GST rate revision for textile sector runs into headwind
Even as the central government aims to correct the inverted duty structure to give relief to the textile industry, manufacturers — especially those of textile and apparel (other than fibre and yarn) — have raised red flags on the upcoming Goods and Services Tax (GST) rate hike, which will kick in from January 1, 2022.
Officials in the loop tell CNBC-TV18 that the Union Ministry of Textiles — after receiving inputs from industry associations — has now decided to approach the GST secretariat seeking a restoration of the rate to 5%.
“The industry is of the view that textile fabric manufacturers or fabric weavers will see a significant rise in their working capital requirements due to the disparity, as raw material will be taxed at 5% and the finished product will be taxed at 12%. So, they are seeking a restoration of the old rate of 5%,” the source said.
The textiles ministry is opposed to the rate hike and feels that the industry needs relief. Any decision which adds to their troubles needs to be flagged. So, our communication to the GST secretariat is very clear — maintain status quo on rates and make any change only after a detailed discussion with the ministry and the industry stakeholders,” the source added.
Cotton fabric manufacturers too are opposed to a hike and want GST to remain at 5%
The GST Council, in its last meeting, took the decision to correct the inverted tax structure by raising GST from 5% to 12% for several textiles and apparel (other than fibre and yarn) items from January 1, 2022.
Currently, GST on manmade fibre (MMF) and MMF yarn is at 12%, and MMF fabrics is at 5%. The chemical inputs used to make yarn or fibre are taxed at 18% .
So now, all interested parties have their eye on January 1, 2022, waiting to see whether the plea raise by the textiles ministry gets a timely resolution.
source- CNBC TV18
https://www.cnbctv18.com/business/gst-rate-revision-for-textile-sector-runs-into-headwind-11826212.htm/amp
