CHENNAI: Kirana shop owners are in a fix. They fear the implementation of Goods and Services Tax (GST) will make them vulnerable to competition from online stores and supermarket chains.
Business as a whole has already been hit in kirana or petty shops with the opening up of organised retail.
Organised retail shops are able to sell the products at cheaper rates and many of them dole out offers, says Rajesh, a kirana shop owner. He says the implementation of uniform tax across the nation could push them out of business.
Most kirana shops, which are usually run by school dropouts, do not have a Tax Identification Number (TIN) and have become vulnerable as they cannot migrate to GST without TIN.
Even the awareness about GST among traders is low. Many shops are not yet prepared for GST.
Interestingly, under GST, businesses should avoid any transaction with unregistered companies as everything gets documented and could result in reverse taxation.
This could mean petty shops, which are not registered, may run out of business. Most traders, fearing for their livelihood, have threatened to protest the implementation of GST.
Tamil Nadu Vanigar Sangangalin Peravai leader Vellaiyan said a black flag will be hoisted at Koyambedu Wholesale Market around midnight to register their protest against the new tax regime.
Interestingly, grocery shops have been part of the Tamil Nadu market since the 18th century. Every street or lane in Tamil Nadu has at least two or three grocery shops and every one of them is successful as they have their own market to make a profit.
Interestingly, many owners of supermarkets are cautious about the implementation of GST.
Rajesh Chaudhry of Vinayaka Supermarket near Iyappa Nagar told Express that although he has done pre-verification for GST, he is still confused about the pricing of commodities.
“We have stopped buying goods. We don’t know which prices will come down and which will go up. Only in the next three days, I will do a survey of the market before placing orders,” Chaudhry said.
Interestingly, business activities came to a standstill on Friday itself as traders kept their fingers crossed to embrace the new tax regime.
Another trader told this newspaper that they did not know what to do and what not to as there is no awareness about the new tax regime.
“Most goods will have additional taxes and retail shop owners have to pay the difference from July 1. We don’t know whether we can get refunds from distributors,” said Chaudhry.
“Some of the products, whose prices will rise due to GST following increase in taxation from 13.5% to 28% will now be borne by the trader,” he said.
“We are totally confused about the new tax regime,” he added. The current estimated value of the Indian retail sector is about $500 billion and is pegged to reach $1.3 trillion by 2020.
The penetration level of modern retail (currently 5%) will increase six-fold from $27 billion to $220 billion in 2020. But then, no one has a clear figure about the unorganised retail shops like that of Kumar’s, which cater to a majority of the country’s population.