The Indian Government announced concessional GST rates for select handicraft items last year. This aims to support small and medium-sized businesses in the handicraft sector and stimulate its growth. The sector is a key contributor to India’s economy, generating employment in rural and semi-urban areas. The reduced tax burden through concessional GST rates will enhance its growth prospects.
Eligible items for Concessional GST Rates
The following handicraft items are eligible for concessional GST rates:
- Bamboo furniture
- Bamboo flooring
- Handmade carpets and rugs
- Handmade lace
- Handmade quilts
- Handmade curtains
- Handmade bedspreads
- Handmade table covers
- Handmade kitchenware
- Handmade toys
Pre-GST Regime Taxation of Handicrafts in India
In the pre-GST regime, handicrafts enjoyed tax exemptions in 15 out of India’s 29 states.
In eight states, they were subject to a 5% value-added tax (VAT), while other states applied similarly low tax rates.
However, with the implementation of the new GST system, most of these rates were expected to increase.
Handicraft GST Rates in India
The concessional GST rate applicable to these items is 12%, which is lower than the standard rate of 18%
Benefits of Concessional GST Rates on Handicraft Products
Small and medium-sized businesses in the handicraft sector benefit from the concessional GST rates in several ways.
They experience a reduced tax burden, leading to increased profitability and improved cash flow.
The businesses have more resources for investment in growth, including expansion, innovation, and operational improvements.
Additionally, the concessional rates enhance affordability for consumers, driving up demand and boosting sales.
These benefits aim to support the ongoing growth and sustainability of small and medium-sized businesses in the handicraft sector.
Moreover, If you want any other guidance relating to GST Rates on Handicraft Products, Please feel free to talk to our business advisors at 8881-069-069.
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