With the Goods and Services Tax (GST) set to be introduced from July 1, traders and businessmen in Surat, Ahmedabad, Morbi, and other industrial hubs in different parts of Gujarat have begun to mobilise in protest against the new tax regime.
Owners of diamond-cutting and polishing factories in Surat, and textile traders, power loom operators, and ceramic tiles manufacturers in Morbi and North Gujarat have held demonstrations against the new tax law, which will replace the multitude of State and central taxes such as excise and VAT.
Inspector raj
“We have been exempted from any kind of sales tax and VAT since 1957. The 5% GST imposed on yarn and fabric will hurt those in the business of selling cloth. The process of GST is lengthy and it will start an ‘inspector raj’ in our industry,” said Gaurang Bhagat, President of Mascati Cloth Merchants Association in Ahmedabad.
Surat has about 80,000 textile traders in 120 textile markets across the city, generating a daily turnover of ₹100 crore. But the traders downed their shutters on Thursday and Friday in protest against the new tax regime.
The diamond-cutting and polishing industry, which employs around a million people in Surat, has also held protests, and has demanded exemption from the proposed 3% GST on polished diamonds.
‘Bane for business’
“We are a labour-intensive sector that provides employment to lakhs of people. The introduction of GST on polished diamonds will severely harm our business,” a prominent diamond baron from Surat told The Hindu.
“Gujarat is predominantly a manufacturing State. So the GST will have an adverse impact on sectors such as ceramics because businesses that right now pay 12.5 % excise and 5% VAT must, under the new law, pay 28% tax on ceramic tiles and other products,” a BJP legislator from the State said.
Trade bodies and industry associations have made representations to the State and Central government authorities, seeking an exemption, a lower rate, or a modification in certain provisions of the new tax regime.
“We are looking into the representations received from various industries and trade bodies,” said a senior official from the state finance department.