The GST Council on Friday unanimously decided to defer hike in GST on textiles from 5 per cent to 12 per cent. The development comes amid objections from states and the industry, reports say. The GST rate hike on textiles was to scheduled to become efffective from January 1.
In the pre-budget meeting chaired by Union Finance Minister Nirmala Sitharaman, states like Gujarat, West Bengal, Delhi, Rajasthan and Tamil Nadu said that they are not in favour of a hike in Goods and Services Tax (GST) rate on textiles to 12 per cent, from 5 per cent currently, with effect from January 1, 2022.
Earlier, Delhi Deputy Chief Minister Manish Sisodia said the Delhi Government will protest against the proposed tax hike on textiles. “The government won’t let the common man’s voice be suppressed,” Sisodia said.
If a common man buy clothes of Rs 1,000, he has to pay GST of Rs 120. “Delhi is not in favour of this,” he added.
Tamil Nadu Finance Minister P Thiaga Rajan said, “It is one point agenda (for tomorrow’s Council meet). It is an agenda that many states have raised. In the agenda item it says that it was raised by Gujarat but I know that many states raised it. .. It should be stalled (move to raise GST rate on textile)”.
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Trade bodies, including the Confederation of All India Traders (CAIT), had protested againt the GST hike.It said the decision to hike GST on footwear and textiles will not only hurt businesses, but will also impact the poorer section of the population who will not be able to afford such items due to hiked prices.
Industry too has opposed the rise in tax from 5 per cent, citing higher compliance cost especially for the unorganised sector and MSMEs besides making poor man’s clothing expensive.
