It’s chaos at retail outlets as the transition begins

Two days in, retail stores in Mumbai were grappling with the changes brought on by the new Goods and Services Tax regime, including incorrect tax identification numbers, wrong tax rates programmed into the updated billing software and, in some cases, no software updates at all.

Ketan Upadhyay, the manager of a snazzy restaurant in Bandra, said his IT consultants — who had updated his tax software on Friday night — had entered the wrong VAT rates on alcohol sales. (GST does not cover alcohol sales; only State value added taxes apply.)

“My consultant, he was probably hassled having to make these changes for all his clients’ systems so quickly, he keyed in the alcohol VAT rate at 4.1 per cent instead of 5 per cent,” Upadhyay said.

“I can’t change the tax rate in the bills manually — that’s not allowed — and I have to wait till he’s free to come fix this in our system. So we’ve been charging customers lower taxes and I’ll have to cover the rest myself. Right now, I don’t know how much money I’m losing.” Are customers surprised by the rise in prices? “Not really,” said Anil Bhagnani, who runs the popular Elco fast food restaurant. “GST has been all over the news in the last few weeks and people are know that eating out is going to be more expensive.

“But the rates are unfair to my customers who eat outside and don’t come in to the restaurant.” Elco has a seating area outside if you want to quick bite or a takeaway.

“Now customers here have to pay the same 18 per cent GST rate as those who sit inside where the air-conditioning is,” Bhagnani said. “Air conditioning is not a luxury in India any more; eight out of 10 restaurants in the city have it, especially in this heat. So that’s unfair to customers that they have to pay a higher rate.”

Pharmacies have had the hardest time recalibrating prices. “I have more than 4,000 different kinds of products in the store; I’m not even half way through making the updates,” the proprietor of a pharmacy in a neighbouring suburb said on Saturday afternoon.

“We’re still updating our software. We couldn’t finish it last night. And then I have to figure out how the tax credits work and that will take a few weeks at least.”

For the large part, shop owners expect these early technical glitches to be ironed out through the week. Back at the Bandra restaurant, it happens sooner than I hoped for. After a boozy dinner with friends, our bill arrives and we’re expecting to get away with a cheaper tax rate because of their flawed billing. But the VAT on separate alcohol bill is 5 per cent, as it should be.

“Oh, my IT guy just came in a while earlier to correct the VAT rate on our billing system,” Upadhyay explains. “So now we’re good and I’m going to stop losing money.”

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