Introduction
The demand for 5% GST on J&K handicrafts has gained momentum, with both the J&K government and local businesses urging the GST Council to lower the current tax rate. This move could significantly impact artisans, exporters, and compliance norms under Indian GST law.
Why Is There a Push for 5% GST on J&K Handicrafts?
Jammu & Kashmir’s famed handicrafts—Pashmina shawls, walnut wood carvings, papier-mâché art—are globally recognised. Yet, many of these are taxed at 12% or 18% GST, making them less competitive in both domestic and global markets.
The key reasons for seeking a 5% GST slab:
- Preserve local livelihood: Over 2.5 lakh artisans depend on the sector.
- Improve global competitiveness: Lower tax improves export pricing.
- Boost tourism-linked sales: Handicraft purchases form a major part of tourist spending in J&K.
- Align with other artisan states: Similar demands have been accepted for specific items in other states under Schedule I of Notification No. 1/2017-CT(R).
Current GST Rates on Handicrafts
| Handicraft Item | Current GST Rate | GST Rate Sought |
|---|---|---|
| Pashmina Shawls | 12% | 5% |
| Papier-Mâché Items | 12% | 5% |
| Walnut Wood Carving Furniture | 18% | 5% |
| Copper and Brass Samovars | 12% | 5% |
Note: These are general rates; actual classification may vary based on HSN code interpretation.
Legal Framework and Precedents
The request for a 5% GST on J&K handicrafts is likely to be evaluated by the Fitment Committee and placed before the GST Council for consideration.
Legal references to consider:
- Notification No. 1/2017-CT(R) (as amended): Provides the GST rate structure for goods.
- Section 11 of the CGST Act, 2017: Empowers exemption/reduced rate on goods of public interest.
- SC ruling in Union of India v. Mohit Minerals (2022): Reinforced GST Council’s recommendatory role but emphasized cooperative federalism.
Expert View: A Policy vs. Revenue Trade-Off
“If GST rates on traditional handicrafts are lowered, it won’t just revive artisan incomes—it could drive formalisation of a historically unorganised sector,”
— CA Arif Ahmad, Srinagar-based tax consultant.
What Should J&K Businesses Do Now?
While the rate cut is not yet approved, here’s how local sellers and exporters can prepare:
- Classify items accurately under proper HSN codes
- Maintain documentation to claim lower rates when notified
- Engage with local GST officials for correct interpretation
- Register under GST, if not already, to benefit from future relief
- Explore e-commerce platforms under Composition or regular schemes for national sales
Will the GST Council Approve the 5% Rate?
The next GST Council meeting is expected to review several rate rationalisations. Given that:
- Tourism, exports, and MSMEs are central to India’s current economic policy
- The Finance Ministry has supported regional crafts in earlier sessions
- There is a strong case of parity with similar exemptions in other states
There is a fair chance of this demand being accepted, at least partially.
FAQ: GST on J&K Handicrafts
Q1: Is there any existing exemption for J&K handicrafts under GST?
No full exemption, but some items may qualify under Schedule I of GST notifications if made without machinery.
Q2: Will a lower GST rate apply automatically once approved?
Only after a formal notification is issued by CBIC following Council approval.
Q3: Can artisans without GST registration sell to tourists?
Yes, but they must ensure annual turnover is below the threshold limit. Otherwise, registration is mandatory.
Summary
The J&K government and artisan businesses are demanding a 5% GST rate on handicrafts to boost local livelihoods and exports. Here’s what it means.
Final Thoughts
A 5% GST on J&K handicrafts isn’t just a tax issue—it’s about preserving culture, enabling artisans, and fuelling inclusive growth. If you’re a trader or exporter in this sector, now’s the time to review your GST structure and prepare for upcoming policy changes.
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