No GST hike for textile products, Council decides to hold on 12% rise

New Delhi: The Goods and Services Tax (GST) Council chaired by the Union Finance Minister Nirmala Sitharaman today put on hold the decision to hike the rate of GST on textiles from 5 per cent to 12 per cent after states and industry objected to the move.

The Minister was forced to call an urgent meeting of the GST council under emergency provision when several states and the industrial players have raised their objections against the Union government's decision to raise the GST rates for textile products. The hiked GST rate was to come into effect from January 1, 2022.

The higher compliance costs for the unorganised sector and micro small and medium enterprises (MSMEs) like the textile industry will make poor man's clothing higher and the industry which is already suffering the COVID syndrome, will be pushed to experience more sufferings, the industry bodies said.

Earlier in the year, the Central Board of Indirect Taxes and Customs (CBIC), on the recommendations of the GST Council, had announced that the GST rate on garments, textiles, and footwear would be raised from five per cent to 12 per cent with effect from January 1, 2022.

Sitharaman said that the meeting was called after the finance minister of Gujarat requested for deferment of the decision taken in the Council's meeting in September 2021 on the inversion of the tax structure.