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1 year of GST: Traders cry foul while real estate sector feels the pinch

The one year since the introduction of GST has been torrid for small businesses although the central government has tried to address some problems faced by traders and reduced tax rates for several sectors including real estate and hospitality.

india Updated: Jun 30, 2018 23:47 IST
HT Correspondents
HT Correspondents
Hindustan Times, Mumbai/Kanpur/Surat/Chandigarh
GST,One year of GST,Traders
Despite a reduction in GST on the real estate sector to 12%, customers are not getting their share of the benefit because of confusion over the calculation of the rebate.(Bloomberg)

Surat-based power-loom owner Bhavesh Patel and Kanpur’s tarpaulin maker Rohit Maheshwari have one thing in common: both nurse a grouse against the Goods and Services Tax (GST) that was billed as the biggest tax reform in India since independence when it was introduced a year ago.

Patel closed his 17-year-old factory in January because the absence of input tax credit for the textile industry led to an increase in manufacturing costs amid rising competition from China. “Profit had become a far cry. I was incurring losses to the tune of Rs 50 per metre,” Patel said.

Maheshwari finds the filing of monthly returns cumbersome. He claims to have lost money because of glitches in GST servers. He said many of his input tax credit claims have been pending with the government for the past year.

Every month, Mahaeshwari spends two days on filing his GST return. “Even a spelling or numerical mistake will leave me with a sore head,” he said, recalling how mistakes in making entries had cost him money and server crashes had brought penalties.

“The GST technical infrastructure clearly is way below what it should be as the server crashes regularly and entries don’t reflect it,” he said.

The one year since the introduction of GST has been torrid for small businesses like the ones run by Patel and Maheshwari although the National Democratic Alliance government at the Centre has tried to address some problems faced by traders and reduced tax rates for several sectors including real estate and hospitality.

“The number of power-loom machines has slipped to 5.5 lakh from 7.5 lakh in Surat since implementation of GST. Around two lakh workers have lost jobs,” said Ashok Jirawala, president of the Federation of Surat Weavers Association.

According to Sachin Gala, who deals in textiles at Hindmata Market in Central Mumbai, the submission of accounts three times a month for GST is a major headache. “This only increases the cost for the traders and he is forced to pass it on to the consumers,” said Gala.

Small-scale businesses such as utensil makers have faced the brunt of GST. “The business has come down by at least 20 % in the last one year,” said Fancy Parmar, owner of S. Kantilal, a well known utensil store in Mumbai.

Despite a reduction in GST on the real estate sector to 12%, customers are not getting their share of the benefit because of confusion over the calculation of the rebate. Real estate consultancy Jones Lang LaSalle and consulting firm PwC India wrote in reports two months ago that very few builders were passing on the benefit of the cut to consumers.

According to Anuj Puri, chairman of Mumbai-based ANAROCK Property Consultants, confusion about the amount of rebate that a homebuyer is entitled to get back as input tax credit (TC) is yet to be cleared up

“With this lack of transparency on ITC, homebuyers are understandably upset because as of now, their overall payment has increased,” said Puri.

“The GST was said to be a dream taxation system,” Badish Jindal, president of the Federation of Punjab Small Industries Association said, but because of “poor implementation” it has become a major hassle for traders.

GST is a pain because of multiple tax slabs and the requirement of filing around 40 returns a year, according to the association.

First Published: Jun 30, 2018 23:47 IST