Withdrawal of proposed 12 % GST tax rate on textiles

Confederation of All India Traders CAIT (Aa Aper Hudr l Tade Fteration, Aciaton & Not-Concete Sedur d lalal “Vyapar Bhawan” 92/1, Naiwala, Karol Bah, New Delhi-110005. Phone +91-11-49os4, Telefae 91 -11-4GS E-mail: teamcairgmail.com Weheite http://www.cait.in

Ref. No.: 3178/1/51 18 February, 2022 Smt. Nirmala Sitharaman Hon’ble Minister for Finance Government of India New Delhi Dear Smt. Nirmala Sitharaman Ji, Subject : Withdrawal of proposed 12% GST tax rate on textiles The trade is grateful to you for deferment of increase in GST rate on fabric, garments and made ups, as per the demand of trade and commerce in the Country.However , certain facts and figures as stated by us below amply reflect that proposed hike is unjustified and do not serve the purpose of streamlining the inverted duty structure. We draw your kind attention to the reasons as to why the status quo of 5% on fabric, saree, garments and made ups is required to be maintained.

1. Whether there was inverted duty element across the textile sector, covering, cotton, jute, silk, MMF etc. The answer is a big “No”. This is evident from the GST tax structure on various types inward supplies and outwards supplies of cotton, jute, silk, MMF etc. which is enumerated in a tabular form:

GST on different types of goods and Stages

From the above table it could be seen that there is an inverted tax structure under the head Synthetic/MMF only. In Synthetic/MMF inverted tax structure is at two stages one is at the stuge of conversion of Fiber to Yam ie 18% to 12% and second on conversion of yarn to fabric 12 to 5% With the introduction of Notification 14/2021 dated 18 /11/2021 the rate of GST has been increased across all types of textile goods and the tax structure on introduction is Fayde ka Sauda tike this:

GST on different types of goods and Stages

Erom the table ahose it could be seen that inverted duty on Synthetic MMF frum Varn to fahricis removed but inverted duty on Syothetic/MMF from Fiber to Yarn is still there . And textile gondy other than MME have been disturbed without there being any issue ef inverted tax structure

2 Secondly, there is considerable value ddition at the stage of fabric isuc of invertel duty even in MME to apparel/garmentimadeupi that there is no

3. Motcover , out of textile and apparel of cotton MMF, SIK Jute ete. MMF contributes 25% of total GST collection from the textile sector and only 5 to 7% are covered under inverted tas itructure Ju to correct this 5 inveted tas stricture, it in not wise to disturb the entire textile and apparel sector where there i s no inverted tan issue which is 90 to 9% of the total textile and apparel trade.

4 Frum varioes representations received by your office pre and post issuance of Notification 14/2021 it could be scen that this increase in rute from 5% to 12 % will hamper the textile trade in the following manner: )

i. ) Traders having turnover of less than thresheld now have to bear m additional bunden of 7 as they are nol eligible te elaim ITC on the inputs. This will add to their cost aid it will bocome difficult for them to compete with persons who are covered under GST. This covers street vendirs haivkers, women working from home, amall boutiques, small shop -keepers, exhihiloes ete. These are sielf urganifet traders and form a major part of small traders which cater to the nevds of the considerable populution of our country m

ii.) Stmilarly for the person who is following the composition scheme, the additional burden of 7% is too much as they B00 are not eligible to claim any TC m

iii) The additional burden of 7% is to be bome by the truders on stuck lying with the traders which are sold on MRP.

iv) Further, in the case af HR sales where the payment eycle is af 90 to IN0 days nd tax hs to be paid on monthly basis this additional burden of 7 would affect the working cupital of the husinessman and would directly affect the survivalof the industry .

v )Will result in NPA, businevs closure, mental and financial stress, and unemployment.

In light of the above, you will appreciate that an increase in tax ate from 5% to 12% on the fabrics and apparels of various textile materials where there is no invened tat sructure would not be in the inturest ef the trade and will affect the trade badly, Which if implemented would result in NPA buniness elasure, stress and unemployment of many as textile trade pives livelihood to all struta of society. TTherefore, it is requested that a reconmendation may kindly be made from your side for withdrawal of Notification No. 14/2021. This recommendation andits implermentation will not only boost the economy, it will rcate un attiosphere of hope and certainty. If this request and condition of the teatile trade and Industry is nọt taken seriously the decenralired unit and small traders will keep struggling for surival and will eventually lose their business

We are sure that it will receive your kind and ungent attention and you will be kind in doing as prayed Thank Yoni, With kind regards Yours tnaly ến Khandelwal National Secretary General Contnet Cell: +91-9891015165 e-Lala Fayde ka Saula Be Proud To Be A Trader