The entire Khadi & Village Industries (KVI) sector has been enjoying the benefit of tax exemption even under the pre-independence era. The reduction of the exemption from SSI being drastically reduced from the existing Rs.150 lakh to Rs.20 lakh, the exemption cover enjoyed by many of the Khadi Institutions (KIs) has been removed. KIs are now mandated to obtain registration under GST and also pay GST on various Khadi products which is 5%. The products of the Village Industries sector were either taxed @ 0-14.30% before-GST and post-GST the same products attracts tax @ 12-28%.
A detailed analysis on the impact of GST on khadi sector has been provided in the given link. Please refer Impact of GST on Khadi Sector