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Textile Min Reiterates Uniform GST on MMF, Yarn, Fabric from Jan 1

The government will go ahead with its decision to implement a uniform Goods and Services Tax (GST) rate of 12% on man-made fiber (MMF), MMF yarn, MMF fabrics and apparel from January 1.

This comes despite demands from some states and the industry, which opposed the rise in tax from 5%, citing higher compliance costs, especially for the unorganized sector and micro, small and medium enterprises (MSMEs), besides making poor man’s clothing expensive. Telangana and West Bengal had also urged Prime Minister Narendra Modi to intervene, citing job losses and closure of units.

The textiles ministry said in a statement on, Monday that this has been done to address the inverted tax structure in the MMF textile value chain and will help the segment emerge as a big job provider. “The government has notified uniform goods and services tax rate at 12% om MMF, MMF yarn, MMF fabrics and apparel that has addressed the inverted tax structure in the, MMF textile value chain. The changed rates will come into effect from January 1, 2022,” the ministry said.

Amit Mitra, an advisor to the West Bengal chief minister and the state’s former finance minister has said that by rising GST to 12% from 5%, 15 million jobs will be lost, and 100000 units will close.

The confederation of All India Traders (CAIT) said on Monday that the tax will not only add to the financial burden of end users but also affect small business and encourage tax evasion, among other malpractices.

The traders’ body sought rate hike’s implementation to be deferred and the government to constitute a taskforce to arrive at a consensus. “GST collection is increasing every month and as such, any increase in tax rates without consulting stakeholders will run contrary to ease of doing business,” CAIT said. As per the ministry, the industry has the capacity to generate around 70 jobs in garmenting and an average of 30 jobs overall for every Rs 1 crore ($132,426) invested, compared to 12 jobs created on an average in other industries. S-ET

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