Govt broadcasts uniform 12 per cent GST on attire, cloth and footwear

The Finance Ministry of India on Monday stated the uniform GST fee of 12 per cent on artifical fibre(MMF) yarns, MMF materials and attire will scale back the scale back the compliance burden of the business, offering a readability and settling for as soon as the power points arising from the inverted tax construction.
The modified charges will come into impact from 1st January, 2022. It will assist unlock the potential of the MMF section and emerge as an enormous job supplier within the nation, the press observe launched by the federal government stated. The GST on MMF, MMF Yarns and MMF Fabrics have been 18 per cent, 12 per cent and 5 per cent respectively.
“The Textiles & Apparel (T&A) industry was having long pending (first under sales tax then, under VAT and finally under GST regime) demand for removal of inverted tax structure on manmade fibre (MMF) value chain, the press note said, adding, “The taxation of inputs at higher rates than finished products created build up of credits and cascading costs. It further led to accumulation of taxes at various stages of MMF value chain and blockage of crucial working capital for the industry.”
The assertion additional added that although there was an choice of claiming the untilised Input Tax Credit(ITC) as a refund, there have been attendant issues and ensuing compliance burden. “The inverted tax structure caused effective increase in rate of taxation of the sector. The world textiles trade has been moving towards MMF but India was not able to take advantage of the trend as its MMF segment was throttled by inverted tax regime,” the observe additional added.
The assertion stated the uniform imposition of 12 per cent GST charges might be benefitting and saving a whole lot of working capital. Besides, the uniformity in GST charges on job work associated to dying and printing providers will profit the business to soak up and get well unutilised ITC.
According to the launched assertion, a good portion of MMF merchandise (output) is anticipated to be exported, which can lend a greater scope for encashing the untilised ITC. Also since tax on enter will get refunded, on output (export) which might be zero rated, it might not add to price and make exports aggressive.
In addition to this, uniform 12% GST will assist the business having enormous portion of piled up opening ITC by enabling them to encash the identical progressively.
Highlighting that the differential charges for garment creates drawback in compliance of tax regime, it stated MMF garment can’t be recognized simply and can’t be taxed in another way, therefore there may be want for uniform fee as it might make it easy and since there may be a lot excessive potential of worth addition in garment section would take up the rise in fee in worth addition.