GST Impact: Business Dips For Chandni Chowk Textile Traders

Originally Published On BW Businessworld |

Tanay Rastogi, the sixth generation in his family in the business of textiles owns multiple stores of high brand wedding clothes in the major markets of the capital, including Chandni Chowk, Karol Bagh, Rohini, Kamla Nagar and South Extension. Prior to the roll-out of the biggest tax reform, Tanay earned about a lakh in a day. But after the implementation of the Goods and Services Tax, the scenario has changed. He along with his salesmen sits idle at his store in Chandni Chowk with no customers around. “My business is dead, my sale is not even one per cent of what it was before GST,” he said.  According to Rastogi while customers may be willing to pay GST in a shoe shop or restaurant, but when it comes to a Sari, they need discount.

Another wholesaler of Chandni Chowk, a third generation in the textiles’ business held sample bills in his hand, confused about the rates levied under GST. He confessed that he had no idea about the tax slabs, bills and the billing process yet.

Owner of another shop in the vicinity who sells readymade wedding clothes in Old Delhi seemed unperturbed due to GST. He explained that the wholesalers are facing some problems post-GST whereas the situation of retailers is comparatively better. “We are in a better state because we can afford a CA who can guide us in this situation. We know that 5 per cent GST is levied on garments below Rs. 1000 and 12 per cent on the ones above that; but it is not the case in terms of the unorganized sector or small artisans,” he said.

Then there is the matter of suppliers. Virtually 80 per cent of textile production is through micro and small sector namely artisans, who do not have the capacity to get in touch with a Chartered Accountant, traders at Chandni Chowk said.

“I being a learned person is not able to completely understand the whole process of GST, then how can we expect the unorganized sector to learn and start implementing it all of a sudden?” he asks. Rastogi said that the biggest drawback is the inter-state linking, due to which a small-scale artisan in one state will not be able to supply to the bigger states. And Rastogi is not alone. Hundreds of textile traders have similar arguments against GST. While Rastogi is now in touch with his CA for registration on the GST Network, several other fellow traders are still hopeful of some exemption.  

But come what may, the populated streets of Chandni Chowk remains desolate. But one fact emerged: None of the retailers in Chandni Chowk had registered with the GST Network.

Market Resolution

Textile traders at Chandni Chowk are demanding a period of at least six months to switch over to GST so that the returns could be filed on a monthly basis. Some are hopeful of a rate revision to a flat 5 per cent in order to avoid confusion.

Unlike Surat in Gujarat, the collective conscious of the textile traders at Chandni Chowk are is against going on strike. The textile industry has suffered an estimated loss of Rs 40,000 crore due to the protest against GST since July 1 in the states of Gujarat, Tamil Nadu, Punjab, Uttar Pradesh, and Andhra Pradesh among others.

(This article was originally published in BW Businessworld, and is written by Shareen Sharma and Shruti Shende.)