The state government of Gujarat has announced a new scheme, under which state goods and services tax (SGST) will be reimbursed for sales within the state. As per a General Resolution (GR) of the department of industries and mines, the reimbursement will be availed on inputs and input services except input tax credit (ITC) of capital goods.

The new scheme is in lieu of value-added tax (VAT) incentives promised in the Textile Policy 2012. Prior to the implementation of the GST from July 1, 2017, the textile industry used to get 2.5 per cent of VAT paid. Subsequently, the state government constituted a high-level committee to decide on compensation for VAT incentives promised under the textile policy.

On the basis of the recommendations submitted by the committee chaired by the principal secretary of the industries and mines department, the government decided to extend SGST incentives in the form of reimbursement under the Gujarat Textiles Policy 2012.

Eligible manufacturing units will be eligible for reimbursement of the aggregate of SGST amount paid through cash ledger against output liability of SGST on sale of eligible products/intermediates. However, the units shall first have to utilise all the ITC available in its credit ledger maintained on the common portal.

Reimbursement will be made by the industries commissioner on a quarterly basis, or as may be otherwise prescribed.

Under the earlier VAT system, tax was collected by the state where goods were manufactured. But under GST, the tax goes to the state where goods or services are consumed. The GST so collected is divided equally between the state and Centre. This means that manufacturing units will get 50 per cent (i.e. the state portion) of the tax paid on eligible products as reimbursement. (RKS)

Fibre2Fashion News Desk – India

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