Reduction in GST rates on job work of textile yarn and fabric manufacturing to 5 per cent from 18 per cent will give a leg-up to SMEs in power loom, knitting and processing sectors, CITI today said.

Chairman of the Confederation of Indian Textile Industry (CITI) J. Thulasidharan explained that reduction of service tax on job work would bring relief to the textile industry from the extra burden as bulk of the work is with SMEs and carried on through job works.

A job work involves a manufacturer sending goods out of the factory for specialised processing job without having to pay taxes.

The move “would now help SMEs of power loom, knitting and processing sectors not to face much financial burden”, he said in a statement.

“Job work in the textile sector is taken as services and was subject to 18 per cent GST”, he said.

“Under such situation, the manufacturer who does not have integrated composite units to complete the process of embroidery, printing and finishing as per the market requirements would have been in a great loss”, Thulasidharan added.

He also welcomed the decision of the GST Council for increasing turnover from Rs.50 lakh to Rs.75 lakh under the
composition scheme for traders and manufacturers. This is seen as helping MSMEs grow their business and carry out their activities efficiently. However, the Chairman suggested reduction in GST on speciality textile fabrics, man-made fibres and yarns.