EPCH TAKES UP ISSUES OF THE HANDICRAFTS SECTOR WITH THE HANDICRAFTS SECTORAL GROUP OF THE GST COUNCIL

New Delhi – 17^th June, 2017  –  Goods and Services Tax (GST) is going to be introduced across the country from 1^st July 2017  and is one of the biggest taxation reforms in India, it is a comprehensive tax levy on manufacture, sale and consumption of goods and services at a National level. GST is all set to integrate the state economies and boost overall Growth. Amalgamating several Central and State taxes into a single tax would help mitigate cascading or double taxation, facilitating a common national market.

GST Council has set up 18 sectoral groups representing various sectors of the economy in order to ensure smooth rollout of GST.  Shri Pradeep Goel, Commissioner, CBEC is the co-convenor of the Handicrafts sectoral group and a first meeting of the Handicrafts sectoral group was held today at New Delhi.

Other senior officers of the Ministry of Finance also attended the meeting and the Handicrafts sector was represented by Shri O.P. Prahladkha, Chairman-EPCH and Shri Rakesh Kumar, Executive Director – EPCH.  Further, Industry Associations like The Handicrafts Exporter’s Association, Delhi, Jodhpur Handicrafts Exporters Federation, Handicrafts Exporters Association, Agra, Buying Agents Association, Delhi and some other prominent exporters also attended the meeting.

Shri Rakesh Kumar, ED-EPCH made a presentation giving an overview of the handicrafts sector including exports, export markets, craft clusters, various handicrafts segments and the manufacturing process.  All issues pertaining to handicrafts sector were taken up one by one and included the following:-

• Handicrafts – Classification on GST Schedule:-  Handicrafts is currently exempted from Central Excise and Value added Tax (VAT) in various states, the rates on handicrafts sector are indicated at the 4 digit HS classification  and that too on higher side for handicrafts items.

•  Job Work:- GST Act does not provide any relief to the sector particularly with respect to the provision contained in the Section 9 (4) with regard to the Reverse charge in case of supplies from un-registered persons.

• Sale to foreign tourists:- to be considered as a deemed export and mechanism to be developed to exclude them from GST.

• Stock in hand as on 30th June 2017:- A limit of one year should be removed for exporters for allowing ITC for stocks only for one year purchases in case of exporters.

• GST on Sale of Scrips :- The utility of the scrips apart from basic customs duty, the exporters will lose to the extent of 40-50% and will incur losses. The Government may consider the utilization of these scrips against all types of GSTs.

• GST on fair participation :- Participation in B2B fairs within India to be treated similar to the process of movement of goods (No Sale or Purchase) and to be exempted from GST.  Further, participants participating in fairs in various states to be exempted from registering as a casual taxable person in the state where the exhibition is being held.

• GST on foreign agency commission earned by Buying Agents :- The services rendered by buying agents should be treated as Export of Services where commission is received in foreign exchange and should be subject to zero rate GST.

• Rate of Duty Drawback:- Tax incidence is being offset by way of grant of duty drawback to the exporters, lower rate of drawback when input tax credit is availed and higher rate of duty drawback when input tax credit is not availed on the same lines as available currently in the Drawback Schedule to be made to the exporters.

Shri Rakesh Kumar, said that “Shri Pradeep Goel, Commissioner, CBEC heard the suggestions placed before him and assured that the sectoral group would consider the genuine requests of the Handicrafts sector and relief to the sector would be provided through necessary amendments.  He informed that the sectoral group will be visiting the major craft clusters in the next 20 days and would be meeting the handicrafts stakeholders across the country to take the feed back so that the same can be placed before GST Council”.

Shri Rakesh Kumar, further informed that in order to educate the member exporters on various aspects of GST, the Council has conducted seminars across various craft clusters and a one day training program on GST was also organised today at New Delhi providing complete hand holding support to the handicrafts exporters so that the transition for exporters is smooth into the GST regime. Similar one day training programmes will be held across the craft clusters.

Shri O P Prahladka, Chairman, EPCH said that EPCH is hopeful that issues and problems related to handicrafts sector would be properly addressed by the GST Council and relief be given to the sector.

The exports of handicrafts during the period April- March 2016-17 have registered a growth of 13.15 % in Rupee terms and stands at Rs. 24,392 crores, however, the growth in dollar terms is 10.52%with exports of US $ 3639 million. The exports of handicrafts during the period April May 2017-18 is Rs 4488 crores registering a growth of 16.15% informed Shri Rakesh Kumar, Executive Director – EPCH