Goods and Service Tax is an indirect tax which is applied through out the country and it is replaced by multiple cascade taxes levied by the central and respective state government. GST was introduced as ‘ The constitution (one hundred and first amendment)act 2017’, following the passage of Constitution 122nd Amendment bill.
In 2000 the GST was first proposed and it took 17 years for the process of forming the legalization. Finally, the most awaited GST is announced by Finance Minister of India Mr. Arun Jaitley.
Textile has very long value chain from fibre to garment and in today’s era in the decentralized sector of textile it is very difficult to have a different tax structure but still, Indian government managed somehow.
What Is GST?
As the name itself is self-explanatory GST is a tax which is imposed or applied when a consumer or buyer buys a good or service.GST is a single comprehensive tax that will include all the other small direct and indirect taxes on consumption like service tax. Such taxation system is followed in the most of the developed countries in the world.
GST replaces all the indirect taxes which are imposed on goods and services by the Indian central government as well as by the respective state governments.
Ministry Of Textile On GST
Smriti Irani the minister of textile asked to the southern Gujarat chamber of commerce and industry to work and cooperate with the government for the betterment of synthetic textile sector and to stop from making demands.
And she added that while meeting with the businessman that those who are against its implications must think of its merits. Passing GST bill is a very revolutionary step by the Indian government.this advantage we can’t let go away so start to work with the government.
GST And Textiles
Textile industries in India convinced the government to impose lowest GST rate of 5% through out all the value chains in the textile and apparel sector, which will all avoid the possibility of tax evasiveness.
The chairman of Texprocil said that “5%GST rate for cotton textiles is very progressive and growth oriented and also thanked hon’ble finance minister for accepting the council suggestions”.
The chairman also requested to the government to ensure the speedy refunds of the input tan credits on exports so that exporters funds does not get blocked.
Highlights In GST About Textiles
- There are four slabs as 5%,12%,18%,28%.
- In order to save and promote natural fibers like wool, jute, silk, and coir exempted from GST where the yarns and fabric made out of these fibres attract only 5%.
- In the same way in order to promote khadi yarn (coarser yarn) also exempted from new taxation system.
- 5% is imposed on to the other vegetable fibres like hemp, flax, etc.
- Cotton attract 5% on cotton fibres yarns as well as fabrics.
- Home textiles such as curtains, blankets, rugs etc attract 5% and 12%.
- Man made filaments as well as man made staple fibres have 18% but the fabrics of man made fibres or filaments attract only 5%.
- Special textiles like embroidery, lace, trimming, tapestries, coated and laminated fabrics have 5% and 12 %.
- On knitted garments, there is only 5%.
- Final garments and accessories will attract the % tax depending on its selling price.garments having selling price more than 1000rs / piece will attract 12% where as below 1000rs/pec only 5 % tax.
- The leading textile entrepreneurs said that the new taxation system will make the textiles industry “more competitive” and help in “exponential growth” in the country.
- CMD of Raymonds Group Gautam Singhania congratulated our prime minister and whole government of India for introducing the biggest transformational tax reform in India.
- Sanjay Lalbhai, Chairman of Arvind Ltd, praised GST. He said that “Implementation of the GST is a historical and bold decision of the present government. It will bring transparency in the industry”. He also added that “the GST will push the Indian textile to be more competitive and this will help India to compete with China in the international market”.
- Speaking at the seminar, President and CEO of US Polo Association, David Cummings, said that “the decision of introducing GST is good for Indian and foreign companies alike”.