GST deals a blow to State’s traditional handicrafts

With many traders reporting a decline in sales, the livelihood of thousands of artisans dependent on handmade crafts is at stake

Karnataka’s traditional handicraft and handloom products, including those with the Geographical Indication (GI) tag, seem to be struggling under the recently implemented Goods and Services Tax (GST) regime. The famed Mysuru wooden inlay works, Bidariware, Ilkal saris, and Channapatna toys are among the many products reeling under the pressure of increased tax rates. At stake is the livelihood of thousands of artisans dependent on these traditional crafts.

The tax on the wooden inlay works, a product with GI tag, has gone up from 14% (including 5.5% VAT) to 28% under GST, simply because this traditional art has been clubbed with wooden furniture, having a crippling effect on the craft industry. Though several artisans creating wall panels have not been affected, award-winning inlay work artisans such as K. Ramu has seen a steep decline in sales. “Inlay works are rendered on tables and clubbed with furniture. The tax outgo has doubled and sales are down by 70%,” said Mr. Ramu. It is a similar situation with artisans engaged in wooden carvings, which now attract 18% tax.

The three-month-old GST regime has also affected Channapatna toys, another popular craft. Tax on colourful lacquerware toys and dolls, which went up from 5% to 12%, has brought down sales, and traders are accumulating huge stocks as orders have been cancelled. “Toys are gathering dust in warehouse and many artisans are not getting work,” said L. Eshwar Raju, who runs Shree Toys Factory.

Increase in tax from 5% to 12% on Bidriware, another product with GI tag, has had a negative impact on the wholesale. While across-the-counter sales locally have not been impacted much since bills are normally not generated, bulk orders from outside Karnataka and online sales have come down as the product cost has increased with the GST. Artisans such as Mujeeb Quadri are even contemplating shifting to other businesses.

While many artisan communities have been hit directly by the GST, Ilkal sari sellers are facing a piquant situation with handling reverse charge mechanism. While most weavers from whom they buy saris are in unorganised sector, sari sellers have to pay 5% GST and then get it reimbursement from the government.

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