India's shadow economy struggles under new GST

New Delhi

SHOPKEEPER Alauddin Ansari opens a paper ledger of daily sales at his small leather shop on the edge of one of India's biggest slums and points to a blank page. That was his tally for the day. Nothing.

Before Indian Prime Minister Narendra Modi introduced the country's new goods and services tax (GST) on July 1, Mr Ansari was earning 6,000 rupees (S$128) a day, he said, selling leather jackets, wallets, bags and belts. But India's new tax classified leather products as luxury items and raised the rate to 28 per cent - more than double the 13.5 per cent tax levied until June 30. Since then, his business has collapsed. "My business is down nearly 75 per cent," Mr Ansari said, turning a page to show that he made just 850 rupees the previous day at his shop near Mumbai's vast Dharavi slum. "Obviously, the GST has had an impact on trade. At 28 per cent, GST is a bit too much."