The government’s move to keep the Goods and Services Tax (GST) rates on various textiles and low-priced garments roughly around the current levels will prevent any flare up in prices, industry executives said on Sunday. But their hope for a single rate for both natural and man-made fibres under the GST regime to correct a historical imbalance in favour of the cotton-based textile structure has been dashed. The GST rates on silk and jute fibres, however, have been kept at zero.
Although ready-made garments above Rs 1,000 each will attract a 12% GST, against the current tax incidence of roughly 7% in many states, the input tax credit facility under the new regime will easily offset any perceived losses due to a higher tax rate.
Shirts below Rs 1,000, used by most Indians, will attract just a 5% GST rate.
According to Ashok G Rajani, chairman of the Aparrel Export Promotion Council and chief of Midas Touch Exports, the GST rates on garments are reasonable and could lead to some items becoming even cheaper in the new regime.
While the government has kept the GST rate for cotton fibre at 5%, the same as now (although there is no excise duty on cotton fibre now, states impose a 5% VAT), it didn’t reduce the tax rate for man-made fibre and fixed it at 18%, against the current tax incidence of roughly 17.5%, including both excise duty and VAT.