It’s not that a tax waiver or a low rate of tax is everyone’s choice. The input tax credit (ITC) facility, which will be the hallmark of the proposed goods and services tax (GST), has several industrial segments pitching against their potential exclusion from the tax regime while some other asking for higher rates than proposed by the government.
After solar and wind power companies demanded GST on their output (electricity), a segment of the upstream textile industry has now asked for 12% GST on the textiles and garments, while as essential goods, the lowest GST rate of 5% looks likely on them.
According to sources, many participants of a recent stakeholders’ meeting with the textile commissioner in Mumbai were surprised when the Synthetic & Rayon Textiles Export Promotion Council (SRTEPC) indicated that 12% GST should be fine for the textile and garments industry.
Currently, natural fibres — including cotton — do not attract any excise duty, while a 12.5% excise duty is levied on man-made fibres, such as polyester. A 4-6% value added tax (VAT) is imposed by states on both man-made and natural fibres.
SRTEPC chairman Anil Rajvanshi told FE that the industry, in another meeting with textile minister Smriti Irani and textile secretary Rashmi Verma in New Delhi on November 9, “unanimously” agreed on two things: The entire textile sector should be subject to “one rate without any exemptions” and a “low possible rate” should be imposed.
Asked why he is asking for “a low possible rate” and not the “lowest rate” of 5%, Rajvanshi, who is also a senior vice-president of the country’s largest man-made fibre producer, Reliance Industries Ltd, said: “You should ask for what is possible. If you ask for zero tax, is it possible? You know the excise duty on cotton yarn is 6%; it’s a separate issue that there is an option route also (to get refunds against the duty paid).”