Problems Faced by Handicrafts Industry and Their Relief Initiatives by GST Council

By: Gaurav Batra In: Industry News Last Updated: 2017-10-31

The Goods and Services Tax is a revolutionary tax regime which was implemented in India to offer uniformity in the taxation system. It has been three months since GST implementation in India 1st July 2017 and many of the industries are already complaining about the adverse effects of this new tax regime. There were numerous complaints from the SME sector of India against the GST and to entertain these complaints, the 22nd GST Council Meet was held in New Delhi on 6th October 2017. This meeting was led by the honorable Finance Minister of India Mr. Arun Jaitley and was attended by the state finance ministers and other members.

Problems Faced By Handicraft Industry Because Of GST
A major impact of the GST was seen on the Indian handicrafts industry and the people in this industry were burdened by the compliances of the GST law. The GST Council meeting has come up with a number of relieving solutions to the handloom and handicraft industry of India. Before talking about the amendments in the existing policies, let’s see what types of problems were faced by the people of the handicraft industry in India.

The tax rate on handicraft was kept between 5% and 28% while prior to GST, the handicraft products did not attract any type of value-added tax. Handicraft items under INR 1,000 were taxed 12% and others attracted a tax of 18% or 28%. This led to increased price and low sale in the handicraft industry.

A credit flow problem rose in the handicraft industry which in turn led to the delay of payment in most of the cases. The multiple tax returns that needed to be filed under GST also caused a lot of tension in the industry as most of the traders and exporters run a small-scale business and have low to no idea of filing returns. This called for a professional which also added to their expenses in low-income times.

Relief Offered By The GST Council Meet

The initiatives by the Goods and Services Tax have been welcomed with open arms by the Export Promotion Council for Handicrafts (EPCH). The GST Council Meet was held in New Delhi on 6th October 2017 and the changes or rather the initiatives towards the SME sector, especially the Indian crafts or handicrafts industry, have been much appreciated. This would allow the momentum of the handicraft export from India to gain pace and become a booming industry once again. The export sops announced by the GST Council are being hailed by the Indian handicrafts industry which can gain its exports momentum back once the lower rates would be applicable.

One of the biggest steps taken by the GST Council Meet was the suspension of the Reverse Charge Mechanism. The handicraft enterprises would get a refund of their taxes for the month of July by 10th October 2017 and further on for August and September. Moreover, the merchant exporters would only have to pay a GST of 0.1% when procuring goods from any type of domestic suppliers. Another step taken by the GST Council to provide relief to the handicrafts industry is the reduction of GST on the sale of duty credit scrip to mere 0%. The e-wallet facility, no GST payment under Advanced Authorization Scheme & EPCG and postponement of e-way bill implementation are some of the other initiatives announced by the GST Council that are appreciated by the Export Promotion Council for Handicrafts (EPCH).

The compliance burden on the handicrafts industry has been reduced by the steps that have been taken by the GST Council in favor of the industry. The tax rates have been reduced on the handicraft products and the services rendered in the industry. This proves that the GST Council is taking initiatives to improve the export situation of handicraft and crafts of India