Southern India Mills Association (SIMA) today hailed the Goods and Services Tax (GST) rates announced for the textile industry.
Union Finance Minister Arun Jaitley announced that all natural fibres including cotton, cotton yarn, fabrics and ready-made garments valued below Rs.1000 have been classified under 5 per cent GST rate, garments valued above Rs. 1000 under 12 per cent; synthetic or man-made fibres and synthetic yarn under 18 per cent, with the fabric irrespective of fibre has been classified under 5 per cent GST rate. As the textile industry has been under the optional route since 2004 and the fabrics have been under zero VAT rate, the 5 per cent GST rate would bring substantial revenue apart from widely broadbasing the tax net across the textile value chain and ensuring compliance, SIMA chairman M Senthilkumar said in a release here.
The 5 per cent GST on readymade garments below Rs. 1000 would greatly benefit the common man across the country, being a mass consumption item. SIMA chief has stated that 5 per cent GST rate on cotton fibre would sustain the competitiveness of over 20 million cotton farmers as this rate across the value chain would enable the cotton textile industry to remain globally competitive, achieve substantial growth rate and increase cotton fibre consumption and thereby increase the earnings of the farmers.
He expressed hope that the textile job work would be exempted from service tax which is essential to benefit the industry, especially the powerloom sector, knitting, processing and garmenting sectors. Senthilkumar said that 18 per cent GST rate levied on man-made fibre and synthetic yarn would have inverted duty structure problem as the fabric would attract only 5 per cent GST rate. SIMA thanked Union Textile Minister Smriti Irani and Jaitley for considering the request of the industry and the Chief Ministers of all states, particularly southern States for supporting the cause of the industry.