CAIT urges Centre to withdraw 12% GST rate on textiles

Source: Economic Times dated 11.02.2022

The Confederation of All India Traders on Thursday urged Union Finance Minister Nirmala Sitharaman to withdraw the proposed GST tax on textiles.

In the GST Council meeting in late 2021, it was unanimously decided to defer the hike in tax rate on textiles from 5% to 12% and the matter was sent to the tax rate rationalisation committee which will submit its report by February.

Currently, the textiles sector is being taxed @ 5% rate, the traders’ body said.

In a joint statement, CAIT National President B.C.Bhartia and Secretary General Praveen Khandelwal said: “In communication to Mrs. Sitharaman, we said that the proposed hike, which is in abeyance stage, should be withdrawn in the largest interest of consumer of the country as such hike will load an extra burden of 7% rate on general consumers and will also hit the traders by blocking their capital with the department in the shape of refunds.”

There was no tax on textile or fabrics for a number of years, the joint statement added.

The increase in GST rates on textile will not only add to the financial budget on end users but will also affect small businessmen badly and will encourage evasion of tax and various malpractices being undertaken by habitual offenders of law, the trade body said.

“Bringing the textile industry back 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 at 5 per cent and the rate be reduced from 12% to 5%, wherever applicable, it said.