TEXTILE SECTOR POST GST
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 31-8-2017<\/p>\n
Taxation of textile sector is opaque and non-neutral across its various segments and regions. Many textile outputs are either exempt under the central and state tax regimes or are subjected to relatively low tax rates. Most of the indirect taxes fall on inputs and services. On the whole, the textile sector is lightly taxed and also subsidized. Textile exports are supported through payments of un-rebated taxes (duty drawback) on textile inputs and other subsidies. The GST shall replace a number of earlier central and state taxes. India has a number of schemes for rebating or subsidizing textile exporters
\nRegistration
\nAccording to sections 22 and 24 of the CGST Act, 2017, every supplier shall be liable to be registered under the Act in the State from where he makes a taxable supply of goods and\/or services if his aggregate turnover in a financial year exceeds rupees 10 lakh <\/p>\n
= = = = = = = =<\/p>\n
Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n een kept under 5% tax, cotton farmer is not liable to registration under section 23(1) (b) of CGST Act, 2017 as an agriculturist to the extent of supply of produce out of cultivation of land is not liable for registration. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n d as under: = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n lue on which the tax has to be paid and not the MRP. Rate of tax linked to the sale value applies only to garments and not for sarees and suit lengths which are fabrics. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ed. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n s would not be eligible for input tax credit. It is important for manufacturers to plan the procurements from the vendors in GST regime. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" TEXTILE SECTOR POST GSTBy: – Dr. Sanjiv Agarwal Goods and Services Tax – GSTDated:- 31-8-2017 Taxation of textile sector is opaque and non-neutral across its various segments and regions. Many textile outputs are either exempt under the central and state tax regimes or are subjected to relatively low tax rates. Most of the indirect taxes … Continue reading “TEXTILE SECTOR POST GST”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-7524","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/7524","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7524"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/7524\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7524"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7524"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7524"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
For full text:-Visit the Source <\/a><\/p>\n
\nRate of Tax
\nIn pre-GST period, following tax rate structure was applicable on textile industry-
\n * Garment manufacturers could opt for complete excise duty exemption or pay a concessional excise duty of 2% (with abatement of 40%), i.e. effective rate of 1.2% was applied for branded garments with MRP of >Rs 1000 without availing input tax credit as most of the raw materials especially cotton based sector did not suffer excise duty.
\n * There was also an option of paying excise duty @ 7.5% (if opted for 12.5% payment with abatement of 40%) on condition of claiming Cenvat Credit.
\n * The sales tax or VAT would also be paid at lower rates or at concessional rates under composition schemes as applicable in different states.
\nKeeping in mind the indirect taxes paid by t<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nS.
\nNo.
\nType of fibre\/filament
\nGST rate
\nFibre
\nYarn
\nFabrics*
\nGarments and made ups**
\n1.
\nSilk
\nNil
\n5%
\n5%
\n5% \/ 12%
\n2.
\nWool
\nNil
\n5%
\n5%
\n5% \/ 12%
\n3.
\nCotton
\n5%
\n5%
\n5%
\n5% \/ 12%
\n4.
\nOther vegetable fibres
\nNil \/ 5%
\n5%
\n5%
\n5% \/ 12%
\n5.
\nManmade fibres \/ filaments
\n18%
\n18%
\n5%
\n5% \/ 12%
\n* – 5% GST rate with no refund of unutilized input tax credit.
\n ** – (i) 5% GST rate for garments \/ made ups of sale value not exceeding ₹ 1000 per piece.
\n (ii) 12% GST rate for garments \/ made ups of sale value exceeding ₹ 1000 per piece.
\nThus, the GST rate structure for the Textiles Sector enables ease of classification and determination of rate.
\nThe main demand of the textile traders has been not to put any tax on fabrics. However, the same has not been accepted because of the following reasons:
\n * Nil GST on fabrics will break the input tax credit chain and then the garments \/ made ups manufacturers will not be able to get the credit of tax on previous st<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nGST rate on fabric is 5 percent irrespective of composition. Dhoti is classifiable under Chapter 52 or Chapter 54 as fabrics. Old dhoti is classifiable under heading 63.09 as worn clothing. The tax for chapter 63 is similar to apparels and related to sale value whereas cotton fabrics\/man-made fabrics, irrespective of value, are taxed at 5%. Whatever be the classification, as presumably the old cotton dhoti would be below the sale value of ₹ 1000\/- per piece, it would be taxed at 5%.
\nRate on coin mats, mattings and floor coverings falling under Chapter 57 is 5 percent. The rate of 5% would be chargeable on the job process relating to the textile yarns (other than Man Made Fibre\/Filament) and fabrics. Sarees are treated as fabrics and a saree remains fabrics only as no new item emerges having distinct name, chara<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nGST on Khadi Products
\nWith the exemption to the SSI sector being drastically reduced from the earlier INR 150 lakh to INR 20 lakh, the exemption cover enjoyed by many of the Khadi Institutions (KIs) has been removed. KIs are now mandated to obtain registration under GST and also pay GST on various Khadi products which is 5%. The products of the Village Industries sector were either taxed @ 0-14.30% before-GST and post-GST the same products attracts tax @ 12-28%.
\nIn pre-GST regime, only Khadi yarn produced in Khadi sector was exempted, while other Khadi products attracted 5% GST. Ministry of MSME has approached Ministry of Finance to consider the sector for exemption from GST or to ensure a seamless flow of input tax credit in order for Khadi Institutions to claim input tax credit.
\nCredit Restrictions
\nVide Notification No. 5\/2017-Central Tax (Rate) dated 28.06.2017, it has been notified that in case of the following items \/ products, where the credit has accumulated on account<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nAnnouncement of transitional rates for Remission of State Levies of Garments & Made-ups
\nIn order to support exporters of garments and made-ups, the Government has announced as a transitional arrangement that for the period 1st July 2017 to 30th September 2017, the exporter may claim Remission of State Levies (ROSL) at the rates prior to introduction of GST.
\nConclusion
\nWith the GST, the manufacturing sector will become more competitive. As far as the textile sector, being an essential item for the common man is concerned, textile items are being demanded to be kept under GST with the minimum possible tax slab with the special rates.
\nThe introduction of GST does have some negative impact for the textile industry in general. However, the consolidation of taxes will help create a level-playing field for the bigger textile manufacturers as smaller or<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n