Impact of GST on Textile Industries

The textile industry of India is known for its craftsmanship and different designs all over the world. Starting as early as the Indus Valley Civilization India’s textiles are famous for their fine quality and craftsmanship.

In modern-day, India is famous to the finely created textiles in high demand all over the world. Despite such high demand, the textile industry in India was unable to 100% demand of Indian textiles both organic and synthetic.

The textile industry in India has witnessed several adjustments in taxation under the GST regime. The implication of GST will affect the sector and its boost future. The textile production process that features synthetic & artificial fibers and naturally created fibers.

The GST regime offers many good things about the industry players in the domestic market that focus on strengthening the domestic market creating new opportunities for new businesses in the textile industry. The advent of GST in the textile sector will encourage more organized structure in implementation in the textile industry.

The GST brings forth transparent easy taxation process that is fast paced and saves time from filing taxation at multiple levels for goods and services offered by the textile industry. The textile industry has raised concerns for a while.

These are the concerns for duty disparity that is preventing the domestic textile producers from expanding their operations and scaling up their manufacturing for better revenue via exports. This is consequently hurting the country’s exports in textiles leading to the loss of revenue.

Cotton based textiles are an important part of the country’s economy and duty relaxation plays an important role in business expansion in different parts of the country. The cotton fibers and textiles witness more effort and time consumption compared towards production of the synthetic and artificial fibers.

Hence, it may happen the government will introduce special taxation relief and incentives for the cotton textile industry. Whole consumption of textiles made from synthetic and artificial fibers at the global scale are 70%.

With duties and taxation streamlined and simplified. It is then easy kids and existing businesses to buy and sell synthetic and artificial fabrics.

In view of ICRA, a lower rate of 12% is required by the Dr. Arvind Subramanian Committee is supposed to have a negative impact close to textile group. In this case, especially the cotton value chain, that is present attracting a zero central excise duty (under optional route).

Unlike the synthetic fiber sector, the location where fiber attracts excise duty at the stage (unlike cotton). Hence, there a good incentive for your downstream players in the synthetic sector to avail the Input Credit Tax (ITC).

The textile industry is broadly divided into nine categories when we talk with regards to the taxation insurance policies. The current taxes vary from 4% to 12% based on these categories.

Further, unorganized players that given tax exemptions according to the proportions their operations dominate the textile sector.

There are different taxation policies for cotton and man-made fibers: Zero duty for cotton fibers as the actual high excise duty structure of nearly 12.5% on man-made dust.

With the implementation of your GST, first and foremost . uniform taxation policies can cause an obstruction as the input taxes will be eliminated since GST is a consumption taxes. Zero rating on exports under GST Registration in India will increase exports further without the need for various subsidy schemes.

Goods movement within the states is much easier as many local state taxes which usually levied for your borders of states will evade and free movement of goods will get allowed. The cotton and synthetic fiber are also subject to 4%-5% state VAT, which will be evaded with GST.

However, generally if the duty dealing with all cotton and synthetic fibers remains to be the same, prices of textile items made from cotton fiber could rise a tad bit.

Nevertheless, the equal tax treatment policy will offer you a rise to man-made fiber production in addition to its exports also. The industry has since a hard time, been complaining that the duty disparity is barring domestic producers from scaling up operations and, eventually ending up hurting India’s export competitiveness in artificial and synthetic textiles.

This is because while artificial and synthetic fibers account for around 70% of earth’s total fiber consumption, create up intended for 30% of India’s usage.

Get on the web an edge over other in GST Registration and GST Return Filing from experienced specialist at reasonable cost.