GST Council may announce rate cut on carpets at its next meet

The GST (Goods and Service Tax) Council of India is reportedly planning to cut the GST rate on carpets from the current 12 per cent to 5 per cent.

The decision is expected to be announced at the next GST Council meeting to reduce the toll on the carpet industry after the implementation of the new tax regime.

According to those associated with the industry, the move will come as a breather for the highly labour-intensive carpet sector.

The new taxation system which came into effect on July 1 this year took a huge toll on the indigenous handicrafts sector, particularly the carpet industry.

Uttar Pradesh and Jammu & Kashmir witnessed the closure of various carpet manufacturing units on a large scale.

The carpet industry in India is currently pegged at around Rs. 3,000-4,000 crores of which more than two-thirds come from the Bhadohi-Mirzapur-Varanasi-Gopiganj-Khamaria belt.

The current rate levied on carpets has made the sector uncompetitive as the influx of cheaper machine-made carpets from neighbouring countries like China is increasing in the Indian market.

“Heritage item like this should not die. Our carpet industry is reeling under huge pressure. The industry is hoping a generous decision from the Council in view of the plight faced by it. Handicrafts also expecting more flexibility from the Council,” said J&K Finance Minister Haseeb Drabu.

The GST Council at its latest (23rd) meeting (on November 10, 2017) slashed tax on more than 200 items with 178 from the top bracket.