The textile industry has urged the union government to make a uniform levy of 5% (lowest slab) on all textile and clothing products under the GST (Goods and Services Tax). They also want the government to continue the duty drawback benefits for garment and made-up exports.
The entire cotton textile value chain is currently enjoying zero per cent central excise benefit under optional Cenvat route from 2004.
“A uniform levy of 5% GST on all textiles and clothing products would ensure smooth migration of entire textile value chain to GST tax structure with full compliance, creating win-win strategy for all the stakeholders and would bring substantial revenue to the exchequer when compared to the existing revenues,” textile associations from south India said in a joint memorandum to union textiles minister Smriti Irani. “The net revenue that is being realised with the current optional central excise duty, 2% CST (central sales tax) and reduced VAT (value added tax) rate (in various states) is less than 3% of the revenue to be collected,” they said.
“This revenue will double if the GST rate is fixed at the lowest slab of 5% without any exemption across the value chain,” Southern India Mills’ Association (SIMA) said in the memorandum submitted to the minister after an interaction programme here on Friday.
“The deserving sectors like handlooms could be given the benefit of refunding of taxes under direct benefit transfer system. In addition, all the state levies like market committee cess in the nature of entry tax should also be subsumed,” SIMA said.