At last, after many ups and downs, the GST Bill has been passed unanimously. It is, we can say, the best example of cooperative federalism! After 1991, and still a long way to go, the Rajya Sabha finally passed the Goods and Services Tax (GST) Bill. Though the actual GST rate applicable to textile and garment products will be announced, Apparel Resources tried to figure out how it will impact the textile industry. It is being said that facing 12% excise duty, the man-made fibres can now also expect exemption as that of cotton textiles. The cotton fibres have no such duty, and as such this difference has distorted the domestic consumption pattern in favour of the cotton fibres. By passing of the GST, this disparity in the excise duty will be ‘erased’ totally, unless the Government decides to give some exemption to cotton fibres. The cotton and man-made fibre are also subject to 4-5% state VAT, which will be subsumed by the GST. GST is likely to have a fibre-neutral rate structure unless differentiation is introduced by explicit choice (Fibre Neutrality Effect).
Meanwhile, a report ‘Implications of GST for Indian Textiles Sector’ by Ministry of Textiles, Government of India, says that since the CGST (Centre Goods and Services Tax) and SGST (State Goods and Services Tax) rates are likely to be higher than the corresponding textile sector revenue neutral rates (RNRs), the textile prices would go up. This will adversely affect demand for textile products. It also says that exports will be zero-rated and all input taxes paid will be rebated by the tax authorities making duty drawback kind of schemes redundant (export zero-rating effect).
Also Read – Textile industry wants GST levied on ex-factory price, not MRP
Dr. A. Sakthivel, President, TEA (Tirupur Exporter’s Association) said the passage of GST Amendment Bills will pave way for the growth of economy and exports. Congratulating the Prime Minister Narendra Modi he said, “The industries and the people will get benefit out of the introduction of GST in the system and at the same time, we request to the Government to address any issues arisen in exports further to implementation of GST system.
Planning to engage one credible external agency to submit our textile industry suggestions on GST, Prabhu Dhamodharan, Secretary, Indian Texpreneurs Federation (ITF), Coimbatore said, “ITF wholeheartedly welcomes India’s important economic reform GST. For textile sector it’s an opportunity to bring whole of textile value chain under GST and in the long run we can build efficient industry by way of this reform.” He also demanded that Government should keep textiles in lowest possible tax structure in GST. “Being an essential item, textiles should be with lower slab than the standard rates,” he said, and added, with GST it is an opportunity for the Government to bring cotton fibre under tax net.
