Industry welcomes cut in GST rates on textile job work

Aamir H Kaki

The textile industry has welcomed the Government’s move to cut the Goods and Services Tax (GST) on job work or the third-party services, but said some more leniency in cost is needed.

In its meeting last week, the GST Council, chaired by Finance Minister Arun Jaitley consisting of representatives from all the states, had taken the decision to bring down the tax on all the job works such as weaving, knitting, cutting, and embroidery in the textile sector at from 18% to 5%.     

The 5% rate will be applied on job work in apparel, carpets and shawls. 

“We welcome this move of the government but it would be better if it is zero percent,” P M Shah, President, Southern Gujarat Chamber of Commerce and Industry (SGCCI) told The Dollar Business.

“The thing is that the Government has decreased the GST on all the job works of the textile sector from 18% earlier to 5% but we still have to pay it and it is a cost burden for us, he said.

Input tax credit which the industry gets is the best option and is beneficial for us, Shah said, while adding, “We’re demanding full and timely refunds of input tax credit.”

He further said that SGCCI has submitted a representation to the Commerce Ministry on behalf of the textile industry, demanding imposition of import duty on the Chinese fabrics to safeguard the SME segment, which has been under lot of pressure due to heavily under-invoiced fabric imports from China.

In a statement, the Confederation of Indian Textile Industry (CITI) Vice Chairman Sanjay K Jain said, “A common rate across the chain would also avoid confusion. All textile job works being manufacturing activities were exempted from service tax in pre-GST regime. But job workers could not avail input tax credit that had been increasing the cost of the products and affecting the export competitiveness and also the domestic consumers,” he added.