A Group of Ministers (GoM) tasked with rationalising GST rates is poised to recommend a significant overhaul of the tax structure for a wide range of goods and services, including textiles. The recommendations, which are expected to be presented at the 55th GST Council meeting on December 21 in Jaisalmer, could have far-reaching implications for the textile industry.
Textile Sector in Focus:
One of the key areas of focus for the GoM has been the textile sector, which has long grappled with an inverted duty structure. This structure, where input materials are taxed at a higher rate than the final product, has led to significant challenges for the industry.
To address this issue, the GoM has proposed a revised GST rate structure for textiles:
- Textiles Priced Up to ₹1,500: The current 5% GST rate will remain unchanged.
- Textiles Priced Between ₹1,500 and ₹10,000: The GST rate will be increased to 18%.
- Textiles Priced Above ₹10,000: The GST rate will be increased to 28%, aligning them with luxury goods.
While this move is aimed at simplifying the GST framework and enhancing revenue collection, it could also impact consumer prices for certain textile products.
Other Key Recommendations:
In addition to the changes proposed for the textile sector, the GoM has also recommended several other significant modifications to the GST rate structure:
- Increased GST on Luxury Items:
- High-end wristwatches priced above ₹25,000 will see a GST rate hike from 18% to 28%.
- Shoes costing over ₹15,000 will also be subject to a higher GST rate of 28% (up from 18%).
- Reduced GST on Everyday Essentials:
- Bicycles priced below ₹10,000 will benefit from a reduced GST rate of 5% (down from 12%).
- Exercise books and packaged drinking water above 20 litres will also see a decrease in GST rates to 5%.
The GoM’s recommendations are expected to be closely scrutinized by industry stakeholders and policymakers. The final decision on the proposed GST rate changes will rest with the GST Council, which will meet on December 21 to consider the GoM’s report.
