The umbrella body states that tax collectors, focused solely on revenue generation with disregard for social impact, may be tempted to push more goods into higher tax slabs
Indian Sellers Collective, an umbrella body of trade associations and sellers across the country has urged the Finance Minister and the GST Council to reject the recommendations of GoM (Group of Ministers) on GST Rate Rationalisation. The body stated that a new fifth GST slab of 35 per cent and pricing-based rate structure will materially and fundamentally alter the country’s GST framework with ‘devastating outcomes’.
“All the gains of the GST regime will be wiped out, with permanent damage to the vast age-old retailer network of India, if the GoM recommendations are adopted. A 35 per cent tax on demerit goods like tobacco and aerated beverages will exponentially grow their illicit market, and a large number of sellers will move out of the formal economy,” stated Abhay Raj Mishra, Member and National Coordinator of Indian Sellers Collective.
The umbrella body added that too many slabs and rate-based sub-slabs will make compliance a nightmare for small to medium business owners, who may prefer to return to the cash economy. It further explained that an overcomplicated tax system, rising costs of superior goods, business models requiring frequent changes, rising corruption and a thriving black and cash economy will kill small and mid-sized retail businesses and eventually hurt investor sentiment.
“Increased compliance costs under a complex GST regime will erode their already razor-thin profit margins, making the cost of doing business unsustainable for micro and ultra-small retailers. This would inevitably lead to their exit from the market, further straining the retail ecosystem,” Dhairyashil Patil, National President of AICPDF highlighted.
The umbrella body also stated that tax collectors, focused solely on revenue generation with disregard for social impact, may be tempted to push more goods into higher tax slabs, requiring reclassification and inventory recalibration, forcing frequent shifts in business models, resulting in a long string of litigations.
