Textiles, clothes and footwear will now be more expensive. The government has increased the GST on these things from 5 percent to 12 percent. These rates will be applicable from January 2022. The Central Board of Direct Taxes (CBIT) has given this information by issuing a notification on November 18.
Now 12 percent GST on textiles, clothes and footwear
GST on fabric has been increased from 5 per cent to 12 per cent with effect from January 2022. Now 12 per cent GST will be levied on fabric of any cost. Earlier, 5 percent GST was applicable on fabrics up to 1000 rupees. Now the GST has been increased from 5 percent to 12 percent on many types of fabrics including woven fabrics, synthetic threads, thanas, blankets, tents, table cloths, rugs. Footwear will also attract 12 per cent GST.
Many common use items have also been exempted from GST. GST is not levied on 150 goods and more than 80 services. Tax experts say that there has been an encouraging trend in the GST collection in the last several months. So some improvement can be done in the slab.
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Three rates instead of four GST rates?
The government can remove the tax slab of 5 percent. Now it can be decided to keep the rates of only 12, 18 and 28 percent. By combining the slabs of 5 and 12 per cent, now only the slab of 12 per cent will be retained. A Group of Ministers (GoM) chaired by the Chief Minister of Karnataka is likely to meet soon in which the recommendations of the GST Council can be considered and finalized.
In the last GST Council meeting, a presentation was given on various aspects of revenue. However, in this the consideration of ending the compensation of the states was not considered. In July 2022, the rule of giving compensation to the states will end. After this, the states have to decide how they will proceed on this.
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