India: Government rules out GST rate revision for textile industry
The Indian Government has ruled out any scope of relaxation on Goods and Services Tax ( GST) for the textile industry. Textile traders have been continuously protesting against the imposition of 5 per cent GST on textile/fabric. However, the Centre seems unfazed.
Finance Minister Arun Jaitley has reportedly said that if zero per cent GST on fabrics is considered, then input tax credit chain for the domestic market will get affected and this will subsequently make the imported products cheaper in the Indian market. Furthermore, zero per cent tax will make the local market incompetent as the influx of imported items will rise.
“Goods and Services Tax structure for the textile industry enables ease of classification and determination of rate,” underlined Jaitley while addressing a session in the Rajya Sabha.
The Minister also refuted claims that the state textile industry has never been ‘taxed’ before. He cited an example from 2003- 04 when the entire textile value chain was subjected to Central Excise duty.
Under the new taxation system, yarns and fibres made from silk, wool, cotton or other vegetable fibres have been placed under the bracket of 5 per cent GST. Garments priced less than Rs. 1,000 will also come under the same (5 per cent) tax slab. However, those (garments) exceeding Rs. 1,000 will attract 12 per cent tax. This irked the industry and led to nationwide strikes.
However, there is still a ray of hope for the textile industry as the Government will undertake
GST revision after three months since its implementation. Till then, there will be no relief to the sector as the FM puts any reduction in GST rate on hold.
Finance Minister Arun Jaitley refutes claims of state textile never being taxed before