Published
Jul 18, 2017
Reading time
2 minutes
Download
Download the article
Print
Text size

Government rules out cutting GST for textiles

Published
Jul 18, 2017

Despite protesters in Gujarat demanding the five percent GST on fabrics be cut, the government has stated that this is not a possibility and reassures that the price of fabric is unlikely to increase. 


Finance Minister Arun Jaitley will not be exempting textiles from the GST - The Fearless Indian


The Finance Minister Arun Jaitley said that there was no possibility of scrapping the new GST rates for the textile industry because, if the government did so, the input tax credit chain for domestic industry would be broken and this would make imported items cheaper. According to the government, this in turn would go against their “make in India” directive and jeopardise the very Indian textile businesses that are protesting the tax.

Protesters had complained that this tax will bring new financial struggles for the sector but Jaitley reassured that the new five percent GST will only be equal to, or in some cases lower than, pre- GST tax rates. He went on to state that central excise duty was taken in 2003 and 2004 and so the GST is not the first time that the textile industry has been taxed as a whole. Therefore, the GST should not drive the price of textiles up and the industry should not be adversely affected.

Not all fabrics will be taxed the same under the GST as, while yarns made from silk, wool, cotton, and vegetable fibres will be taxed at five percent, yarns made from man-made fibres or filament will be taxed at 18 percent. This distinction is designed to make classification simple but some, such as weavers in Tirupur, have complained that they are still unsure about how much they will now be taxed. 


The finance minister said that the GST rate structure for the textiles sector was discussed in detail in the GST Council Meeting held on June 3, 2017, wherein the Council recommended the detailed rate structure for the textile sector. He added that the GST rate structure for the textiles sector enables ease of classification and determination of rate, and the organised traders and unorganized sellers in the sector have not been affected by the GST. 

Copyright © 2024 FashionNetwork.com All rights reserved.