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November 20, 2021

Textile Industry Shocked with increased in GST, Request for withdrawal of new notification

by CA Shivam Jaiswal in GST

Textile Industry Shocked with increased in GST, Request for withdrawal of new notification

Copy of Letter to FM from Confederation of All India Traders

Smt Nirmala Sitharaman

Horible Minister for Finance Government of India

New Delhi

Dear Smt Nirmala Sitharaman Ji,

The entire textile trade and industry is in shock on Government’s decision of increase in tax on textile which is the second largest revenue generating commodity after agriculture. The textile trade in any case was badly hit by COVID-19, and still is struggling for its survival. Under such circumstances this increase in tax rates on textile will act an another set back in Textile Sector. Food , Cloth, House, education and health are the basic needs of a human. On agriculture, health and education there is no tax, on Residential houses the government is providing subsidy and tax rate is 196 and 5%. The Clothing which too is a basic need is taxed at 1296 which is not justified.

There was no tax on Textile/Fabrics fora number of years. Bringing the textile Industry again under tax net itself was a big blow to the entire textile Industry. The trade associations across India had made representa­tions immediately after the last GST Council meeting wherein it was proposed to correct the inverted duty structure on textile. It was requested by the trade and industry that the Status quo be maintained @5% and the rate be reduced from 12% to 596 wherever applicable. However, instead of reducing the rate to 596 the Notification No. 14/2017 dated 18/11/2017 is issued increasing the rate of tax from S% to 1296. This will not only add to the financial burden on end user but will also affect small business men badly and will encourage evasion of . and various malpractices. Further, the goods which are lying in stock oldie busi­nessmen and sold on MRP the additional burden of 7% will be on the businessmen. This increase in tax rate will not only hamper the domestic trade it will affect the exports adversely. Already the textile industry is not at a competent status with Countries like Vietnam, Indonesia, Bangladesh and China. On the one hand the Government talks about Make In India and Atmanirbhar Bharat on the other hand levy such high taxes creating an atmosphere of uncertainty and gloom.

It is requested that a single rate @S. without any cap & category on value may be introduced and the No­tification so issued increasing the tax rate from 596 to 1296 to may kindly be withdraw’. This action of Gov­ernment will not only boost the economy, it will create an atmosphere of hope and certainty. If this request and condition of the textile Trade and Industry is not taken seriously the entire Industry will be in a state of struggling for survival and will eventually result to complete collapse.

The Trade shall ever remain grateful for your kind gesture.

Thank you.

With regards
Yours truly

Praveen Khandelwal
National Secretary General
Confederation of All India Traders

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