Government prepares to introduce new GST rates for apparel and textiles in New Year

By

Isabelle Crossley

Published
Dec 23, 2021

The government has received large-scale backlash for its proposed goods and services tax hike to 12% on numerous apparel and textiles categories, but remains set to implement the tax increase on January 1, 2022.

As the GST Council previously made the decision to increase the textiles GST rates from 5% in many categories to 12%, the central government remains set on going ahead with its plan, despite trade bodies and other government agencies speaking up against it, the Economic Times reported. 

“The decision to implement from January 1 was taken by the Council after intense deliberations,” an official told ET Bureau. “We will place the representations before the Council whenever it meets next.”

The Ministry of Finance stated that it will voice the concerns it has received from traders’ bodies to the GST Council before the end of the year. Although industry organisations including the Retailers Association of India have urged the government to scrap the hike to prevent a rise in consumer prices, the GST Council has argued that it will solve the inverted duty structure currently in place. 
 
“Inverted duty structure broadly harms the sector as companies are unable to take credit of higher tax paid on inputs,” the official told ET Bureau. “It had to be corrected to help the industry.”