GST Council's decision to correct inverted duty structure to lessen tax burden of apparel industry: AEPC
The Apparel Export Promotion Council (AEPC) on Saturday said the decision of the GST Council to correct the inverted duty structure on textiles from January 1, 2022, will lessen the tax burden on manmade fiber (MMF) fabrics and garments.
The GST Council in its latest meeting on September 17 agreed to correct the inverted duty structure on footwear and textiles from January 1, 2022.
AEPC Chairman A Sakthivel said the decision will be a big breather to the industry.
''The revision will lessen the tax burden on manmade fiber (MMF) fabrics and garments,'' he said.
He said the inverted duty structure has been an issue with the apparel industry and that the council had made recommendations to the government for the elimination of this anomaly that has been resulting in input tax credit accumulation blocking crucial working capital for businesses.
Inputs into the MMF fabric segment (fiber and yarn) attract a GST rate of 18 percent and 12 percent whereas the GST rate on the MMF fabric is 5 percent and that for the finished goods apparel is 5 percent and 12 percent, he said.
It creates a tax structure where the rate on inputs is higher than that on the outputs and this increases the effective rate of taxation of MMF fabrics and garments and violates the principle of fiber neutrality, Sakthivel said.
He also said that the GST Council's decision to extend the validity of GST exemption on the transport of goods by vessel and air from India to outside India till September 30, 2022, will partially help soften the impact of the current exorbitant freight costs.
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)