Kerala: Traders worried over input tax credit

THIRUVANANTHPAURAM: Despite the propaganda unleashed by finance minister Dr Thomas Isaac, traders in the state have still not comprehended how they could secure input tax credit for the unsold stocks with them. However, they seem to have perfectly understood what Dr Isaac had left unsaid. They have taken his assurance that tax officials would not bother them till September 30 as a signal to briskly sell their existing stock at the old MRP before the grace period ends. Given that the tax on more than 95 percent of goods had gone down post-GST, traders will stand to gain by selling existing stocks at the old MRP. Trade bodies have unofficially send feelers to their members to step up sales of old stock at old higher rates.

Isaac had said that traders would get back the entire amount paid as VAT as credit from the State GST. If they have bills, they will also get full input tax credit for the central excise paid while purchasing the commodity. Even if there are no bills, Isaac has promised to pay back 40 percent of the central excise paid if the tax on the commodity has gone up to 5 percent or 12 percent, and 60 percent if the tax had gone up by 18 percent or more.

“However, there is no certainty whether we would get input tax credit for our existing stock,” said Alikutty Haji, the general secretary of Kerala Vyapari Vyavasaya Ekopana Samithi. “Even if we get reimbursement for the VAT we had paid, what about the central excise or service tax we had paid to the Centre? How can the state pay us what the Centre owes us,” he asked. Then, there is also the confusion sowed by union food and consumer affairs minister Ram Vilas Paswan.

The union minister had said that new MRP stickers cold be pasted on product packages provided the changes were advertised in advance in two dailies. “This was a clear message that the centre had no plans to provide any input tax credit for existing stock whose prices had gone down post-GST,” said Jaimon Joseph of Alfa Gold in Perinthalmanna. However, large stockists might find it difficult to dispose of their stock before September 10. “In our case, it looks we will have to suffer some losses as we will not be allowed to sell our inventory goods at old MRP after September,” said Hamsa Koya, a hardware merchant in Kozhikode.