The textile industry is batting for a uniform tax of 5% on all under Goods and Service Tax (GST), which is all set to roll out from July this year.
On 31st April’17 the Southern India Mill’s Association (SIMA) submitted a memorandum to the Union Textile Minister, Smriti Irani, saying that their revenue will double if the GST rate is fixed at the lowest slab of 5% and without any exemption across the value chain.
Moreover, this uniform levy will ensure smooth migration of all the textile value chain to GST tax structure with full compliances. It will generate a win-win strategy for all the stakeholders.
This will also bring sustainable revenue to the exchequer as contrast to the existing revenue.
Under GST, the net revenue will be 3% less than the revenue collected currently – the net revenue realised with the optional central excise duty, 2% central sales tax (CST) and reduced Value Added Tax (VAT) rate in various states.
SIMA also stated that even after the implementation of GST, the existing export benefits along with duty drawback rates and other benefits announced under the package of garment and made-up exports need to continue for some time, because the industry had just gone into taking advantage of the schemes and global export opportunities.
In addition, the association also said that since the industry has no level playing field in the industrial market, the existing export scheme could be continued till its expire period for apparel and made-ups package; and for other export benefits it can exist for two years.
This lack of level playing field in the global market is mainly due to the delay in concluding Free Trade Agreements (FTAs) with various markets. However, with the implementation of GST there will be level playing field.
The association requested the Ministry of Commerce & Industry and the Prime Minister’s Office to bring a conclusion to the FTAs with all the important countries such as Europe and Britain.
Considering all the pros and cons of the International market benefits and the importance of a level playing field in it, the SIMA had submitted the memorandum for a uniform levy of 5% on textile and clothing products under GST.