Here are some of the key pain-points from the letter along with our analysis: • If the GST rate is higher than the VAT rate GST is essentially riding on the VAT (tax only on goods sold and not services) calculation, but with uniform taxation across goods and services.However, on some products, GST may become higher than the current levels of VAT and service tax.As the MRP remains constant, it will impact retailers’ profit.

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Retail SMEs Ask Arun Jaitley ForExtensionWindow
To Be GST Compliant
Retail businesses Max Standard Retail Pvt Ltd, SRS Group, Vmart Retail Ltd, etc, led by
Ginesys, have written a letter to the Union Minister of Finance and Chairman of the GST
Council, Arun Jaitley, seeking extra time on account of complexities in business processes to
comply with the Goods & Services Tax (GST) legislation.
#DigitalErra Thought Corner
Here are some of the key pain-points from the letter along with our analysis:
 If the GST rate is higher than the VAT rate
GST is essentially riding on the VAT (tax only on goods sold and not services) calculation, but
with uniform taxation across goods and services.However, on some products, GST may become
higher than the current levels of VAT and service tax.As the MRP remains constant, it will
impact retailers’ profit.
 Sales of goods and sales returnhappen simultaneously in the same invoice
In booming sectors like ecommerce, returns are high, up to 30%. But once GST is paid, and if
the product is returned after two months, how will reversal of GST happen? It can create a
backlog of dues to be paid for the concerned parties.
 Tax on promotional items, buy-one-get-one etc.

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End-user would never like to pay for these so called ‘free services’ but as per the law, tax is
required to be charged on such items. This would impact the retail business in a big way.
 Calculation of factors like Input Credit reversals
Small retailers aren’t adept with meaning of simple terms like manufacturing, sales, service,
valuation, input, output which could complicate the matter.
Lalit Agarwal, Chairman and Managing Director, V-Mart Retail Ltd quoted, “The biggest factor
in retail chain is the rate of tax in GST. We don’t know how the taxes will be determined. The
main challenge is to align with the manufacturers and service providers of the unorganized
sector in the entire retail chain, for majority of them practice manual billing.
Track, educate and bring stakeholders on technological platform
Managing ambiguity will be a big challenge in the days immediately GST is implemented. There
is a need to track, educate and bring the players involved on technological platform to avail the
GST credits.
Prashant Lohia, CEO, Ginesys, said, “It is imperative that the retail sector is ready with
adequate capacity and knowledge to be fully compliant with GST provisions. For the industry
size of over USD 600 billion in India, contributing to 10 percent of GDP and 8 percent of
employment, it is important that the industry gets minimum time for integration and assimilation
of GST provisions.”

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A check by Business-Standard on preparatory statusof GSTimplies:
 Companies are working round-the-clock to meet the July 1 deadline
 Seventy per cent of the large consumer goods companies can meet the deadline, say
experts
 SMEs are not in a position to do so. Many of them have begun work only now,
appointing consultants
 Gains for consumer goods entities will come in areas such as warehousing, logistics and
the supply chain
Smooth implementation of GST calls for discipline across the chain manufacturers, suppliers,
retailers and the like of it. One more suggestion by many entrepreneurs is to run a trial before
actual implementation of GST. In the trial period, GST could run parallel to the existing system
to smoothen the transition. As more learnings happen, the system will get more robust and
stable.The extension window is important for the retailers, who are not in a position to
accurately forecast the impact on GST on final MRP.