The current regime in India wants to convert the country into a developed nation overnight. And this is where the fault lies. Being ambitious is good but being over ambitious with little understanding of the ground situation is suicidal.
This principal applies to the federal as well as the state government as both without having a fair understanding of the handicrafts sector let it into the hands of the new tax regime termed GST.
Imposing 18% tax on raw materials used in handicraft industries with an extra 9% on the ultimate product is throwing it out of competition in the markets already dominated by numerous brands.
The imposition of GST and bringing the handicrafts sector into it meant that the hue and cry about the promotion of craft industry by government sounds like nothing but a rhetoric now, because Handicraft sector was chiefly exempted from taxes earlier and now it has been brought into the ambit of the GST.
GST, as is already being witnessed is paralyzing the handicraft industry and killing the sector. This is mostly because it’s a decentralized occupation and because of lack of education, empowerment of craftsmen and the artist is at stake.
Since Handicraft sector is highly disorganized, current structure of GST has to be reviewed in the wake of the predicament of artisan’s livelihood and the fact that there has been some advancement of cultural crafts.
It is therefore highly appreciable if the GST council has accepted the proposal to slash taxes for protecting small traders of the states. The move has been accepted in the recent Goods and Service Tax (GST) Council meet with the forum agreeing to substantial reduction of tax on handicrafts and walnut.
Conceding the demand of the traders involved in the Handicrafts sector of the State, J&K Government pleaded with the GST Council in its 21st meeting at Hyderabad recently to consider bringing down the tax rate on Handicrafts from 12% to 5%.
The GST Council as well as the J&K Government accordingly issued a notification on September 15, announcing that the small dealers and workers who move handicraft goods from one state to another were exempted from registration under IGST Act.
In case of other states, the threshold of handicraft turnover has been kept at Rs 10 lakh annually while in case of J&K, it has been put at Rs 20 lakh. The decision will benefit small handicraft traders who earn their livelihood by selling Paper Machie items, Carpets, Shawls and Willow Wicker items in other states.
The good news is that the traders don’t have to register as casual traders, as per the GST law, which is the case with traders from other, special-category States, provided the aggregate value of their supplies doesn’t cross Rs 20 lakh in a financial year.
The GST Council also bringing down the rate of tax on Walnuts, which was originally kept at 12% to 5% is also a welcome move.
All these decisions, which revolve around the ease of doing business, will immensely benefit the small traders in the State. But the moves should immediately percolate down to the lowest level so as to reap its benefits fully.