At present, there are three rates – 5%, 12% and 18% – for various items under the textile sector
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% — for various items under the textile sector. Other countries, such as Thailand (10%), China (16%), and Indonesia (7%) 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, experts believe.