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Updated on: Friday, December 31, 2021, 04:09 PM IST

GST Council retains status quo on tax rate hike on textiles to 5%

States like Gujarat, West Bengal, Delhi, Rajasthan, and Tamil Nadu have said they are not in favour of a hike in Goods and Services Tax (GST) rate on textiles to 12 per cent. / Representational Image |

States like Gujarat, West Bengal, Delhi, Rajasthan, and Tamil Nadu have said they are not in favour of a hike in Goods and Services Tax (GST) rate on textiles to 12 per cent. / Representational Image |

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The GST Council on Friday has decided not to hike tax rate on textiles to 12 per cent after many states, including Tamil Nadu and West Bengal, opposed the move.

The Council has decided to retain the status quo on GST rate on textile to 5 per cent, tweeted The Times Of India.

"The GST Council meeting has decided to retain the status quo on GST rate on textile to 5 per cent and not raise it to 12 per cent The issue of GST rate on textile will be sent to the tax rate rationalization committee which will submit its report by February," Finance Minister Nirmala Sitharaman said.

The 46th meeting of the GST Council was chaired by Union Finance Minister Nirmala Sitharaman and comprising state counterparts decided to deliberate on the issue further in its next meeting.

Currently, tax rate on manmade fibre (MMF) is 18 per cent, MMF yarn 12 per cent, while fabrics are taxed at 5 per cent.

The Council in its previous meeting on September 17 had decided to correct the inverted duty structure in footwear and textile sectors.

With effect from January 1, 2022, all footwear, irrespective of prices, will attract GST at 12 per cent. Earlier, it was also decided that 12 per cent uniform GST rate wold apply on textile products, except cotton, including readymade garments.

States like Gujarat, West Bengal, Delhi, Rajasthan and Tamil Nadu have said they are not in favour of a hike in Goods and Services Tax (GST) rate on textiles to 12 per cent, from 5 per cent, with effect from January 1, 2022.

Amit Mitra, advisor to West Bengal Chief Minister, had earlier urged the Centre to roll back the proposed tax rate hike on textiles, saying this would lead to closure of around 1 lakh textile units and 15 lakh job losses.

(With inputs from PTI)

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Published on: Friday, December 31, 2021, 03:34 PM IST
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