Government taxes Khadi for first time since Independence, traders seek relief

Updated on Jul 06, 2017 08:43 PM IST

Though Khadi yarn, Gandhi topi, India’s national flag will not attract any tax under the GST regime, other apparels and Khadi products will have 5% -18% GST.

A Khadi shop without customers in Kota on Friday.(AH Zaidi/ HT PHOTO)
A Khadi shop without customers in Kota on Friday.(AH Zaidi/ HT PHOTO)
Hindustan Times | ByAabshar H Quazi, Kota

Khadi, a fabric often associated with India’s freedom struggle, has so far been exempted from any kind of taxes. However, after GST, now Khadi too comes under the ambit of tax and traders in the state are worried that it will affect their business.

Though Khadi yarn, Gandhi topi, India’s national flag will not attract any tax under the GST regime, other apparels and Khadi products will have 5% -18% GST.

There are nine Khadi Bhandars in the Kota division whose trade has been hit since the launch of GST from July 1. These sell Khadi cloth, readymade Khadi apparels, including kurta pyjama, Nehru jackets, carpet and other products.

“Business has been hit since the enforcement of GST from last six days. Customers are not buying khadi due to a rise in their prices,” said Kamal Kishore Sharma, secretary of the Hadoti Khadi Gramodhyog Samiti (HKGSK). “The fabric, which has been free from any kind of taxation since Indian Independence, has been brought under GST and it is hurting sales. The decision to impose GST will ruin khadi organisations and its weavers,” he said.

While 5% GST has been imposed on khadi cloth, 12% GST has been imposed on the sale and purchase of readymade Khadi products above 1,000 and 18% GST on poly cloth of Khadi (polyester khadi mix cloth).

He said that the annual trade of Khadi in Kota is around 2 crore and there are around 500 khadi weavers in Kota division.

“If sales go down due to taxation, it will reduce production of Khadi and thereby affect khadi weavers,” said a Khadi weaver, Mohammad Irfan, from Kota. He added that since Khadi is a handloom it should be free from any kind of tax.

The owner of Khadi India in Chhawani area, Ashok Jain, said that demonetization has already reduced khadi sale and now GST has reduced daily sales from 15,000 per day to 2000-to-2,500 per day.

“Khadi is a costly cloth and GST will make it costlier,” he said.

Khadi associations have requested the Union government to waive off GST on Khadi by submitting a memorandum and meeting the union finance minister, Arun Jaitley.

However, Sharma said that the discount on Khadi cloth —15% discount by the Union government round the year and 10% discount from Gandhi Jayanti to the death anniversary of Mahatma Gandhi on January 31 given by the state government — will continue.

Meanwhile, the Congress has criticised imposition of GST on Khadi. “Khadi is the soul of the country but GST on khadi exposes the mindset of the BJP which has not participated in the Indian freedom struggle and now wants to discourage people from wearing Khadi,” said Pankaj Mehta, general secretary of Pradesh Congress Committee, Rajasthan.

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