Retailers Association of India’s retail CFO summit on Friday shined light on the changing market scenario in India, with various stakeholders deliberating on the changing role of the Chief Financial Officers (CFOs) as well.
In the discussion on ‘navigating the taxation maze,’ panellists brought forth their concerns over Goods and Service Tax (GST) implementation which is speculated to be in effect from April 1, 2017.
The issues brought up by the panellists pointed to grass root level difficulties which may not have come into focus with the draft rules and laws of GST being widely spoken about.
“We were conducting an internal training on the buyers and merchandising team and there were violent reactions on why we have to input the HSN code. They didn’t understand the use of this lengthy process,” Naveen Duggal, CFO Foodworld Supermarkets said.
He explained that government has laid down the laws for filing GST returns in that the retailers will have to capture three things, namely; GST IN number, Invoice number and the HSN code which would be essential for claiming the input tax credit.
While capturing of the HSN code and GST IN numbers could be fairly doable with the codes being set up in the retailers’ master data or the vendor’s data panels; however capturing the invoice number would be cumbersome.
“…the invoice number which sometimes runs up to 15 digits and may be alphanumeric and sometimes captured at two different levels of management would be challenging to note down accurately,” he added.
Others on the panel like Bibek Agrawala, CFO Lifestyle Business, Raymond, Sanjay Chakravarti, CFO Shoppers Stop and Dinesh Maheshwari, CFO Future Retail Ltd elaborated on how this process might complicate things further for a consumer who simply wants to exchange a product.
Panellists stated that the only reason a consumer holds on to an invoice is for security to return the good to the store. However nowadays the brand name on a pair of jeans could be ‘x’ but the invoice would come into the company under ‘y.’
In addition to the GST rules and keeping in mind that all retailers are maintaining different PRPs; maintaining one HSN code end to end would be cumbersome to the retailer, they said.
The CFO concerns also surfaced on GST impact on packaged or processed food items.
“Coming to food grains there is one issue that food retailers would be worried about in particular. Lets say for example if ‘loose food grains’ were nil rated in the GST ambit then what will happen to the processed food grains?” Naveen said.
He stated that food retailers bare the cost of cleaning and packaging of the product which could be useful for hygienic consumption but might take a hit if the other food items such as rice, wheat, salt, fresh vegetables and fruits, milk and milk products would become cheaper in wholesale on exemption from tax by States.
09:51 AM IST