Ahead of the Union Budget, artisans in the handicraft sector are looking for greater tax relief to overcome the financial impact of the economic downturn and the Goods and Services Tax (GST) rates.
Mysuru is one of the major hubs for handicrafts and supports nearly 5,000 to 6,000 families who are mainly engaged in wood inlay works, furniture and making of idols. But the imposition of GST – which is 18% for furniture and 12% for wall hangings, inlay works and other decorative items – has hit the artisan community hard.
There is no GST on making small idols of gods and goddesses but the bulk of revenue for artisans comes from furniture and inlay works. Incidentally, Mysuru wooden inlay work has a Geographical Indication tag and is recognised for its unique characteristics and skills of the local artisans.
However, the artisans are of the opinion that the economic downturn and the high GST rates have impacted their fortunes.
S. Ramu of the Mysuru Handicrafts Manufacturers Association told The Hindu that they have made many representations to the government to reduce the GST but without any success. “We have appealed once again ahead of the budget and hope that a tax cut will give the requisite boost to the sector,” said Mr. Ramu.
In the pre-GST era, the artisans had to worry only about VAT and it was a nominal 4% on most products though it was 14% on furniture. “But overall, it was lower than the GST rates,” said Mr. Ramu. Consequently, the handicraft turnover has registered a steep decline, aver the Association members, who look forward to a GST rate cut in the budget.
Sunil Kumar, Assistant Director, Handicrafts Marketing and Extension Centre, Mysuru, which looks after the sector in 10 districts said artisans do complain about the high GST rates and have sought a reduction in GST on furniture from 18% to 12% and on other products from 12% to 5%.
The association said the economic slowdown and fall in demand coupled with high GST has eaten into the profits and they are barely sustaining. “Notwithstanding the lower profit margins due to the taxation rate and the dwindling orders we have to pay the skilled artisans and daily wagers to retain them,” Mr. Ramu said.
The bulk of the handicraft items are sold to retailers who in turn depend on the tourist footfall to fuel the demand for handicraft products. But the manufacturers have been forced to shore up the prices to sustain themselves which has lowered the sales and consequently the demand. It is a vicious cycle to break from which the artisans now hope for rate cut.
