The GST regime has been creating furore in the textile sector for quite some time now.  Recently, S. Balaraju, Executive Director of SRTEPC has written to the Ministry of Textiles, pointing out certain anomalies, which are as follows:

  • GST on inputs (Manmade Fibres) is 18% and outputs (Yarns) is12%. This creates accumulation of Input Tax credit of 6% at yarn stage. Further, 12% GST on yarn and 5% on fabrics has created accumulation of Input Tax Credit at fabric stage.
  • Post-GST, there are various duties such as transmission charges, electricity duty, cross subsidy on electricity bills, water cess, LBTs, road tax, labourcess, etc. which are not subsumed with GST. Average percentage of such duties/ taxes of the MMF textiles is over 5% which are unrebated. Current Duty Drawback rates are deficient to the taxes/duties paid by the exporters in this segment.
  • Theprocedure for refund of GST is extremely slow. The current procedure takes approximately 45-60 days’ time contrary to the stipulated time of 7 days in the IGST Act, 2017.This has blocked substantial amount of working capital and creating problem of liquidity shortage with the exporters for maintaining their existing business. GST refund on Exports which had taken place/executed in July 2017 has not been fully refunded yet.

The letter makes a genuine attempt at drawing the attention of the Ministry towards the above mentioned issues and seeks redressal of these grievances in an appropriate manner.