BENGALURU: All eyes are on chief minister Basavaraj Bommai as he heads a group of ministers on charge rationalisation in the hope that it will lessen the Centre’s proposed 12% GST on readymade garments, textile elements and footwear. It is a steep hike from the recent 5%.

The GST council in September determined to hike the GST on all varieties of clothing, textile products and footwear costing up to Rs 1,000 from 5% to 12% helpful January 1, 2022 and the Central Board of Oblique Taxes and Customs (CBIC) on November 18 issued a notification about it.

The aim is to get rid of discrepancy thanks to inverted obligation framework, wherever the tax price of raw materials is better than the rate on concluded merchandise. Though at this time manmade yarn and fibre have been taxed at 12%, readymade garments priced down below Rs 1,000 are taxed at 5% generating a problem for a trader to avail input tax credit score. The government wishes to eradicate it by bringing in uniform tax charges.

This effects in better cost of merchandise and shoppers from lower revenue teams bear the brunt. Whilst the basic cost of uncooked products has already amplified by about 25%, the hike in GST will even more push up the rate of readymade products by 7%. For instance, the selling price of a branded or unbranded shirt remaining offered for Rs 700 has already jumped to Rs 875 in addition 5% GST and the purchaser will have to pay out Rs 61.25 more from next month.

“About 80% of individuals invest in readymade garments and footwear pricing down below Rs 1000 and they will be badly hit by the tax hike. The government can remedy the issue by bringing all raw elements and finished goods under the uniform 5% slab. Climbing the rate to 12% is not the remedy,” stated BT Manohar, member, Karnataka state GST advisory committee.

Bommai in September had written to Union finance minister Nirmala Sithraman requesting her to carry down GST rates on the full gamut of textile products and garments to 5%. Now, he heads the GoM on rate rationalisation and stakeholders expect him to observe up.

“We hope Bommai will help the ailing textile market by owning the GoM advocate lessen tax costs. We gave him a representation, describing how taxing 5% will aid enhance the financial state recovering from Covid-induced slowdown and boost the government’s income by enhanced tax compliance,” said trade activist Sajjan Raj Mehta, who not long ago led a delegation to fulfill the main minister.

The GoM mandated to submit its report to GST council slated to fulfill in December 3rd 7 days has fulfilled two times and will satisfy again soon and finalise its suggestions.