Mumbai: In order to increase tax revenue in the name of removing the problem of tax refund in the textile industry, the Central Government and the GST Council have increased the Goods and Services Tax (GST) rate from 5% to 5% uniformly from January 1, 2022. It has been decided to increase to 12%, but this will make all types of fabrics (Fabrics & Garments) expensive in the country, while tax evasion in the textile business may increase again. Due to which the intentions of increasing the government’s revenue (Tax Revenue) will be dashed.
Organizations of the textile industry say that now that the entire textile business has come under the ambit of GST, this meaningless move of the government will encourage tax evasion. Along with this, the impact of inflation on the general public will increase. Therefore the government should reconsider its decision and make the GST rate 8%. Due to which the revenue of the government will also not be affected and there will be no problem of tax refund and clothes will also not be expensive.
Entire textile industry shocked and angry: Rahul Mehta
Rahul Mehta, Chief Mentor of the Clothing Manufacturers Association of India (CMAI), said that this step of increasing the GST rate is neither in the interest of the government nor in the interest of the textile industry nor the public. For this reason the entire textile industry is shocked and angry. On one hand, the Prime Minister says that everyone should pay taxes honestly. But they should understand that when the tax rate remains high, people will be compelled to evade tax because the margin in this business is very less. We hope that the Prime Minister and the Finance Minister will reconsider this anti-industry decision.
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After bread and house, clothes are also expensive: Vijay Lohia
Vijay Lohia, President, Bharat Merchants Chamber said that in the last one year, all cotton and synthetic yarns have become costlier by 20% to 35% due to global boom and speculation. The government did not take any steps to check the steep increase in yarn prices, on the contrary, increased the tax burden on all fabrics by two and a half times (increased from 5 to 12%). This is a step to ‘add fuel to the fire’. Will India become ‘self-reliant’ by such absurd steps? The central and state governments are only concerned about their earnings. With the increase in the tax burden, after bread and house, clothes will also become expensive. Therefore, the government should reconsider its decision of increasing the tax in the public interest.
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Record GST collection, then why tax hike: Narendra Podar
Narendra Podar, Vice President of Bharat Merchant’s Chamber said that the record GST collection is coming at the rate of 5% only. So what is the rationale for increasing the tax burden? Despite the increasing collection of GST, the tax on all types of clothing is being increased from 5% to 12%. This can lead to increased tax evasion as the textile business is a very low margin business. Instead of 8% rate, then the hassle of tax refund will also end and there will be some increase in the revenue of the government. The public will not be hit by inflation.
…then how will the poor man live: Sunil Majithia
Sunil Majithia, Honorary Secretary, Mumbai Textile Merchants Mahajan said that the country is facing all-round inflation. Roti, cloth and house are the basic needs of every citizen. In this, bread and house are becoming expensive. Now if the cloth will be expensive then how will the poor man live? Therefore, the government should consult the textile industry and find a middle way. If instead of 12%, the same rate of 8% is changed, then the industry will also develop and the public will not be hit by inflation.
On whom how much tax and what is the problem?
In fact, till now the GST rate on cotton yarn and all types of fabrics is 5% and GST is applicable on all other yarns at 12% and on all fabrics costing less than Rs 1 thousand, GST is applicable at 5% while those costing more than Rs 1 thousand. Garment attracts 12% GST. But in the country only clothes and garments costing less than Rs 1 thousand are sold the most (about 95%). Yarn and fabrics manufacturers have higher input tax burden with GST being 12% on yarn and 18% on other raw materials. They have to struggle a lot to get input tax credit i.e. GST refund. Doing this, crores of rupees of textile traders across the country are stuck in GST refund. Therefore, in the name of resolving their problem, instead of reducing the GST on yarn from 12% to 5%, the government has increased the GST rate on all types of fabrics to 12%, but this will make all clothes expensive and tax evasion will also increase. can.