Lok Sabha Question No. 1845 (UNSTARRED), answered on 2018-12-21
Subject: Impact of GST on Apparel Sector
Ministry: FINANCE
Asked by: B.V. NAYAK

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

……..

## LOK SABHA UNSTARRED QUESTION No.1845 TO BE ANSWERED ON FRIDAY, DECEMBER 21, 2018/AGRAHAYANA 30, 1940 (SAKA)

## IMPACT OF GST ON APPAREL SECTOR

## 1845. SHRI B.V. NAIK:

Will the Minister of FINANCE be pleased to state:

- (a)  whether  the  impact  of  Goods  and  Services  Tax  (GST)  on  the  apparel  sector  consisting primarily of Micro, Small and Medium Enterprises (MSMEs) has led to decline in textile exports for the last one and half years and if so, the details thereof;
- (b) the details of the concerns raised by MSMEs;
- (c) whether the Government is introducing incentives like access to loans at discounted rates for MSMEs under apparel/textiles sector that comply with GST rules and if so, the details thereof; and
- (d) the other steps taken to support MSMEs in transition to GST by addressing their concerns and building necessary capabilities?

## MINISTER OF STATE FOR FINANCE (SHRI SHIV PRATAP SHUKLA)

- (a) & (b) No Madam. Export of textile and apparel has increased by 2% from US$ 46 bn during July 2015- October 2016 to US$ 47.1 bn during July 2017- October 2018.
- (c )  Yes Madam. Government has announced the Special Package for garments and made-ups sectors.  The  package  offers  Rebate  of  State  Levies  (RoSL),  labour  law  reforms,  additional incentives under ATUFS and relaxation of Section 80JJAA of Income Tax Act. Further, the rates under Merchandise Exports from India Scheme (MEIS) have been enhanced from 2% to 4% for apparel, 5% to 7% for made-ups, handloom and handicrafts w.e.f. 01.11.2017.

| Export (in US$ mn)   | July 2015-Oct 2016   | July 2017-Oct 2018   | Growth   |
|----------------------|----------------------|----------------------|----------|
| Textile and apparel  | 46,112               | 47,097               | 2%       |

Products such as fibre, yarn and fabric in the textile value chain are being strengthened and made competitive  through  various  schemes,  inter  alia,  Powertex  for  fabric  segment,  Amended Technology Upgradation Fund Scheme (ATUFS) for all segments except spinning, Scheme for Integrated Textile Parks (SITP) for all segments, etc. Assistance is provided to exporters under Market Access Initiative (MAI) Scheme. Further, Government has enhanced interest equalization rate for pre and post shipment credit for the textile sector from 3% to 5% w.e.f. 02.11.2018.

(d) Based on the representations and feedback received, the GST Council has undertaken various decisions from time to time to alleviate the concerns raised by the small and medium sectors. Details of various such decisions implemented for the small and medium enterprises are placed below:

(i) Increase in aggregate annual turnover threshold for eligibility under the composition scheme from Rs. 75 lakh to Rs. one crore for 27 States (including Jammu & Kashmir and Uttarakhand).

(ii) Increase  in  the  aggregate  annual  turnover  threshold  for  eligibility  under  the Composition  scheme  from  Rs.  50  lakh  to  Rs.  75  lakh  for  Special  Category  States  (as specified in sub-clause (g) of clause (4) of article 279A of the Constitution) other than Jammu & Kashmir and Uttarakhand.

(iii) Taxpayers  having  annual  turnover  of  up  to  Rs.1.5  crore  in  the  previous  year provided with an option to file quarterly Returns (FORM GSTR-1) and taxpayers having annual turnover above Rs.1.5 crore to file monthly returns (FORM GSTR-1).

(iv) Registered persons making supply of goods to make payment of tax on issuance of invoice and not at the time when advances are received.

(v) Suspension of the application of reverse charge mechanism under Section 9(4) of the CGST/SGST Acts, 2017 and Section 5(4) of the IGST Act, 2017 till 30th September, 2019 for all categories of registered persons including Composition taxpayers.

(vi) Uniform  rate  of  tax  @1%  under  composition  scheme  for  manufacturers  and traders.  The  turnover  for  traders  will  be  counted  only  for  supply  of  taxable  goods.  No change in composition scheme for restaurants sector.

(vii) Supply of exempted services by Composition taxpayer will be allowed and the same will not be taken into account while computing the aggregate turnover.

(viii) The amount of late fee payable by a taxpayer whose tax liability for the month was  'Nil'  will  be  Rs.20/-  per  day  (Rs.10/-  per  day  each  under  CGST  &  SGST  Acts) subject to maximum Rs.5000/- each under Act from October, 2017.

(ix) The amount of late fee payable by other taxpayers will be Rs. 50/- per day (Rs. 25/- per day each under CGST & SGST Acts) subject to maximum Rs.5000/- each under Act from October, 2017.

***