GST Council likely to tweak textiles rates in line with global markets

The Goods and Services Tax (GST) Council, which is likely to meet for the first time after elections in the first half of this month, is likely to take up rationalisation of rates in the textile sector in line with the global markets. 

“Removal of anomalies in tax rates in the sector is one of several issues that needs immediate attention,” said a government source. 

Differential rates of textile items are causing hardships, especially on refund to exporters, he said. The government is concerned about the issue, he said. 

At present, there are three rates — 5, 12 and 18 per cent — for various items under the textile sector. While other countries, such as Thailand (10 per cent), China (16 per cent), and Indonesia (7 per cent) have a single rate regi­me. This makes them more lucrative and competitive. 

Besides, custom duties for textile items make the situation worse for exporters. Ideally, there should be rationalisation in customs duty and GST rates, the source said. Though any such cha­nge in customs duty requires proper discussion and need to keep World Trade Organisation (WTO) norms in mind, he added. The council will also consider reducing the rate of cement to 18 per cent from 28 per cent. However, this needs a consensus as it will hit the exchequer by Rs 13,000 crore.

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