Reform gently

Government needs to hand-hold small businesses through the initial transition to the GST regime.

By: Editorial | Published: June 28, 2017 12:40:32 am

On Tuesday, cloth merchants in several parts of the country went on strike to protest against the Goods and Services Tax (GST), threatening to continue their strike till June 30. A day before that, furniture dealers in Delhi pulled down their shutters. Cloth trade falls under the lowest GST slab — 5 per cent. The furniture manufacturers, in contrast, will be subject to the highest slab under the GST — 28 per cent.

Their common grouse is that the levy under the new regime is too high — the textile traders want exemption from the GST for an year, while the furniture dealers want the levy to be reduced to 12 per cent. Other small traders have also registered their protests against the GST through the traders’ association, the Confederation of All India Traders (CAIT). Given that the GST is the biggest tax reform in the country’s history, the government would do well to lend a patient ear to the complaints of the small traders. It must hand-hold them through the initial stages of the reform.

Such hand-holding becomes imperative in light of the other demands of the traders. The GST is a technology-driven regime and according to the CAIT more than 60 per cent of small traders who are under the ambit of this levy don’t have computers. The association also claims that many small traders will be at sea in using the GST software to file returns. “A large number of traders across the country are still unaware not only of the fundamentals of the GST but even the compliance obligations,” said a CAIT white paper released earlier this week.

In a similar vein, cloth traders have demanded that the government give them training about the GST. The CAIT has also appealed that the government declare the first nine months after the implementation of the GST as an interim period, in “which there should not be any penal action against traders for procedural lapses leading to non-compliance”. These pleas and demands are not unreasonable, given that, by all accounts, the teething period, varying from three months to a year, will be rocky for the industry and the economy.

Of course, in recent history, no country has implemented the perfect GST. Seen this way, the new tax regime will be a learning experience for both the government and the different sectors of industry. It is imperative that all parties concerned treat each other with empathy during the initial process to facilitate a painless transition.

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