Nine months after India instituted a Good & Services Tax (GST), retailers and manufacturers are still trying to fully understand and manage issues related to it.
A new survey by Wydr, considered India’s largest wholesale marketplace, showed that 57 percent of respondents–manufacturers, wholesalers and retailers–said they have yet to fully grasp the workings of GST, while nearly 19 percent of all respondents said they don’t understand it at all, according to survey results published by Quartz India.
A total of 130 respondents across India participated in the Wydr survey, which asked how the GST regime has impacted their businesses.
“The scale of implementation for the GST is unprecedented anywhere in the world, which naturally leads to some challenges and teething troubles in the first few months,” Quartz reported Devesh Rai, founder and CEO of Wydr, as saying in line with the survey’s release. “The survey’s results demonstrate that even though significant progress has been made in GST rollout, the administration needs to enhance its focus on educating small and medium business owners across India.”
The GST is an indirect tax levied on the supply of goods and services within the country, allowing the government more flexibility in policy and simplifying the overall tax code. These measures included a reduction in the rate of GST on man-made items like synthetic filament yarn, nylon, polyester and acrylic to 12 percent from 18 percent.
In the Wydr survey, 53 percent of respondents said they had experienced a decline in sales and revenue after the introduction of GST on July 1, while 25 percent said the impact on sales had been positive.
Roughly 26 percent said they saw a decline in profits of more than 30 percent in the post-GST regime, while 55 percent were unsure or believe that GST is not good for their businesses in the long run.
“Firms don’t just need to apply the correct rate, but also have to match invoices of their outputs and inputs in order to be eligible for full input tax credit, which increases compliance costs further,” Rai was quoted as saying. “However, the government is working toward minimizing the issues. It has not even been a year since the tax system has been implemented and considering the scale of implementation, I think we are much better off.”
The so-called “one nation one tax” system has left 82.8% of respondents with new additional costs and increases in their business expenses. Nearly 30 percent said they believe GST is not a simplified tax structure and still requires a lot of understanding, while more than 55 percent said they do not get GST-related help easily. About half of the respondents agreed that GST has opened them expanding their business across the country.