Textiles and footwear will face a higher GST today.
When the Goods and Services Tax Council meets on Friday, it is expected to put the implementation of a higher textile tax on hold. The industry and several other states have objected to the tax rise from 5% to 12% in the beginning January 1, citing higher compliance costs, particularly for the unorganized sector and MSMEs, and arguing that it will make poor man's apparel a little more expensive.
Gujarat, West Bengal, Delhi, Rajasthan, and Tamil Nadu all said no to a GST raise at a pre-budget meeting convened by national finance minister NIR MAL A Sith a Ra man.
Mannish Sisodia, the deputy chief minister of Delhi, said the plan to hike the GST on textiles is not people-friendly and should be rescinded. If an ordinary man spends Rs 1,000 on garments, he must pay Rs 120 in GST. "Delhi is not in favor of this," Sisodia, who is also the finance minister of Delhi, stated.
P Thiago Raja n, Tamil Nadu's finance minister, said: "It's a one-point agenda (for the council meeting on Friday). Many states have raised it as a priority. It is stated in the agenda item that it was raised by Gujarat, however I am aware that it was raised by various states... The decision to increase the GST rate should be put on hold."
We will fight for a total reversal. The industry has made various representations to us. This sector employs a lot of people and has a lot of small businesses, according to a state's finance minister. A number of states are planning to argue for the raise to be completely reversed.
Telangana and West Bengal have requested Prime Minister Narendra Modi to intervene, citing the potential for job losses and unit closures. Subhash GAR G, a cabinet minister in Rajasthan, believes that the textile's industry should be boosted.
According to Amit Mithra, Bengal's chief minister's adviser, rising GST from 5% to 12% will result in the loss of 15 million jobs and the closure of 100,000 businesses. India's domestic textile and garment industry is worth roughly $140 billion, with exports worth another $40 billion. In 2019, the textile and apparel industry contributed 2% to India's overall GDP and 11% to total manufacturing in terms of gross value addition.
The textile's ministry said in its year-end statement on Monday that the higher and uniform GST has addressed the inverted tax structure in the man made fiber (MMF) textile value chain, and will enable the MMF segment to grow and emerge as a major employer in the country.
According to the Confederation of All India Traders (CAI T), the additional tax will not only increase the financial burden on end consumers, but will also impact small enterprises and encourage tax fraud.
The increased GST rates, on the other hand, have angered business groups and state governments. There's a likelihood that state legislators would speak out against the GST increases on these items during the conference. As a result, there's a likelihood that the GST raise on footwear and textiles would be delayed.
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