No GST hike on textiles

GST Council defers tax rate hike on textiles

The government was under pressure from businesses and traders from across the country and the industry was anticipating a roll back on the sharp increase in GST on textiles from 5% to 12%.

New Delhi

The implementation of Goods and Services Tax (GST) rate hike on textiles from 5% to 12% effective from January 1, 2022, has been deferred. The GST Council on Friday decided to defer the hike in the rate of goods and services tax (GST) on textiles from 5 per cent to 12 per cent, said Nirmala Sitharaman, Union Finance Minister.

The meeting was called under emergency provision. FM said that the meeting was called after finance minister of Gujarat requested for deferment of decision taken in the Council’s meeting in September 2021 on inversion of tax structure.

The government was under pressure from businesses and tradersfrom across the country and the industry was anticipating a roll back on the sharp increase in GST on textiles. Several states also opposed the move, forcing the Council rethink the hike on textile.

During its last meeting in September 2021, the GST Council corrected the inverted duty structure – a situation where tax on raw materials is more than that on finished products – in the sector by raising rates on finished goods. The Council raised GST on 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 from January 1, 2022.

The GST Council meeting took place ahead of the Union Budget for 2022-23, which is scheduled to be presented in Parliament on February 1, 2022.