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Khadi may get exemption from GST

LiveMint logoLiveMint 14-07-2017 Harveen Ahluwalia

New Delhi: Khadi products may after all be exempted from the recently implemented goods and service tax (GST), Kalraj Mishra, Union minister for micro, small and medium enterprises (MSME) said on Friday.

In a statement released by the Khadi and Village Industries Commission (KVIC) on Friday, Mishra said the GST panel has already started analyzing the “pros and cons of GST exemption, to benefit the workers, weavers and spinners associated with Khadi”.

“Even the finance minister had assured me to give a GST exemption for the financial development of otherwise economically backward lot of weavers and spinners,” he said, while addressing a meeting of various Khadi institutions in the national capital.

While 5% GST has been imposed on Khadi cloth currently, 12% GST has been imposed on the sale and purchase of readymade Khadi products priced above Rs1,000. Khadi yarn, Gandhi topi and India’s national flag, however, have been kept out of the purview of GST.

The tax on Khadi, which had been free from any kind of taxation since 1947, has hurt Khadi traders across the country. Khadi associations made several representations to the government, requesting it to waive off the tax, citing the financial stress of weavers and spinners.

Haribhai P Choudhary, minister of state for micro, small and medium enterprises, said the matter has been brought under the “cognizance of the GST panel and will soon be sorted out.”

Over the past few months, KVIC has been trying improve the financial health of the industry by pushing Khadi in the branded space and tying up with various apparel companies.

In May, Aditya Birla Fashion and Retail Ltd (ABFRL) partnered with KVIC for a period of five years, to launch a new line of Khadi products under the Peter England brand. Textile and apparel maker Raymond also announced the launch of its Khadi label—Khadi by Raymond in May. KVIC recently received orders worth Rs 12 crore from Air India and Raymond Ltd.

Earlier this month, KVIC signed a memorandum of understanding (MoU) with the National Institute of Fashion Technology (NIFT) for better design development and training at different Khadi institutions.

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