Uniform GST helps textiles create jobs
New Delhi: The uniform 12 per cent GST rate on man-made fibre (MMF), yarn, fabrics and apparel will reduce compliance burden for the industry and help the sector emerge as a big employment generator, the textiles ministry said on Monday. The Central Board of Indirect Taxes and Customs (CBIC), under Ministry of Finance, on November 18 notified 12 per cent GST rate for MMF, MMF yarn and MMF fabrics which will come into effect from January 1, 2022. Currently, tax rate on MMF, MMF yarn and MMF fabrics is 18 per cent, 12 per cent and 5 per cent, respectively.
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.
Uniform GST rate on MMF, MMF yarn, MMF fabrics and apparel has addressed the inverted tax structure in the MMF textile value chain. This will help the MMF segment grow and emerge as a big job provider in the country, the ministry said in a statement. 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 MMF value chain.