How will GST affect artists?

Anjali Jhangiani
Wednesday, 28 June 2017

CA Rishabh Parakh discusses the pros and cons of GST for artists

Everyone’s talking about GST. Some are in favour of the system and some aren’t, but nonetheless, everyone must know the pros and cons that apply to them. Though this is going to affect different sectors of society in different ways, we are going to focus on what changes will the implementation of GST introduce for people who work in the arts sector — that includes musicians, sculptors, painters, comedians, theatre artists, actors, and others.

Rishabh Parakh, chartered accountant, says, “There are over a thousand categories in which you can categorise different kinds of artists. All of them have different requirements and expenses, so it will affect different artists differently.”

But zeroing in on the woes of craftsmen, which include painters, handicraft makers, engravers, people who prepare antique items, and such, Parakh says, “These people had to pay a certain percentage of VAT till now. While VAT was completely exempted in West Bengal since 2003, the percentage was very less in Rajasthan. With GST in the picture, all the craftsmen across India will have to pay tax according to a standardised system. Say the uniform rate for GST will be 12 per cent for craftsmen across India.”

The artists who prepare Ganapati idols will feel the heat of GST during the upcoming festive season. Parakh explains, “Since these artists were buying their material at a lower cost, they were consequently selling their work for a lower cost. With the implementation of GST, their cost of raw materials will rise, which will consequently increase their selling price too.”

But this applies to only those artists whose total annual income is over Rs 20 lakh. The ones earning below that will not be affected.

Another question on artists’ minds is whether this is going to affect entertainment tax. “There are some taxes like entertainment tax, income tax and such, that will have no effect with the implementation of GST,” says Parakh.

Coming to musicians, Parakh says that buying new instruments or paying for repairs might cost them a little more if and when GST is implemented. But if corruption is ruled out and the manufacturing company is actually saving on the cost of production due to GST, there is a slim chance that they will transfer this benefit to their consumers. “The objective of implementing GST is to remove multiple level taxes. The idea is to help manufacturing units save on taxes, which in turn will reduce their manufacturing or selling cost. But it is highly doubtful whether the manufacturing units will share the benefit with consumers or charge them even more,” says Parakh.

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