Ginners across the country have decided to observe a day’s strike on Friday, with the threat of more action later, in protest at the five per cent goods and services tax (GST) on cotton.
While implementing the new tax since July 1, the GST Council had levied a five per cent rate through the Reverse Charge Mechanism (RCM) on all agricultural commodities, later deferred till March 31, 2018. However, three weeks earlier, a five per cent GST was imposed on cotton, the only agri commodity to attract this.
“Several representations were made to the ministry of textiles for withdrawal of the RCM imposed on cotton. There has been no communication from the government. Hence, the one-day strike. If the GST Council does not withdraw RCM in the next meeting scheduled on December 21, we would go on indefinite strike later,” said Upendra Singh Rajpal, president, Maharashtra Cotton Ginners Association and vice-president of the Cotton Association of India.
In the RCM, a recipient of goods and/or services is liable to pay GST, instead of the supplier. In this case, ginners instead of the cotton farmers.
A senior official of the Saurashtra Ginners Association said the new levy would have a big impact on ginners’ operating margins.