India Considers Uniform 12% GST for Textile Sector to Simplify Tax Structure and Boost Competitiveness

• India may reconsider the GST structure for the textile value chain.
• Current differential tax rates create an inverted duty structure.
• Proposal for a uniform 12 percent tax rate on all textile products.
• Aims to simplify tax structure, increase competitiveness, and attract investment.
• Proposal could raise taxes and prices on cotton, reducing its appeal.
• GST Council may consider the proposal before September.
• Cotton currently taxed at 5 percent, yarn at 12 percent, synthetic fibres at 18 percent.
• Garments below ₹1,000 taxed at 5 percent, above ₹1,000 at 12 percent.
• Industry demands correction in inverted duty structure for ITC claims.
• Simplified tax rate could ease financial burden and attract investment.
• GST Council working on broader GST simplification to boost growth.
• Proposed plan reduces synthetic fibre tax from 18 percent to 12 percent.
• Cotton tax would rise from 5 percent to 12 percent.
• Garments would have a uniform 12 percent tax regardless of price.
• Proposed changes may ease compliance but increase cotton tax burden.
• Cotton value chain suffers from inverted duty structure.
• Uniform tax rate could simplify taxation but increase cotton product prices.

Source: fibre2fashion.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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