The government has increased the GST (Goods and Services Tax) on finished goods such as clothing, footwear and textiles from 5% to 12%, effective January 1, 2022.
The Central Council for Indirect Taxes and Customs (CBIC) notified the hike on November 18. Meanwhile, the GST rates for certain man-made fibers and yarns have been reduced from 18% to 12% as per the notification, thereby bringing uniformity of rates. throughout the textile sector as well as the elimination of aberrations due to the reverse tariff structure, which is a situation where the tax rate on inputs used is higher than the tax on the finished product.
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The rate of the GST on fabrics was increased to 12% from 5% from January 2022 and the GST on clothing of any value was also increased to 12%, from 5% previously with a cost of up to 1,000 Rs per piece.
Textiles, including fabrics, synthetic threads, pile fabrics, blankets, tents, accessories such as tablecloths or towels, rugs and tapestries, have seen their rates increase from 5% to 12%, while the rates for footwear of any value have been increased. from 5% (up to Rs 1,000 / pair) to 12%.
At its September meeting, the GST Council pledged to rectify the reverse structure of tariffs on textiles and footwear.
He added that the same would take effect on January 1, 2022, but left the effective rates unresolved at the time.
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The Clothing Manufacturers Association of India (CMAI) has expressed deep disappointment with the government’s decision to increase the GST on clothing from January 1, 2022.
The industry body added that rising costs will have a major impact as the industry faces inflationary pressure with prices for raw materials, especially yarn, packaging materials and freight, to the rise.