The GST council meeting on December 31 decided to go ahead with the proposal to hike the tax on footwear priced up to Rs 1,000 from the present 5 per cent to 12 per cent.

Published: 03rd January 2022 02:13 AM   |   Last Updated: 03rd January 2022 02:13 AM   |   A+ A  A-

THIRUVANANTHAPURAM : Frequent increase in fuel prices may have forced many people to prefer walking for short distances. But walking too has become a "costly affair" with the hike in GST on footwear.

The GST council meeting on December 31 decided to go ahead with the proposal to hike the tax on footwear priced up to Rs 1,000 from the present 5 per cent to 12 per cent. Already, 12 per cent is levied on footwear priced above Rs 1,000. The increase will make footwear expensive for the common man. 

Footwear prices had already increased by 20-25 per cent owing to the fuel price rise in the latter half of 2021. A pair of plain rubber slipper which cost Rs 99 in June last year is now priced at Rs 124. The price of plain rubber slippers rose from an average Rs 110 to about Rs 140. These prices will further go up with the tax hike.

The Kerala Retail Footwear Association claims that the decision will sound death knell for the sector. "The two lockdowns and the general drop in demand due to COVID have severely disrupted the sector. Most of us have large stocks which have to be sold for the new rate. This means, the retailer has to pay up for the 7 per cent gap in tax payment. The GST Council did not give us time to sell off the old stock," says Noushal T, general secretary of the association.

C Dhaneesh Chandran, a retailer based in Thiruvananthapuram said the price hike would affect the fast-moving segment. "People's spending on footwear has significantly come down since the pandemic. Many people have switched from costly footwear to low and medium priced pairs," he said.

Footwear priced below Rs 1,000 include those made of rubber, ethylene vinyl acetate (EVA), polyvinyl chloride (PVC) and polyurethane footwear. "People buy new pairs after three or four months. They do it as a habit. The hike will force them to minimise purchase," he said.

Footwear manufacturers too are worried. "Most of us have huge stocks bearing old price stamped on the pairs. The only option left with us is to sell at a discounted price to retailers," said Sajith Kaithona, a Kozhikode-based manufacturer.

Centre didn't heed demand: Kerala Finance Minister KN Balagopal

Finance Minister KN Balagopal said the state had raised the issue at the GST Council meeting. "Our demand was to conduct a scientific study to decide whether a tax hike was required. The Central government decided to implement it for footwear. The centre claimed that the actual price rise would be only 2-3 per cent. I fear that won’t be the reality," he told The New Indian Express.

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