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GST puts weavers in a fix

GST has many weavers and handloom organisations worried. Traditionally, the handloom sector has largely been exempt from taxation in India but that changed since GST came into effect last year. Under the new GST rules, all input materials used in handloom production, in addition to the finished cloth, attract a tax of five per cent to 18 per cent, which is a significant burden on weavers.

Earlier, the tax only applied to finished cloth. Now, everything is charged, the cloth, the thread. Besides the obvious financial burden of GST, many weavers are upset about other provisions under the new tax law. The existing transport services are now demanding a GST number for transporting their cloth anywhere within the country; even if the weavers choose to transport the cloth themselves, they have to produce an e-way bill, which is generated digitally. Individual weavers are also required to maintain regular accounts and file tax returns.

A small weaver in a village, with little education, who has known nothing but weaving all his life, is supposed to get an e-way bill done, having little computer smarts. Many weavers and artisans are finding it difficult to migrate to the new GST system or don’t have an income that would justify the effort it would take to comply with it.