The textile sector in Maharashtra and Surat is opposed to the GST Council repealing the inverted duty structure in January 2022

Surat: Textile entrepreneurs in the state’s largest man-made fabric (MMF) textile sector, Surat and Maharashtra, have spoken out against the GST Council’s planned step to eliminate an inverted duty structure.
The Southern Gujarat Chamber of Commerce and Industry (SGCCI) convened a virtual conference of textile entrepreneurs on Thursday to discuss the GST Council’s proposed action. The conference was attended by power loom weavers and traders from Ichalkaranji, Bhiwandi, and Malegaon centres, who all spoke out against the elimination of the inverted duty structure. Textile businessmen have indicated that the elimination of an inverted duty structure will have a significant influence on the textile industry. The reason for this is that when the return system was implemented in August 2018, every taxpayer was required to invert their accrued Input Tax Credit (ITC) in order to get the refund.
The 45th GST Council meeting, which was recently hosted, came to the conclusion that inverted duty structure from the textile industry will be eliminated soon. Correction of the reversed duty system is feasible through either a reduction in the GST rate on yarn to 5% or an increase in the GST rate on fabric to 12%. “If the government planned to eliminate the reversed standards associated in textiles, why was the reversal of ITC made mandatory for the textile business in July-2018,” said Ashish Gujarati, head of SGCCI.
Gujarati went on to say, “The textile sector is comfortable with the 5% GST on fabric, and entrepreneurs and traders do not want to modify the tax rate at any cost.” The elimination of the inverted duty structure will cause greater damage than gain.”
Because the GST Council has suggested that the correction in inverted duty framework would take effect on January 1, 2022, the textile industry should make its case to the Council that the reversal of ITC made by them in July-2018 be allowed or a possible method to mitigate the reversal loss be provided.