Chaos Reigns and Protests Erupt as GST is Rolled Out

As the country moved to the Goods and Services Tax (GST) regime on the midnight of June 30, confusion over the manner of its implementation and the rates of tax to be levied on various goods and services beset businesses and traders. Several States witnessed protests and strikes by traders who are dissatisfied with the tax rates and the additional compliance burden they will have to bear under GST.

Reports from various parts of India show that there is widespread confusion among traders regarding how the GST works. A large section of them have never used computers, for instance, and are finding it difficult to adjust to the new system.The vast majority (89% according to some estimates) of shops in India do not have computers, and the need to file online returns will add to their costs.

While major consumer goods companies have reduced the prices of some products such as cottage cheese and dairy whitener, prices of products such as pickles, jam and ghee have been increased. Disputes regarding the pricing of services have been reported from various parts of the country, as consumers learnt with dismay that eateries and restaurants had jacked up prices. Confusion and commotion have been reported at business establishments, and shortage of drugs have caused distress among patients as unprepared stockists have reportedly refused to stock medicines.

Even as chaos continued to reign in the first days of GST implementation, protests by sections of people who fear that their livelihoods would be hit by GST have erupted in various parts of the country.

The textile industry is among the sectors which are expected to be most adversely affected by the implementation of GST.

Yarn, fabric cotton and readymade garments priced up to Rs 1000 will attract 5% GST, while ready-made garments priced over Rs 1000 will be taxed at 12%. According to traders, as goods previously exempted from VAT begin to be taxed, the prices of textile products would rise, adversely affecting sales.Those who run traditional, non-mechanised textile manufacturing units and the small traders would be the worst hit.The textile industry, which employs over 35 million people, is the second largest provider of employment in India after agriculture.

The Rajasthan Cloth Traders Association went on a four-day strike across the state starting from 27 June. Various cloth merchant associations in Gujarat had called for protests from 27 to 29 June, and most cloth shops in the state remained close on July 1, the first day of the implementation of GST. Textile traders in Mumbai held a rally against the GST, while the traders of Delhi’s famous textile and apparel market in ChandniChowkwent on strike for several days consecutively last week. There were major protests in West Bengal as well, where 1.5 lakh traders kept their shops shut on July 1. Thousands of textile shops in Bengaluru downed shutters on Friday.

The representatives of the Erode Handloom Cloth Merchants Association has warned to go an indefinite strike from July 5 if the demand to withdraw five per cent GST on textile goods is not met.