GST cut to boost cotton, woollen but prices remain unaffected

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CHANDIGARH: The cut in GST rates on job work done in natural fibre including cotton and woollens has provided a major relief to textile companies, but that is expected to have little effect on prices of textile products, industry executives said.

GST cut to boost cotton, woollen but prices remain unaffectedThe GST Council has reduced the rate to 5% from the initially decided 18% on August 5.

The move is expected to boost domestic business and increase international competitiveness, they said.

“The relief will surely reduce tax burden and avoid inverted duty for textile manufacturers,” said Maninder Singh, manager-GST at Vardhman Textiles. But that will not lead companies to reduce product prices, he added.

The relief is expected to hugely benefit the unorganised sector, where as much as 80% of the works such as stitching, weaving and knitting happens.

Textile companies have welcomed the move, but many have sought clarification over the term \’job work\’, which could include manufacturing activities such as weaving, cutting and knitting.

The Nahar Group, a Ludhiana-based textile conglomerate, has written to the textile ministry to find out whether operations including packaging, shifting of raw material, loading and unloading also fall in the 5% slab. “Much of such operations are contractual, but still have indirect tax implication for the company,” finance controller PK Vashistha said.

“The lower GST slab will benefit the entire value chain of textile sector,” said Sudarhsan Jain of the Knitwear and Apparel Manufacturers Association.
The 5% tax rate is applicable for job works in apparel as well as shawls and carpets. The tax relaxation will benefit the unorganised sector more, said Sushil Kaura, the Wool & Woollens Export Promotion Council chairman.

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