The introduction of the Goods and Services Tax (GST) in India has significantly affected various industries, including the art world. While GST has been beneficial for some sectors, its impact on the art industry has been less favorable. For art enthusiasts and collectors, understanding GST’s effect on the art market is crucial. This blog explores how GST has reshaped the taxation landscape for artworks in India.
Pre-GST Taxation on Art
Before GST, artworks such as ceramics, folk paintings, and antiques were subject to Value Added Tax (VAT) or were exempt from taxes in many states, such as West Bengal. In states like Rajasthan, the VAT on art was minimal. Original engravings, prints, and lithographs also enjoyed low tax rates, making art more accessible and affordable for collectors and art enthusiasts.
Post-GST Taxation on Art
With the advent of GST, the tax rates for the art industry were redefined, falling under the GST Rate & HSN Code for Paintings, Decorative & Sculptures – Chapter 97. This new single taxation policy has made artworks more expensive, posing challenges for Indian artists in finding buyers. Here is a breakdown of the GST rates for various art forms:
- Paintings, Pastels, and Drawings: Original artworks, including engravings, prints, lithographs, and sculptures, are now taxed at 12%.
- Postage Stamps and Numismatic Coins: Items such as postage or revenue stamps, first-day covers, and numismatic coins are taxed at 5%.
GST Rates on Artworks :
- HSN Code 9701: Paintings, drawings, and pastels executed entirely by hand (excluding certain decorative articles) – 12%
- HSN Code 9702: Original engravings, prints, and lithographs – 12%
- HSN Code 9703: Original sculptures and statuary in any material – 12%
- HSN Code 9704: Postage or revenue stamps, first-day covers, postal stationery – 5%
- HSN Code 9705: Collections and collectors’ pieces of zoological, botanical, mineralogical, anatomical, historical, archaeological, paleontological, ethnographic, or numismatic interest – 12%
- HSN Code 9706: Antiques exceeding 100 years in age – 12%
Detailed Breakdown of GST for Specific Art Items
- HSN Code 9701: Includes various traditional paintings like Mysore, Rajasthan, Tanjore, and palm leaf paintings, all taxed at 12%.
- HSN Code 9703: Covers sculptures and statuary made of various materials, also taxed at 12%.
- HSN Code 9705: Encompasses numismatic coins, taxed at 5%, and other collectors’ pieces, taxed at 12%.
Taxation of Artworks in Transit and Exhibition
The GST regime also clarifies the taxation process for artworks in transit and those exhibited in galleries. According to Circular No. 22/22/2017-GST dated December 21, 2017, when artists supply their works through galleries, the supply is only taxable at the time of actual sale, not when the artwork is sent to the gallery for exhibition.
Key points include:
- Delivery Challan: For initial transportation of goods for reasons other than supply, a delivery challan is issued. This is also declared as specified in rule 138 of the GST rules.
- Tax Invoice: If the tax invoice cannot be issued at the time of removal of goods, it must be issued after the delivery of goods.
Interstate Art Supplies
Supplies of artworks from one state to another are considered inter-state supplies and attract integrated tax as per section 5 of the Integrated Goods and Services Tax Act, 2017. This further complicates the logistics and financial planning for artists and galleries.
Conclusion
GST has undeniably reshaped the landscape of the Indian art market. While it has streamlined the taxation process, it has also increased the cost of artworks, posing challenges for both artists and buyers. Understanding these changes is essential for anyone involved in the art industry, from creators to collectors. By navigating these new regulations, stakeholders can better adapt to the evolving market and continue to thrive in the world of art.
LinkedIn Link : RMPS Profile
This article is only a knowledge-sharing initiative and is based on the Relevant Provisions as applicable and as per the information existing at the time of the preparation. In no event, RMPS & Co. or the Author or any other persons be liable for any direct and indirect result from this Article or any inadvertent omission of the provisions, update, etc if any.
