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Traders body CAIT seek deferment of GST rate hike on textile & footwear

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CAIT in a letter to Sitharaman said, "Increasing the rate of tax from 5 percent to 12 percent on textiles and footwear which is illogical and beyond the canon of GST tax structure particularly at a time when the domestic trade of the country is on the verge of recovery from the colossal damage caused due to the last two spells of the COVID-19."

Traders body CAIT seek deferment of GST rate hike on textile & footwear
With just about a few days left for the new GST tax rates on textiles and footwear to kick in, the Confederation of All India Traders (CAIT) has approached union finance minister Nirmala Sitharaman, seeking a deferment of the new rates and chalking out a middle path.
CAIT in a letter to Sitharaman said, "Increasing the rate of tax from 5 percent to 12 percent on textiles and footwear which is illogical and beyond the canon of GST tax structure particularly at a time when the domestic trade of the country is on the verge of recovery from the colossal damage caused due to the last two spells of the COVID-19."
The association has also lauded the government on exemplary GST collection across the country, "increasing every month and as such, any increase in tax rates without consulting the stakeholders" will run contrary to the ease of doing business call of Prime Minister Narendra Modi.
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CAIT national secretary general Praveen Khandelwal told CNBC-TV18, that since stakeholder consultations have always been a fruitful way forward to iron out sticky issues, this time too CAIT has urged for the same.
"We have requested the finance minister to defer the implementation of a tax rate hike for a certain period and meanwhile constitute a task force under the chairmanship of Chairman, Central Board of Indirect Taxes comprising of representatives of trade and senior officials of the government to discuss the issue at length and arrive at a consensus."
Explaining the rationale, Khandelwal said, "There was no tax on textile/fabrics for a number of years. Bringing the textile Industry again under the tax net itself was a big blow to the entire textile Industry. The trade associations across India led by CAIT 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 percent and the rate be reduced from 12 percent to 5 percent wherever applicable. This will not only add to the financial burden on end-user but will also affect small businessmen badly and will encourage evasion of tax and various malpractices."
Other hardships that the industry will face also include -- the goods which are lying in stock of the businessmen and sold on MRP the additional burden of 7 percent will be on the businessmen. This increase in tax rate will not only hamper the domestic trade it will affect the exports adversely, noted CAIT.
"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," Khandelwal added.
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