Textile Industry is divided into Two Segment, firstly Unorganised and Secondly Organised.

The
unorganised sector consists of Handloom, handicraft, small and medium-scale mills and
Organized Sector consist of spinning, apparel and garments segment which apply modern
machinery and techniques. The rate structure for the textiles is decided at 5 per cent and 18 per
cent for cotton fibre and man-made synthetic fibre respectively. While silk and jute are totally
exempted from the GST purview. The GST rate on apparels is also decided on a category basis, as
Apparels below INR 1000 will be attracting 5 per cent GST while those above this mark will be
taxed at 12 per cent.

Impact of GST on textile industry:-

1. Rate: GST has subsumed most of the indirect taxes such as central excise duty,
service tax, VAT / Sales tax and entry tax. For textile and its products, GST the
average tax rate is 18%. This could have a negative impact as the industry is
price sensitive.
2. Input credit: Input tax credit is not allowed if the inputs are procure from
composition scheme taxpayers or the unorganized sector, and large portion of
the textile industry in India operates under the unorganized sector or
composition scheme. Thus gap will be left under GST and would enable a
smoother input credit system.
3. Credit on Capital Goods: under GST, there will be input tax credit available for
the tax paid on capital goods, which earlier was not allowed ( excise duty paid is
not allowed as input tax credit).
4. Manufacturing cost: GST would help reduce costs for manufacturers in the
textile industry as it subsumed the various fringe taxes like Octroi, entry tax,
luxury tax etc.
5. Exports: Under GST, Input tax credit will be provided as a refund under GST
instead of earlier duty drawback schemes. This would be a significant boost for
promoting the export of textile products. Earlier exporters can claim the
exemption for duty paid if they export six times the value of duty within a
period of next six times, this scheme would lose its significance under GST.
Certain areas which need to be Concern of:-

 Credit available — matching/verification — returns filed and payments made

by the supplier.
 Job workers — not so organised to comply with a technology oriented law like
GST
 Exemption limits — reduced from Rs.1.5 crores to Rs.20 lakhs in GST regime.
 Multiple registrations and returns.
 Composition Scheme not available for job workers
.
Rates on Textile and Apparel Industry

Conclusion
There are few drawbacks for the textile industry which is due to higher tax rate and
removal of benefits under cotton value chain. GST will support the industry in the
long run by registering more taxpayers under this system. Smaller players like textile
processing, job workers, fabric manufacturers or garment units will have to maintain
their records properly. Textile industry hopes will become more competitive in both
the global and domestic markets and sustain a long-term growth.
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Name: Fabindia
Contact: +91 80104 88888
Name: Chumbak
Contact: 011-41306553

Questionnaire

1. Do you think GST will burden the people/consumer?

2. Do you think all businesses need to be registered under GST?
3.