GST benefit to fabric sector prospective in nature

By: | Published: July 28, 2018 4:44 AM

The government notified the decision of the GST Council to allow the fabric industry to utilise accumulated input tax credit (ITC) lying in the ledger due to the inverted tax structure for the commodity, which means that the out GST tax on the fabric is lower than the tax imposed on input/raw material.

gst, gstnThe benefit will be prospective in nature as it is restricted to the ITC accumulated on supplies received from August 1.

The government notified the decision of the GST Council to allow the fabric industry to utilise accumulated input tax credit (ITC) lying in the ledger due to the inverted tax structure for the commodity, which means that the out GST tax on the fabric is lower than the tax imposed on input/raw material.

However, the benefit will be prospective in nature as it is restricted to the ITC accumulated on supplies received from August 1. The notification clarified that “the accumulated ITC lying unutilised in balance, for after payment of tax for and up to the month of July 2018, on the inward supplies received up to the July 31, 2018 shall lapse.”

“This would only bring partial relief to the industry as the prospective nature of the notification means that the sector will suffer a setback in the short-term,” Rajat Mohan, partner at AMRG & Associates, said.

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