Sitting idle in the narrow lanes of Lallapura in Varanasi, master weaver Shahid Jamaal is visibly disappointed as four out of his five power looms are shut for about a fortnight.
After the implementation of GST, disappointment looms large in Lallapura area which is known for weaving of Banarasi sarees.
As a result of pre- and post-implementation impact of the Goods and Services Tax (GST), wholesalers have stopped placing orders for the sarees.
“GST will increase the manufacturing cost of sarees as the prices of raw material, including yarn, will go up in the new tax regime,” Jamal said.
Weavers of Varanasi demand that the government should exempt textile from GST.
Fear of the new tax regime compounded with lack of clarity led to the textile industry protesting in several parts of the country. Since July 1, a 5% GST will be added to textiles including the Banarasi sarees, so far left out of the tax net.
“A wholesaler has informed me about the new rates of yarn. Instead of Rs 350 per kilogram, it will now cost Rs 380. Rates of material used in finishing and embroidery will also go up,” he said.
“How will I compensate for the increased manufacturing cost? Wholesalers will not pay for it. They will give old rates for sarees,” Jamaal added.
But experts and lawmakers point out that an increase in tax can be passed on to consumers, and so will not impact the weavers.
Just like the Banarasi weavers artisans feel that GST will kill the art of zardozi and chikankari.
Already facing tough competition from Chinese clothes and machine works, chikankari and zardozi workers in Lucknow also share the resentments against GST.
“There are around 3.5 lakh chikankari workers in and around Lucknow. Imposing Goods and Services Tax (GST) on handicraft would increase the problems of artisans who are already struggling to make ends meet,” said founder of Self-Employed Women’s Association (SEWA) Runa Banerjee.
Representatives of the industry are planning to meet union finance minister Arun Jaitley to seek exemption from GST and inform him about the ground realities of this unorganised sector.
A trader at Janpath market in Lucknow, Dilip Khairjani, said procedural complexities would make it practically difficult to implement GST on chikankari.
“Tax burden on every product priced below Rs 1,000 will be 5% and those above this amount will attract 12% tax under GST. Add to it the procedural complexities and costs. The final burden will be 18-20% on every product,” he said.
Taxation would be different for stitched and unstitched pieces of handicraft, he added.
In the run up to the GST implementation, state governments were instructed to convert their sales tax offices into Seva Kendras to help small and medium scale businessmen.
“The fear around GST is exaggerated because it involves IT. But these state GST Seva Kendras are supposed to help in registration,” said revenue secretary Hasmukh Adhia while addressing 5-day masterclass on GST in New Delhi.
Reports have been pouring in from different part of the country on businesses complaining about confusion around GST.
“States were supposed to arrange for tax officers to come and train traders and businessmen, nothing has happened so far. Bother sellers and buyers are confused about GST,” said Sushil Jain, president of federation of industrialists, traders and jewellers in Noida.
Some traders in Lucknow agreed that taxation procedure under GST remained unclear.