Textile industry hail GST rate cut on textiles job works

By

Maverick Martins

Published
Aug 8, 2017

The Confederation of Indian Textile Industry (CITI) has hailed the government’s decision to bring down the GST rate on textile job works like weaving, cutting, knitting and embroidery to 5 per cent from 18 per cent.

After the implementation of GST on July 31 across India, job works in the textile sector were taxed at 18 percent under the new tax system leading to massive protests and shutdown across the country.
 
After receiving various representations from various textile bodies across India, the GST Council headed by Finance Minister Arun Jaitley last week had slashed the GST rate to 5% giving some reprieve to the textile sector in India.

"A common rate across the chain would also avoid confusion. All textile job works being manufacturing activities were exempted from service tax in pre-GST regime. But job workers could not avail input tax credit that had been increasing the cost of the products and affecting the export competitiveness and the domestic consumers," CITI Vice Chairman Sanjay K Jain said in a statement.
 
He said the 5 per cent GST rate on job works would enable the industry to claim full input credit and avoid any inverted duty and strengthen the global competitiveness of the textile sector apart from benefiting the domestic consumers.
 
He urged to the government and GST Council to accommodate the textile industry's demand of 12 per cent GST rate from the current18 percent on MMF and synthetic yarn or refund of duty under inverted duty incidence at fabric stage as prescribed in GST Act.
 
Earlier other industry bodies like the Indian Texpreneurs Federation (ITF) and Tiruppur Exporters Association (TEA) had also welcomed the announcement to slash prices on job works on textiles.