Organized/ Unorganized Traders/ Sellers of Textile Sector not affected by GST: FM

Organized Traders and Unorganized Sellers of Textile Sector not affected by GST: FM

Union Finance Minister Shri Arun Jaitley, in reply to a query in Rajya Sabha, has said that the organized traders and unorganized sellers in Textile Sector have not been affected by the Goods and Services Tax (GST). Further, FM has denied to accept the demand of the textile traders regarding not putting any GST on fabrics.

GOI Press Release dt. 18 July 2017

He said that the GST rate structure for the textile sector was discussed in detail in the GST Council Meeting held on 3rd June, 2017, wherein the Council recommended the detailed rate structure for the textile sector. Accordingly, the GST rates for the textile sector have been notified as under:

Sl. No.

Type of fibre/ filament

GST rate

FibreYarnFabrics*Garments and made ups**
1SilkNil5%5%5% / 12%
2WoolNil5%5%5% / 12%
3Cotton5%5%5%5% / 12%
4Other vegetable fibresNil / 5%5%5%5% / 12%
5Manmade fibres/ filaments18%18%5%5% / 12%

* 5% GST rate with no refund of unutilized input tax credit. ** (i) 5% GST rate for garments / made ups of sale value not exceeding Rs.1000 per piece. (ii) 12% GST rate for garments / made ups of sale value exceeding Rs.1000 per piece.

Thus, the GST rate structure for the Textiles Sector enables ease of classification and determination of rate.

Further, FM has said that the main demand of the textile traders regarding not putting any GST on fabrics, can not be met because of the following reasons:

i) Nil GST on fabrics will break the input tax credit chain and then the garments/ made ups manufacturers will not be able to get the credit of tax on previous stages

ii) Nil GST on fabrics will result in zero rating of imported fabrics, while domestic fabrics will continue to bear the burden of input taxes.

iii) Generally, the GST rates are equal or lower than the pre-GST tax incidence. And therefore, the price of fabrics is not likely to go up.

Further, he has stated that it is not correct to say that textiles sector was never taxed in independent India. In fact, during 2003-04, the entire textiles sector was subjected to central excise duty. Necessary steps have been taken to facilitate taxpayers to take GST registration. GST Sewa Kendras have been set-up in various centres to handhold the taxpayers and to provide all necessary guidance regarding GST compliance.

Related Posts:

CBEC’s 20 FAQs on GST in Textile Sector

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