Sunday 23 January 2022
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GST Council defers implementation of tax rate hike on textiles

The council decided that a 12% uniform GST rate would apply on textile products, except cotton, including readymade garments, in its latest meeting

The GST Council on Friday decided to put on hold the decision to hike the tax rate on to 12% after many states, including Tamil Nadu and West Bengal, opposed the move, an official said. The 46th meeting of the GST Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising state counterparts, decided to deliberate on the issue further in its next meeting.

Currently, the tax rate on manmade fibre (MMF) is 18% and MMF yarn 12% while fabrics are taxed at 5%. The Council in its previous meeting on 17 September had decided to correct the inverted duty structure in footwear and textile sectors.

With effect from 1 January 2022, all footwear, irrespective of prices, will attract GST at 12%. It was decided that a 12% uniform GST rate would apply on textile products, except cotton, including readymade garments.

States like Gujarat, West Bengal, Delhi, and Tamil Nadu have said they are not in favour of a hike in Goods and Services Tax (GST) rate on to 12% from 5% with effect from 1 January 2022.

Amit Mitra, the advisor to the West Bengal chief minister, had earlier urged the union government to roll back the proposed tax rate hike on textiles, saying this would lead to the closure of around 1 lakh textile units and loss of 15 lakh jobs.

Meanwhile, the Delhi government supported the protest of traders against the increase in the GST on and said it would raise the issue in the GST Council meeting, Deputy Chief Minister had said on 30 December.

“The protest by textile traders against hike in GST from 5% to 12% is justified. The AAP and Delhi government under the leadership of Arvind Kejriwal have been in favour of keeping the tax rates low. I will demand keeping the tax on low in the GST Council meeting tomorrow,” tweeted Sisodia who is also minister in charge of the Delhi government’s finance department.

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