Is GST the Grail we have been waiting for?

The managing editor, Noel D'cunha pinged on PrintWeek India's WhatsApp group that the cloth shop owners in Surat are on strike. The reason: the 5% GST levied on textiles. Also, the police had baton-charged members of the textile association in Surat. Important markets in Surat were shut down. Likewise, the Maskati market in Ahmedabad, a major textile centre in the state, wore a deserted look as around 25,000-30,000 traders also observed a shutdown.

07 Jul 2017 | By Sriraam Selvam

There are two concerns for the shutter down. From a zero tax to a 5% tax, the new slabs would affect their businesses. Many small traders - including the SME ops in print - say that the time for GST compliance is too short.
 
It's the same saga in Tamil Nadu - where the textile cluster that includes Coimbatore, Erode, Tirupur, Salem, Namakkal, and Karur, is also on strike. They are piqued about the GST rates imposed on textile manufacturers, including job workers, who were so far exempted from any form of tax.
 
The difference in Gujarat is, the multi-day strike has impacted the print shops in Surat.
 
On the cusp of the GST cross-over, I chatted to a digital print expert in Chennai about the "bizarre" digital print market in Surat.
 
One of them shared with me that Konica Minolta is very popular in Surat. The Capex for a KM 1100 is at Rs 33-35 lakh in Surat. For multiple devices. Otherwise, the going price is: Rs 42-45 lakh.
 
So how does one explain a sales price of Rs 4.75? I am told this is because of special offers on device price and TG; plus "maximum tampering of toners in the Surat market, which is followed by Delhi, and then by Navi Mumbai."
 

Shutters down at the Surat textile market in protest of GST

So? How does this impact price of the print unit, I ask. I am told, "one tampered bottle can affect customers cost by about 17 paise positively and negatively affect the vendor by 25 paise.

The GST regime could clean up this grey market which thrives on refurbished imported devices and toners and serves to be detrimental to the noble cause of print at a fair price.
 
My crash course on the uncharacteristic low prices in the digital print market is over.
 
As I amble over to collect my car, I bump into a sales tax consultant.
 
As of tomorrow (1 July), he is out of a job.
 
It's all for the good, I say.
 
I hope so, he says.
 
Though GST in its current form is far from ideal, it definitely is a step in the right direction and as a pro-GST advocate, these are the five reasons why I feel this tax system clean-up will benefit our industry in the long run. 
 
The foremost and the most obvious advantage is GST would subsume around 17 indirect tax and totally eradicate inefficiencies that existed while trying to be compliant to local and central agencies.
 
Another significant benefit from GST is the much-increased flow of input credit which primarily means the ability to claim input credit for even capital goods which were earlier unavailable. This would largely bring down capital expenditure by a minimum of 10%. The cascading effect of taxes would also become negligible as restrictions on items to claim input credit has considerably decreased.
 
GST is also expected to widen the tax net and bring in much needed transparency. With the concept of matching returns in place, the ability to claim input credit hinges on return filing by all parties involved.
 
The most talked about aspect of one nation one market could become a reality with lessened scrutiny at inter-state borders and this means realistic warehousing methodology can be employed.
 
Lastly, the technology-driven implementation of GST with the appointment of GST Suvidha Providers (GSP) and several software companies providing simple solutions as Application Suvidha Providers (ASP) would make the entire compliance process hassle free.
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