- Rate hike for some products from January 2022.
- The GST has been increased from 5 per cent to 12 per cent
This was stated by the Union Ministry of Indirect Taxes. Previously, only five per cent tax was levied on garments worth up to Rs 1,000. The prices of woven fabrics, textiles including synthetic yarn, blankets, tablecloths and mats will go up. The rate will be increased from 5 per cent to 12 per cent and the price of footwear, including leather, will also go up. The rate hike will be from 5 per cent to 12 per cent for all finished products above Rs 1,000.
The Clothing Manufacturers Association of India (FMOA) has said it is disappointed with the government’s decision to increase the GST rate on garments. The association said the government was raising taxes amid a series of crises in the industry. Another problem is the rising cost of raw materials. The manufacturing sector is in crisis as the prices of yarn and packing materials and freight costs are soaring. Following this, the government is raising taxes.
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Although the GST rate has not been increased, it is expected that the market will see a 15-20 per cent increase in garment prices in the coming season. Eighty per cent of the garments market in India is under the category of garments priced below Rs 1,000. Clothing manufacturers are also pointing out the possibility of higher prices for this category of clothing.
As prices for products in the lower tax slab increase, so will the government’s GST revenue. In October, GST revenue rose to Rs 1.30 lakh crore. The central GST is Rs 23,861 crore, the state GST is Rs 30,421 crore and the combined GST revenue is Rs 67,361 crore, an increase of 24 per cent over October 2020-21 and 36 per cent compared to October 2019-20.