New Delhi, Aug 11 (KNN) Khadi Institutions are now mandated to obtain registration under GST and also pay GST on various Khadi products which is 5%, Ministry of MSME has said.

The Ministry has welcomed the introduction of GST and said, “The entire Khadi & Village Industries (KVI) sector has been enjoying the benefit of tax exemption even under the pre-independence era.”

With the exemption to the SSI sector being drastically reduced from the existing Rs.150 lakh to Rs.20 lakh, the exemption cover enjoyed by many of the Khadi Institutions (KIs) has been removed, Minister of State for MSME, Giriraj Singh said in a written reply to a question in Rajya Sabha.

The products of the Village Industries sector were either taxed @ 0-14.30% before-GST and post-GST the same products attracts tax @ 12-28%.

At present only Khadi yarn produced in Khadi sector is exempted, while other Khadi products attract 5% GST. 

Ministry of MSME has approached Ministry of Finance to consider the sector for exemption from GST or to ensure a seamless flow of input tax credit in order for Khadi Institutions to claim input tax credit. (With PIB Inputs)