The Confederation of All India Traders
“Vyapar Bhawan”
925/1, Naiwala, Karol Bagh, New Delhi-110005.
Phone +91-11-43032664, Telefax: +91-11-45089665
E-mail: teamcait@gmail.com Website: 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 duly 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
| Material /Fiber | Fibre/Raw | Yam | Fabric | Apparels /Garments Upto Rs.1000 |
Apparels /Garments above Rs.1000 |
| Cotton | 5% | 5% | 5% | 5% | 12% |
| Synthetic/MMF | 18% | 12% | 5% | 5% | 12% |
| Silk | 0% | 5% | 5% | 5% | 12% |
| Jute | 0% | 5% | 5% | 5% | 12% |
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 stage of conversion of Fiber to Yam i.e. 18% to 12% and second on conversion of yarn to fabric i.e.. 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 like this:
GST on different types of goods and Stages
| Material /Fiber | Fiber/Raw | Yam | Fabric | Apparels /Garment, Upto RS.11100 |
Apparels/ Garments above Rs.1000 |
| Cotton | 5% | 5% | 12% | 12% | 12% |
| Synthetic/MMF | 18% | 12% | 12% | 12% | 12% |
| Silk | 0% | 5% | 12% | 12% | 12% |
| lute | 0% | 5% | 12% | 12% | 12% |
From the table above it could be seen that inserted duty on Synthetic/MMF from yarn to fabric is removed but inverted duty on synthetic/MMF from Fiber to Yarn is still there. And textile goods other than MMF have been disturbed without there being any issue of inverted tax structure.
2. Secondly, there is considerable value addition at the stage of fabric to apparel/garment/madeups that there is no issue of inverted duty even in MMF.
3. Moreover out of Textile and apparel of cotton, MMF Silk Jute etc.. MMF contributes 25% of total (GST collection from the textile sector and only 5 to 7% are covered under inverted tax structure. Just to correct this 5% inverted tax structure, it is not wise to disturb the entire textile mid apparel sector where there is no inverted tax issue which is 90 to 95% of the total textile and apparel trade.
4. From various representations received by your office pre and post issuance of Notification 14/2021 it could be seen that this increase in rate from 5% to 12 % will hamper the textile trade in the following manner:
i) Traders having turnover of less than threshold now have to bear an additional burden of 7% as they are not eligible to claim ITC on the inputs. This will add to their cost and it will become difficult for them to compete with persons who are covered under GST. This covers street vendors, hawkers, women working from home, small boutiques, small shop-keepers, exhibitors etc. These are self organized traders and form a major part of small traders which cater to the needs of the considerable population of our country .
ii) Similarly for the person who is following the composition scheme, the additional burden of 7% is too much as they too arc not eligible to claim any ITC.
iii) The additional burden of 7% is to borne by the traders on stock lying with the traders which arc sold on MRP.
iv) Further, in the case of B2B sales where the payment cycle is of 90 to 180 days and tax has to be paid on monthly basis this additional burden of 7% would affect the working capital of the businessman and would directly affect the survival of the industry.
v) Will result in NPA. business closure, mental and financial stress, and unemployment.
In light of the above, you will appreciate that an increase in tax rate from 5% to 12% on the fabrics and apparels of various textile materials where there is no inverted tax structure would not be in the interest of the trade and will affect the trade badly. Which if implemented would result in NPAs, business closure, stress and unemployment of many as textile trade gives livelihood to all strata of society. Therefore, it is requested that a recommendation may kindly he made from your side for withdrawal of Notification No. 14/2021. This recommendation and its implementation will not only boost the economy, it will create an atmosphere of hope and certainty. If this request and condition of the textile Trade and Industry is not taken seriously the decentralized unit and small traders will keep struggling for survival and will eventually lose their business.
We are sure that it will receive your kind and urgent attention and you will be kind in doing as prayed.
Thank You with kind regards
Yours truly
Praveen Khandelwal
National Secretary General
Contact Cell: +91-9891015165
I think that the Government is keen to extract every milliliter of blood – They Tax most essential things in life, DOOD, CLOTHING AND SHELTER, to such extent that we may SOON see skeleton like figures without clothes sleeping on platforms.