GST on Textiles in India: Who will Bell the Cat?

Code : FAC0066

Year :

Industry : -

Region : Asia

Teaching Note:Available

Structured Assignment : Not Available

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Abstract: The implementation of GST in India from July 1, 2017, brought about tremendous changes in the indirect tax structure in the country. GST impacted each and every sector and industry in its own way. The textiles industry was no exception. With GST being imposed on textiles, various pre-GST era problems of the textiles industry were addressed. However, it also created new issues for the government, including the important issue of an inverted tax structure. Inverted tax structure refers to the imposition of higher tax rates on inputs and lower tax rates on outputs. This forced the government to refund the excess to the industry. Hence, the GST council, headed by the Finance Minister, Ms. Nirmala Sitharaman, announced a new common tax rate to be implemented across the textiles industry, i.e., 12 per cent, effective from January 1, 2022. However, this decision was strongly opposed by the textiles industry, the consumers, as well as a few state governments. Due to this, the Council had to put the implementation of the new rates on hold till further notification. In this context, a new policy strategy needs to be followed by the government to resolve the issues of inverted tax structure.

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Pedagogical Objectives:

  • Understand the difference between Direct and Indirect taxes .

  • Understand the pre-GST tax structure and its drawbacks

  • Describe GST Council and its structure

  • Understand the Concepts of Supply, Input Tax Credit, and Inverted Tax Structure

  • Analyze the impact of GST on the textiles industry

    Keywords : GST; Taxation; Indirect Tax; Textile Industry; GOI; Concepts of Supply; Input Tax Credit; Inverted Tax Structure; GST Council

    Contents :
    » Introduction
    » Background of GST
    » Textiles Industry in India
    » Tax Rates In Textiles – Pre and Post
    » GoI’s Concern
    » The Concerns of The Industry And Consumers
    » Road Ahead
    » Exhibits

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