GST Council defers implementation of tax rate hike on textiles

The GST Council on Friday decided to put on hold the decision to hike tax rate on textiles to 12 per cent after many states, including Tamil Nadu and West Bengal, opposed the move, an official said.

The 46th meeting of the GST Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising state counterparts, decided to deliberate on the issue further in its next meeting.

Currently, tax rate on manmade fibre (MMF) is 18 per cent, MMF yarn 12 per cent, while fabrics are taxed at 5 per cent.

The Council in its previous meeting on September 17 had decided to correct the inverted duty structure in footwear and textile sectors.

With effect from January 1, 2022, all footwear, irrespective of prices, will attract GST at 12 per cent. It was also decided that 12 per cent uniform GST rate wold apply on textile products, except cotton, including readymade garments.

States like Gujarat, West Bengal, Delhi, Rajasthan and Tamil Nadu have said they are not in favour of a hike in Goods and Services Tax (GST) rate on textiles to 12 per cent, from 5 per cent, with effect from January 1, 2022.

Amit Mitra, advisor to West Bengal Chief Minister, had earlier urged the Centre to roll back the proposed tax rate hike on textiles, saying this would lead to closure of around 1 lakh textile units and 15 lakh job losses.