Impact of GST on Musical Instruments and Industry

The implementation of Goods and Services Tax (GST) Regime is definitely a favorable step for the country in terms of economic growth as a whole. However, there are some industries such as the musical industry is not getting benefits with the new tax regime. Let’s have a closer look at the impact of GST on musical instruments and industry:-

Western musical instruments are placed in higher slab rate category i.e 28 percent under the Goods and Services Tax Regime in order to promote the native instruments. The newly implemented GST is imposing 28 per cent tax rates on western musical instruments including piano, humble mouth organ, guitar, and saxophone, as per the latest meeting conducted by the GST Council. Whereas, the Sitar has been exempted under the new indirect tax regime. Though, Store owners, as well as musicians, have been adversely influenced by 28 per cent GST rates on western musical instruments. Apart from these, domestic handmade instruments does not levy any tax rates in the new tax regime.

Under the Previous tax regime, many states such as Karnataka was imposing up to 14 -14.5% value added tax (VAT) on musical instruments whereas the musical instruments of domestic origin were taxed at 5.5 per cent GST.

Director of a music store chain Soundglitz, Siddharth Patwa, said, “Abroad, music is considered to be educational. Putting a tax of 28 per cent on instruments makes pursuing music a luxury.”

A senior director at consulting firm Deloitte India, M S Mani, said, “The idea seems to be to promote local instruments and local music. Imported western instruments will be more expensive compared to handmade instruments manufactured in the country.”

Musical lovers are been worrisome on the high tax rates of musical instruments and nearly doubled if one wants to play the Spanish or the Hawaiian guitar. It is strange that damru or dhol buyers will not be required to pay taxes, whereas those are buying a set of drums will have to pay 28 percent GST.

Read Also: Impact of GST Over Indian Handicraft Industries

But tax officials warned against offering several tax exemptions on domestic musical instruments. Bipin Sapra, indirect tax partner at consulting firm Ernst & Young said: “While exempting indigenous musical equipment will indeed be beneficial in keeping the cost of these products low and give a fillip to their use, the design of GST is based on minimal exemptions and wider base. More the exemptions, the rate on other commodities will continue to be high.”

The government has decided to put the everyday used household musical items in the nil or low tax rate especially those are available in the domestic market. While, abroad music equipments will be categorized under luxury goods and will be levied 28 per cent tax rates under GST

A move was taken by the government, zero levying or nil tax rate on some of the handmade musical equipment to keep the artisan away from the filing and payment of taxes under GST, specifically when a lot of goods sourced from the unorganized sector. Apart from these, various handmade musical instruments are manufactured in domestic countries, which do not want to indulge in complicated compliance requirements.