CFLA urges 5% GST on footwear of all MRPS, Govt re­duces by 5% on footwear up to ` 1,000

Shoes & Accessories - - The Month That Was | Updates I India -

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.

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