Impact of GST on Textile Industries

The textile industry of India is famous for its craftsmanship and unique designs all around the globe. Starting as early as the Indus Valley Civilization India’s textiles are famous for their fine quality and craftsmanship.

In modern-day, India is famous because of its finely created textiles in high demand all over exciting world of. Despite such high demand, the textile industry in India was unable meet up with 100% demand of Indian textiles both organic and man made.

The textile industry in India has witnessed several alterations in taxation under the new GST regime. The implication of GST will affect the sector and its growth in future. The textile production process contains synthetic & artificial fibers and naturally created fibers.

The GST regime offers many advantages to the industry players in the domestic market that target strengthening the domestic market creating new opportunities for new business organisations in the textile industry. The associated with GST in the textile sector will encourage more organized structure in implementation in the textile industry.

The GST brings forth transparent as well as simple taxation process to get fast paced and saves time from filing taxation at multiple levels for Goods and Services Tax Website and services offered by the textile industry. The textile industry has raised concerns for some time while.

These are the concerns for duty disparity that is preventing the domestic textile producers from expanding their operations and scaling up their manufacturing for better revenue via exports. This is consequently hurting the country’s exports in textiles leading to loosing revenue.

Cotton based textiles are an important part of the nation’s economy and duty relaxation plays a crucial role in business expansion in different areas. The cotton fibers and textiles witness more effort and time consumption compared to your production of the synthetic and artificial fibers.

Hence, it may happen the government will introduce special taxation relief and incentives for the cotton textile industry. The existing consumption of textiles made from synthetic and artificial fibers at the global scale are 70%.

With duties and taxation streamlined and simplified. This will make it easy for brand and existing businesses to buy and sell synthetic and artificial sheets.

In take a look at ICRA, a lesser rate of 12% is recommended by the Dr. Arvind Subramanian Committee is likely to have damaging impact from the textile business. In this case, especially the cotton value chain, that is situated at present attracting a zero central excise duty (under optional route).

Unlike the synthetic fiber sector, for the fiber attracts excise duty at the stage (unlike cotton). Hence, there is an incentive for that downstream players in the synthetic sector to avail the Input Credit Tax (ITC).

The textile industry is broadly split into nine categories when we talk on your taxation . The current taxes vary from 4% to 12% based on these categorizations.

Further, unorganized players in which given tax exemptions by the size of their operations dominate the textile section.

There are wide and varied taxation policies for cotton and man-made fibers: Zero duty for cotton fibers as the actual high excise duty structure of nearly 12.5% on man-made materials.

With the implementation of the GST, there will be uniform taxation policies this also cause a blockage as the input taxes will be eliminated since GST is really a consumption . Zero rating on exports under GST will increase exports further without the requirement for various subsidy schemes.

Goods movement within the states can much easier as many local state taxes which levied through the borders of states will evade and free movement of goods will get allowed. The cotton and synthetic fiber are also subject to 4%-5% state VAT, that is evaded through the GST.

However, generally if the duty dealing with all cotton and synthetic fibers remains the same, prices of textile items made from cotton fiber could rise a tad.

Nevertheless, the equal tax treatment policy will provide rise to man-made fiber production will be exports too. The industry has since a time, been complaining that the duty disparity is barring domestic producers from scaling up operations and, eventually ending up hurting India’s export competitiveness in artificial and synthetic textiles.

This is really because while artificial and synthetic fibers account for around 70% of earth’s total fiber consumption, create up for 30% of India’s appeal.

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