Lok Sabha Question No. 3352 (UNSTARRED), answered on 2017-08-04
Subject: GST on Textiles and Other Industries
Ministry: FINANCE
Asked by: RENUKA BUTTA, SHARAD BANSODE, V. SATHYABAMA, NALIN KUMAR KATEEL

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF REVENUE

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## LOK SABHA

## UNSTARRED QUESTION NO.3352

## TO BE ANSWERED ON FRIDAY THE 4 TH   AUGUST, 2017

## SHRAVANA 13, 1939 (SAKA)

## GST ON TEXTILES AND OTHER INDUSTRIES

## 3352.  SHRIMATI BUTTARENUKA:

ADV. SHARADKUMARMARUTI BANSODE:

SHRIMATI V. SATHYABAMA:

DR. A. SAMPATH:

SHRI NALIN KUMARKATEEL:

Will the Minister of FINANCE be pleased to state:

- (a) whether the textile industry merchants/organised traders/unorganized sellers/workers  have  expressed  serious  concerns  on  imposition  on  Goods  and Services Tax on textiles and if so, the details thereof;
- (b)  whether  the  Government  has  received  many  representations  from  the  textile merchants/traders/associated with textile industry for exemption of GST  on
- textiles/handlooms/man made fibre;
- (c)  if  so,  any  discussions  or  consultations  are  being  held  by  the  Government  with textile representatives and the action taken/being taken by the Government thereon;
- (d) whether the Government is taking any measures to protect the interests of the Indian fabric manufacturers from Chinese competition by reducing GST rates;
- (e) if so, the details thereof and action taken by the Government in this regard; and
- (f) whether the other various industries such as pharmaceuticals, automobiles, hotel industries, consumer goods manufacturers and badly affected by GST and if so, the details thereof?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI SANTOSH KUMAR GANGWAR)

(a),  (b),  (c),  (d)  and  (e):The  GST  rate  structure  for  the  textile  sector  was discussed in detail in the GST Council meeting held on 3 rd June, 2017, wherein the  Council  recommended  the  detailed  rate  structure  for  the  textile  sector. Accordingly, the GST rates for the textile sector have been notified as under:

| S.   |                            | GST rate   | GST rate   | GST rate   | GST rate                |
|------|----------------------------|------------|------------|------------|-------------------------|
| No.  | Type of fibre / filament   | Fibre      | Yarn       | Fabrics*   | Garments and made ups** |
| 1.   | Silk                       | Nil        | 5%         | 5%         | 5% / 12%                |
| 2.   | Wool                       | Nil        | 5%         | 5%         | 5% / 12%                |
| 3.   | Cotton                     | 5%         | 5%         | 5%         | 5% / 12%                |
| 4.   | Other vegetable fibres     | Nil / 5%   | 5%         | 5%         | 5% / 12%                |
| 5.   | Manmade fibres / filaments | 18%        | 18%        | 5%         | 5% / 12%                |

* - 5% GST rate with no refund of unutilized input tax credit.

- **  -  (i)  5%  GST  rate  for  garments  /  made  ups  of  sale  value  not  exceeding Rs.1000 per piece.
- (ii) 12% GST rate for garments / made ups of sale value exceeding Rs.1000 per piece.

Thus,  the  GST  rate  structure  for  the  textiles  sector  enables  ease  of classification and determination of rate.

Representations have been received from Trade and Industry regarding GST rate structure for the sector. The main demand of the textile traders is not to put any tax on fabrics. However, the same cannot be accepted because of the following reasons:

- (a) Nil  GST  on  fabrics  will  break  the  input  tax  credit  chain  and  then  the garments / made ups manufacturers will not be able to get the credit of tax on previous stages.
- (b) Nil  GST  on  fabrics  will  result  in  zero  rating  of  imported  fabrics,  while domestic fabrics will continue to bear the burden of input taxes.
- (c) Generally,  the  GST  rates  are  equal  or  lower  than  the  pre-GST  tax incidence. And therefore, the price of fabrics is not likely to go up.

(f): The GST rates on supply of goods and services have been notified based on  the  recommendations  of  the  GST  Council.  The  GST  rates  on  goods  and services have been fixed taking into consideration, inter alia, the total indirect tax incidence in pre-GST regime, including cascading of taxes. The GST rates so notified are lower than the pre-GST tax incidence on many items of mass consumption such as cereals, pulses, milk, tea, vegetable edible oils, sugar, toothpaste,  hair  oil,  soap,  footwear,  Childrens'  picture,  drawing  or  colouring books, etc.

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