The Goods and Services Tax (GST) Council has announced tax reduction for the textile and apparel exporters of India at its 22nd meeting held on October 6 in New Delhi.
The Council has reduced the GST rate on manmade yarns like polyester, viscose and other blended yarns to 12% from the current 18%. Arun Jaitely, Finance Minister chaired the meeting.
Jari job work will now attract only 5% GST against 12%. This will benefit textile hubs like Surat.
Additionally, it was announced that the apparel exporters will start receiving GST refund (for July) from October 10 onwards while refund process for the August month will begin from October 18.
The Council will create an e-Wallet for the exporters by April 1 next year. This will allow them to pay IGST/GST by using the e-Wallet technology.
The Government will also deposit a nominal amount as ‘advance refund’ the in e-wallet. Actual refunds will be settled against the advance refund made. The facility will benefit the exporters by accelerating the GST refund process.
The FM also announced that 0.1% GST will be charged from merchant exporters through schemes like existing advance authorisation, EPCG, EoU till e-Wallet comes into effect.
Various textile and apparel trade associations of India have hailed the Government’s move of slashing the GST rates.
Rajeev Bansal, Chapter Chairman of Indian Industries Association and a member of Noida Apparel Export Cluster said, “Reverse Charge Mechanism (RCM) has been deferred till 31 March 2018. I agree that it is very much required to keep the GST chain alive and it is a good step for the time being. However, the release of the refund will ease the liquidity is amongst the exporters.”
Another apex trade body Indian Texpreneurs Federation (ITF) welcomed the decision. Prabhu Dhamodharan, Convenor told Apparel Resources, “We are thankful to the Government for this. The textile manufacturing sector will get enough relief with this reduction. It is a historic decision. We’ve got what we requested.”
A committee, headed by Revenue Secretary Hasmukh Adhia, will submit its preliminary report to the GST Council soon on the challenges faced by the exporters. The Council will then take possible steps for the betterment of the industry.
Next meeting of the GST Council will take place on 9th and 10th of November in Guwahati.
