Empowering MSMEs with News & Insights

GST: Carpet manufacturing MSMEs badly hit, operations at halt: CEPC

Updated: Jul 21, 2017 11:51:24am
image

GST: Carpet manufacturing MSMEs badly hit, operations at halt: CEPC

New Delhi, July 21 (KNN) With over 20 days into the newly rolled out Goods and Services Tax (GST) , the handmade carpet industry comprising of mainly the Micro, Small and Medium Enterprises (MSMEs) in the country have been badly affected, Carpet Export Promotion Council said.

Talking to KNN, Mahavir Pratap Sharma, Chairman of Carpet Export Promotion Council (CEPC) explained the situation.

Under the GST, the carpet industry has to face two different tax slabs at two levels. Tax rate 0f 18 per cent is imposed on the job work involved in the manufacturing and another 12 per cent in the sale and purchase.

Sharma explained that the manufacturing of handmade carpet is a lengthy process that stretches for over 8-9 months. At every stage the MSME units employ a large number of skilled as well as unskilled labours.

“The whole process goes on for over 9 months, the business model in the carpet industry is not like any other industry, therefore a tax rate of 18 per cent on job works is not in the interest of the industry, also ” said Sharma.

He added that apart from the high tax rate, the enormous amount of paper work that goes into GST is not practical for a small carpet making unit to handle. On an average a unit will have to file over 1000 entries in the GSTN.

Explaining the market situation Sharma said that the market is not ready to accept a proposed 10 per cent hike in the price which the industry needs to tackle with the GST.

“The GST burden is totally on us, the market isn’t willing to absorb the hike in price, they might just simply buy from other carpet making countries like China and Turkey”

With the situation growing from bad to worse, the CPEC has requested the government for a roll back on the GST on job works. It has also appealed for a revision of tax rate on the sale and purchase from 12 per cent to 5 per cent.

Sharma informed that there have been no assurance from the government in this regard so far. (KNN/ DA)

COMMENTS

    Be first to give your comments.

LEAVE A REPLY

Required fields are marked *