GST latest news: Appointed consultants by the textile ministry would be required to recommend changes to the present tax and duty structure.
Ministry of Textiles is planning to commission a study to understand if the Goods and Services Tax (GST) on textiles and apparels is adversely impacting domestic production and requires restructuring.
"We have received complaints that the GST rate on synthetic fibres is leading to an inverted duty structure, making imports cheaper than domestic manufacture. To address the concerns, the Ministry has decided to appoint consultants who will assess GST rates on the value chain of textile," said a report by Hindu Businessline, quoting a government official.
The government taxes synthetic fibre at 18 percent, yarn at 12 percent and final output, including garments, at 5 percent. This creates an inverted tax structure where GST rate on inputs is higher than that on output.
In addition to hurting exporters, the inverted duty structure creates unfair competition between imports and domestic producers, said Sanjay Jain, former Chairman, Confederation of Indian Textiles Industries (CITI).
"The government needs to come up with measures to address such concerns and keep the industry afloat considering there is already a liquidity crunch in the market," Jain said, adding that capital blockage due to the inverted duty structure is leading to huge losses.
Appointed consultants would be asked to map various GST rates on products covering the entire value chain and gather industry representations and demands made till date, as per the Request for Proposal (RFP) circulated by the Ministry of Textiles.
They also have to find out if the taxes have affected the prices and thereby effected affordability for the buyer. The consultants would be required to recommend changes to the present tax and duty structure.
The agency is also expected to record interactions with respective representatives of the value chain/industry associations/with select stakeholders and industry representatives across the country to seek feedback/views on the subject to understand challenges in greater detail, the RFP said.
The Ministry has also invited bids for selection of a consulting firm for undertaking a study on Making Cotton Competitive.
The agency would be required to map the entire cotton value chain, including farming, production, productivity, and processing. They will also identify the problems faced by various players across the value chain and review the impact of existing assistance given to cotton farmers, processingand production entrepreneurs, as per the RFP.
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