The issue of inverted duties on textiles is in all likelihood to be discussed in the upcoming meeting of the GST Council.
The meeting will take place later this month.
It is also being said that with most states on board to raise revenue so that they do not have to depend on centre for compensation, the GST Council is likely to consider a proposal to do away with the 5 per cent slab by moving some goods of mass consumption to 3 per cent and the remaining to 8 per cent categories.
As of now, GST is a four-tier structure of 5, 12, 18 and 28 per cent. Besides, gold and gold jewellery attract 3 per cent tax.
The discussions are on so as to raise the 5 per cent slab to either 7, 8 or 9 per cent; however, a final decision will be taken by the GST Council which comprises Finance Ministers of both centre and states.
In December, the council had dropped plans to hike the GST rates for most textile products in the man-made fibre (MMF) value chain from 5 per cent to 12 per cent amidst protests from the industry.
The inverted duty structure in textile was deferred at the last meeting, and can be taken up at the forthcoming meeting.
“While the rollback of the GST rate hike proposed on many textile products would benefit the sector, it would be necessary to find out a solution to the problems of inverted duty structure in the textile sector,” said MS Mani, Partner, Deloitte India.
The tax rate on MMF at present is 18 per cent, MMF yarn 12 per cent, while fabrics are taxed at 5 per cent.
