New Delhi | Jagran Business Desk: The Goods and Service Tax (GST) Council on Friday unanimously decided to defer the hike in GST levied on textile products including readymade garments, fabrics, synthetic yarn, blankets, tents from 5 per cent to 12 per cent after many states, including Tamil Nadu, Delhi and West Bengal, opposed the move. The government had earlier this year notified the hike, which is scheduled to come into effect from Saturday, January 1, 2022.

The decision to defer the hike was taken during the 46th GST Council meeting chaired by Union Finance Minister Nirmala Sitharaman on Friday. "The GST Council meeting has decided to retain the status quo on GST rate on textile to 5 per cent and not raise it to 12 per cent. The issue of GST rate on textile will be sent to the tax rate rationalization committee which will submit its report by February," Sitharaman said, as reported by news agency ANI.

Currently, the tax rate on manmade fibre (MMF) is 18 per cent, MMF yarn 12 per cent, while fabrics are taxed at 5 per cent. The Council in its previous meeting on September 17 had decided to correct the inverted duty structure in footwear and textile sectors.

With effect from January 1, 2022, all footwear, irrespective of prices, will attract GST at 12 per cent. It was also decided that a 12 per cent uniform GST rate would apply on textile products, except cotton, including readymade garments.

States like Gujarat, West Bengal, Delhi, Rajasthan and Tamil Nadu have said they are not in favour of a hike in Goods and Services Tax (GST) rate on textiles to 12 per cent, from 5 per cent, with effect from January 1, 2022.

The recommendation of the GST Council to increase the GST rates on textiles from 5 per cent to 12 per cent, shall impact a large number of small traders dealing in the textile sector as well as the consumers who will be forced to pay exorbitant rates if the regime is implemented. People in the textile sector argued that such a decision may create a negative impact resulting in a drop in demand and recession.

 

(With Agencies Inputs)

Posted By: Talibuddin Khan