No one has quit business in Surat because of GST: Hasmukh Adhia

Finance Secretary Hasmukh Adhia says Surat’s textile traders were not willing to come into the goods and services tax net mainly because of the fear that the correct turnover would have to be reported, which might force them to pay more income tax as well. In an email interview to Shantanu Nandan Sharma, Adhia makes it clear that allowing the fabric industry to refund duty inversion — one of the key demands of the city’s textile traders — is unlikely to materialise soon. The other issues, he claims, have been amicably settled. Edited excerpts:

On last year’s anti-GST protests
It (protest in Surat) did not surprise me. The reason is very simple. The major item of production in Surat is polyester fabric, and before the GST came, there was absolutely no excise duty or VAT on fabric. Since most fabric manufacturers are coming in the tax net for the first time, it was expected that there would be some opposition to that. Also, in spite of the fact that 5% GST levied on fabric was fully to be paid out of input tax credit available on yarn, the traders were not willing to come in the tax net, mainly because of the fear of their turnover being reported correctly, which may have consequence on direct tax side.


On textile traders quitting the business after GST
To the best of my knowledge, I do not think anyone has wound up their business because of GST. There could be other reasons, such as cyclical ups and downs of the business.

Trade representatives from Surat have in the past one year met me many times, separately or in the presence of the local Members of Parliament. All their grievances have been resolved satisfactorily. The only unresolved demand for the fabric industry is to allow them refund of duty inversion, which is a difficult proposition in view of the large outgo of refund being expected.

On traders’ continued discomfort with GST
According to our reports, the implementation of GST has stabilised very well in the entire country now, including in Surat. So many of their issues have been sorted out in both the textile and diamond industry and, I feel, Surat traders are quite comfortable now.