Merchants using ‘puzzling GST’ to cheat consumers

Categories: GST Recent News, News
No Comments

Merchants are using the confusion over different Goods Services Tax (GST) slabs to cheat consumers.
The traders, who increased prices of several commodities citing implementation of the new tax regime, are now making huge profits by charging wrong tax rates. Unable to confront the traders, the consumers are paying the bills without a murmur.

Analysts observed that different tax slabs for the same product is giving rise to this menace. For instance, GST is just 5 per cent on garments which costs less than Rs 1,000 per piece. The same garment will be charged with 12 per cent GST if its price is above Rs 1,000. At the time of implementation, the Centre said different rates would help the commoners. However, the on-ground reality is that the two slabs are helping the traders to mint money.

In small towns and villages, most garment purchases do not exceed the Rs 1,000-figure. Instead of levying 5 per cent GST, the traders are charging 12 per cent GST on all goods. Even in big malls, garments, including saris, which are available for less than Rs 1,000 are being tagged under 12 per cent GST.

Further, the traders are unwilling to furnish receipts even though all purchases above Rs 200 must have bills.

Similarly, GST on restaurant food was brought down to five per cent in last November. However, majority of the eateries continue to charge the previous rates of 12 per cent at restaurants without air-conditioners and 18 per cent at restaurants with air-conditioners.

Sources said merchants are managing two separate books of accounts. The first is for the consumers but this book has no legal identity. The other book is for the tax authorities where dubious payments are not recorded.

Absence of surprise checks by the commercial tax department is reportedly helping traders to resort to malpractices. Surprisingly, just around 30 per cent of the traders who registered under the previous tax regime Value Added Tax (VAT), have enrolled under GST. “We wanted to give little cushion to the merchants to overcome the initial hurdles of GST. We will start inspections shortly,” said a commercial taxes official.

Different Slabs Confusion

* Any piece of apparel or clothing should be taxed at 5% GST if it does not cost more than Rs 1,000

* Any piece of apparel or clothing of sale value exceeding Rs 1,000 should be taxed at 12% GST

 * A pair of footwear with a retail sale price of not more than Rs 500 should be taxed at 5% GST
 * There will be 18 percent GST if the retail sale price is indelibly marked or embossed on the footwear itself
 * Restaurants, eating joints, including mess, canteens, which does not have an attached residential or lodging facility will have to charge 5% GST on all food and drinks

Read More at: