![\"Handicraft](\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/07\/Handicraft-business.jpg\")
<\/figure><\/div>\n\n\n\nWhat all Tax Benefit is given to Handicraft?<\/h2>\n\n\n\n
As, we all know that we have Parliamentary\nform of democracy both at Center and State level. Therefore, tax benefit is\nprovided both by Center Government and State Government to the homemade craft\nbusiness.<\/p>\n\n\n\n
To understand it better let us divide\nit into two parts: <\/strong><\/p>\n\n\n\n Under the old system before GST act, handicraft\nwas not taxable in 15 out of 29 states. However, some tax used to be levied @ 5\n% in remaining states. Also, service tax\nwere also charged when some services is received by craftsmen for production of\ngoods.<\/p>\n\n\n\n Also, most of homemade craft were\nkept under Schedule I which is exemption list under the model VAT law.<\/p>\n\n\n\n To understand tax benefit post GST we are dividing this into two parts:<\/p>\n\n\n\n Any export of homemade goods shall be ‘zero rated supply’ which means that no tax need to be paid at\nthe time of exports but credit of the input tax related to that supply will be\nadmissible. This regulation is been made since homemade items should be freely exported\nin accordance of world trade organization. <\/p>\n\n\n\n Refund shall be granted of tax on goods and exported out of India or on inputs used in the handicraft goods which are exported out of India. So, the exporter of homemade goods can get dual benefit i.e. no tax at the time of export along with refund of tax paid on inputs.<\/p>\n\n\n\n Under the IGST law, exporter of handicraft has two options to either pay\nIGST at the time of export or export the goods without payment of taxes\n(zero-rated supplies). In the first scenario, the refund of the taxes paid will\nbe available to the exporters and in the second scenario, the refund of the tax\npaid on the inputs or used in the production of handicraft goods exported out\nof India. <\/p>\n\n\n\n The Government of India has introduced Exports from India Scheme through\nthe Foreign Trade Policy 2015- 2020. Over 35 handicraft products such as\ncandles, paper and clay articles would be entitled for export benefits under\nthe scheme. Under this scheme, the government provides duty credit scrip to\nexporters. The rate varies from product to product and the export destination,\nas envisaged in the foreign trade policy. Some Merchandise Exports from India\nScheme entries under handicraft sector are included for enhanced benefits under\nMEIS for the export.<\/p>\n\n\n\n Under the new system, the legislature sorted most of the handicrafts\nitems under the slab of 2.5 % to 6 % of GST rate. Also, the benefit is also\nenjoyed by craftsmen due to reduction in double jeopardy i.e. double taxation\nof goods both at center and state level in GST system. For example –\nHandcrafted candles are taxed @ 6 % under code 3406, Bangles, beads and small\nware is taxed @ 2.5% etc. <\/p>\n\n\n\n![\"Handicraft](\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/07\/Handicraft-Business.png\")
<\/figure><\/div>\n\n\n\nExport\nof Homemade Goods<\/h3>\n\n\n\n
![\"CEO](\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/07\/CEO-1.png\")
<\/figure><\/div>\n\n\n\nHome\nConsumption of Homemade Goods<\/h3>\n\n\n\n