Let me explain the following major changes dealt with textile industries after implementation of GST
In the previous regime VAT, OCTORI Duty, Entry tax, Luxury tax are there,
But as of now Under GST no such cost there as everything subsumed under GST so this shows Reduction in manufacturing cost
Input tax credit:
Majority of Textiles are dealt with unorganized sectors and Persons under composition scheme, so GST would enable a smoother input credit system, which would shift the balance towards the organized sector.
Currently, the import cost of procuring the latest technology for manufacturing textile goods is expensive as the excise duty paid is not allowed as input tax credit. Whereas under GST, there will be input tax credit available for the tax paid on capital goods.
GST Rates & HSN Codes For Cotton Products like- Dhoti,Shirting, Casement, Viol, Sheeting, Suti, Cambric, Lawn, Latha, Lungi & furnishing fabrics, Saree, Zari Border Saree, Zari Border Dhoti
|Cotton Composition||HSN Code||GST Tax Rate|
|Products with more than 85% cotton content & weight is less than 200 gm/sq mtr||5208||5%|
|Products with more than 85% cotton content & weight is greater than 200 gm/sq mtr||5209||5%|
|Products with less than 85% cotton content, mixed with additional fabrics & weight is less than 200 gm/sq mtr||5210||5%|
|Products with less than 85% cotton content, mixed with additional fabrics & weight is greater than 200 gm/sq mtr||5211||5%|
|Other Cotton Products||5212||5%|
GST Rates & HSN Codes For Synthetic Filament Yarn Products like- Parachute Fabrics, Tent Fabrics, Nylon Furnishing, Umbrella cloth, Polyester Shooting, Polyester Shirting, Other polyester cloth, Nylon Brasso, Nylon jacket, Nylon saree, Terylene saree, Dacron saree, Rayon Crepe, Rayon jackets, Rayon saree, Rayon shirting & Rayon brocade.
|HSN Code||GST Tax Rate|
|Synthetic Mono filament of 67 Decitex or more and of which No cross sectional dimensions exceed 1 mm; strips & the Like of synthetic textile material of an apparent width not exceeding 5 mm.||5407||5%|
|Artificial Mono filament of 67 Decitex or more and of which No cross sectional dimensions exceed 1 mm; strips & the Like of synthetic textile material of an apparent width not exceeding 5 mm.||5408||5%|
Currently, manufacturers/traders are not inclined towards exports due to the extensive procedure costs and delays made in the processing of duty drawback.
Under GST, the system of duty drawback will lose its significance. Input tax credit will be provided as a refund under GST instead of current duty drawback schemes. This would be a significant boost for promoting the export of textile products.
Export promotion capital goods scheme is available for all the cotton-based textile exporters. Under this scheme, exporters can claim the exemption for duty paid if they export six times the value of duty within a period of next six years. It is expected that this scheme would lose its significance under GST.
There may be a few drawbacks for the textile industry due to the higher tax rate and removal of benefits under cotton value chain, but it is safe to say that GST will help this industry in the long run by getting more registered taxpayers under a well-regulated system. It can also be hoped that GST will help the textile industry to get more competitive in both the global and domestic markets and create opportunities for sustainable, long-term growth.
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