‘For weavers, craftsmen confusion over GST still prevails’

The pruning of GST rate on various handicraft and handloom products notwithstanding, small weavers and craftsmen in the sector are likely to feel the brunt of the new tax regime.

The tax rates levied on various handloom and handicraft products under the GST regime, which was rolled out on July 1, varied between 12 per cent and 28 per cent.

The GST Council recently slashed the rates on various handicraft goods bringing them down to 12 per cent from 18 per cent. GST on certain specific products such as Sabai ropes and cups and plates stitched from Sal/Soali leaves was reduced from 18 per cent to 5 per cent while the tax rates on idols made of clay which was at 28 per cent, have been exempted. The GST on Khadi clothes and fabrics sold by organisations certified by Khadi and Village Industries Commission has also been waived.

However, according to Sumit Dutt Majumder, senior customs and GST expert, bigger players may not want to buy from small unregistered suppliers as it would block their working capital.

“There are two clauses in GST which makes it difficult for these small artisans. One is the reverse charge mechanism requiring the recipient of goods or services to pay GST, which will discourage them to buy goods from an unregistered supplier. The second is with regard to the inter-State supply of goods,” Majumder said on the sidelines of a seminar ‘Crafts and GST’ organised by the Crafts Council of India.

The GST Council recently deferred the levy of reverse charge mechanism for goods bought from unregistered suppliers for the handloom and handicraft sector. However, the way the whole system of GST has been designed any unregistered person in the system will affect the flow of credit.

“Any person who aims to make it big some day will go ahead and get registered to remain viable in the business,” he said.

There are close to nine crore artisans engaged in the handicraft and handloom industry across the country.

“There is considerable confusion and lack of knowledge among the craftsmen, weavers and weaver co-operatives on the imposition of GST,” Kasturi Gupta Menon, honorary president, Craft Council of India, said.