Nirmala Sitharaman (FM) dismisses 'Textiles Ministry Proposal' to defer GST rates hike
_large.jpeg)
25 December 2021, Mumbai:
India’s Treasury Minister Nirmala Sitharaman rejected the Ministry of Textiles’ proposal to postpone the Goods and Services Tax (GST) hike from 5% to 12% of current textiles and other textile products at today’s meeting.
A similar request from the Federation of All Indian Traders (CAIT) was also rejected.
As a result, the GST tax rate will be raised on schedule from January 1, 2022, from 5% to 12% for all types of fabrics and garments with retail prices less than £ 1,000.
However, the GST tax rate for artificial fibers will drop from 18% to 12%. Prices for cotton, cotton yarn, and synthetic yarn remain unchanged at 5 percent, 5 percent, and 12 percent, respectively.
At its last meeting, the GST Council decided to change the GST tax rate to address the reverse tax structure of the MMF textile value chain.
The 18%, 12%, and 5% GSTs levied on MMFs, MMF yarns, and MMF fabrics have created an accumulation of credit and cascade costs due to higher taxation on inputs than finished products. This also led to the accumulation of taxes at various stages of the MMF value chain and the blockade of working capital, which is important to the industry.
India’s Treasury Minister Nirmala Sisaraman rejected the Ministry of Textiles’ proposal to postpone the Goods and Services Tax (GST) hike from 5% to 12% of current textiles and other textile products at today’s meeting. did. A similar request from the Federation of All Indian Traders (CAIT) was also rejected.
“The GST law provides for a refund of unused temporary consumption tax credits (ITCs), but there are other issues that have increased the burden of compliance. The reverse tax system is sector taxation. It has caused an effective increase in rates.
Global textile trade is heading towards MMF, but India could not take advantage of this trend as the MMF segment was constrained by a reverse tax system, “said the Ministry of Textiles. Last month we announced a change to the GST structure.
“A uniform rate of 12% could contribute positively to the growth of the sector by saving a lot of working capital and reducing the compliance burden on players in the industry. ITC accumulated by the tax reversal. It will help to resolve the residuals early. “
Regarding the decision to tax all garments evenly at 12%, the ministry said that differences in garment tax rates would cause problems with tax compliance.
“MMF garments are not easily identifiable and cannot be taxed differently, so we need a uniform tax rate. May be absorbed into value. It will provide clarity to the industry and solve the problems caused by the reverse tax system at once. “
However, industry experts feel that uniform rates make it harder for a sector to stay afloat, leading to smaller players being pushed into unorganized sectors.
As a result, few textile groups have told the Ministry of Textiles to postpone/cancel the increase in GST rates from 5% to 12%, and clothing prices were less than £ 1,000. This request is currently being rejected.
(The news article has not been edited by DFU Publications staff)
Dear Reader, we at DFU Publications are committed to providing the latest news updates on trade development and insights, to keep our readers informed. Stay tuned. Subscribe to our newsletter.
DAILY NEWS:
