Lagatar24 Desk
New Delhi, Dec 31: In the GST (Goods and Services Tax) Council meeting on Friday, the GST Council decided to postpone the decision on increasing the textile tax from the previous 5% to the proposed 12 %.
The Goods and Services Tax rate on textiles from 5% to 12% was to come into effect from January 1, 2022.
“The GST Council has decided to defer the hike in the GST rate on textiles (from 5% to 12%). The Council will review this matter in its next meeting in February 2022,” said Bikram Singh, Industry Minister, Himachal Pradesh after the 46th GST Council meeting in Delhi.
The GST Council unanimously decided to postpone the hike during the 46th GST Council meeting, which was presided over by FM Nirmala Sitharaman.
The Council’s decision comes after several states announced higher tax rates on textile products beginning January 1 and demanded that the rate increase be postponed.
In a pre-budget meeting chaired by Union Finance Minister Nirmala Sitharaman, states such as Gujarat, West Bengal, Delhi, Rajasthan, and Tamil Nadu stated that they are opposed to raising the GST rate on textiles from 5% to 12%.
At its previous meeting on September 17, the Council decided to correct the inverted duty structure in the footwear and textile sectors. All footwear, regardless of price, will be subject to 12% GST beginning January 1, 2022, and all textile products, except cotton, including readymade garments, will be subject to 12% GST beginning January 1, 2022.
Notably, GST is a governing body to regulate and direct each and every step for the implementation of GST in the country had recently made certain recommendations for revision in the GST rate in order to correct inverted duty structure and other anomalies. This includes a rate revision in the textiles sector.
Currently, a 5% tax is levied on sales up to Rs 1,000 per piece, whereas the GST Council’s recommendation to raise the rates on textiles from 5% to 12% will affect a large number of small traders in the textile sector, as well as consumers who will be forced to pay at the higher rate.
