Gujarat elections: Saurashtra traders miffed after GST nixes ‘kutcha’ transactions
Rajkot/Morbi/Amreli: If there is one issue which has caused considerable disquiet among traders in poll-bound Gujarat it is the implementation of the goods and services tax (GST)—what locals claim is the pain of switching business transactions from kutcha (informal) to pucca (formal).
Yes, they say, demonetisation of high-value currencies last November was disruptive, but it was temporary. In contrast, the changes associated with GST are structural.
In districts like Rajkot, Amreli and Morbi, traders, particularly those in medium and small enterprises, are agitated over the lack of clarity about uploading invoices into the GST network and the frequent changes in tax slabs.
For instance, Vijaybhai Kavathia who owns a grocery shop at Babra in Lathi constituency of Amreli district feels that while demonetisation affected his business temporarily, it is the transition to digital economy and GST filing that has made things more difficult—something that is making him rethink his support for the ruling Bharatiya Janata Party (BJP). “Many educated people like me are struggling with our GST filings because the government has taken no steps to create awareness about it,” he says.
The introduction of GST means retailers, even small neighbourhood shops, have to provide itemized bills for all purchases, hurting traders like Kavathia.
Uploading invoices in the GST network is critical for claiming credit for taxes paid by suppliers in every step of the supply chain.
Effectively with the implementation of GST, the informal system of kutcha or hand-written bills to avoid paying taxes is history.
“Nearly 35% of Gujarat’s population is in the trading class if not in the trading castes. It is a support-base that cuts across caste and hence gains more significance. The traditional structures of an informal accounting system has suited traders in the state till now but suddenly the entire structure of filing has changed. In that sense the anger against the BJP government and its economic policies, particularly during elections, was expected,” said Vidyut Joshi, former vice-chancellor of Bhavnagar University.
The issue of demonetisation and GST has resonated in the election campaign too. While the Congress ran an entire campaign attacking NDA government over the rollout of GST, BJP leaders have been pitching the government’s economic policies as those helping economically weaker sections by bringing in more transparency in the system.
Many traders, however, believe that irrespective of GST’s fallout, they would continue to vote for BJP because it is a party that supports traders.
“GST filing is a new system and it has impacted small traders, particularly manufacturers. But in my opinion, some bitter pill has to be taken for long term gains and this could bring in more transparency in a set up like ours which is so informal,” said Kunal Bhai Dhanja, a ceramic shop owner from Morbi town.
Morbi district, according to estimates, accounts for nearly 90% of India’s ceramic production.
“As a political grouping, traders in Gujarat or mostly otherwise too, are not usually anti-government and here too the sentiment is neither against GST nor against Prime Minister Narendra Modi. The resentment is over the manner in which GST is being implemented and the expectation that some of their demands like lesser frequency of filing tax returns and more stakeholder consultations are met,” Joshi, who is based in Ahmedabad, added.
To be sure some of these issues have been addressed by the GST Council, the apex body, in its last two meetings. It has promised to ease the burden of transitioning to the formal economy further.
In the final analysis it is clear that there is considerable unease among the traders over the move to bring them into the formal economy.
But whether it is sufficient for them to revolt against the BJP is still unclear.
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