A not-so-sweet Rakhi for shopkeepers as GST cuts a bitter taste

Mumbai: This festive season may be harsh on your sweet tooth and that of shopkeepers, due to the newly rolled out Goods and Services Tax (GST) cutting a bitter taste in the mouth.

GST, which was introduced in July, 2017 to subsume a string of levies, taxes the most important part of the festive diet -- sweets -- at a rate of 5 per cent. Other celebratory items like savouries and chocolates also attract GST rates of 12 per cent and 28 per cent respectively.

With Raksha Bandhan usually marking a jump in sales of sweets, GST has left smaller sweet shop owners in distress. Take Mumbai’s Brij Albela for instance, which is struggling to migrate its system to the new tax regime. “The computerisation process is still on. Till then, we are not charging GST to our customers. We are bearing the tax charged while buying raw materials from our pockets,” rued the owner Trilok Sharma. He added that although sales double during Rakhi, this year, they will be running losses as their systems are not GST-compliant yet.

The Central Board of Excise and Customs on August 4 clarified that all sweets, whether they contain chocolates or not, will attract 5 per cent GST.

However, sweet shop owners, especially the small-scale ones are struggling to keep up with the slew of GST clarifications. This has led to confusion, with some shopkeepers saying there is 28 per cent GST for sweets containing chocolate and others claiming it is 5 per cent. The same applies to sweets containing dry fruits, which standalone attract 18 per cent GST.

Moreover, there is usually a hike in prices of sweets in July, according to Bhartendu Singh of Chandu’s, a famous sweet shop in Mumbai. The hike is in the range of Rs 10 to Rs 30 per kg for bestselling sweets like kaju katli and peda. “This year we have decreased the prices for these sweets in the range of Rs 20-60 per kg owing to GST, so that it does not tax the customer too much,” said the manager.

Although some brands like Damodar Sweets claim that consumer sales have been unaffected by GST, others claim consumers have been hesitant, especially in picking savouries, that earlier attracted a concessional VAT of 5 per cent. "We have had to adjust the prices of namkeen here and there for our regular buyers . They were ready to walk away on seeing the increased prices," said a worker at one of the leading sweet shops in the city.