KOLHAPUR: The textile business in Ichalkaranji, popularly called as the Manchester of Maharashtra, will come to a standstill for five days from Friday as over 100 cloth merchants in the town are going on strike against the newly-imposed goods and services tax (GST).
The mill owners and traders in Surat, Ahmedabad, Malegaon and Bhiwandi have already gone on strike, badly affecting the textile business.
The cloth merchants in Ichalkaranji say that the GST is a complex system. While launching the new tax regime, Prime Minister Narendra Modi had called it a good and simple tax.
Since the merchants will stop procuring cloth from millers, the mills will stop functioning as operators fear that over-production and fewer traders will lead to fall in the prices.
Ugamchand Gandhi, president of the Ichalkaranji Powerloom and Merchants Association, said, ” The GST is very complicated. The tax is levied on every stage of cloth production. Also, we have to file three returns every month. We demand that we should be allowed to file the returns once in three months. Moreover, there is no guarantee that there won’t be harassment by the tax authorities. So, we are going on strike; we will protest by organising a march on the local administration office.”
Recently, the government claimed that the merchants do not have to file the returns thrice, but once; and for twice in a month they need to update to the tax authorities through online process.
Already over 40% of the loom owners have stopped procuring yarn since the GST came into force. The GST council, which comprises of state ministers, has bracketed yarn, cotton and fabric together in the 5% tax category. Also, the mill owners claim that the tax will be collected at each stage, such as spinning, sizing, weaving and processing.
If the cotton merchants stop buying the finished product, business over Rs 100 crore every day will come to standstill and employment of over 50,000 people will be directly affected.
Vinay Mahajan, president of Yantramag Dharak Jagruti Sanghtana, based in Ichalkaranji, said, “The merchants are demanding that the GST should not be levied on unit-wise work done. The government has assured the manufacturers that they will get the returns in the form of input tax credit even though tax is levied on each stage of the cloth making process.”
There are four stages in the textile industry through which the cloth and then the garment is prepared. For each of these stages — spinning, sizing, weaving and processing — separate units have been set up in the textile town. Earlier, there was taxation at the initial stage of procurement of yarn and all the units were free from any kind of tax.
Source by http://timesofindia.indiatimes.com