The Department of Revenue had notified GST @12 % on MMF, MMF yarn, fabrics and apparel on 18.11.2021 which was to come into force from 1st January, 2022. Fabrics and Apparel Industry represented against this revision of GST slab from 5% to 12%.
This Ministry under the able leadership of Piyush Goyal, Minister for Textiles, Smt. Darshana Jardosh, Minister of State for Textiles arranged a meeting of a delegation of textiles industry and trade representatives with Finance Minister Smt Nirmala Sitaraman, regarding the concerns of textiles industries.
After persuasion, the GST Council’s 46th meeting was held under the chairpersonship of the Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman. The GST Council has recommended deferring the earlier decision to change the rates in textiles recommended in the 45th GST Council meeting. Consequently, the existing rates in the textile sector would continue beyond 1st January, 2022.
The Ministry of Textiles expresses its hearty thanks and is grateful to Hon’ble Prime Minister and Union Finance & Corporate Affairs Minister for considering the requests of industry stakeholders especially in present challenging times when the sector is on the path of recovery.
The GST Council, the highest decision-making body for indirect taxes, met under emergency provisions after states made a request for deferring the tax rate hike on textiles, from the current 5 per cent, to be effective from January 1, 2022.
Currently, the tax rate on man made fiber (MMF) is 18 per cent, MMF yarn 12 per cent, while fabrics are taxed at 5 per cent. In the Council meeting in September, it was also decided that a 12 per cent uniform GST rate would apply on textile products, except cotton, including readymade garments.
Briefing reporters after the Council meeting called under ’emergency provisions”, Sitharaman said the Council had in September decided to correct the duty inversion in textiles with effect from January 2022.
“From December onwards… representations started coming and on December 29, letters also came from the Gujarat Finance Minister and therefore the emergency meeting (was called). The decision of the emergency Council meeting today is that we retain the status quo and not go to 12 per cent, from 5 per cent, meaning don’t do the correction now in case of textiles,” she said.
Sitharaman said states also raised the issue of long-term ways by which the Council could look at correcting duty inversion and also have a plan for revenue generation.
States like Gujarat, West Bengal, Delhi, Rajasthan, Tamil Nadu, Chhattisgarh, Telangana and Andhra Pradesh have said they are not in favour of a hike in the Goods and Services Tax (GST) rate on textiles to 12 per cent, from 5 per cent, with effect from January 1, 2022.
