The textiles industry has complained that the absence of refund on input tax credit on the domestic sale of synthetic fabrics has blocked its working capital, while an inverted duty structure makes the rate on inputs higher than that on the output. “At present, synthetic fibre is taxed at 18 per cent, yarn at 12 per cent and final output at 5 per cent, creating a tax structure where rate on inputs is higher than that on output. This inverted structure has made it easier to import synthetic textiles, (rather) than manufacture them domestically,” said Sanjay Jain, chairman, Confederation of Indian Textile Industry (CITI).“Refund of inverted duty is allowed, but it is complicated and leads to working capital blockage for months. Goods and services tax (GST) on capital goods is not refunded,” Jain added.