From January 1, the businessmen into the job work of dyeing or printing of textile and textile products will have to pay 12% GST on their sales as compared to the current rate of 5%. And in case they provide job work to any person not registered under GST, then 18% tax will be applicable. On November 18, the ministry of finance had issued a notification in this regard. At the time it had also issued a notification for an increase in the GST rate on fabrics and garments from 5% to 12%. Enraged, businessmen have given a call to gherao the residence of Prime Minister Narendra Modi on November 25.
Naveen Thaman, a tax professional, said, “In a move to stop refund of accumulated input tax credit (ITC) on account of GST being higher on inputs than finished goods, the GST council increased it on service of job work of dyeing or printing of textile and textile products from January 1. Earlier, all types of job work related to textile and its products attracted 5% GST. Whether it was dyeing of yarn and fabrics or printing of fabrics and garments, the taxpayers were entitled to a refund of accumulated ITC as inputs for these job works—like dyes, chemicals and packing material—had an 18% GST, while these job works attracted 5% GST. Therefore, an ITC of 13% was claimed back. Now, if these job works are performed for assessees registered under GST, then rate will be 12% else 18%.”
Thaman said, “From January 1, these job workers will not be entitled for refund of accumulated ITC. However, there will be no change in GST for other job works, like washing, stitching and embroidery, and it will continue to be 5%. Though the GST council has taken these steps to keep rate of tax for one industry same and to discourage fake billing for taking refunds, the charges for dyeing and printing will go up, leading to an increase in rates of garments for consumers.”
Industrialist Tarun Jain Bawa, who is national president of Bharatiya Arthik Party (BAP), said, “The decision to increase GST by 7% is a ploy to destroy small units that are already struggling. But we are not going to accept these cruel acts of the Centre and have decided that thousands of businessmen will gherao the residence of PM Narendra Modi in New Delhi on November 25.”
Harish Kairpal, president of Ludhiana MSME Association, said, “We feel cheated and humiliated. We were not consulted by the Centre before going ahead with the decision to increase GST to 12% from 5% on our end products and raw materials. Moreover, the notification has come as a sudden shock as no one knew about it till now. We came to know about it through the Times of India. It is our request to the Centre not to go ahead with this hike.”
