Contact us on +022 2419 3000 or

GST rate change will help textile industry: Govt

Nov 26, 2021
GST rate change will help textile industry: Govt

New Delhi

The textile ministry said that this will save working capital for businesses, reduce compliance burden and resolve input tax credit related hassles. The GST Council had in September decided to correct the tax anomaly called inverted duty structure—a situation where tax outgo on raw materials is more than that on the finished products. Accordingly, the government last week announced the new tax rates. 

18 items including, woven fabrics of cotton, silk and wool, coir mats, matting and floor covering, apparel and clothing accessories of sale value up to Rs. 1,000 and footwear priced up to Rs.1,000 a pair were moved from the 5% slab to 12% slab. 

The textiles ministry stated that the new rate-- uniform GST rate of 12 %--on manmade (synthetic) fibre, manmade fibre yarn, manmade fabrics and apparel has addressed the inverted tax structure in the manmade textile value chain.  


The rates prior to the change takes effect on manmade fibre, manmade fibre yarn and manmade fibre fabrics are 18%, 12% and 5% respectively. The taxation of inputs at higher rates than finished products created build-up of credits and cascading costs. It further led to accumulation of taxes at various stages of manmade fibre value chain and blockage of crucial working capital for the industry, textile ministry said.  The changed rates will help this segment grow and emerge as a big job provider in the country, the ministry said. 

However, the Industry body Retailers’ Association of India (RAI) has urged the finance minister to reconsider the GST Council’s recent decision to increase taxes on several textile and apparel items from 5% to 12% effective January 2022. The steep increase in GST rate will adversely impact 85% of the industry while trying to ease the problem faced by 15% of the industry, according to RAI.


Image Source: Google Images

Also Read: