Jan 3, 2022
Trade bodies demand scrapping of GST rate hike on textiles, not deferral
Jan 3, 2022
Clothing and hosiery trade bodies have praised the Goods and Services Tax Council’s decision to postpone its textile tax hike and have urged the government to scrap the proposal altogether.
“It is a respite but we want abolition and not deferment of the hike,” the West Bengal Garments Manufacturers & Dealers Association’s secretary Devendra Kumar Baid told the Press Trust of India. “If it is postponed then it may come sometime later. So we want to continue to keep up the pressure to abolish the proposal altogether for the sake of the industry and avert huge job loss.”
The GST Council is India’s highest decision-making body for indirect taxes. The organisation had planned to raise GST rates on numerous categories of clothing and textiles from 5% to 12% from January 1, 2022. However, following pleas from state governments and trade bodies, the council chose to defer the ruling to avoid the lakhs of job losses numerous organisations and politicians said it would lead to.
“It is at least a temporary respite ahead of the new year,” said K B Agarwala, president of the Federation of Hosiery Manufacturers Association of India. “The tax hike would have caused a huge impact on the sector as it could not have absorbed the hike. The organised sector, which is reeling under a 25% inflation owing to input material price hike, would have collapsed ad the government would have lost revenue with the strong emergence of a parallel economy to bypass the tax.”
The GST Council ruling to defer the tax hike follows protests and strikes in areas including Ahmedabad, Rajasthan, and Surat, among other locations. Organisations that have voiced their stance against the hike include the Retailers Association of India, Confederation of West Bengal Trade Association, and Federation of Rajasthan Trade and Industry.
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