Retailers will have to re-schedule their entire GST program considering the hike in goods and service tax on textiles and footwear.
Bengaluru: The cost of clothes and footwear will see a rise in its price as the Goods and Service Tax is going to hike up by 7 percent from January 1, 2022. Currently, the GST levied on apparel and footwear is 5 percent which will change to 12 percent.
Already, the citizens of the country are facing inflation on each and every commodity. Adding to that, this rise in GST is all set to create holes in the wallets of shopping enthusiasts.
Neeta Joshi, an ardent user of handloom woven clothes expressed how her shopping will affect after the rise in the price of the textile woven in handlooms.
Neeta said that “Every customer takes one or two pieces at a time. Now they are going to re-think first for one or not to buy at all because it is going to be expensive. And marriage season is ongoing, so it is very tough for those who have a wedding in the house, they are going to be very affected.” With that, she also mentioned that the workers in the handloom industry who were already affected by the pandemic will be hit again as the people will reduce their shopping subsequently.
Retailers believe that they would be the first ones who will face the brunt of the hike. The whole sellers and manufacturers will have a late impact as they would come last in the cycle. Zain, an associate owner of a clothing shop at Church Street said that they will have to change their complete GST program and it would be very difficult for them.
“From 299 to 300 is a psychological thing, so obviously the person will tend to back out. For us as a layman, we go to a store we see a sudden rise in pricing with quality being the same, with the print being the same and the price is going up unnecessarily is going to be an impact for everyone,” said Zain.
Experts believe that the rise in GST is in a way good if seen from the business point of view. The increase in the GST will result in the release of the blocked working capital with the government. This working capital trapped with the government stays untouched and remains unproductive.
Shail Shah, a chartered accountant in a firm said that “To any business, I would advise passing on the benefits of the working capital cost reduction to the customers rather than keeping it and increasing the margins it is better to back the customer loyalty by reducing the prices so that for the longer purpose the customers stay with the brand.”
But this will happen whenever it has to happen, till then, the customers will have to bear the loss as the hike in GST is more than double and is advised by the experts not to be a spendthrift.