Relief for textile industry after GST Council defers decision to hike tax from 5% to 12%

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States like Gujarat, West Bengal, Delhi, Rajasthan and Tamil Nadu had earlier said that they are not in favour of a hike in GST rate on textiles

Relief for textile industry after GST Council defers decision to hike tax from 5% to 12%

Representational image. AFP

The GST (goods and services tax) Council has deferred its decision to hike the tax on textiles from five percent to 12 percent, following objections from states and officials from the industry.

The GST rate hike on textiles was to come into effect from 1 January.

States like Gujarat, West Bengal, Delhi, Rajasthan and Tamil Nadu had earlier said that they are not in favour of a hike in GST rate on textiles.

Delhi deputy chief minister Manish Sisodia said the idea to hike GST on textiles is not people-friendly and this should be withdrawn. If a common man buys clothes of Rs 1,000, he has to pay GST of Rs 120. “I will demand keeping tax on textile low in the GST Council meeting tomorrow,” tweeted Sisodia on Thursday who is also minister in charge of Delhi government’s Finance department.

Tamil Nadu finance minister P Thiaga Rajan, was quoted as telling Economic Times, “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.”

“We will push for a complete rollback… We have received several representations from the industry…This sector is a large employer and has large MSMEs who will be impacted,” he added.

Amit Mitra, the principal chief advisor to West Bengal chief minister, had urged Union Finance Minister Nirmala Sitharaman to roll back the proposed hike.

An Indian Express report said that he said the new rate structure would cause closure of around 1 lakh textile units and losses of 15 lakh jobs nationally.

The move to increase the GST on textiles came when the Council in its 45th meeting in September had recommended making certain rate changes for footwear and textiles.

With inputs from agencies

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