From January 1, the rate of GST on all products of textile value chain is going to be 5 to 12 percent. By the way, textile traders across the country including Surat are opposing this decision of the GST Council and there is also a flurry of agitation. In protest against the GST rate hike, all the business organizations have declared a one-day bandh on Thursday in unison. Political discussions have also started after the announcement of shutdown of business organizations. In such a situation, tomorrow on December 31, a meeting of the GST Council will be held under the chairmanship of Finance Minister Nirmala Sitharaman and inter alia, the report of the state’s panel of ministers on GST rate hike will be discussed. This will be a live meeting, in which reforms in GST rates on certain goods will also be discussed.
Let us tell you that the 46th GST Council meeting will be held in Delhi on December 31. On December 30, there will be a pre-budget council with the finance ministers of the states, in which the report will be presented by the minister to the council regarding changes in GST rates. In addition, the fitment committee, made up of tax officials from states and the Center, has made several “comprehensive” recommendations to the GoM with regard to changes in slabs and rates and removal of items from the exemption list. Presently, there is a four tier slab structure of GST 5, 12, 18 and 28 per cent. Essential goods are either kept tax free or taxed in the lowest slab, while luxuries and demerit items are subject to the highest slab. Cess is levied on luxury and demerit items in the highest slab.
To balance the impact of slab rationalization on revenue, there has been a demand for merger of 12 and 18 per cent slabs as well as exclusion of certain items from the exempted category. Former West Bengal Finance Minister Amit Mitra has urged the Union Finance Minister to roll back the proposed hike in textiles from 5 per cent to 12 per cent, saying it will close around one lakh textile units and lead to the loss of 15 lakh jobs. Telangana Industries Minister KT Rama Rao has also urged the Center to withdraw its proposed plan to hike GST rates. The industry has opposed the hike in tax by five per cent, citing higher compliance cost, especially for the unorganized sector and MSMEs, besides making clothing for the poor expensive.