GST council defers GST hike on textile

The higher tax rates were objected to by many states and the industry.

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GST council defers GST hike on textile

In its 46thmeeting, the GST Council, under the chairmanship of Nirmala Sitharaman, has decided to roll back its decision to hike GST on textile from 5% to 12%.

The higher tax rates were objected to by many states and the industry. States Gujrat, West Bengal, Delhi, Rajasthan, and Tamil Nadu were not in favor of hiking the GST rate on textile which was to be made effective from 1st January 2022.

Also Read: What is GST Compensation, how does it work?

Delhi’s Deputy Chief Minister, Manish Sisodia, who is also Delhi’s Finance Minister strongly opposed the hike citing that the Move to raise GST was “not people-friendly”.

“The government won’t let the common man’s voice be suppressed,” Sisodia said.

Tamil Nadu finance minister P Thiagarajan said: “It is a one-point agenda (for Friday’s council meeting). It is an agenda that many states have raised. In the agenda item, it says that it was raised by Gujarat but I know that many states raised it … It (the move to raise the GST rate) should be stalled.”

West Bengal’s former finance minister Amit Mitra had urged the Union finance minister to roll back a proposed hike in textile saying that it would lead to the closure of around one lakh textile units and 15 lakh job losses.

At its last meeting in September, 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.

Currently, a 5 percent tax on sales of up to Rs 1,000 per piece is charged, whereas the recommendation of the GST Council to increase the rates on textiles from 5 percent to 12 percent would have impacted small traders in the sector as well as the consumers.

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GST council defers GST hike on textile
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The higher tax rates were objected to by many states and the industry.
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THE POLICY TIMES
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