GST burden on Khadi must be removed: V Shivadasan MP

New Delhi: Dr. V Shivadasan MP has stated that a solution must be found for the severe challenges faced by Khadi institutions and workers due to GST. He raised the issue in the Rajya Sabha with special emphasis. Although GST came into effect on July 1, 2017, a notification allowing GST relief for Khadi yarn, Gandhi caps, the national flag, and similar items was issued only from September 26, 2017.

Since no retrospective benefit was granted, all Khadi products sold between July 1 and September 25, 2017, were subjected to tax. This created an unexpected financial burden for Khadi institutions operating on small margins.

Dr. Shivadasan pointed out that several Khadi products, including readymades, bed sheets, and pillow covers, are subject to GST at 5 percent for products priced below 1,000 rupees and 12 percent for products above 1,000 rupees. Since Khadi is entirely handmade, the production cost is naturally higher. The additional GST burden increases retail prices, which in turn gradually reduces sales.

He stated that this levy threatens the livelihood of thousands of people working in the Khadi sector and endangers the long-term sustainability of the Khadi sector, which has historically played a crucial role in rural employment and self-reliance.

Dr. Shivadasan MP urged the central government to either consider full GST exemption for Khadi products or ensure unobstructed input tax credit (ITC) for Khadi institutions. He said such measures are essential to protect Khadi workers and revive the Khadi sector.