By Salman Danish Khan
Sooner rather than later, the policy-makers will have to come forth and allay the fears of businessmen reeling under the new goods and services tax regime.
TAX! The term evokes gut feelings and knee-jerk reactions.
For taxpayers, every penny deducted from their income is a veritable frown, and every tax hike is a premonition of an imminent apocalypse.
For those maintaining the exchequer, every penny collected in the form of tax is akin to a twirl in an emperor’s moustache!
Yes, the helmsmen are justified in their right to tax, but the nodding taxpayers too deserve to be kept privy to the rationale behind changing tax regimes.
At no point should an honest taxpayer feel the heat.
Even when it was just being mooted among think-tanks almost a decade back, the goods & services tax (GST) elicited a nationwide clamour.
Although it promised cess uniformity across India, sceptics foresaw disproportionate hikes, which in-turn led to countrywide protests by traders and alarm signals by industry watchers.
Today, seven summers later, the GST has finally arrived and as expected, it hasn’t received a red carpet welcome.
While some are forced to sit up and take notice, others are scratching their heads in disbelief over the irrationalities.
Moradabad-based Abdul Samad, an old-hand at brassware trade, shares that the erstwhile value-added-tax (VAT) rate of 12% was already hurting the industry, and now a 28% GST is becoming a bitter pill to swallow.
He observes: “Profitability is shrinking as we are already paying high excise and custom duties. Tax reforms are meant to be catalysts for industrial growth and not the other-way-round.”
His firm Worthy Warehouse hires the most skilled craftsmen who demand hefty wages. “It’s a challenge to synergise quality and economies-of-scale in the current scenario,” he ponders.
A sentiment echoed more than a thousand miles across in the western city of Ahmedabad where an apparel maker-cum-exporter is quite disturbed by burgeoning production costs.
Vaqar Khan, owner of Delta Impex, laments: “One fine morning we woke up to catastrophe! How should I react to an 18% levy on thread which was tax free earlier? Can anyone reason out the 13% hike in cess on cotton?”
The travails don’t end here though.
“Why should we end up paying the highest GST in the world? With squeezed margins, we might have to reduce the workforce which would render many unemployed,” he sighs.
Burying regional VAT differences and complexities was the impetus behind GST, but the new tax regime appears to be infested with anomalies.
“A trader or any other businessman is expected to file 13 tax returns annually. Accounting costs have skyrocketed as a result,” avers Rajesh Gupta, a chartered accountant from Jaipur.
Agrees Jaipur-based contractor S. A. Syed who has recently ventured into irrigation works through his firm Stone Box Infra.
“The registration process is very cumbersome and you have to literally run errands. Nowadays I spend more time with the tax officials rather than my project site,” he wistfully says.
He adds: “We fall under the service sector where levies are in excess of 18% now. Although these can be passed on to the clients, we are shelling out extra bucks for power tools which have become expensive of-late. Fluctuating fuel costs add to our woes.”
Well, it appears that GST has drawn more flak than plaudits. And something needs to be done if the trade fraternity and the new levies are to make good bedfellows!