The 28th Goods and Service Tax (GST) Council meeting yielded positive results for the Indian textile industry. The centre reduced tax rates on overall 50 products in a bid to attract traders and middle-class section. Regarding textile, it also decided to allow input credit on manmade fabric equivalent to 7 per cent, providing a level-playing field to synthetic textile manufacturers through a uniform tax rate on the entire value chain. The revised GST rate will be applicable from July 27. The move will cut effective GST on synthetic fabric to 5 per cent from 12 per cent earlier.
The council also agreed on the refund of Input Tax Credit (ITC) at fabric stage that brought a huge relief for the textile sector. Rates cut on Chenille fabrics and other fabrics under heading 5801 and handoom dari to 5 per cent from 12 per cent is a big win for the textile manufacturers who were reeling under immense pressure. It is expected to benefit around 40,000 textile workers who have lost their jobs in the last one year. The council has allowed traders, who generate turnover up to Rs 5 crore, to file the return quarterly.
The Confederation of Indian Textile Industry (CITI) heaped praises on the Government for this move saying that this step taken by the Central Government will not just enhance the country’s economy but will also improve its domestic and overseas export sector. Sanjay K. Jain, Chairman, CITI, said, “The industry was waiting for these steps for a very long time as it is already facing a lot of problems in competing with its competitors in the global market. We have been continuously asking the Government to provide relief to the fabric segment as for the overall growth of the textile sector, as it provides sizeable employment opportunities – 40 jobs on 1 crore investment – that is more than any textile value chain sector.”