11.01.2023: PHDCCI urges government to rationalise GST on textiles

PHD Chamber of Commerce and Industry (PHDCCI) on Tuesday asked the government to rationalise Goods and Services Tax (GST) on textiles. 

“The GST on man-made fibre (Polyester Fiber) and its basic raw materials PTA (Purified Terephthalic Acid) and MEG (Mono Ethylene Glycol has been still kept at 18% per cent). The GST on Filament Yarn/ Spun Yarn has been reduced to 12% and on all fabrics (Man-made & Cotton) to 5%leading to an inverted duty structure and blocking of working capital. The Government should bring down GST on man-made fibre and their raw materials PTA & MEG to 5%, ” the industry body said in its pre-budget expectations. 

It has recommended rationalizing accumulated ITC on capital goods. 

“At present accumulated Input tax credit (ITC) on capital goods is not refundable as the definition of ‘Net ITC' in Rule 89(4) includes ITC on inputs and input services only. This leads to a huge blockage of the capital of exporters who have invested substantial amounts in capital goods procured from abroad or from within India on payment of IGST/ GST. Non-grant refund of ITC on capital goods adds to the cost and makes Indian exports non-competitive.” it said.

PHDCCI has also demanded that the man-made fibre industry from fibre / yarn to garments should be under the ministry.

“MMF Industry is classified under the Department of Chemicals and Petrochemicals, Ministry of Chemicals and Fertilizers as the input materials are Petrochemicals. However, in terms of saleable products, the yarns and fibre are under the Ministry of Textiles. The duality has generally led to confusion and chaos as all our requests are going back and forth. No one in the Ministry of Textile takes an overall view of the problem. Being administered by one Ministry would be helpful for the industry. Needless to add, keeping in view our saleable output, it should be Textile Ministry,” it said. 

The chamber has also demanded removal of anti-dumping duty on raw material PTA.

“Availability of basic raw materials at international prices-Anti – dumping Duty (ADD) on Purified Terephthalic Acid (PTA) the main raw material for manufacturing polyesters which was levied in July 2014 has impacted the growth of man-made fibre very badly. There is no Anti-dumping Duty on fibre/ yarn and fabric. This anomaly has allowed the import of yarns and fabrics into India at prices lower than domestic prices,” it pointed out. 

Source: United News of India 

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