Do you own a kirana shop? Are you an ordinary man who buys grocery regularly? If yes, chances are you have heard about GST and want to know the changes happening in your account book after the implementation of the new tax regime.
GST applies to the goods and services sold for domestic consumption. You, as a consumer, will pay the tax to the government indirectly when you purchase groceries and essentials from kirana shop owners. Therefore, you will see a wide range of price change on goods due to the taxes imposed by the GST.
To know how the GST will affect you as a kirana shop owner or ordinary buyer, go through the process before and after GST implementation.
Kirana Shops Under Pre-GST Regime
The dealers used to visit the kirana shops to take orders, and the suppliers delivered the order to the store the next day. Kirana shop owners paid VAT on purchased goods from the dealers and distributors.
During the pre-GST regime, the tax was applied at every stage of production of goods, and hence the kirana owners could Skip VAT Registration. This was possible mainly because as a convenience store owner, you were making a sale to an ordinary man who never demanded an invoice.
The Current State Of Kirana Shops
GST has subsumed almost all indirect tax in the country, including VAT. From now on, kirana shopkeepers will have to pay only one tax, i.e. GST.
The GST is a destination tax; hence it will be procured from you at the consumption end of the goods and not at every stage of production. Hence, invading tax for kirana shops will not be possible anymore.
Who Is Liable For GST Registration?
- If you own a kirana shop and have an annual turnover under Rs. 20 lakh, then you are exempted from GST.
- In case your turnover from the shop exceeds Rs. 20 lakh, you will have to registered for GST.
You can register your business on the GST Portal and begin filing the gstr (the annual return form).
How Will The Ordinary Man Be Affected By GST?
GST will affect not only businesses who have to register under GST but also the ordinary man. A large number of the Indian population comprises of middle and low-income groups. Grocery bills consume a lot of space on the monthly accounts of these families.
Looking at the pattern of price hikes and drops altogether, customers might be anxious about the effect of GST on groceries and essential products. The ordinary man will see a hike in prices in case the goods fall under a higher tax slab of GST. But some products will be completely exempt from taxation.
To understand the tax rate on different goods, let us see the tax rate slab of GST.
Tax Slabs Under GST
GST has distributed goods and services in five different tax slabs as follows:
- 0% Tax: This exemption applies to essential goods like fresh fruits and vegetables, milk, buttermilk, curd, natural honey, flour, besan, bread, salt, jaggery, cereal grains, fresh meat, fish, chicken and eggs, etc.
- 5% Tax: Packaged food items, frozen vegetables, coffee, tea, spices, nuts, raisins, ice, agarbatti, etc.
- 12% Tax: Frozen meat products, butter, cheese, ghee, dry fruits in packaged form, animal fat, sausages, fruit juices, namkeen, ketchup and sauces, spoons, forks, tooth powder, etc.
- 18% Tax: Pasta, biscuits, cornflakes, pastries and cakes, preserved vegetables, jams, soups, ice cream, mayonnaise, mixed condiments and seasonings, mineral water, etc.
- 28% Tax: Chewing gum, bidi, molasses, chocolate, waffles, pan masala, aerated water, along with personal care items like deodorants, shaving creams, aftershave, hair shampoo, dye, sunscreen, etc.
Highly essential goods will attract minimum tax rates to keep the prices low for you. But the luxury goods will attract more tax, which will lead to increased prices of the goods.
As a kirana shop owner, you will have to be extra particular with bills now. Off-putting some account details will not be okay and can have serious implications on your business.
Remember to register under GST to avoid penalty and understand all the pertinent information on the procedure. To sign the required documents, use a digital signature tool, such as emsigner for gst.
A range of goods will be available at the same prices as before, but few non-essential and luxury goods will attract more rate of tax, costing more on your pockets as a consumer.