GST blues for music retailers

By Apoorv Perti

Chennai, September 21: Music stores and musicians across the city have been affected following the classification of music instruments as luxury items taxable under the 28 per cent category of the Goods and Services Tax (GST).

Lakshmanagoswami, owner of Sruthilaya in Mylapore, said “Sales already used to fluctuate all the time but demonetisation and GST have made things worse as this year’s sales have fallen by more than 50 per cent compared to last year’s. The businessman has to bear all the costs and bribing and corruption are at an all-time high.”

“Online shopping is also a major challenge as people are always looking for the cheapest option available,” he added.

Under Chapter 92 of the GST commodity tariff schedule, music instruments, parts and accessories are all categorized as luxury items taxable at the 28 per cent GST rate. But the ground reality is that there is no clear distinction on how much each instrument should be taxed.

“It makes no sense to not tax indigenous instruments as the industry is small and stagnant. The synthesizer market is growing and there are more people getting into it”.

Seethapathi from Krish Musicals, in K.K. Nagar, said “There is no clarity on which instruments are to be taxed what. Some instruments fall under the 15-18 per cent tax category while others full under the 28 per cent category”.

Most customers are confused about what to buy and when to buy after GST. There is growing competition among music instruments retailers and wholesalers as well. Well reputed retailers have to compete with smaller retailers, which sell cheaper and sometimes lower quality products. Customers are opting for inexpensive unknown brands over popular ones like Yamaha, Ludwig and Dunlop.

Under the GST ruling, indigenous hand-made musical instruments are not to be taxed so as to promote the Indian music industry. Lakshmanagoswami from Sruthilaya countered this saying that all instruments, Indian made or imported, were taxed some rate or the other.

The GST ruling has particularly affected those in the electronic music industry as the equipment required is usually imported and expensive.

Tanseer Jabbar is the owner of The Inventory which deals in synthesizers and studio and live equipment. He said that costs had gone up considerably for the business as well as the customer. The total taxable amount came up to 38 per cent, which included the already existing 10 per cent excise duty on imports and the 28 per cent GST.

Jabbar said “It makes no sense to not tax indigenous instruments as the industry is small and stagnant. The synthesizer market is growing and there are more people getting into it. So ideally the growing industry should be promoted rather than the old one”.

The GST is going to impact the music industry in the coming years with more budding musicians opting out of buying the instrument they want or need, according to Lakshmanagoswami. But it remains to be seen how the indigenous music industry will fare.

For beginners on GST, below is a video explainer: