GST: Retailers Association of India demand tax free packaged foodgrains, simpler invoice formats

Key Highlights

• RAI has requested packaged foodgrains to come under 0% tax bracket under GST.
• The industry body has also requested revision in delivery charge rates under GST.
• The firm has requested for simplified business to consumer (B2C) invoicing formats.

With two-days to go before India undergoes its biggest tax overhaul, the Retailers Association of India (RAI) have a couple requests from the government. The Goods and Service Tax (GST) will go live on the midnight of July 1.

The retailer’s industry body on Wednesday wrote letters to the government after receiving representation from its members who are asking for the tax on packaged foodgrain to be lifted and for modifications in the preparation of GST invoice rules in B2C retail trade.

Also Read: Retail CFOs feel GST may complicate input tax credit return filing

The first letter written by Kumar Rajagopalan, CEO of RAI, who wrote a letter to Union Finance Minister, Arun Jaitley on June 15 requesting to treat both unpacked and packed foodgrains products the same and made tax free.

“We request you to treat both unpacked and packed foodgrains and cereals on par and specify both as tax free,” the letter by Rajagopalan read.

Making his plea for the retailers in the country heard, Rajagopalan said, “This move to tax packaged commodities will take Indian market and the consumer movement several decades backwards and will mark the beginning of the movement from packaged commodities to loose unpacked commodities and put consumers at a great risk.”

While deciding the rates on different commodities the GST Council last month kept unpacked foodgrains outside of the GST ambit at 0% tax while packaged foodgrains will be taxed at 5%.

“As per our understanding, the Honorable Government has made items such as cereals and foodgrain GST-free and impose a 5 per cent levy on branded foodgrain and cereals. This seems to imply that items that are packaged are to be taxed while those that are not packaged would not be taxed. The perception seems to be that packed items are not good for consumers and companies selling the packed items are making more money,” Rajagopalan read.

A second letter to the Commissioner in the Department of Central Excise, Yogendra Garg was written by Gautam Jain, Director – Advocacy, RAI who requested for simplification of invoice rules required for B2C retail trade under GST.

“As per GST invoice rules all dealers are required to issue invoice as per format specified. The format of invoice contains details that may not be necessary in B 2 C trade as customers are retail customers and would not be claiming input credit of GST,” Jain said.

The demands of simplifying invoice preparation under GST compliant formats were listed in the letter as follows:

1. Capturing of GST rates for each article and providing tax details. These are not relevant for end customers, as they are concerned with net sale price.

2. HSN Codes are recorded by the retailers in backend. Customers don’t need the HSN Codes. Retailers will provide HSN Code summary with their returns.

3. GST requires invoice to be signed either digitally or physically by authorized person. Retail generates many cash memos and it will be practically difficult to sign each invoice by authorized signatory. Further, to sign all invoice digitally with DSC will result in keeping DSC USB with each POS machine.

4. Articles falling under tax rate of 0% are classified as exempt in the GST law. Requirement for tax invoices is made to generate separate tax invoice for exempt goods sold. Hence, if someone buys 0% tax goods like loose grocery, a separate invoice is required to be issued. This will add one additional bill for single sale.

5. Current GST law requires issuance of 3 copies of invoices, Original, For Transporter and For Seller. This has no relevance for retail sales invoices.

“Invoice compliances will increase the size of the invoice and will have information which might not relevant for customer. All point of sales systems, printers would need to be upgraded, which would be significant investment,” Jain added.

An 18 member National Council of RAI comprised of major brands in the Indian retail industry was cited in both letters.

RAI National Council comprised of Atul Chand, ITC –LRBD; Avjit Mitra, Infiniti Retail (Croma); B A Kodandarama Setty, Vivek Ltd; BS Nagesh, Shoppers Stop; Bhaskar Bhat, Titan Industries Ltd; Govind Shrikhande, Shoppers Stop; J Suresh, Arvind Brands; Jamshed Daboo, Trent Hypermarket; Kabir Lumba, Lifestyle International; Kishore Biyani, Future Group; Krish Iyer Walmar India; Noel Tata, Trent; Pranab Barua, Aditya Birla retail; Rafique Malik, Metro Shoes; Rahul Mehta, CMAI, Rakesh Biyani, Future Group; Shashwat Goenka, Spencer’s Retail and Vinay Nadkarni, Globus.

RAI has also requested for revision of delivery charges by retailers as charing of 'correct GST rates' for deliveries of multiple goods with different GST rates would be a task for the retailers.

“It would become difficult for retailers to charge the correct GST rate for such delivery charges. We recommend that delivery charges upto Rs 300/- for retail sales delivery to customers address should be subject to a fixed rate of 18% GST,” Jain said.