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GST Council decides to defer rate hike on textiles from 5% to 12%

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Union Finance Minister Nirmala Sitharaman said the issue of GST rate on textile will be sent to the tax rate rationalisation committee which will submit its report by February.

GST Council decides to defer rate hike on textiles from 5% to 12%
The 46th meeting of the Goods and Services Tax (GST) Council, which met today, has decided to maintain status quote on the rate for textiles -- 5 percent instead of the proposed 12 percent.
The decision to defer correction of inverted duties was taken only in the case of textiles, Union Finance Minister Nirmala Sitharaman said.
"The GST Council has decided to retain status quo on GST rate on textile to 5 percent and not raise it to 12 percent. The issue of GST rate on textile will be sent to the tax rate rationalisation committee which will submit its report by February," Sitharaman said.
Further, Himachal Pradesh's Industries Minister Bikram Singh told CNBC-TV18  that the tenure of group of ministers (GoM) at GST Council has been extended.
“Only single decision has been taken by the Council, deferring the percentage increase in textile goods. It is deferred till the next Council meeting," Singh said. Regarding inverted duty structures, "there are different opinions from all the states, but the decision regarding textile rates will be taken in February", he said.
Sitharaman said there was a consensus that inverted duty structure hurts everyone.
The GoM will submit the report by February for circulation to all ministers.
"The GST Council could meet in February-end or early March after the report of the GoM on rate rationalisation is submitted," Sitharaman said.
The Council in its previous meeting on September 17 had decided to correct the inverted duty structure in footwear and textile sectors.
With effect from January 1, 2022, all footwear, irrespective of prices, will attract GST at 12 percent. It was also decided that 12 percent uniform GST rate would apply on textile products, except cotton, including readymade garments.
States like Gujarat, West Bengal, Delhi, Rajasthan and Tamil Nadu have said they are not in favour of a hike in Goods and Services Tax (GST) rate on textiles.
Tamil Nadu Finance Minister Palanivel Thiagarajan said, "The proposed hike in GST on textile could not have come at a more inopportune time. The textile industry is limping back to normalcy from the onslaught of COVID pandemic."
He added, "Tamil Nadu is one of the major states producing handloom, powerloom textiles. The handloom sector will not be able to absorb the blow due to the increase in GST. The GST Council could consider reversing the hike in GST; readymade garments of over Rs 3,000-5,000 can be taxed at the higher rate of 12%. Allow the present rate of 5% on textiles below Rs 3,000/unit."
Andhra Pradesh Finance Minister Buggana Rajendranath Reddy said on Friday. Speaking to reporters after the 46th GST Council meeting chaired by Union Finance Minister Nirmala Sitharaman, Reddy said several states said in the meeting that there was no clarity on GST to be imposed on apparel, clothing and textile products.
"Currently, the tax rate on manmade fibre (MMF) is 18 percent, and MMF yarn 12 percent, while fabrics are taxed at 5 percent. Any hike in GST on textiles will impact Andhra Pradesh badly as there are about 3 lakh handloom weavers, and most people wear cotton clothes unlike nylon in other state," Andhra Pradesh Finance Minister Buggana Rajendranath Reddy said.
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