New Delhi: The impact of GST can also be seen on the festival bonding brother and sister relationship, Rakhi, the sacred thread that women tie on the wrist of their brothers on the day of Raksha Bandhan, will not attract the goods and services tax (GST) provided it’s the traditional cotton thread. However, gold and silver rakhis will be taxed 5%.

The finance ministry has said puja samagri, including holy red thread ‘kalava’, would attract nil GST. Thus, rakhi, which is in the form of kalava, would be exempted.

Any other rakhi would be classified as per its constituent materials and attract GST accordingly, it said. Thus, rakhis made of gold and silver would face 5% GST.

Central Board of Excise and Customs made these clarifications in response to queries from industry and public in the form of frequently asked questions. It also clarified that sandesh, a popular Bengali sweet, would attract 5% GST whether it contains chocolate or not, clearing a confusion over tax treatment of sweets.

On the other side the busiest market of Old Delhi, Sadar Bazar, looks like a deserted market this year. The shopkeepers blame the newly introduced Goods and Services Tax (GST) for this decline in business.

“I have been in this business (of rakhis) for the past 20 years but I have never seen such a low,” says Jitender Gupta, a trader. He adds, “By now, we usually [end up] selling half of our stock, lekin is baar ek-tihayi bhi nahi bika hai. All because of GST confusion.

We can’t issue bills as we have no clarity about HSN code (Harmonized System Nomenclature) number that should be on these rakhis. Many of us have not even got our GST numbers! The whole process has affected our sales severely.”

The shopkeepers in Sadar Bazar are angry and disappointed that the introduction of GST has hit their businesses. But above that, most of them are in dilemma if rakhi comes under taxable goods or not! “Until last year, there used to be no tax on rakhis, and after GST there’s no clarification on which tax slab it falls in,” says Shayam Mittal from Shayam Rakhi Bhandar, adding, ”Rakhis were tax free until last year but we have no clue about this year.

since GST has come into effect. Though the festivity and goods tax slab is 28 per cent, but we don’t know if rakhis are under this slab. The worst is that even my chartered accountant is confused about it.”