The textile industry of India is famous for its craftsmanship and different designs all around the globe. Starting as early as the Indus Valley Civilization India’s textiles are famous for their fine quality and craftsmanship.
In modern-day, India is famous for its finely created textiles in high demand all over the world. Despite such high demand, the textile industry in India was unable to meet 100% demand of Indian textiles both organic and man made.
The textile industry in India has witnessed several modifications to taxation under brand new GST regime. The implication of GST will affect the industry and its growth in future. The textile production process discussing synthetic & artificial fibers and naturally created fibers.
The GST regime offers many advantages to the industry players in the domestic market that target strengthening the domestic market creating new opportunities for small businesses in the textile industry. The advent of GST in the textile sector will encourage more organized structure in implementation in the textile industry.
The GST brings forth transparent as well as simple taxation process will be fast paced and saves time from filing taxation at multiple levels for goods and services offered by the textile industry. The textile industry has raised concerns for a while.
These are the concerns for duty disparity that is preventing the domestic textile producers from expanding their operations and scaling up their manufacturing for better revenue via exports. This is consequently hurting the country’s exports in textiles leading to the loss of revenue.
Cotton based textiles are an important part of the nation’s economy and duty relaxation plays a vital role in business expansion in different areas. The cotton fibers and textiles witness more effort and time consumption compared on the production of the synthetic and artificial fibers.
Hence, it may happen the government will introduce special taxation relief and incentives for the cotton textile industry. Affected consumption of textiles made from synthetic and artificial fibers at the global scale are 70%.
With duties and taxation streamlined and simplified. This makes it easy for new and existing businesses shop for and sell synthetic and artificial linens.
In view of ICRA, a cheaper rate of 12% is mandatory by the Dr. Arvind Subramanian Committee is supposed to have a damaging impact on the textile business. In this case, especially the cotton value chain, that is a present attracting a zero central excise duty (under optional route).
Unlike the synthetic fiber sector, if the fiber attracts excise duty at the production stage (unlike cotton). Hence, there a good incentive for that downstream players in the synthetic sector to avail the Input Credit Tax (ITC).
The textile industry is broadly split up into nine categories when we talk with regards to the taxation insurance policies. The current taxes vary from 4% to 12% based on these sorts.
Further, unorganized players who are given tax exemptions according to the measurements their operations dominate the textile community.
There have different taxation policies for cotton and man-made fibers: Zero duty for cotton fibers as when compared with high excise duty structure of nearly 12.5% on man-made products.
With the implementation of your GST, your site uniform taxation policies that will cause a blockage as the input taxes will be eliminated since GST is often a consumption tax. Zero rating on exports under GST will increase exports further without the necessity for various subsidy schemes.
Goods movement within the states are going to much easier as many local state taxes which levied for your borders of states will evade and free movement of goods will get allowed. The cotton and synthetic fiber are also subject to 4%-5% state VAT, that is evaded through the GST Registration Portal Login.
However, in case the duty dealing with all cotton and synthetic fibers remains the same, prices of textile items made of cotton fiber could rise a little.
Nevertheless, the equal tax treatment policy will offer you a rise to man-made fiber production this exports also. The industry has since a protracted time, been complaining how the duty disparity is barring domestic producers from scaling up operations and, eventually ending up hurting India’s export competitiveness in artificial and synthetic textiles.
This is mainly because while artificial and synthetic fibers account for around 70% of by far the total fiber consumption, create up safeguard 30% of India’s usage.
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