Amidst workshops and seminars for traders and businessmen, consumers have been offered little clarity on how GST (Goods and Services Tax) will impact their every day purchases. With just hours left for the new tax slabs to kick in, effectively meaning a change in the prices of day-to-day commodities, there are more questions doing the rounds than answers.
The predominant doubts are of how one will know how much to pay for what, especially in local kirana stores that are yet to buy computers, let alone start computerised billing.
“Will the new rates be printed on the packets, or will they be mentioned on the bill?” asked Ragini, a resident of Jayanagar. Shankar, the owner of the kirana store where Ragini buys her provisions from, was no less confused. “We expect nothing to change for at least 15 days. We have to finish the existing stock. It is only during our next purchase that we will know the ‘how and what’ of the GST impact. Until then, we will continue to charge old rates,” he said.
There has been mixed responses from traders when it comes to preparedness for the GST rollout. Uttam, who owns an electrical shop in Ulsoor, said: “We have always generated computer bills. Now, we only have to update the software as the tax slabs have changed.”
Next door, in a silver jewellery store run by Jeetu, there is no computer, and he has no idea about the GST. “We will wait and see what we should do after July 1,” he said. Babu, the owner of a kirana store, said: “We have never had a computer. We bill by hand as most of our customers are known. My son-in-law is checking how to install a computerised billing process in the shop.”
This has left consumers with no other go but to find information on their own.
“Irrespective of the tax, it is the consumers who will ultimately pay because it will be passed on to them. We still don’t know if the GST rates will be printed like MRP. There is also a provision in the GST Act for an anti-profiteering authority. Any benefit of reduction in price owing to GST should be passed on to consumers. So, it is not merely about an increase in prices,” said Y.G. Muralidharan from Consumer Rights Education and Awareness Trust. The government should take up the task of educating consumers too, he added.
The confusion over foodgrain brands
While foodgrains of unregistered brands are exempted under GST, those of registered brands are taxed 5%. The foodgrain sector is dominated by hundreds of local brands apart from big, well-known brands of basmati rice and wheat flour ( atta ), all of which will get pricier.
Ramesh Chandra Lahoti, president, Bangalore Wholesale Foodgrain and Pulses Merchants’ Association, said that over 60% of the foodgrains’ market was dominated by local brands which are registered. “Starting from July 1, the consumer needs to pay tax of 5% on all these products. As per Thursday’s market rates, all pulses will cost ₹5 more, rice ₹2.5 to ₹4 more and wheat ₹2 per kg,” he said.
But, there is a peculiar problem consumers and retail traders will be faced with. “Most retailers purchase a 50 kg bag of toor dal or wheat, mostly of local brands which enjoy customer loyalty. But individual consumers are likely to buy only a few kg in loose, which is the usual practice. The government in all its publicity over GST has been saying that loose unpacked foodgrains is exempt from GST. This may create a situation where the retailer may have paid tax, while the consumer refuses to,” said Mr. Lahoti.
B. Raju, who runs a kirana store in north Bengaluru, said the only way to overcome this was either to include the tax component in the retail price of the foodgrain without the knowledge of the consumer, or move to stock unbranded foodgrains to sell in smaller quantities.
Mr. Lahoti predicted that most retailers, to withstand competition, will move to stock unbranded foodgrains to sell them loose and this may mean drop in quality.
Mind your restaurant bill
It is not just foodgrains. The next time you eat out, the food on your plate is going to fetch you a new kind of bill.
Chandrashekhar Hebbar, president of Bruhat Bangalore Hotels’ Association, said consumers will have to look out for different bills in different kinds of restaurants. “Those eating at darshinis or budget hotels will be charged only 12% GST, and no service tax. This is an 8% increase from the old slab. Those eating in AC restaurants will have to shell out 18% as tax. But, small and roadside eateries, whose business does not cross over ₹20,000 a day, will have only 5% tax,” he said.
What this will translate into is migration of consumers from darshinis to smaller eateries. “For example, with 5% tax, the price of a plate of idli-vada will rise from ₹40 to ₹42. But in a darshini, this will become ₹45,” he said.
