Surat Welcomes 5% GST On Fabrics

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Surat’s textile entrepreneurs, including powerloom weavers as well as traders, have welcomed the Goods and Services Tax (GST) rate of 5% on fabrics and heaved a sigh of relief after their fears that GST on fabrics would be in the slab of 12%, which could have destabilised the sector in the long run, failed to come true.

Synthetic & Rayon Textile Export Promotion Council (SRTEPC) Chairman Narain Aggarwal said that the GST rate of 5% on fabrics is quite favourable to the industry and the GST of 18% on synthetic fibre is the same as it was earlier. Surat manufactures around 40% of Indian man-made fabrics (MMF), besides sarees and dress materials, which are sold throughout the country.

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It is estimated that around 40% production of sarees as well as dress materials manufactured in Surat is targeted at poor and lower-middle class consumers in the country. Presently, the city manufactures around 4 crore metres of fabric per day on more than 6.5 lakh powerlooms, while there are around 165 textile markets housing over 65,000 wholesale textile shops, generating a daily turnover exceeding Rs 120 crore.

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Prior to GST, taxes like Cenvat at 12.5% and excise duty at 5%, besides VAT put together on 1kg of yarn came to around Rs 16.31 and tax forgone on dyes and chemicals comes to around Rs 7.42. However, the total tax on fabrics and yarn comes to Rs 23.73 per kg. As per the Surat-based industry’s calculation, GST of 5% on fabrics would be Rs 30, which means that the government would get more revenue under the new GST regime.

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