Retail SMEs seek two-month extension window for GST compliance

Retail businesses Max Standard Retail Pvt Ltd, SRS Group, Vmart Retail Ltd, etc, led by Ginesys, have written a letter to the Union Minister of Finance and Chairman of the GST Council, Arun Jaitley, seeking extra time on account of complexities in business processes to comply with the GST legislation.

The consensus to approach the Finance Minister to communicate the immediate concerns of the retailers emerged from the recently held retailers' summit, in the capital, titled "Future Storming with Ginesys for retailers."

The letter highlighted key challenges anticipated by the retail industry. The retailers requested for a two-month extension for the sector, along with the clarification for the industry to absorb the change. The extension window is important for the players of sector as order placement for the next quarter has already commenced and retailers are not in a position to accurately forecast the impact on MRP.

Letter underlined the pressing issues, which included,

1. In terms of section 31 of the CGST Bill, 2017 read with Invoice Rules, Tax invoice is to be issued in the case of supply of taxable goods, whereas Bill of Supply is to be issued in the case of exempted goods.

Issuing separate invoices/cash memos for taxable and exempted goods would be difficult for retailers as currently they just issue a single invoice. How will they segregate goods to issue two separate documents?

2. Sundry advances are received when Gift Card, Cash Vouchers, Membership cards etc., are issued to the customers. But at the time of receipt, it isn't clear against which Goods/HSN Number such advances have been received?

3. Sale of goods and sales return happen simultaneously in the same invoice at the retail Stores. How to issues invoices in such a scenario under GST?

4. If the GST rate is higher than the VAT rate, how to deal with the stocks lying at retail stores? Here, MRP is constant (since already printed) and an increase in the GST rate would reduce profits. How to handle such a situation?

5. As per the requirement, CGST & SGST are required to be shown separately on the invoice, thereby increasing complexity for a retailer.

Is it possible, to apply a single rate on the invoice so as to make things simple? However, at the back office, accounting for taxes would be done separately to meet Govt. Norms.

6. How to handle situations wherein promotional items, buy-one-get-one etc., are sold at zero cost? As per the law, tax is required to be charged on such items whereas the end-consumer would never like to pay these taxes.

This would impact the retail business in a big way.

7. Input Credit reversals, on account of sale of dutiable & exempted goods, is very difficult to calculate, as the ratio of sale of exempted items varies on a day-to-day basis. How to manage such transactions?

Prashant Lohia, CEO, Ginesys, said, "It is imperative that the retail sector is ready with adequate capacity and knowledge to be fully compliant with GST provisions. For the industry size of over $600 billion in India, contributing to 10 percent of GDP and 8 percent of employment, it is important that the industry gets minimum time for integration and assimilation of GST provisions."

Some of the critical GST uncertainties and issues in retail sector will be addressed through technology platform. Responding to the need of the time, Ashish Mittal, Co-Founder, EasemyGST, said, "EasemyGST, India's most comprehensive GST compliance and ERP integrated solution, is working closely with Ginesys and its customers by creating a flexible tax law engine and integrating with existing ERP solutions like Ginesys, SAP , Oracle applications as per new GST provisions."

Added, Lalit Agarwal, Chairman and Managing Director, V-Mart Retail Ltd, "The biggest factor in retail chain is the rate of tax in GST. We don't know how the taxes will be determined. The main challenge is to align with the manufacturers and service providers of the unorganized sector in the entire retail chain, for majority of them practice manual billing. We need to track them, educate them and bring them on technological platform to avail the GST credits."

During the summit, that took place on Saturday, Ginesys gave the participants a live demonstration of the recently launched EasemyGST initiative, a comprehensive GST compliance and ERP integrated solution, through which it was established that industry is not fully prepared to take the GST regulations forward. This was done with an industry readiness index test.