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L AT E S T D E V E L O P M E N T S I N T H E G S T D E B AT E …
Tax slashed on textile jobwork,
but many concerns remain
D
evelopments and contrasting
opinions continue to be the talk of
the town for GST this year. It is for sure
that this will be applicable from July
1, 2017 and allows filing of returns till
September 2017. It is also confirmed
that the Anti-Profiteering authority will
be here for two years which will take
all final decisions regarding penalties.
With regard to the textile industry,
they got a major relief when the GST
Council announced a sharp cut in rates
on the merchant services to straight
5% from an 18% high declared earlier.
Since many inputs were kept under
various tax slabs, the continuation of
18% tax on merchant services would
have offered inverted duty structure
resulting in negative impact on the
business. However, at the same time,
not including apparel jobwork into the
same 5% rate, is a crucial reason of
worry for the apparel industry.
Rahul Mehta, President, CMAI
Raja M Shanmugham, President,
Tirupur Exporters Association
(TEA), is thankful to the GST Council,
particularly to the Union Minister of
Finance, for considering the requisitions
of the textile industry and added that
the much-awaited decision is a big relief
for the Tirupur knitwear garment sector.
However, he also showed alarming
concern about the stature of the apparel
and textile clusters like Tirupur which
would be badly affected by not being
included in the list of 5% reduced rate. A
letter in this regard has also been sent
to the MSME Minister, Textiles Minister,
Minister of State for Commerce and
Industry and the PMO.
Considering the fact that any rate
revision in GST would be done only after
three months, comes as a major blow to
the garmenting, made-ups and spinning
domains which are predominantly
dependent on jobwork and who would
Sanjay K Jain, MD, TT Ltd
50 Apparel Online India | JULY 1-15, 2017 | www.apparelresources.com
have to now pay 18% service tax to avail
the same. Moreover, Indian exporters
are still in doubt about the migration
to the new tax regime which would
need significant tweaking of the duty
drawback schemes. What would happen
to the various drawback benefits, and
how the refund mechanism would take
place, are a few apprehensive questions
lurking in everybody’s mind. It is being
said that if the policy is not tweaked
to accommodate GST, the industry
can face loss of nearly Rs. 1,500 crore
refunds budgeted for the current year.
Subrata Gupta, Joint Secretary, MoT
said, “It will probably undergo some
changes because VAT (value added
tax) is being subsumed under GST. It is
being studied right now.”
Prediction regarding the consequences
of GST has caused several strikes by
various stakeholders of the domestic
textile industry across the nation
raising objections against it. Surat,
Ahmedabad, Erode, Amritsar and
few other hubs are witness to such
protests. In Amritsar, the industry
emphasized on cotton and natural yarn
not being covered under the excise
tax, which will be charged with 5%
GST and man-made yarns with 18%.
In Surat, protesting traders and power
loom weavers demanded the textile
sector to be exempted from GST and
instead demanded for turnover tax. The
system regarding return goods is also
complicated in GST.
In Mumbai, The Clothing Manufacturers
Association of India (CMAI) in
partnership with Tata Consultancy
Services (TCS), has developed a