Union Budget 2019: With the new government working on national retail trade policy and talks of reducing the number of licenses required to open and operate retail establishments, retail is finally getting the national attention it deserves. The retail fraternity hopes that the momentum will continue and the forthcoming budget meets expectations under two main themes: boosting consumption and facilitating ease of doing business. They key expectations/asks of retailers from the budget 2019-2020 are:

Goods & Service Tax (GST)

• Declare packed food grains and cereals as tax free to promote accountability, ease of transport and hygiene. Currently, loose food items such as cereals and grains are GST-free and branded food grain and cereals are taxed at 5%.
• Introduce a Tax Refund for Tourists (TRT) scheme like in countries such as Singapore to encourage tourists to spend more in India and boost tourism.
• Increase the threshold for the five percent GST slab for apparel and clothing from Rs. 1000 per piece to Rs. 2,000 per piece to boost volume growth without substantial revenue loss to the Government.
• Allow refund of accumulated input tax credit accrued on account of Input Services, Capital Goods, where input tax is higher (18%) than output GST to avoid inverted duty tax structure and accumulation of tax input. This would assist retail businesses falling under various GST slabs.
• Treat sales return as an inward supply for the original supplier and outward supply for the original buyer when the returns are received from registered customers/ franchisees. Alternatively, permit issuance of a single credit note for multiple tax invoices.
• Examine the validity of Advertisement Tax imposed by state and local authorities. Advertisement ceased to exist from 01.07.2017 as it has been subsumed into GST. A clarification statement directing state and local authorities to not levy the said tax be included in the budget to ease the tax burden of businesses.

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Direct tax 

• Remove the amendment made to section 132A of the Income Tax Act in Budget 2017 that states that “the basis for conducting the raid” will not be shared by the income tax officials. Retaining the amendment would lead to harassment of taxpayers and raids based on whims of officials.
• The Budget 2019 should put more money in the hands of the middle class, which will create demand and increase consumption, positively impacting retail and the economy.
• Corporate tax rate be brought down to 25% unconditionally without any turnover criteria, and to 18% in a phased manner. To prevent revenue loss, such corporates may be given the option to pay 25% of the tax rate without availing any tax incentives (akin to the option currently available under section 115 BA).
• The MAT (Minimum Alternate Tax) rate be brought down to 10% and the levy of MAT be restricted to those incomes that are taxable under regular provisions.

Digital and Modern Retail 

• Promote the use of Point of Sale (PoS) machines—the first step to modernising a retail business—as they help retailers make bills for customers and prevent embezzlement. They encourage an accounted economy. Reimbursement of money for such POS to small retailers can be a good way to encourage adoption.
• Efforts should be made to ensure that all retailers use EDC machines (used for accepting digital payments such as cards) and that the cost of accepting Digital payments is never more than the cost of accepting cash.

Ease of doing business 

Expedite the formulation and implementation of the national policy for retail trade for providing a substantial boost to the retail sector that is the second largest employer, after agriculture.

Source : Economic Times