RUDRAPUR: The implementation of the goods and services tax (GST) on July 1 has affected sales at the central government-run Khadi Gramudyog outlets in Uttarakhand’s Kumaon region. Earlier, items sold at Khadi outlets across the country were exempted from taxes. Post GST, 28 Gandhi Ashrams across Nainital and Udham Singh Nagar districts have seen a total fall of over 30% in sales. The production of Khadi products has also been reduced by more than 80%, leaving around three thousand employees in the lurch.

Khadi Gramudyog stores sell a variety of products from herbals soaps and face packs to incense sticks, sarees and even the national flag. GST has been imposed on all commodities except the Tricolour and the Gandhi topi and the outlets have witnessed a significant dip in sales.

There are over 100 small and medium sized Khadi Gramudyog outlets in the Garhwal region where 25% footfall has dropped on an average after GST implementation. Sanjay Tomar, manager of a Khadi outlet in Krishna Nagar, said, “The business has dropped as supply from far off states has stopped. Manufacturing units of products such as herbals, clothes and edibles are yet to switch over to the GST regime and are unable to transport the consignment.

“Prices have increased after GST, also registration of manufacturing units under GST is slowing the business,” said Deepak Bisht, an executive of Khadi outlet on Chakhrata road.

Rajit Ram Yadav, the director of Rudrapur’s only Gandhi Ashram that caters to a dozen nearby villages and border areas in UP, told TOI that GST has proved to be more devastating than demonetisation for the centre. “While sales dip during demonetisation was a temporary phase, the new tax ambit is permanent and is having an adverse effect on the earlier tax-exempted stores,” said Yadav.

“Earlier, items at khadi outlets were sold at MRP. But with GST, we did not get any clarity on tax rates and exemptions. In July, we did not charge our customers GST and the commission decided to pay the tax on its own. Despite the effort, the sales have cumulatively plummeted,” said Shrikant Dixit, manager of the Rudrapur centre.

Dixit added, saying that if sales keep declining, they will lose another season just what had happened during demonetization. We will have to clear stocks first before placing new orders,” said Dixit.

Production has gone down at units in Kashipur, Jaspur, Haldwani and Gularbhoj, where around 3,000 people are employed.

Suresh Chand Pant, secretary of regional office of Gandhi Ashram Commission in Haldwani, said, “In August 2016, the 28 centres in two districts generated Rs 25.28 lakh, but this year, August sales were only Rs 18 lakh. Even in July, the sales were Rs 34.28 lakh.”

Operators said that items such as herbal shampoos, black henna, stuffed clothes and cosmetics have come under the tax ambit of 18-28%. A blanket has now become expensive by Rs 500 under the 18% tax ambit. This has affected sales in the popular segments.

Former health minister, Tilak Raj Behar, said, “Around 13 lakh people are associated with Khadi Gramodyog across the country and GST may lead to several job losses.”

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