If there's one word that sums up the response of India's businesses and consumers to the country's new national sales tax, it's 'confused.'
Will premium economy seats be taxed as economy class or business? Is a chocolate-coated biscuit a biscuit or chocolate? These are the questions now troubling businesses large and small across India's $2.3 trillion economy.
The roll out of the goods and services tax came less than a year after the government's shock withdrawal of 86 percent of the nation's currency, which helped knock India's GDP growth down to 6.1 percent from 7.1 percent in the January-March quarter and eliminated as many as 1.5 million jobs.
After more than a decade-long journey, the biggest tax reform since independence in 1947 became a reality on July 1, combining more than a dozen levies into one tax.
Many Indians responded by sharing their first GST bill on WhatsApp, Facebook and Twitter. The novelty soon wore off. Small traders and businesses struggled to issue invoices and battled with the new software, with some forced to provide handwritten invoices to customers.
In an attempt to cut through the confusion, the government held tax 'master classes' and published advertisements in the newspapers showing the revised prices alongside the old prices of goods.
About two dozen states of 29 have abolished check points at their borders, where tax compliance and goods inspections used to delay deliveries - often by days.
Yet while travel time has been reduced as tax inspectors disappear from the roads, transport department officials are still actively checking vehicles. Transportation of illegal goods has reduced because those businesses cannot provide GST-compliant bills.
"People are finding it tough to understand the GST," said Pradeep Singal, national president of the All India Transporters Welfare Association. "This has meant that companies had ordered in advance and are still using old stocks," pushing down transport business by 30 percent."
Traders, particularly in small towns, are struggling with their lack of knowledge of the new tax regime -- compliance obligations, raising invoices and accessing input credits, said Praveen Khandelwal, secretary general of the Confederation of All India Traders.
Small merchants and e-commerce companies are tripping over a dizzying array of documents and the complicated classification system that determines what percentage of tax will be charged. Thousands of small merchants have stopped selling on e-commerce sites because they can't meet these new requirements.
Add to that, there's multiple rates for various products. Footwear below 500 rupees ($7.70 U.S.) attracts one rate and above that price attracts a higher tax rate, leaving suppliers confused over which rate they should apply.
"Any new law would have interpretation issues," said Pratik Jain, national leader indirect tax at PWC India. "Like what rates would be charged for an economy-plus ticket issued by some airlines? It should be charged at economy rates."
Whether the GST network can seamlessly match billions of credits, facilitate tax collections, provide refunds and check evasions will be tested when most of the traders and companies file returns in September.
Businesses have not yet uploaded their sales and purchases invoices generated post-July 1 on the network, as that part of the system has not been functioning and companies have been allowed to file late returns for first two months.
"The biggest problem being faced right now is that the GSTN has still not formalized their format for firms to pay taxes," said Sachin Menon, national head of indirect tax at KPMG India. "We have some multiple revisions in format in the last couple of weeks alone. Companies providing GST software are having a tough time."
Small business owners, as well as traders and shopkeepers who have never turned on a computer, are scrambling to acquire the skills to navigate these technological challenges.
Prices of some products are varying according to location as traders have not fully implemented the new structure and profiteers have stepped in, hindering the creation of a single Indian market.
For instance, Maruti Suzuki India's Baleno Sigma gasoline model cost 635,000 rupees near Navi Mumbai in Maharashtra while the same model is priced at 664,952 in Bengaluru in Karnataka.
"A quick comparison of price of motorcycles and cars across the country reveals a convergence in price post-GST," equity analysts of Jefferies India Private, the unit of the global investment banking firm said in a July 13 note.
Movie tickets in Tamil Nadu and Maharashtra became costlier as the states imposed additional taxes, defeating the purpose of a unified tax. The federal government, however, has set up a panel of officials to monitor any price rise, shortage of commodities and implementation of GST.
Textile traders have been protesting to demand that fabrics be exempted from the tax. The government is reluctant to agree, saying it will break down the input tax credit chain.
The industry won't be able to sustain the rise in costs, given that 60 percent of the trade is in the informal sector, said S. Sunanda, secretary general of the Confederation of Indian Textile Industry, which represents more than 3,000 units.
"Individuals form about 65 percent of units involved in our trade," Sunanda said. "The trade will be hit by cheaper imports from China, Bangladesh and Indonesia."
There's a 5 percent GST on cotton, however the government raised tax rates on man-made fiber to 18 percent from 12 percent.
"While the medium-to-long run benefits of GST cannot be disputed, the short-run impact on growth is expected to be negative as compliance, confusion and inventory effects take a toll," said Abhishek Gupta, India economist at Bloomberg Intelligence. "However, recorded GDP growth is still likely to show an increase as part of the shadow economy shifts to the formal sector."
The Washington Post
Wed Jul 26 2017
![Good, bad and ugly of India's new national sales tax journey Good, bad and ugly of India's new national sales tax journey](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/http://img.astroawani.com/2016-10/51477554711_950x600.jpg)
Textile traders have been protesting to demand that fabrics be exempted from the tax.
