Tuesday, February 27, 2018

Indian government's new tax hurts the wedding industry

The Indian government's Goods and Services Tax has taken the shine out of the big, fat Indian wedding.

The tax was introduced over 7 months ago and it replaces more than a dozen central and state tariffs- and has converted India into a single market. The government says that will help cut red-tape and make it easier to do business in the country.

However wedding vendors and their customers say, while the tax has helped formalise the economy, it has come at a heavy cost...

Our India correspondent Neha Poonia reports.

In: 'Indian weddings...'
Out: SOC
Dur: 2:20



VO
Indian weddings are always a lavish, colourful affair.

From the music to the jewellery to the fanfare..it's a celebration where Indian families usually pull out all the stops.

This year though, the festivities have lost steam and families are blaming the goods and services tax.

For the Sharmas- the new tax has meant they've had to rethink the budget for their daughter's wedding.

<<Bite: Sunita Sharma, Bride's Mother>>
Before, GST came into effect, I had planned to buy 6 to 7 jewellery sets for my daughter. I had also planned to have an extensive trousseau for her. After GST, the tax rates on gold and wedding clothes have gone up. We can't afford to spend so much. So we've got her fewer things to keep our budget in control.

VO
Her daughter Niharika Sharma says post GST's implementation- gold, apparel, hotel rooms, photographers, and makeup artists have all become more expensive- prompting the family to cut corners to stick to their budget.

<<Bite: Niharika Sharma, Bride>>
In a way you had to prioritise. Is it really worth it? Can I spoil myself? No. Maybe lets prioritise what is important- lets focus on that. Lets not go crazy.

VO

Earlier, most vendors like tent suppliers, caterers and florists would also often offer huge discounts and avoid paying taxes by not issuing bills. Now with GST having forced formalisation of all sectors- that is no longer an option, pushing budgets through the roof.

Weddings in India are often considered to be an indication of a family's wealth and linked to a person's social standing. So much so that, in India, most families end up spending one fifth of their savings on weddings but GST has changed that...


The reluctance to spend has hit wedding planners' profits as well. Kaveri Vij says business has been down by 10% since the GST's implementation. 

She is spending a lot more time now hunting for cheaper alternatives for their clients. 

Many families are now holding more functions at home and are even reluctant to pay them the 18% service charge that GST mandates.

<<Bite: Kaveri Vij, Wedding Planner, Designer Events Inc>>
At the end the consumer is the one that is being hit by all the taxes in terms of the wedding, even on the smallest commodity which is adding to their wedding budgets. As a result they are compromising on certain services.  
 
VO

The Indian government says that the long term benefits of GST outweigh any temporary slumps. The hope is that business will look more upbeat in the months ahead.

Neha Poonia, New Delhi
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