GST on Textile sector: Industry insiders fear that if the idea to impose a standard slab of 12 percent for GST on textile sector passes, it will hurt the ‘already devastated’ industry and lead to job losses. Currently, there are two tax brackets: 5% for bills under 999 Rupees and 12% for bills over that amount. In response to calls for a unified tax slab, a suggestion was made to set it at 12 percent for both slabs. Representatives from the apparel industry, on the other hand, are asking for a single slab of 5% GST Rate.
“The industry one of the largest employers, is one of the worst-hit by the pandemic. With no social gatherings and people working from home, sales have dropped by over 50%. People also do not have spending capacity. Meanwhile, the prices of raw materials have shot up significantly. In such a situation, hiking tax to 12% will further hit the industry,” said Karnataka Hosiery and Garments Association member Sajjan Raj Mehta.
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Perikal M. Sundar, president of the Federation of Karnataka Chamber of Commerce and Industry (FKCCI), wrote to Chief Minister Basavaraj Bommai, who was recently appointed as chairman of the Group of Ministers on GST Rate Rationalisation, saying,said, “This sector may face closure, resulting leading to unemployment and revenue loss to the government.”
Garment workers are also concerned about the proposal. According to a recent research by the Garment and Textile Workers’ Union (GATWU), the pandemic has resulted in the closure of at least 60 garment companies and the loss of approximately 40,000 employment, largely among women, in Bengaluru alone.
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“Earlier, Mr. Bommai, acting on our petition, has written to Union Finance Minister Nirmala Sitharaman seeking a uniform slab of 5%. Now that he chairs the rate rationalisation committee himself, we hope he will honour his commitment,” Mr. Mehta added.
According to experts, the scale of the crisis is severe across the country. Even those who are employed have seen their pay cut and, in many cases, have not been paid for months.
The demand in the domestic market has fallen steeply and it is in this sector that there has been the most closures and job losses. In such a situation, hiking GST to 12% would lead to a further fall in demand and will eventually hit us workers. It will only mean more closures, loss of jobs and salary cuts. This is the time the government must stand by the sector, experts further added.
Industry representatives recently met with the CM to request a uniform 5% GST slab for the whole industry.
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