![Bekas pemimpin Bangladesh, Hasina didakwa lakukan genosid Bekas pemimpin Bangladesh, Hasina didakwa lakukan genosid](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2016-07/71467442821_SheikhHasina.jpg)
Bekas pemimpin Bangladesh, Hasina didakwa lakukan genosid
Sheikh Hasina didakwa melakukan "genosid dan jenayah terhadap kemanusiaan" semasa beberapa minggu protes ganas yang mengakibatkan ratusan orang terbunuh.
![Fadillah tiba di Peru untuk hadiri mesyuarat menteri-menteri tenaga APEC 2024 Fadillah tiba di Peru untuk hadiri mesyuarat menteri-menteri tenaga APEC 2024](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-08/51723674456_FadillahYusof.jpg)
Fadillah tiba di Peru untuk hadiri mesyuarat menteri-menteri tenaga APEC 2024
Timbalan Perdana Menteri Fadillah akan mengetengahkan pendirian Malaysia dalam melaksanakan usaha peralihan tenaga negara.
![Lawatan PM Anwar ke India dijangka kukuhkan hubungan ekonomi - Ramanan Lawatan PM Anwar ke India dijangka kukuhkan hubungan ekonomi - Ramanan](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-07/61721630406_TBAnwarIbrahim.jpg)
Lawatan PM Anwar ke India dijangka kukuhkan hubungan ekonomi - Ramanan
Perdana Menteri Anwar dijadualkan membuat lawatan rasmi pertama ke India dari 19 hingga 20 Ogos.
![PRK Nenggiri: Generasi muda tagih peluang pekerjaan PRK Nenggiri: Generasi muda tagih peluang pekerjaan](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-08/81723287338_Nenggiri.jpg)
PRK Nenggiri: Generasi muda tagih peluang pekerjaan
Tanpa kehadiran tapak perindustrian, rata-rata penduduk di sini hanya bergantung harap kepada pekerjaan tradisional.
![Dua pelajar cemerlang Malaysia terpilih sertai CSSP di Geneva Dua pelajar cemerlang Malaysia terpilih sertai CSSP di Geneva](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-08/71723670962_ShimZiJunNurulN.jpg)
Dua pelajar cemerlang Malaysia terpilih sertai CSSP di Geneva
Dua pelajar cemerlang Malaysia dipilih menyertai Program Pelajar Musim Panas CERN (CSSP) 2024 di Geneva, Switzerland.
![Hari Kebangsaan: Tidak berkira hias rumah, kereta sejak 24 tahun lepas Hari Kebangsaan: Tidak berkira hias rumah, kereta sejak 24 tahun lepas](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-08/81723628328_TBKandapan.jpg)
Hari Kebangsaan: Tidak berkira hias rumah, kereta sejak 24 tahun lepas
Kandapan juga cukup terkenal dengan keretanya yang turut dihiasi Jalur Gemilang, bendera Johor dan semua negeri serta pelbagai pelekat imej bertemakan kemerdekaan termasuk wajah pemimpin negara.
![Malaysia kekal destinasi utama bagi pelaburan PTTEP - BMI Malaysia kekal destinasi utama bagi pelaburan PTTEP - BMI](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2021-02/81613025046_TBPelantarMinyak.jpg)
Malaysia kekal destinasi utama bagi pelaburan PTTEP - BMI
Malaysia akan kekal sebagai destinasi utama bagi pelaburan syarikat minyak nasional Thailand, PTT Exploration and Production (PTTEP), dalam jangka masa pendek dan panjang.
Jualan penyaman udara naik mendadak di negara Balkan
Menetap di negara sejuk, mereka tidak pernah terfikir memasang penyaman udara di dalam rumah memandangkan musim panas bukanlah setiap hari. Namun, cuaca panas melampau membuatkan mereka bertukar fikiran.
![Malaysia kecam sekeras-kerasnya pencerobohan ekstremis Zionis Israel ke atas Masjid Al-Aqsa Malaysia kecam sekeras-kerasnya pencerobohan ekstremis Zionis Israel ke atas Masjid Al-Aqsa](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-01/61706688348_wismaputra.jpg)
Malaysia kecam sekeras-kerasnya pencerobohan ekstremis Zionis Israel ke atas Masjid Al-Aqsa
Kerajaan Malaysia mengecam sekeras-kerasnya pencerobohan Masjid Al-Aqsa oleh ekstremis Zionis Israel pada 13 Ogos.
![Reda dengan pemergian anak walaupun bukan pengakhiran diharapkan - Ayah Nidza Afham Reda dengan pemergian anak walaupun bukan pengakhiran diharapkan - Ayah Nidza Afham](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-08/61723653359_TBMOKHTAR.jpg)
Reda dengan pemergian anak walaupun bukan pengakhiran diharapkan - Ayah Nidza Afham
Ayah kepada penyanyi dan Youtubers Muhammad Nidza Afham Mokhtar reda dengan pemergian anak lelakinya walaupun itu bukan pengakhiran yang beliau harapkan.
![Q&A: Apakah itu GST? Q&A: Apakah itu GST?](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/http://img.astroawani.com/2013-07/81373530977_295x200.jpg)
Q&A: Apakah itu GST?
Astro AWANI menyediakan satu Q&A untuk memudahkan anda memahami pengumuman kerajaan tentang pelaksanaan GST.