Shutdown by Karnataka textiles sector for GST rollback

Bengaluru, June 30 (IANS) The textiles sector in Karnataka on Friday observed a total shutdown across the state to press for a rollback of levying the Goods and Services Tax (GST) on its products and bringing the trade under the new tax regime.

"As textiles were considered essential goods, they were exempted from any tax till now. But under the GST, we have to pay 5 per cent tax for goods up to Rs 1,000 in value and 12 per cent for goods above Rs 1,000 in value and file documents online to the GST network on purchase of raw materials, their processing and packaging," Karnataka Weavers' Federation President T.V. Maruthi told reporters here.

Hundreds of textile weavers, twisters, traders, wholesalers and retailers took out protest rallies and staged demonstrations in towns and cities across the state against the central and state governments for imposing a huge tax and administrative burden on them and sought a roll back of the 5 per cent tax on textiles.

"As about 70 per cent of the textile business is still in the unorganised sector, we will not be able to sustain the additional burden as margins are less in the volume-driven sales. It (GST) benefits only large producers and exporters not us," said Maruthi.

With the majority of textiles traders, dealers, suppliers and retailers having small businesses, levying tax on them is not justified in a competitive market, which is saturated with import of readymade goods, including global brands.

"As cloth is an essential commodity, levying GST on it is unjustified and irrational as it will add to operational cost and push up its price at every stage of the supply chain," said textiles trade representative Vimal Kante.

"Those doing inter-state business will be the worst affected as they cannot sell or buy without GSTN even if their turnover is below the Rs 20 lakh ceiling.

"There are about 80,000 textile shops across the state, including 10,000 in Bengaluru which are run by single proprietors or dealers. They are not computer literate to file returns 33 times a year, as required under the GST regime," pointed out Kante.

Like any other business, the textiles business is also done mostly on credit. Wholesalers and retailers do business offline with manual billing. Even if they register with GSTN, they will have to hire IT-savvy accountants or auditors to file e-returns.

"We hope the central and state tax offices will set up kiosks for wholesalers and retailers to ease filing of returns at a cost than investing in computers and hiring operators," said Karnataka Cloth Merchant Association President S.K. Sanghvi.