. The challenge is more at the back end and there is no issue on the top line.”
Highlighting a different point of view, Leather Bags and Accessories maker, Hi Design President, Dilip Kapur feels that the impact will be different from demonetisation. “He said, Demonetisation was a month thing for us. GST will be very beneficial in the long term but short term GST is a massive issue, it’s much more than demonetisation.”
Elaborating about the impact he shared, that changes in pricing, working on a relationship with e-commerce is a serious issue. He concluded by saying, “It will be more of an operational headache for a month or two.
There is a sense in the industry that it may lead heavily increase of price but Mukesh Mathur of Manthan Analytics said the impact is going to be minimum and the price increase will be marginal.
The government has released five different tax slabs for all leading products that are sold via retail mode. Such as apparel, footwear, leather goods and accessories. The tax slabs are 0 %, 5%, 12%, 18% and 28%.