Recently, the government announced a straight away cut the GST rates on all the job work related to natural fibres which include woollens and cotton. But it is unexpected that still, the prices of textiles products will be unaffected. Means that there will be same prices applicable which were earlier decided in keeping purview of GST.
The confusion is that even the tax rates are downsized, why the industry wants to keep the prices higher and equal to the decided rates after GST. The GST council took the decision to reduce the rates from 18 percent to now applicable 5 percent. This rate reduction was done to increase domestic business capacity and boost international competitiveness.
Maninder Singh, manager-GST at Vardhman Textiles mentioned that “The relief will surely reduce the tax burden and avoid inverted duty for textile manufacturers.” And also said that the move will not compel textile companies to reduce the prices. While the decision is very much healthy for all those unorganized sectors who are employing 80 percent of the labours doing stitching, knitting and weaving jobs on the textiles.
The job work is still under confusion in the textile industry as it demands clarifications regarding the manufacturing practices mainly done in knitting, weaving and cutting. According to a textile firm based in Ludhiana which is mainly concerned in shifting of raw material, packaging, loading and unloading of products are all included in the 5 percent slab. Also by the words of finance controller PK Vashistha it is said that Much of such operations are contractual, but still have indirect tax implication for the company.
