BHUBANESWAR: The dawn of the GST regime caused confusion among traders and consumers alike in Bhubaneswar. Showrooms which had been jam packed on Friday to take advantage of pre-GST discount offers, wore a deserted look on the morrow as most retailers slashed discounts. Consumers were skeptical, suspecting they may be lured into paying more than they have to.
While sales of electronics goods, cell phones, branded wrist watches, gold, diamond and silver ornaments, two-wheelers and four-wheelers and branded furniture saw a downward trend, business was normal, however, in stores dealing with daily consumables.
As wholesalers of goods like refrigerators, air conditioners, TVs, microwave ovens and mixers are yet to figure out the new taxation structure, they preferred not to sell for at least a couple of days till things get clearer.
Traders here are of an opinion that the new regime will benefit customers, who used to be charged 31 per cent tax, including 12.5 per cent central excise, 2 per cent service tax, 2 per cent entry tax and 14.5 per cent VAT, on high-end electronic goods.
“Since consumers will now pay 28 per cent tax for some of these goods, we may lose 3 per cent on products which are in our stock. We do not know what will be the cost of new supplies. The price for end users will depend on the price manufacturing companies would offer us,” said Bibhudutta Das, sales manager of an electronic goods outlet.
Stores which have old stocks were seen offering consumers discounts though there was a drop of 5-5 per cent in the quantum from Friday. Of the six big retail counters, New Indian Express surveyed, only four admitted to selling items at 18 per cent GST.
However, there was absolutely no immediate impact on locally made furniture, which is now charged at 28 per cent.
“We are in a state of confusion. Earlier we were not charging any tax on the locally-made furniture. Now we have to charge 28 per cent. We fear a drop in sales and a loss of profit margin as people may opt for branded items,” said AK Parida, proprietor of Anand Furniture.
The price of plastic products, rubber tyres, leather bags and kitchen appliances would cost more as customers have to pay 28 per cent instead of 18.5 per cent and 6 per cent.
Lower middle and middle class people will benefit from the new tax regime as most of the bare essentials have been made tax-free. While foodgrain, which were charged 5 per cent earlier, are now tax-free, the tax on edible oils has come down from 6 per cent to 5 per cent. Ornaments would now cost more as people will be charged 2 per cent extra.
“Earlier though we were paying 3 per cent tax, including 1 per cent each of VAT, entry tax and central excise, customers were being charged for only 1 per cent on the product price. Now they will pay three per cent,” said Prakash Meheta of Vinayaklal Bavchand and Sons at Bapuji Nagar.
Drug traders are the worst sufferers as most of them have not yet installed GST billing software and many of them are continuing with the old billing structure. According to chemists and druggists, majority of drugs come under the slab of 12 per cent, which was 5 per cent earlier.
The president of the Utkal Chemists and Druggists Association P Satyanarayan said nearly 80 per cent of the retailers who have a turnover of Rs 20 lakh to Rs 75 lakh per annum have already installed GST software and started compliance. “We have opened help desks in all districts to provide assistance to retailers. The government has given two months time to complete the process and we hope everything will be streamlined soon,” he added.