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Fibre2Fashion
Published
Jun 2, 2017
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Confederation of All India Traders demands categorisation of fabrics of all kinds under 5% GST slab

By
Fibre2Fashion
Published
Jun 2, 2017

The Confederation of All India Traders (CAIT) has urged Union finance minister Arun Jaitley to categorise fabrics of all kinds under the 5 per cent tax slab of the Goods and Services Tax (GST). Being a new entrant to the taxation club and given that cloth is an item of mass consumption, 5 per cent should be the appropriate rate of taxation, added CAIT.



It is well known that Chinese made synthetic cloth is cheaper than its Indian counterparts, essentially due to the massive scale of production and government incentives. A higher taxation rate will cripple Indian industry further by triggering a price rise which will ensure more market penetration for Chinese cloth in India. So, while yarn can be kept at 12 per cent, it is imperative that a lower tax rate of 5 per cent should apply on cotton and synthetic garments, said CAIT in a press release.

With a view to facilitate smooth transition of trade and commerce from current VAT regime to GST tax regime, CAIT has suggested that a period of nine months beginning July 1,2017 (the likely date of GST implementation) can be declared as a 'trial period' and no penal action is taken against any trader for procedural lapses except wilful tax offenders.

The association has also suggested that first three years of GST implementation in India can be declared as the 'Transition period' and instead of penalising, due support is given to trade and industry to cope up with the new taxation system.

 

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