Ahmedabad: The central government's Diwali gift to small and medium businesses in the form of GST relaxation carries a political undertone, with PM Narendra Modi’s home turf Gujarat going to polls this year.
Over the past decade and a half, the BJP has enjoyed an overwhelming support in the urban areas of the state, and it is evident from the number of seats it has won in all the major cities in the past assembly elections.
However, a large number of traders and businessmen were disappointed with the visible effects of demonetisation and how the Goods and Services Tax was implemented earlier this year.
Gujarat Finance Minister Nitin Patel said on Friday evening, "Not just the major industries of textile and diamond, but smaller clusters in other cities will also benefit from the reforms announced by the GST Council. GST on almost all items that are manufactured in the state has been reduced."
Chief Minister Vijay Rupani added, "People are not against GST and have welcomed the idea of ‘One Nation One Tax’. There were some roadblocks in its implementation which have now been addressed."
Dinesh Navadiya, the regional chairman of the Gems and Jewellery Export Promotion Council, told News18, "The decision not to cite one's PAN for buying gold jewellery up to Rs 2 lakh will give a boost to the gold industry not only in Gujarat, but the entire country. However, the GST Council has done little for the diamond industry of Surat."
Navadiya added that the Gujarat diamond industry is competing with the markets of Israel and Belgium, where there are no taxes whatsoever on diamond manufacturing, polishing and cutting businesses.
"It will be extremely difficult for Surat's diamond industry to complete with the others when the market structures are so different."
Gaurang Bhagat, President of the Ahmedabad Maskati Mahajan, an umbrella body of textile markets in Ahmedabad, said that most of the decisions taken by the GST Council for the textile sector are good and should be welcomed.
"The announcements on RCM and synthetic yarn are quite favourable. Also, the decision to exempt traders with turnover of less than Rs 1.5 crore from filing returns every month, will help traders especially those in the unorganized sector who will now be able to compete with the others," Bhagat told News18.
Union Finance Minister Arun Jaitley on Friday said small businesses would be allowed to file tax returns once a quarter instead of monthly returns. The compliance burden of SMEs in GST has been cut while eligibility of composition scheme has raised to Rs 1 crore.
The government also scrapped GST notification on gems and jewellery stating that PAN card will no longer be mandatory on the purchase of jewellery for over Rs 50,000.