What is Wholesale trade and Impact of GST on Whole Sale Traders

Meaning of Wholesale trade and Impact of GST on Whole Sale Traders


The details about Wholesale trade and Impact of GST on Whole Sale Traders are explained here. 

Wholesale trade

Wholesale trade is a form of trade in which goods are purchased and stored in large quantities and sold, in batches of a designated quantity, to resellers, professional users or groups, but not to final consumers.


Wholesale trade consists of purchasing, storing and selling goods, generally to retailers, professional (industrial or commercial) users or authorities, or to other wholesalers or intermediaries, regardless of the quantities sold.

Wholesale trade intermediaries put buyers and vendors into contact (or perform commercial operations for a third party), without being owners of the goods (these are commission agents, brokers, sales agents, self-employed representatives, etc.). Trading groups, other trade intermediaries, may be the owners of goods, which they sell to their members and their affiliates for a very low trade margin.

Almost all goods may give rise to wholesale trade but only some of them are sold in retail (retail trade).

Impact of GST on Whole Sale Traders

Under the current indirect tax regime, wholesalers and retailers normally escape the tax liability as there is no mechanism by which their actual purchase and sale can be traced. Many of their transactions are done in black, meaning no invoice is issued to the buyer, and eventually no entry is posted in the books for such sales.

These taxpayers usually leverage the tax liability evaded and undercut the market to gain in volume. Their margin of profit remains as low as 1 percent. Since under the GST regime, every invoice pertaining to taxable supply has to be uploaded on GSTN’s common portal and has to be accepted by the buyer, wholesalers and retailers will now be unable to escape their tax liability. The only possibility for tax evasion would arise if the entire supply chain is outside the tax network and did not file a return under GST law, which is very unlikely.

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