Indian textile and apparel export industry pleased with GST relief
The Goods and Services Tax (GST) Council has announced tax reduction for the textile and apparel exporters of India at its 22nd meeting. The Council has reduced the GST rate on man-made yarns like polyester, viscose and other blended yarns to 12% from the current 18%. Arun Jaitley, Finance Minister, chaired the meeting. Zari job work will now attract only 5% GST against the previously fixed 12%. This will benefit textile hubs like Surat. Additionally, it was announced that the apparel exporters will start receiving GST refund (for July) from October 10 onwards while refund process for the August month will begin from October 18.
The Council will create an e-Wallet for the exporters by 1st April next year. This will allow them to pay IGST/GST by using the e-Wallet technology. The Government will also deposit a nominal amount as ‘advance refund’ in the e-Wallet. Actual refunds will be settled against the advance refund made. The facility will benefit the exporters by accelerating the GST refund process.
The FM also announced that 0.1% GST will be charged from merchant exporters through schemes like existing advance authorization, EPCG, EoU till e-Wallet comes into effect. Various textile and apparel trade associations of India have hailed the Government’s move of slashing the
Ashok Rajani, Chairman, AEPC said, “These measures will give immediate relief to the apparel exports sector. However, since the duty structure remains inverted with fabric at 5% GST, we are hopeful that the embedded taxes arising out of this inverted structure will be refunded to exporters through appropriate mechanisms."
P Nataraj, Chairman, The Southern India Mills Association (SIMA) commented, “Reduced rate of GST on MMF would greatly benefit the spinning and power loom sector, improve global competitiveness and cloth the poor masses of the nation at an affordable cost.” He was hopeful that the GST Council would soon consider refund of the accumulated input tax credit at fabric stage especially the processed fabrics and also mandate the duty drawback committee to recommend appropriate duty drawback rates and RoSL rates to sustain the export performance.
Rajeev Bansal, Chapter Chairman, Indian Industries Association (IIA) and Secretary, Noida Apparel Export Cluster said, “Reverse Charge Mechanism (RCM) has been deferred till 31 March 2018. I agree that it is very much required to keep the GST chain alive and it is a good step for the time being. However, the release of the refund will ease the liquidity amongst the exporters.” Another apex trade body, Indian Texpreneurs Federation (ITF) also welcomed the decision. Prabhu Dhamodharan, Convenor, ITF stated,
“We are thankful to the Government for this. The textile manufacturing sector will get enough relief with this reduction. It is a historic decision. We have got what we requested.”
Sanjay K. Jain, Chairman, CITI stated that the announcement has sorted out a big issue of inverted duty for the MMF products as it was causing serious issue of escalation of the cost of synthetic products which was further leading to cheaper imports from the competing countries like China and Indonesia. “Extending the tax exemption for 100% EOU units, Advance Licensing Scheme and EPCG Scheme and allowing the merchant exporters to purchase with 0.1% tax payment up to 31st March 2018 are a few announcements that will benefit the textile industry,” said Sanjay.
Extending the tax exemption for 100% EOU units, Advance Licensing Scheme and EPCG Scheme and allowing the merchant exporters to purchase with 0.1% tax payment upto 31st March 2018, are a few announcements that will benefit the textile industry.