NEW DELHI: From pungi (or been, the instrument used by snake charmers) to ektara and the more familiar sarod, sitar and tabla, the GST Council on Saturday decided against levying the indirect tax on 134 handmade indigenous musical instruments. The harmonium makes the cut but guitar, saxophone, piano or the humble mouth organ don’t figure on the list that was finalized at the meeting of ministers on Saturday evening.
Taxation concerns related to musical instruments as well as handicrafts and sports goods were flagged before the Council some weeks ago as musicians and those selling these goods were complaining about the high levy of 28%. The government has sought to “correct” some of the anomalies in these product groups.
Earlier, many states levied up to 14-14.5% value added tax (VAT) on musical instruments with indigenous ones attracting a levy of 5-5.5%.
“The idea seems to be to promote local instruments and local music. Imported western instruments will be more expensive compared to handmade instruments manufactured in the country,” said M S Mani, senior director at consulting firm Deloitte India.
Music lovers have been complaining that the tax has almost doubled if you want to play the Spanish or the Hawaiian guitar. And, many are finding it strange that the damru or dhol buyers will not have to pay tax, while those buying a set of drums have to shell out 28% GST.
GSTC has clearly put in a lot of effort as there are items that are specific to some states such Getchu Vadyam or Jhallari, Venu (Carnatic flute) Pullanguzhal, dhak (used in Bengal especially during Durga puja) or pakhavaj jori (similar to tabla and used by Sikhs).
But tax experts cautioned against offering too many exemptions. “While exempting indigenous musical equipment will indeed be beneficial in keeping the cost of these products low and give a fillip to their use, the design of GST is based on minimal exemptions and wider base. More the exemptions, the rate on other commodities will continue to be high,” said Bipin Sapra, indirect tax partner at consulting firm Ernst & Young.
While the government has cautiously opted to keep everyday household items in the low or nil tax bracket, musical instruments, especially those that do not have roots in India, are seen to be luxury goods.
A zero levy on some of the handmade instruments is, however, seen as a move by the government to keep the craftsman away from the hassle of filing and paying taxes, especially when a lot of inputs are also sourced from the unorganized sector. In addition, several of the handmade instruments are produced at home in cottage industries, which do not want to be burdended with compliance requirements.