Jamuna Lal Bajaj Street, one of the busiest parts of the city, wore a deserted look on Tuesday. Comprised largely of shops linked to the textile industry, traders closed down operations here as part of a three-day nationwide strike opposing the five per cent Goods and Service Tax (GST) on fabrics. The protest is also against the “complex procedures” that traders have to pick up to comply with the new rules. A string of shops on Cotton Street, Satyanarayan Park and the adjoining street in Burrabazar — one of east India’s largest wholesale hubs — remained closed throughout the day.
“Fabrics and textiles should be treated on par with agriculture industry. Till a couple of years ago, fabrics were essential commodities. The government announced it (the new tax rules) on June 3, and it will be imposed on July 1. Complexity of GST is too terrible to understand. Our trade is not conducive to GST rule. Most people who earn their bread and butter through this industry are not educated. How will they cope with GST?” Arun Bhuwalka, president of Chamber of Textile Trade and Industry told The Indian Express.
According to sources, readymade fabrics below Rs 1,000 would attract 5 per cent GST, and fabric above Rs 1,000 will be charged 12 per cent. Natural fibres such as cotton or cotton yarn will attract five per cent GST. Protesters said this is the first time in the country that fabrics will be taxed.
“About 70 per cent of the 50 lakh people associated with the trade are related to the micro sector… These new tax rules will disturb the entire trade system. This will have a very serious impact on our industry. We demand that the government realise the simplicity of this trade, and roll back its decision to impose GST on fabrics,” said Brij Mohan Mohta, senior vice-president of the Chamber of Textile Trade and Industry.
Amit Agarwal, a protester, said: “We have to learn computer skills and hire a chartered accountant. We are small day-to-day traders, it doesn’t make sense. Government is perhaps not aware of the plight of small traders who deal with fabrics.”
Wholesalers justified the strike by saying the five per cent tax would badly affect their business. Traders are also worried about how the textile industry — which runs on credit — will get accustomed to the new system.
“The maximum period (to pay tax) under GST is 180 days. Ours is a business that runs on credit. We get payment even after 210 days, and at times fabrics are returned to us, so we cannot consider the goods to be sold till payment is done. This is so confusing. Our purchase and sales statements will not tally,” added Bhuwalka.
As per traders, the situation is especially difficult in West Bengal, as fabrics are brought from outside and not manufactured within the state. It will be a big blow to the micro-sector, which employs thousands of poor people, claimed traders.
“The five per cent tax would increase the cost of the fabric, and the middle-men who are poor will be badly effected,” said Sitaram Prasad, a fabric dealer.