GST Council Retains 5% GST Rate on Textiles, to Be Reviewed in Feb: FM

A hike GST rate on textiles from 5 percent to 12 percent was to be effective from 1 January.

Speaking to the media on Friday, 30 December, Industry Minister of Himachal Pradesh Bikram Singh, said that the GST Council will defer the rate hike on textiles from 5% to 12%, and the matter will be reviewed at the meeting in February, the Economic Times reported.

(Photo: The Quint)

Finance Minster Nirmala Sitharaman on Friday, 31 December said that the Goods and Services Tax (GST) Council has deferred the decision on rate hike on textiles from 5 percent to 12 percent and a rate rationalisation committee will review the proposed hike, news agency ANI reported.

The matter was reviewed at the 46th meet of the GST Council in the national capital on Friday.

"The GST Council meeting has decided to retain the status quo on GST rate on textile to 5% and not raise it to 12%. The issue of GST rate on textile will be sent to the tax rate rationalization committee which will submit its report by February," Sitharaman said.

In November, the Finance Ministry had decided a uniform 12% GST rate for manmade fibre (MMF), yarn, fabrics and apparels and footwear. The rate hike was to come to effect on 1 January.

Opposition to the Hike

The country's industries and states had opposed the increase in the tax.

Last week, the Principal Chief Advisor to West Bengal Chief Minister, Amit Mitra, had asked Union Finance Minister Nirmala Sitharaman to scarp the proposed hike, adding that the new rates would lead to the closure of nearly 1 lakh textile units and mammoth job losses.

Telangana Industries Minister KT Rama Rao had echoed these concerns, and Gujarat, too, made a representation to the GST Council, elucidating how the decision till impact a huge number of taxpayers connected with the textile sector.