Afraid of GST, retailers are limiting their purchases
Afraid of possible losses after the July implementation of
The fear is a result of the worry that once
Also read: No surprises in GST rates, promises Jaitley
On its part, the government has announced that the seller would get a 40% deemed credit on the Central GST (CGST) paid, but as per industry experts, there could still be some loss, given that
"Many distributors and retailers are reluctant to buy products that they think they would not be able to sell before July 1 when GST comes in," Pratik Jain, leader, indirect tax, PwC, told ET. "This is mainly due to the 40% deemed credit and the loss that can happen to retailers and distributors due to the differential rates and (ambiguity on) who shall bear that."
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The retailers and wholesalers of consumer goods and automotive sectors seem to follow a new trend, as per which they would be buying what they would be able to sell till July 1.
"The problem is that many retailers are worried. First, they are not sure about the rates and, secondly, they are not even well informed about GST," said Praveen Khandelwal, secretary-general, the Confederation of All India Traders. "Some retailers do not want to fall in the trap where they end up making losses although I think the government should come out more clearly and say that there would be no loss and there would be 100% tax credits on such tax losses."
Also read: Here’s how enforcing input tax credit will dent the SME economy
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