The government of India had introduced the GST with a great show by calling in the special Parliament late at night. GST which has been under the firing line for hard to understand the new tax reform.
In another decision of the Union Government of imposing 5% Goods and Service Tax (GST) on raw hides is adding to the worries of the leather and sports industry.
The leather industry which is in constraints of steep hike of 15 to 20% in the cost of raw material after the government’s decision of banning slaughterhouses in Uttar Pradesh followed by the sale of cows and buffaloes for slaughter across the country.
After imposing GST on the raw material in the leather industry and other goods used for manufacturing cricket balls, the price of the cricket balls is expected to double in the next two months, traders claimed.
“Currently, traders have leather stock for one month. So, prices of cricket balls may be stable or may only witness a marginal hike of 5% to 10% in prices. But, if the cattle ban remains intact for over one month, the cost of cricket balls will see a hike of over 40%,” said Ravinder Dhir, president, Sports Forum,
Further, he added that volleyballs, cricket balls and baseballs are all made of leather, for which the leather is imported mostly from Western UP, but due to slaughterhouses there have already been shut down. “A sheet of leather which earlier cost us Rs 1300 in March is now available for over Rs 1,700,” Dhir said
Rajinder Prasad, a leading sports trader here, said that superior quality cricket ball price has gone up to Rs 600 now against Rs 350 to Rs 400 six months ago.
There were at least 60 tanneries (factories) in the district. Five years ago, the figure rose to more than 100.
Jobs Are At Stake:
“Generally, traders prefer to buy the skin from slaughterhouses as it produces high-quality leather products as compared to the skin of dead animals for a cricket ball and sports goods,” said Col Jagjit Singh Paul, president of the Punjab Leather Federation
He further added that jobs of over 10,000 employees in the leather industry here are at stake after the ban of the slaughter of animals and GST on raw hides.
“There was no tax on the purchase of raw material within the state and only 2% Central Sales Tax (CST) was imposed on the imported material. “But after implementation of the GST, the government has imposed 5% tax on the purchase of material within the state and 5% IGST on the import of raw material,” Col Jagjit said.
Similarly, the government is charging 12% GST on the import of finished leather against the current 6.05% VAT charged by the state government, which would increase the cost of all leather goods.
Meanwhile, leather traders are on strike for the past one week against the government’s decision of 5% GST on raw material.