New Delhi: The Goods and Services Tax (GST) Council has decided to defer the hike in tax rate on textiles from 5 per cent to 12 per cent as several state governments have raised objections, Andhra Pradesh Finance Minister Buggana Rajendranath Reddy said on Friday.
Speaking to reporters after the 46th GST Council meeting chaired by Union Finance Minister Nirmala Sitharaman, Reddy said several states said in the meeting that there was no clarity on GST to be imposed on apparel, clothing and textile products.
“Several states including Andhra Pradesh requested the Council to take back the earlier decision to increase the GST on textiles from current 5 per cent to 12 per cent from January 1 2022,” he said.
Even there was no clarity on the rate of GST that would be imposed on nylon and cotton fabric as well as man-made and natural textiles.
There were also no estimates available with the Council on a possible increase in the refund if to be given, he said.
Currently, the tax rate on man-made fibre (MMF) is 18 per cent, MMF yarn 12 per cent, while fabrics are taxed at 5 per cent.
Stating that any hike in GST on textiles will impact Andhra Pradesh the most, Reddy said it is because there are about 3 lakh handloom weavers and most people wear cotton clothes unlike nylon in other states.
“…we requested the Council to take a call on increasing the GST on textiles after conducting a thorough study and assessing the data,” he added.
Friday’s GST Council meeting is significant as it is taking place ahead of the Union Budget for 2022-23, which is scheduled to be presented in Parliament on February 1, 2022.