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Demand of 'no tax' on fabrics not acceptable: Jaitley
Jul '17
The main demand of the textile traders is not to put any tax on fabrics, which cannot be accepted for certain reasons, finance minister Arun Jaitley said in a written reply to a Starred Question in Rajya Sabha today. The government has taken necessary steps to facilitate taxpayers to take Goods and Services Tax (GST) registration, the minister said.

Explaining the reasons for ‘no tax’ on fabrics being unacceptable, Jaitley said nil GST on fabrics will break the input tax credit chain and then the garments/madeups manufacturers will not be able to get the credit of tax on previous stages. Secondly, nil GST on fabrics will result in zero rating of imported fabrics, while domestic fabrics will continue to bear the burden of input taxes.

“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,” Jaitley explained further.

On the claim that textiles sector was never taxed in independent India, Jaitley said that the entire textiles sector was subjected to central excise duty during 2003-04.

He said GST Sewa Kendras have been set up in various centres to handhold the taxpayers and to provide all necessary guidance regarding GST compliance.

The finance minister said that the GST rate structure for the textiles sector was discussed in detail in the GST Council Meeting held on June 3, 2017, wherein the Council recommended the detailed rate structure for the textile sector. He added that the GST rate structure for the textiles sector enables ease of classification and determination of rate, and the organised traders and unorganized sellers in the sector have not been affected by the GST. (RKS)

Fibre2Fashion News Desk – India

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