18.08.2022: GST Council unlikely to correct inverted duty structure on textiles next month

The GST Council is unlikely to take up correcting inverted duty structure for textile anytime soon. Meanwhile, the Council in its next meeting will take up two issues–a circular for not imposing IGST on ocean freight and opening up windows for transitional credit beside reports by two Group of Ministers (GoM).

The next Council meeting is scheduled to take place in Madurai (Tamilnadu) next month, though date has not been fixed yet.

Inverted Duty Structure on Textiles

A senior Finance Ministry official confirmed to  BusinessLine that no time line had been proposed yet for correcting the inverted duty structure (higher duty on raw materials and other inputs and lower duty on final product). “This is not just an economic issue but a much bigger political issue and considering state assembly election in Gujarat, the possibility of considering IDS on textile soon is ruled out,” he said. 

In December, the GST Council had decided to defer correcting IDS on textile from January 1, 2022. It was decided that the GoM on rationalisation will look into this issue and suggest a special rate after correction of IDS. In its interim report, the GoM focussed on correction of IDS in some of the sectors and also on exemption. Now, it is working to preparing another report, but as of now there is no indication that the textile issue is to be part of this report.

Agenda for Council meeting

Meanwhile, the official quoted above said that the agenda for the next council meeting meeting is almost firmed up. These include issuance of a circular (after Supreme Court ruling) rejecting GST on ocean freight, approval to allow the opening up GST portal for transitional credit beside two reports of GoM.

Tentative Agenda for Madurai GST Council Meeting

– To examine recommendations of Group of Minister on online gaming, casinos and horse racing

– To examine recommendations of Group of Minister on Goods and Service Tax Appellate Tribunal (GSTAT)

– To consider second report of Group of Ministers on rate rationalization (subject to submission) 

– To consider giving post facto approval to a circular on opening two months special window related for transitional credit 

– To consider issuance of circular for removing IGST on ocean freight

Source: The Hindu Business Line 


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