GST Council to reduce taxes on Indian apparel industry
The Apparel Export Promotion Council (AEPC) said that the GST Council’s decision to correct inverted duty structure on textiles from January 1, 2022 will lessen the tax burden on manmade fibre (MMF) fabrics and garments.
India
The
GST Council in its latest meeting agreed to correct inverted duty structure on
footwear and textiles from January 1, 2022.
The
Apparel Export Promotion Council (AEPC) said that the GST Council’s decision to
correct inverted duty structure on textiles from January 1, 2022 will lessen
the tax burden on manmade fibre (MMF) fabrics and garments. AEPC Chairman A
Sakthivel said the decision will be a big breather to the industry.
He
added that the inverted duty structure has been an issue with the apparel
industry and that the council had made recommendations to the government for
the elimination of this anomaly that has been resulting in input tax credit
accumulation blocking crucial working capital for businesses.
Inputs
into the MMF fabric segment (fibre and yarn) attract a GST rate of 18% and 12%
whereas the GST rate on the MMF fabric is 5% and that for the finished goods
apparel is 5% and 12%.
Sakthivel
said that, it creates a tax structure where the rate on inputs is higher than
that on the outputs and this increases the effective rate of taxation of MMF
fabrics and garments and violates the principle of fibre neutrality. He also
said that the GST Council‘s decision to extend the
validity of GST exemption on transport of goods by vessel and air from India to
outside India till September 30, 2022, will partially help soften the impact of
the current exorbitant freight costs.
Source: The Free Press Journal
Image
Sources: Google Images
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