Goods and Services Tax (GST) Council – on its concluding day of meeting – has not decided the tax regime for the textiles industry. The rate announcement has been deferred till June 3 as the Council found complexities within the entire textiles value chain. In addition, postponing final decision is also due to the industry’s anticipation of a fibre neutral taxation across the chain.
According to the textile industry representatives, different rates for different parts of the textile value chain with some being taxed and some being exempted has led to tax evasion and flourishing of the unorganised sector. Therefore, majority of textile industry is demanding to put this industry in uniform 5 per cent tax slab.
Also Read – Indian Texpreneurs Federation seeks uniform tax rates under GST
It may be noted here that tax variation in textiles has been such that currently, while fabrics do not attract excise duty or sales in most states in India, branded apparels are subject to both excise duty and sales tax. Dr A Sakthivel, Former Chairman of Apparel Export Promotion Council (AEPC), commented, “We are awaiting clarity on what kind of input credit would be given in case the branded garments vertical attracts a higher rate of 18 per cent.”
Additionally, the textile industry has shown its concern over compliance issue. While, currently a large part of the unorganised sector also goes along in the name of branded garments by placing private labels, it is to be seen how the same would be defined under GST for better compliance across the industry.
The deferment decision has been taken by the Union Finance Minister Arun Jaitley in the GST Council meet in Srinagar.
Bharat Tex Special Report 2026 
