Artisans, handloom weavers struggle to navigate GST

HYDERABAD: Handicraft artisans and handloom weavers, who earn less than Rs 20 lakh a year, need not register under the GST regime but those working in the sector say otherwise. Traders say that though the GST rules allow artisans to do inter-state trade via e-waybill, many artisans do not have the needed documents nor have access to a stable Internet connection or a transport service that facilitates e-way billing.  The handicraft and handloom sectors in Telangana are classified as small-scale industries. Together, the sectors provide employment to over 7 lakh persons according to the Telangana Socio-Economic Outlook, 2017.

Many of them operate through cooperatives societies or have a preferred trader through whom they sell their products. Earlier, the sector had been exempted from value added tax and other duties but under GST the products are taxed at different rates — 12, 18 and 28 per cent. Though exempted from filing GST returns, artisans still have to deal with the GST system. 

Adding costs
For instance, inter-state transfer of goods has to be done via an electronic bill or e-waybill mechanism for goods whose value exceeds Rs 50,000. Most of the artisans operate out of rural Telangana with little or no access to a transport service that can generate an e-waybill. Those in the sector say many artisans have registered under GST regime but have not filed returns, attracting a penalty of Rs 100 per day for late filing “Most don’t have PAN cards and almost all are computer illiterate.

An artisan or a corporative society that represents him will have to shell out Rs 3,500 per month to an expert for filing GST returns,” said Syama Sundari, a policy research coordinator with Dastkar Andhra, a NGO working with handloom weavers in Telangana. “Most artisans earn a maximum of Rs 5,500. Filing three tax returns a month is not a joke even for an organisation like us. One can imagine the state of an artisan at a village with unsteady power and internet connection. Someone else has to be hired to do online filling of returns on his behalf,” she added.

Stiff competition
Under the new tax regime, many of the raw materials used for hand-made products have the taxes subsumed into them. This is expected to push the prices of hand-made products higher which would adversely impact the sector which is already facing stiff competition from machine-made products. “Anything made by hand will be pricey and GST will make it costlier. ” she said

Traders wary

Those sourcing their products from artisans like Meeta Mastani, co-founder and chief executive officer of Bindaas Collective, have two choices before them: either listen to their chartered accountant and stop trade with artisans who do not have a GST pin or absorb the tax and claim input tax credit. “I then have to file GST returns on their behalf but I get the money back after three months. But, if my working capital is stuck, then I will not deal with them. Even government agents are not buying from those artisans who do not have GST number. This will not work as people will stop buying from them. Artisans need GST number even for exhibiting products at a government mela, and it is proving to be a dampener.