India’s Union Finance Minister Arun Jaitley has announced to slash Goods and Service Tax (GST) rates on handicraft items to 0 per cent. The decision was taken at the 25th meeting of the Council in New Delhi on January 18, 2018.
The revised GST rates will be applicable from January 25, 2018. The meeting took place just ahead of the Union Budget, slated to be presented on February 1, 2018. While addressing the media, the FM said about 29 handicraft items would attract no tax and asserted that the move was taken to protect jobs in the handmade industry.
India exports about Rs. 4,000 crore of handicrafts every year, including handmade carpets. Presently, handicraft items are placed under the 12-18 per cent tax slab.
The announcement has come as a sigh of relief to around 9 crore weavers and artisans across the country who were hit hard post-implementation of the new tax regime.
The Council also discussed a range of legal amendments required in the GST-related laws, so that the Government can push through the changes in the Budget session of Parliament, which starts on January 29, 2018.
Further, Jaitley said the GST Council discussed making GST return filing process simpler. Implementation of the GST has had a cascading effect on the Indian handicraft industry. The sector noted 25 per cent drop in business since the new tax regime came into effect.
GST came as the second setback to the industry after demonetisation (announced in November 2016). After note-ban, the handicraft industry noted a decline in business to Rs. 51.5 crores in 2016-17 from Rs. 54 crores in 2015-16.
The handloom and handicraft sectors had been demanding complete exemption from GST since its execution.
The GST Council has also announced the rate reduction on velvet fabric from 12 per cent to 5 per cent with no refund of unutilised input tax credit, effective January 25, 2018.