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Synthetic fibre prices to go up due to new GST rate

Oct 22, 2021
Synthetic fibre prices to go up due to new GST rate

Lucknow, UP

With a unified Goods and Services Tax (GST) rate on textile products set to kick in from January 01, 2022, Gujarat-based textile industry fears that synthetic textile prices would surge by nearly three times.

 

Currently, man-made fibre-based textile value chain is witnessing 5-18% GST rate at different levels. GST rate is 18% on mono-ethylene glycol (MEG) and purified terephthalic acid (PTA), 12% on polyester partially-oriented yarn (POY) and 5% on grey fabric, finished fabric and garments. This has led to a tax structure where the rate on inputs is higher than that on the outputs, leading to inverted duty structure.


Experts have pointed out that correction of inverted duty will lead to seamless input tax credits, making the impact benign on the entire value chain. Biggest impact of the proposed change in tax structure would be on man-made fibre-based textile value chain, mainly developed in Surat and South Gujarat region, claimed Ashish Gujarati, president of South Gujarat Chamber of Commerce & Industry (SGCCI).

 

Recently SGCCI delegation met Gujarat’s Chief Commissioner of GST who is also member of GST Council’s fitment committee. In the representation, SGCCI said that due to proposed uniform tax rates, the government’s GST revenue would not increase much but the end-users will end up paying more.


Source: Financial Express

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