GST fallout: July sales of Arts Emporium down by 40%

August 12, 2017   admin  GST News
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In GST list of goods and services, most handicrafts have been taxed at 12 percent.

The cash-starved J&K Handicraft Sales and Export Corporation which runs the ‘Government Arts Emporiums’ is now witnessing a sharp decline in sales due to the Goods and Services Tax (GST) levied on Kashmir arts, as the figures show year-on-year sales for the month of July are down by 40 percent.

In GST list of goods and services, most handicrafts have been taxed at 12 percent.

Compared to Rs 1.06 crore turnover of the arts emporium in July 2016, sales worth only Rs 70.53 lakh were witnessed by the emporium showrooms in July this year, said Ishtiyaq Drabu, managing director of the JKHSEC. GST was implemented in the first week of July in J&K which has resulted in a widespread resentment from handicraft traders and artisans.

“Most of the customers are staying away from purchasing high value Kashmir arts such as carpets and wood carving items. We are a marketing concern and provide marketing cover to end products of the artisans. Any kind of dip in our sales affects thousands of artisans directly,” said Drabu.

The emporium which runs 18 showroom across the country, out of which three are located in Jammu and one in Leh has in particular have seen a dip in sales of walnut wood-carving products which has been taxed at 28 percent under GST, Drabu informed.

“First due to a low tourist influx to Kashmir and now due to GST, our showrooms have also seen a sharp decrease in footfall. People prefer machine-made carpets which they get on much cheaper prices,” Drabu said. Emporium showrooms located at Boulevard, Lal Chowk, Airport apart from its main showroom near Pologround are also unable to attract customers in large numbers, he said.

Having faced Rs 5 crore to Rs 6 crore annual losses during last few years, the management of the emporium is now worried as GST is gradually taking a toll on its day-to-day business. Explaining the impact of GST on its business, Drabu said the corporation procures handicrafts directly from artisans based on a “sale cum return” model, which is now under threat from GST.

“We mostly procure goods from artisans and pay them only once we sell the handicrafts. Incase the product is not sold we have the option of returning it back to the artisans. But now if we keep the product in our showrooms for more than 6 months, it will be taxed under GST. We have to realise that a handicraft product sometimes takes several months and even a year or so to sell,” Drabu said.

The implementation of GST has come at a time when the emporium has several revival plans in the pipeline. Apart from receiving funds for purchase of goods from the state government recently, the emporium is also planning to foray into sale of handicrafts through e-commerce, Drabu added.

“We have been managing Rs 8 crore to Rs 9 crore revenue lately and for the first time received funds from the state government to procure goods. But GST is proving to be a spoiler impacting our business and putting all our expansion plans on the back burner,” Drabu said.

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