Silk fibres have been exempted under GST. (File Photo)
GUWAHATI: Five years ago, Lekha Goswami left her plum corporate job to follow her passion – designing traditional clothes and started a one-room Assamese ethnic-wear boutique. Off late, the 37-year-old has been anxiously spending inordinate amounts of time reading up on the recently launched GST – all this despite handloom products being exempt from both VAT and Central Excise levies which the new measure replaces.
“Earlier there was no tax in any handloom product… no tax on Muga and Silk. But now we may have to pay 5% GST which is not a good thing. Price will rise and we may have to reduce margins,” said Ms Goswami.
Mekhela Chador, one of the most famous traditional wear in Assam, is the favourite pick among women entrepreneurs in the state involved in apparel design and sale. The attire, which looks similar to a saree, is made primarily from silk and cotton among other natural fibres.
Although, silk fibres have been exempted in the new tax regime, natural fibres will be taxed at 5 per cent besides yarns in all other categories. This has left these new-age entrepreneurs in a fix, wondering if GST would end up making the already expensive northeast ethnic handloom apparel more pricey.
Hundreds of boutiques, where women entrepreneurs like Lekha design apparel with indigenous tribal designs on natural fibres, dot the towns of northeast. Apart from cotton, the famed Eri and Muga are the two most popular and highly priced silk fabrics in Assam. The original muga silk starts from 25,000 onwards.
These boutiques have given a new lease of life to the traditional handloom fabrics of Assam, fighting a battle against cheap fake substitutes made in power looms. It’s a battle for keeping a legacy alive. Together, the states in the Northeast produce over 60 percent of country’s total handloom produce.
“I don’t think this it will affect because the threshold turnover for GST is 10 lakhs and then there is composition policy available and even the state government can give refunds,” said Assam Finance Minister Himanta Biswa Sarma.
But buyers remain sceptical of the new tax regime – wondering if they will have to shell out extra for the prized pieces of clothing. “We are confused about GST. Not sure yet. Still 5% tax on Assam Silk; it will be hard on middle class people,” said Mitali Kalita in Guwahati.