Highlight:
- Going forward with the decision
- There will be no tax deduction for textiles
Kochi: From next month, fire prices will have to be paid for textiles. Despite the concerns of traders, the increase in GST on textiles and footwear has led to a rise in prices. The tax will be raised from the five per cent tax slab to 12 per cent. A more than double tax increase could lead to significant changes in the price of textiles. Meanwhile, traders are still protesting against the tax hike.
The GST council has been informed of the traders’ concerns but the council has not yet taken a decision on the matter. Indications are that the high GST levied on some textile products is unlikely to be postponed. The new GST rates will come into effect from January 1. It will be more expensive for the poor and common people to buy clothes. Moreover, there are fears that the tax hike could backfire on the unorganized sector and micro, small and medium enterprises in the sector.
The Clothing Manufacturers Association of India had earlier said it was disappointed with the government’s decision to increase the GST rate on garments. The association argued that the government was raising taxes at a time when the industry was facing a number of crises. The crisis in the manufacturing sector is due to the rising cost of raw materials, yarn, packing materials and freight costs. Following this, the government is raising taxes. Taking all these into account, the lower priced fabrics will also have to charge higher prices.
Although the GST rate has not been increased, traders have decided to increase the price of garments by 15-20 per cent in the coming season. Meanwhile, a tax hike was also announced. Eighty per cent of the garments market in India is under the category of garments priced below Rs 1,000. There will also be an increase in the price of this category of fabrics.
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It will be more expensive to buy clothes for the poor and common people. Moreover, there are fears that the tax hike could backfire on the unorganized sector and micro, small and medium enterprises in the sector.
Previously, only five per cent tax was levied on garments worth up to Rs 1,000. The prices of woven fabrics, textiles including synthetic yarns, blankets, tablecloths and mats will go up. The price of footwear, including leather, will also go up. The rate hike is from five per cent. A 12 per cent hike will be applicable on all finished footwear products above Rs 1,000. The GST hike was announced in November.
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