Small garment businessmen in West Delhi continue to suffer under GST
10 Dec 2017 12:00 PM IST
Two major reforms, demonetisation and GST in just one year has left small businesses with huge losses and confusion
Ashraf is a 32-year-old jeans wholesaler in Raghubir Nagar working at his shop 10-hours a day, 6-days a week. For him, last one year has been a roller-coaster ride. First, it was the demonetisation in November last year and now it was the Goods and Services Tax (GST) in July this year. His business has had an adverse impact. There are many small businessmen in West Delhi's Raghubir Nagar, who are finding it difficult to survive in the market. They are unable to understand the complex structure of the GST system, when they are still dealing with the the after-effects of Demonetisation.
Initially, the GST for textiles was 18 percent. Recently, it was brought down to 5 percent (earlier there was no or very little tax on textiles). Because of the earlier 18 percent tax, the cost of fabric for the manufacturing of denim became highly expensive which in turn made the final product way too expensive for the consumer, resulting in fewer customers and increasing stocks of denim. Lowering of tax and temporary relief from the government has been able to bring some customers back to the market.
But, when the problem of higher tax rate has been addressed, the major issue for businessmen here, is of understanding the tax regime itself, entering the mainstream and filing their returns.
Like most of the textile industry in the country, Garment businesses in Raghubir Nagar used to operate as unorganised sector. They didn't have registered companies. They never paid taxes. Like Ashraf, most of the shop-owners here are illiterate and are unaware of the intricacies of the tax system. "Bhai! Mujhe toh bill banana hi nahi aata hai ( I don't even know how to make a proper bill )," says Ashraf, when asked about how he makes his sales post-GST.
Registering under the tax system has not been easy for these businessmen. Either they don't have the required paperwork or even if they have applied for their registration they haven't received their Unique 'TIN numbers' yet. Another man, Zameer, sitting next to Ashraf, says that many shop-owners are not able to sell their product because they don't have 'pacca bills'. "Bina bill ke koi maal nahi kharidta, ( No one buys the product without a proper bill )," he says.
Mainly a cash-based industry, businesses here, suffered huge losses during the demonetisation drive and the months that followed. These businesses mostly run on credit. When they receive cash, the settle payments. With demonetisation, the liquidity in the market suffered massively leading to huge losses of these small businessmen. They were just making theirway post demonetisation, when GST came into effect this year. "Ek hi saal mein 2 jhatke de diye sarkaar ne, ( Government has jolted us twice in a single year)," says Ashraf, blaming the government for the timing of the two programmes.
The revision in tax rates has come as a relief, which might bring some old customers who shied away from buying jeans at higher prices, back to the market. But most of the shop-owners with little knowledge of filing multiple tax returns every month will continue to suffer until either the process for filing returns is made easier or these people are educated in a systematic manner to make them understand the existing structure.
Until then, like Ashraf, they will continue to say the same thing, "hum kaam karein, ya tax bharte rahein ( when are we supposed to work, if we are in busy filing taxes )?".

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