With three days left for GST rollout, most computer hardware traders in Nehru Place, the hub of the IT hardware business in south Delhi, are bogged down by concerns over possible losses on their existing stock, the higher number of returns to be filed, multiplicity of tax rates for the sector, alongside the possible hike in tax incidence for data cables and monitors bigger than 17 inches.
Will bring in transparency, unregistered traders into tax net
Anil Gupta, owner of three computer hardware shops in Nehru Place, is betting on GST regime to bring in higher level of transparency through its online system along with bringing in many unregistered dealers into the tax net. Also, the higher level of compliance in terms of increase in number of returns does not bother him as he has appointed consultants and lawyers for helping him out with the filing process. “It may take some time for adjustment but it will be beneficial in the long run. GST will ensure compliance from those traders who have been evading taxes so far. A team of lawyers and tax consultants are working with us to help in the transition process for GST,” Gupta said, adding that they also plan to help smaller traders who will face a greater burden of tax compliance under GST. The only concern he has is regarding losses on the existing stock, which will face GST of 28 per cent from the existing tax rate of around 14-15 per cent.
Multiple tax rates, possible harassment by tax officials
Mahinder Aggarwal, chairman of All Delhi Computer Traders Association, flagged the issue of multiple returns and possible harassment by tax officials in case of any mistake in return filing as the biggest worries facing the computer hardware traders. “We are already not purchasing much of new stock and focusing more on clearing old stock since we do not have much clarity on availing credit on it. Also, most of my time will go in engaging chartered accountants and tax lawyers to avoid any mistake and file 37 returns in a year. When will we find time to engage with customers? Or do our own business?” Aggarwal asks.
Multiple rates for the computer hardware sector may leave space for tax officials to question their consignments whether the applicable tax rate is 18 per cent or 28 per cent. “The government is saying that it’s one nation, one tax so they should have kept one rate for the entire computer hardware sector. They are charging 18 per cent for computer monitors not exceeding 17 inches, but the maximum sales happen for monitors of size bigger than that. So the reduction in GST rate for monitors is not completely beneficial,” Aggarwal said.
Aggarwal added, “Those who are evading taxes, they should be caught. But those traders who have been honest with their work should not face issues or any harassment by tax officials.” S L Daga, another computer hardware trader in Nehru Place fears that they will have to offer more explanation to tax officials under the GST regime for transportation of their consignments because of the multiple rate structure. “They may say that the consignment is of 12 per cent tax rate, when it may be under the 18 per cent tax slab,” Daga said.
Pitching for lower rate for computer accessories
Those dealing with computer accessories are pitching for a rate cut for USB cables, which have been placed in the 28 per cent tax slab under GST. “There is inconsistency in the tax rates as the government has placed cables under 18 per cent tax slab, but connectors such as USB cables are being charged 28 per cent tax rate,” Arvind Yadav, another trader in Nehru Place said. The GST Council, in its sixteenth meeting on June 11, had reduced the GST rate for computer printers to 18 per cent from the earlier decided rate of 28 per cent. The rate for computer monitors not exceeding 17 inches was also reduced to 18 per cent from 28 per cent. However, monitors exceeding 17 inches are still in the 28 per cent bracket, while personal computers will be taxed at 18 per cent. Wires and cables are in the 18 per cent tax bracket, while connectors such as bundles/USB cables have been placed in the 28 per cent category under GST.