The Goods and Services Tax (GST) Council said that no more relief will be given to the textile sector before the bill is rolled out on July 1. Prior to the 17th GST Council meeting that was held on June 18, industry associations had urged Finance Minister ArunJaitley to exempt yarn and fabric from GST and bring various job works under the 5 per cent slab. A day before the 17th Council meeting, the Southern India Mills’ Association (SIMA) had said that the textile industry hopes that the Council would reduce the GST rate on manmade fibres, filaments and yarns from 18 per cent to 12 per cent and also would include garments, made-ups and other sewn product related to job work under 5 per cent GST rate of service tax.M Senthilkumar, Chairman, SIMA had stated that there will be huge accumulation of excess credit with 18 per cent GST rate on yarn and only 5 per cent GST rate and non-refund of accumulated input tax credit at fabric stage. This would significantly increase the fabric cost and seriously affect the independent spinning and weaving units including power loom sector.
SIMA chief had also noted that the differential rates and non-refund of accumulated input tax credit would not only affect the industry, but also lead to wrong declaration and corruption. Therefore, he appealed to the government to discourage any loophole for wrong declaration and corruption and pleaded for refund of accumulated input tax credit at fabric stage to protect the interest of power loom sector and also meet the clothing needs of poor masses of the nation with reasonable tax burden.
Textile clusters in Gujarat had also observed a day-long bandh on June 15 to oppose the Council’s proposal to levy 5 per cent GST on yarn and fabrics, while the Federation of Indian Exports Organisation (FIEO) had urged the government to bring textile job works including embroidery, cutting and garmenting under the 5 per cent slab. The Tiruppur Exporters’ Association (TEA) had appealed to reduce the rate for job work operations after garmenting activities to 5 per cent from the current rate of 18 per cent. The Confederation of Indian Textile Industry (CITI) was also of the opinion that job work under made-ups should also be taxed at 5 per cent instead of 18 per cent. However, the Council did not take any of the demands into consideration and is not likely to alter the rates until after GST is rolled out.