Textiles sector GST Hike: Ministries Differ in their view

The government's move to increase goods and service tax on textiles, when input costs are already rising, is facing resistance from the industry.

The two ministries involved also differ. On Nov. 18, the Finance Ministry, based on the recommendations of the 33-member GST Council, decided to impose a flat 12% tax on textile items like man made fibre and finished goods from Jan. 1, 2022, to correct the inverted duty structure.

At present, a 5% tax is levied on the sale value of up to Rs 1,000 per piece. A uniform tax rate, according to the council, is expected to address anomalies that occur when the tax rate on raw materials is higher than the tax on the finished product.

For instance, inputs into the man-made fibre fabric (yarn and fibre) attract a GST of 12-18%, which is higher than 5% on fabrics. That's also called inverted duty structure.

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(The news article has not been edited by DFU Publications staff)

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