Only a little over half of the registrants on GSTN have so far completed the process by filling up part B of the registration form. (Representational image)
Over a month after the Goods and Services Tax (GST) came into effect, the grains section of Gultekdi wholesale market has reported 40 per cent lower sales. This dip in sales, said traders, is due to the confusion about whether GST is applicable to branded and registered branded commodities, which has kept retail traders away from the wholesale market.
As per GST rules, the tax will not be applicable to packaged goods without a registered brand, but most retailers are wary of taking the risk. Brands which are officially registered will attract a 5 per cent GST.
Loose food grains have been exempted from the GST ambit, but the problem at wholesale markets is the ambiguity regarding the definition of a ‘brand’. Wholesalers usually pack loose grains in packets with generic names and sell them to the retailers. Majority of grains are sold in such packets, which has led to some confusion about whether GST is applicable to them.
On an average, about 225 vehicles carrying goods come to the Gultekdi market for trade, but of late only about 150 such vehicles visit the market. Popatal Ostwal, president of the Poona Merchant’s Chamber, said several retailers were avoiding the market as they feared they would have to pay GST on the product. Most of the retail traders will have to make two declarations in a year under the GST composite scheme.
Ostwal said the Chamber has written to both the Centre and the state finance ministry, asking for clarity on the issue, but was yet to receive a response. Ajit Sethiya, former president of the Poona Merchant’s Chamber and president of the Jaggery Merchants Association, said many retailers had stocked up on commodities, ahead of GST, and they were avoiding visiting the market. Given the lack of clarity, retailers have stopped purchasing from wholesalers and in some cases, wholesalers have stopped selling under brand names. While the government has allowed a two-month moratorium to file returns, retailers are wary about the tax burden.
Another fallout of the GST regime was an increase in the wholesale prices of most food grains, said Ostwal. “The per quintal price has increased by around Rs 300. Our experience is directly opposite to the claims made by the government… that food grains prices would go down post GST,” he said
