GST on garment-making may be lowered to 5 per cent

The Goods and Services Tax (GST) Council, headed by India’s finance minister Arun Jaitley, is likely to very soon consider lowering of tax rates for garment-making tasks from 18 to five per cent and removing anomalies in taxation where the intermediate goods are taxed at the highest bracket than the tax on the final output, media reports said.

The Council, comprising representatives from all 29 states, is scheduled to meet full-fledged for the first time on August 5 after the new indirect tax reform was rolled out on July 1. It may also take a look at streamlining the GST-related anomalies raised by the industry over the past one month, according to a news agency.
On July 17, the panel had discussed, via a video conference, hiking cess rate on cigarettes due to some anomaly in the earlier rate.
While services by way of tasks related to textile yarns (other than man-made fibre/filament) and textile fabrics attract 5 per cent GST at present, other tasks related to garments attract an 18 per cent levy.
Under the revised regulation, in the textiles category, cotton and natural fibre and all kinds of yarns are levied a 5 per cent GST, while man-made fibre and yarn attract an 18 per cent tax rate. Silk and jute fibre are exempted.
Man-made apparel up to Rs 1,000 attract a 5 per cent tax and those above Rs 1,000 attract 12 per cent. All categories of fabric attract a 5 per cent rate.

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