The textile industry of India is renowned for its craftsmanship and different designs all around the globe. Starting as early as the Indus Valley Civilization India's textiles are famous for their fine quality and craftsmanship.
In modern-day, India is famous due to the finely created textiles in high demand all over the earth. Despite such high demand, the textile industry in India was unable to meet 100% demand of Indian textiles both organic and man made.
The textile industry in India has witnessed several adjustments to taxation under brand new GST regime. The implication of GST will affect the sector and its development in future. The textile production process which includes synthetic & artificial fibers and naturally created fibers.
The GST regime offers many advantages to the industry players in the domestic market that are designed for strengthening the domestic market creating new opportunities for new businesses in the textile industry. The creation of GST in the textile sector will encourage more organized structure in implementation in the textile industry.
The GST brings forth transparent straightforward taxation process to get fast paced and saves time from filing taxation at multiple levels for goods and services offered by the textile industry. The textile industry has raised concerns for a while.
These are the concerns for duty disparity that is preventing the domestic textile producers from expanding their operations and scaling up their manufacturing for better revenue via exports. This is consequently hurting the nation's exports in textiles leading to the decline of revenue.
Cotton based textiles are an important part of the country's economy and duty relaxation plays a vital role in business expansion in different areas. The cotton fibers and textiles witness more effort and time consumption compared towards production of the synthetic and artificial fibers.
Hence, it is achievable the government will introduce special taxation relief and incentives for the cotton textile industry. Whole consumption of textiles made from synthetic and artificial fibers at the global scale are 70%.
With duties and taxation streamlined and simplified. This will make it easy for new and existing businesses to get and sell synthetic and artificial materials.
In view of ICRA, a decreased rate of 12% is required by the Dr. Arvind Subramanian Committee is travelling to have a damaging impact close to textile sector. In this case, especially the cotton value chain, that are at present attracting a zero central excise duty (under optional route).
Unlike the synthetic fiber sector, if the fiber attracts excise duty at the assembly stage (unlike cotton). Hence, there is definitely an incentive for the downstream players in the synthetic sector to avail the Input Credit Tax (ITC).
The textile industry is broadly divided into nine categories when we talk with regards to the taxation manner. The current taxes vary from 4% to 12% based on these sorts.
Further, unorganized players are usually given tax exemptions judging by the dimensions of their operations dominate the textile section.
There will vary taxation policies for cotton and man-made fibers: Zero duty for cotton fibers as the actual high excise duty structure of nearly 12.5% on man-made dust.
With the implementation from the GST, first and foremost . uniform taxation policies that may cause an obstruction as the input taxes will be eliminated since GST Registration Portal Login can be a consumption tax. Zero rating on exports under GST will increase exports further without the various subsidy schemes.
Goods movement within the states are going to much easier as many local state taxes which levied through the borders of states will evade and free movement of goods will get allowed. The cotton and synthetic fiber are also subject to 4%-5% state VAT, which will be evaded with GST.
However, when the duty treatments for all cotton and synthetic fibers continues to be same, prices of textile items associated with cotton fiber could rise a tad.
Nevertheless, the equal tax treatment policy will provide rise to man-made fiber production and its exports also. The industry has since a lengthy time, been complaining how the duty disparity is barring domestic producers from scaling up operations and, eventually ending up hurting India's export competitiveness in artificial and synthetic textiles.
This is really because while artificial and synthetic fibers explain around 70% of the earth's total fiber consumption, they manufacture up for less than 30% of India's requirement.
Get company is an edge over other in GST Registration and GST Return Filing from experienced specialist at reasonable cost.