18% Tax to Raise Prices of Garments

Textile industry today urged the GST Council to lower the service tax on job work related to made-ups and garment sector, saying the proposed 18 per cent tax would escalate the prices of final goods making them uncompetitive in the international market.

In a statement, Confederation of Indian Textile Industry Chairman J Thulasidharan said the industry is apprehensive about the made-ups and garment sector as the job work related to these still comes under 18 per cent service tax slab.

He requested the Goods and Services Tax (GST) Council to reconsider this on an urgent basis and bring it under the 5 per cent slab.

The Council yesterday fixed the tax rate on job workers in textile, diamond processing, leather, jewellery and printing at 5 per cent, as against the normal 18 per cent GST rate for services.

Giving reasons for lowering the tax rates, Finance Minister Arun Jaitley had said the objective was to maintain equivalence to the existing taxation level.

Thulasidharan welcomed the announcement on revision of GST rates on job work of textile yarn and fabric manufacturing activity from 18 to 5 per cent.

He said the lower tax will provide relief to the textile industry from the extra burden as majority of the work of textile manufacturing is with small and medium enterprises and is carried on through job works especially in the power loom, knitting, processing and garment manufacturing sectors.