Union Minister for Finance, Defence and Corporate Affairs, Arun Jaitley recently said that the GST rate structure for the textile sector was discussed in detail in the GST Council Meeting held on 3rd June, 2017, wherein the Council recommended the detailed rate structure for the textile sector. The demand of textile traders to exempt fabrics under the Goods and Services Tax (GST) system cannot be met with as manufacturers will then not be able to claim credit of tax on previous stages.

Jaitley said in a written reply in the RajyaSabha that nil GST on fabrics will result in zero rating of imported fabrics, while domestic fabrics will continue to bear the burden of input taxes.The textile industry has been demanding exemption under the GST, saying that the sector has never been taxed. They are claiming that fabric will become 10-12 per cent expensive under the new regime due to the tax rate as well as the compliance cost, making the Indian textiles globally uncompetitive.

He said that it is not correct to say that textiles sector was never taxed in Independent India. In fact, during 2003-04, the entire sector was subjected to central excise duty. The Minister assured that the GST rates are equal or lower than the pre-GST tax incidence and the price of fabrics are not likely to go up. The organised traders and unorganised sellers i.e small retailers in textile sector have not been affected by the Goods and Services Tax (GST).