Music artisans and Music store owners say the number of customers have dipped significantly after the Indian government imposed 28 percent GST (Goods and Service Tax) on musical instruments, making them costlier. Musicians and store owners are also not sure if the new tax rate will apply to all kinds of musical instruments or only certain categories.
- Musical instruments in several states were earlier taxed at 14.5 per cent; lot of Indian-made instruments were earlier taxed at 5.5 per cent
- Certain musical instruments in Bengal were earlier exempted from value added tax, and the remaining instruments were taxed at 14.5%.
- Under GST, handcrafted indigenous musical instruments are exempt from tax. But guitars and violins, even if made in India, are categorised under western instruments and taxed more, thus creating confusion.
- In states like Bengal, lakhs of students, teachers, music schools, workers are associated (directly or indirectly) with the music industry.
But has the new GST really impacted the sales of musical instruments?
Yes, say a few music store owners; the new tax rate has affected entry-level products for budding musicians and new learners.
- “We have been compelled to hike the price of our products. There is a steep decrease in production and selling of instruments. Customers are not willing to buy instruments at a higher cost. If this continues, we will have to shut shop,” secretary of West Bengal Musical Instruments Dealers and Manufacturers Association, Ajit Kumar Mondal.
- “A hike of Rs 300-500 in fast-moving instruments like guitars and keyboards has led to a drop in sales definitely. As the margins have become very small for retailers, it’s becoming difficult to offer any discounts to customers,” said Jason Prasanna Raj, manager at Traegen Systems that runs a franchise for Yamaha Music Store in HBR Layout.
- People are buying spare parts, and even musical instruments from abroad because its cheaper abroad than in India, says one musician.
- “As soon as one sees a 28 per cent tax, it becomes a deterrent. Music is a way of life and has helped me make a living. But I struggle to afford a good guitar, a mike or an amplifier. Now it’s become even more difficult. This (28 per cent GST) actually makes businesses lose money,” says Beatboxer and singer Vineeth Vincent.
Scenario in Bengal
Bengal, an important cultural hub in India, has over 3000 small, big and medium musical instruments manufacturing units that employs around 5 lakh people.
Most top classical Indian musicians — be it Pundit Ravi Shankar or Amjad Ali Khan, have walked through the narrow lanes of north and central Kolkata, looking for an instrument of their choice — guitars, violins, sitars, tablas, and more instruments.
Many of these units, however, are now on the verge of closure.
“Earlier, we had 25 workers. Now only 15 are left as 10 of them were asked to leave. The government should consider our plea and we are hopeful that Bengal government will come forward to rescue us from this crisis,” Sujan Bhowmik, violin luthier and worker at Dhulagarh string instruments unit.
“The industry will find it difficult to survive under 28% GST. We will have to reduce our workforce and also perhaps compromise with the quality of instruments,” says a music store owner.
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Music needs to be encouraged
Musicians say music should be encouraged by treating it as an educational endeavor; by applying a tax of 28 per cent on instruments, pursuing music will be considered a luxury.
However, some Tax consultants say that these are initial teething problems, and the prices will normalise and maybe even drop after a few months, once there’s more clarity on the new tax rules.
“With GST coming in, businesses will have to change their filing process. And once new imports begin, prices will be regularised due to the reduced import duties,” says a GST practitioner.