New Delhi, Oct 20 (KNN) With the Goods and Services Tax (GST) entering its fourth month, the Micro, Small and Medium Enterprises (MSMEs) have reiterated their demand of zero per cent GST on handmade products with the state government, responding to which CM Siddaramaiah has written to the GST council. 

Talking to KNN, Abhilash, convenor of the Gram Seva Sangh explained the latest development along the matter.

He informed that earlier before the coming of the GST, the sector attracted no tax at the input level. This helped the sector fetch some profit in conducting business since the sector largely comprises of the tiny and micro units that don’t run huge profit oriented businesses.

Also the handmade sector offers employment to the unskilled and the unorganized sector of the population adding to the employment rates.

But with the coming of the GST, the different items made by this sector are placed under various tax slabs against which the MSMEs and Self Help Groups (SHGs) led by the Gram Seva Sangh have been protesting.

He said that for the sector that largely operates in a not very organized manner, it is not possible to absorb the tax shock all of a sudden because of which the sector is experiencing huge losses.

Commenting on the One Nation One Tax motto of the government with regard to the Goods and Services tax, Abhilash said that the mechanism of unifying itself is not in the best interest.

Explaining it further, he said that the item made by a tiny unit comprising of 4-5 worker is placed under a tax slab of 18 per cent, similar to the rate under which the same item produced by a large firm is placed, there is no distinction in the mode of production making it impossible for the small sector to survive.

“The large firms make the products using machines, whereas the small sector does it with hand, the entire GST booklet doesn’t mention the word handmade even once” he added.

Responding to the reduction in tax rate on certain handmade items from 18 per cent to 5 per cent, Abhilash said that this is not satisfactory as earlier there used to be no tax on these items. (KNN/ DA)