India is a country where consumer is treated as a king. Roughly 14 million retail points serve the end consumer in both rural as well as urban markets. Undoubtedly, it’s an enormous task for manufacturers, particularly for those of consumer durables and FMCG to cater to the increasing demand. Further, as 92% of the retail sector is unorganized which makes it all the more difficult or one can say practically impossible for a manufacturer to cater to the end consumer, just relying on distributing channels. Then what’s the solution for this, inevitably, the Wholesale Market.
With GST about to be launched in few days, it will boost the Indian economy as GDP is estimated to grow 2 to 3%, with a great spur in consumption and export is expected. Further, the new tax system will also lead to a rise in the amount of tax revenue as the number of tax payers will rise and evasion will be reduced. In addition GST will certainly eliminate all compliance issues. Let’s discuss how GST will transform the wholesale market in India and what impact it will have on it.
The current tax regime doesn’t cover the wholesale business, however, with the GST regime; this will not be the case as it will bring a large section of the wholesale business under the tax system. Today, most of the transactions in the sector are done in black, i.e. the buyer doesn’t get any invoice and ultimately no entry is posted in the books for such sales. These taxpayers generally influence the tax liability dodged and to gain in volume, weaken the entire market. Also, their margin of profit remains as low as 1%. After the GST gets launched, retailers and wholesalers won’t be able to escape paying taxes as here every invoice related to taxable supply must be uploaded on the common portal of GSTN and must be accepted by the buyer. Tax evasion would have been possible if the entire supply chain would have been outside the tax network and won’t file a return under the law of GST, however, with GST coming into effect shortly, it’s quite unlikely.
The transformation under the Tally GST for businesses working with Tally ERP 9 will happen from manufacture, sale or provision of services to supply of services and goods. This will lead into branch transfers being constituted as supply and will come under the tax bracket, but entitled for full credit. The wholesalers along with the distributors will be indirectly benefitted as the entry tax and octroy will be removed. Further, under the GST regime, payments, refunds and tax returns would enjoy common formats. Traders from different geographical locations across the country will find it quite easy to abide by this new unified tax structure.
To conclude, GST will certainly transform the wholesale market in India. While there is a possibility that it could hit them initially, the benefits of this tax system are immense.
With GST about to be launched in few days, it will boost the Indian economy as GDP is estimated to grow 2 to 3%, with a great spur in consumption and export is expected. Further, the new tax system will also lead to a rise in the amount of tax revenue as the number of tax payers will rise and evasion will be reduced. In addition GST will certainly eliminate all compliance issues. Let’s discuss how GST will transform the wholesale market in India and what impact it will have on it.
GST Impact on Indian Wholesale Market
The current tax regime doesn’t cover the wholesale business, however, with the GST regime; this will not be the case as it will bring a large section of the wholesale business under the tax system. Today, most of the transactions in the sector are done in black, i.e. the buyer doesn’t get any invoice and ultimately no entry is posted in the books for such sales. These taxpayers generally influence the tax liability dodged and to gain in volume, weaken the entire market. Also, their margin of profit remains as low as 1%. After the GST gets launched, retailers and wholesalers won’t be able to escape paying taxes as here every invoice related to taxable supply must be uploaded on the common portal of GSTN and must be accepted by the buyer. Tax evasion would have been possible if the entire supply chain would have been outside the tax network and won’t file a return under the law of GST, however, with GST coming into effect shortly, it’s quite unlikely.
Wholesale Sector will benefit from GST
The transformation under the Tally GST for businesses working with Tally ERP 9 will happen from manufacture, sale or provision of services to supply of services and goods. This will lead into branch transfers being constituted as supply and will come under the tax bracket, but entitled for full credit. The wholesalers along with the distributors will be indirectly benefitted as the entry tax and octroy will be removed. Further, under the GST regime, payments, refunds and tax returns would enjoy common formats. Traders from different geographical locations across the country will find it quite easy to abide by this new unified tax structure.
To conclude, GST will certainly transform the wholesale market in India. While there is a possibility that it could hit them initially, the benefits of this tax system are immense.
