The textile industry has appreciated government's decision to tax 5 per cent GST rate on apparel below Rs 1000 and above those will be charged at 12 per cent. With the implementation of GST rates at every level of the textile value chain, it will be difficult to evade taxes, according to Arvind Sinha, president, Textile Association (India).

"With input tax credits and local levies being merged with GST, essential garments below selling price of Rs 999 will save on the total applicable taxes, making the essential garments even more affordable. There may be a small increase in tax incidence on garments of selling price above Rs.1000, after accounting for all the input tax credits. The industry would absorb the same and there would be no change in customer selling prices," said Rahul Mehta, president of Clothing Manufacturers Association of India (CMAI), in a statement.

"In India, mass consumption of apparel is generally below Rs 1000. With the increasing purchasing capacity, change in the tax system will not have an impact on the buying pattern of consumers," Prabhu Damodaran, secretary, Indian Texpreneurs Federation, told Fibre2Fashion.

"Cotton value chain was largely under optional duty route. Introduction of 5 per cent tax will lead to increase in production cost," Apparel Export Promotion Council chairman Ashok G Rajani told a leading daily.

Appreciating the government's move to impose the 'one nation one tax' policy across India, Damodaran said, "The policy will promote level playing field with the scope of growth of efficient players. A uniform duty structure will help in the development of business. Further, the input tax credit will also help the manufacturers to reduce the cost. According to the policy, manufactures will have to pay tax only on the value addition done by them and not on the entire value of the product."

In countries like UK, China and Australia, the industrial growth rate is high because of the simple taxation process. It will take some time for the policy to streamline in India, said Sinha.

Further, CMAI is currently working with all stakeholders of the textile value chain to identify challenges that may need specific rules to allow ease of doing business, as the industry gets ready to adopt GST. (RR)

Source : Fiber 2 Fashion

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