A week into the rollout of the Goods and Services Tax (GST), confusion, anomalies and violations continue to sweep through the economy as consumers and small businesses struggle to unravel the complexities of the revamped tax structure.
Complaints ranged from shopkeepers charging tax on maximum retail price (MRP) to issuing handwritten receipts with arbitrary GST rates. Many people said they were charged GST over discounted prices or sellers had changed the MRP.
The new tax makes doing business easier and companies can gain substantial savings, although experts warned of teething problems given the tax’s complicated, tiered structure.
An online survey by LocalCircles this week revealed that 31% people polled were charged GST over and above the MRP of the products. About 23% said they were only charged MRP while 20% said they were charged GST above the discounted price.
Some 26% either made receipt-less purchases or were too confused to buy anything. The survey had more than 8800 respondents.
“The medical store refused to give me a bill saying that his system is not upgraded with the new prices after GST. He charged me higher than the MRP,” said Kolkata resident Suranjan Ray.
The government warned retailers and wholesalers not to change MRPs after it received complaints that some businesses were altering the final selling prices on pre-GST stocks to comply with the new tax rates. They were, however, allowed to display a new MRP sticker on unsold stocks.
The government is likely to announce on Friday a toll free line where customers can call in with complaints about MRP violations by retailers.
“We will issue a notification explaining what is MRP, how the tax component is already built into it and GST cannot be charged over it,” said BN Dixit, director of the legal metrology division which deals in units of measurement for consumer products.
But many anomalies are a result of ignorance.
“Consumers have been complaining about retailers charging them GST over the MRP, but you also have to understand that sellers are confused about their pre-GST stock,” said Sushil Jain, president of federation of industrialists, traders and jewellers in Noida.
“They don’t know whether they will get tax credits on them. To ensure that they don’t incur losses these sellers are charging GST on the MRP and selling these products.”
This snacks bill captures one of the problems customers are facing.
The random GST amount in this chemist bill was handwritten. Under the new indirect tax, medicines are classified under 5% and 12% slabs. While 5% tax is levied on oral rehydrates, bandages carry 12%.
Most economists agree the reform – first proposed in 2006 – is long overdue, but warn of an initial shock to the economy as businesses adjust. DBS Bank said in a note this week that given the scale of changes, teething problems and procedural hassles are likely.
“The extent of readiness among businesses, consumers and the collection network will be the biggest challenge, apart from the regulatory machinery,” it said.
