Chennai

Chennai’s grey markets remain fuzzy about GST

All over India, the buzzword among businesses is GST. With just two days to go for the rollout of what has been named in some quarters as India’s biggest tax reform, businesses are racing against the clock to stay GST-compliant. But Chennai’s unorganised shopping hubs, or ‘grey markets’ such as Ritchie Street and Burma Bazaar that sell products including electronic gadgets, pen drives, imported chocolates and perfumes from across the globe, seem to be marching slowly.

Traders here are still confused over the new taxation system and its impact on their businesses. Many are unaware of its nuances or fear that by forcing compliance it strikes against their very business model — functioning outside authorised channels of suppliers and bookkeeping frameworks.

Questions over survival

At Ritchie Street, the second largest electronics market in India after Nehru Place in New Delhi, traders are concerned that the higher compliance cost associated with GST will make their businesses unviable.

In hubs like Ritchie Street, GST is applicable when the turnover exceeds ₹20 lakh. Most of the electronic goods will be taxed in the range of 18-28% under GST when compared to the present tax which hovers in the 5-14% range.

Chennai’s grey markets remain fuzzy about GST
 

A household name for electronics, Ritchie Street covers the narrow Narasingapuram Street, Wallers Street, Meeran Sahib Street, Mohammed Hussain Sahib Street and Guruappa Road.

Here shoppers can buy at below market and showroom prices. However, with GST, traders here fear that footfalls might dwindle as prices are likely to shoot up.

Govind Nagpal, chairman of the All India Radio and Electronics Association (South Zone), representing all sections of electronics trade, indicated that product prices might go up 10-15% post implementation of GST, as electronic products are taxed at a higher range. According to him, the annual turnover of this hub is over ₹2,000 crore and it employs over 15,000 persons, directly and indirectly.

Under GST, a trader will have to register invoices to claim input tax credits at every stage which is a key challenge for unorganised players. The entire process is done online. “One of the key objectives of GST is making trade more organised. So unorganised players need to register and maintain proper invoices to claim tax credits,” M.S. Mani, senior director, Deloitte Haskins and Sells LLP, said.

In the unorganised markets, not many traders maintain records or invoices. Now the manufacturers from whom they source goods would force them to maintain invoices to get tax credits. “GST will be difficult for people who don’t have accounting knowledge. I use Tally software and have been getting regular updates on it regarding GST.

Chennai’s grey markets remain fuzzy about GST
 

But there are many small traders who are still not aware of what GST is and how to implement it,” D. Saifuddin, owner of Global Electronics, who started his venture at Narasingapuram Street in 1979, said.

Some traders pointed out customers are reluctant to take bills for the purchases. Even as we were interacting with shopkeepers, customers walked in and purchased TV accessories without bills. At the piracy hub of India, Burma Bazaar, traders were not aware of GST. The handful of people who knew about it were panicking that their businesses will bleed and will have to be wound up. “We can’t be hiring tax consultants like big firms and after a point this would result in job losses,” said a trader here.

Ill-informed

At Sathya Bazaar, parallel to Ranganathan Street, a part of the Thyagaraya Nagar shopping hub, none seemed to know about GST.

Three shopkeepers said that they don’t give out bills and businesses here are not accounted for. Most of the shops here did not have swipe machines or the Paytm option.

At Parsn Manere, too, which houses more than 40 shops in its basement, shopkeepers did not have a clue about GST.

Chennai’s grey markets remain fuzzy about GST
 

“We heard about it but we really don’t know what kind of tax should we pay or how the whole system works,” said a gadget seller at this complex.

A shopkeeper who trades in DVDs suggested that the government should educate traders in these hubs about GST.


Our code of editorial values

This article is closed for comments.
Please Email the Editor

Printable version | Sep 16, 2021 7:49:36 AM | https://www.thehindu.com/news/cities/chennai/chennais-grey-markets-remain-fuzzy-about-gst/article19166734.ece

Next Story