CFLA urges 5% GST on footwear of all MRPS, Govt reduces by 5% on footwear up to ` 1,000
Council for Footwear & Leather Accessories (CFLA) has been meeting the higher echelons of the Government to impress on them the steps needed to be taken for the development of the footwear sector, including reduction of GST.
Adesh Gupta, Chaiman, CFLA along with Inder Dev Singh Musafir and Ramesh K. Dua met with Dr Arun Kumar Panda, Secretary, MSME, Government of India on 9 July 2018. At the meeting, the core team of CFLA emphasized that GST rates for the footwear sector need to be rationalized to 5% for all MRPS. The sector has been hit by dual rates of 5% and 18%, attracting the unorganized players, resulting in promotion of cash economy as well as inviting cheap and under-invoiced imports from China to the tune of 25 crores pairs annually.
It was also mentioned that the sector specially has a very low revenue impact on GST collections but provides large scale employment at the grass root level having all the recipe for success under “Make in India”, be it raw material, labour, infrastructure, resources required to become a factory of the world. The team strongly contended that there was still an opportunity for creation of at least 1-2 million new jobs at the grass root level if the Government considers lowering of GST rate to 5%.
Further, lowering of GST rate can easily integrate 80% of MSMES. Lowering of GST will prove to be a game changer for the footwear sector considering revenue is paid by a few companies. They recapped the secretary that after the new Government came into power in 2014, footwear sector was chosen as the top priority sector amongst 25 sectors chosen under “Make in India”. A Committee headed by a cabinet minister prepared action plan for 1-year and 3-year in consultation with various stakeholders and was presented to the Prime Minister and his cabinet colleagues.
The advocacy was to integrate 80-90% of MSME sector into the main stream by simplifying/reducing the various layers of taxes such as excise, VAT, etc. to the lowest levels. However, GST was arbitrarily fixed at very high rate of 18%, which paralyzed the footwear sector. At present, the mood in the footwear sector is negative and there was no sign of growth. Adesh said, “On the whole, the meeting with Secretary-msme was productive. The Secretary assured us of full support in the reduction of GST rate for the footwear sector.”
In a latest development the GST Council has cut tax rates on 88 items, including footwear. This was announced by interim finance minister Piyush Goyal. Footwear costing up to ` 1,000 will now attract 5% GST. So far, footwear up to ` 500 attracted 5% GST, and those having retail sale price of over ` 500 attracted 18% rate.