GST Rate On Job Work Across Textile Value Chain Cut To 5%

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GST Rate On Job Work Across Textile Value Chain Cut To 5%

The Goods and Services Tax (GST) Council has decided to cut the tax rate for job work for the entire value chain of textiles sector to 5 per cent.

At its 20th meeting on July 5, the GST Council also gave its in-principle approval to the e-way bill rules, which envisage a technology-driven tracking of movement of goods worth more than Rs 50,000 and for sale beyond 10 km in distance. The e-way bill rules are likely to come into force from October 1.

“A big issue was tax rate for job work in textiles sector. A consensus was evolved that the GST rate for job work throughout the textile chain and even for textile-related items such as apparels, shawls, carpets will be 5 per cent,” Union Finance Minister Arun Jaitley said.

Earlier, GST for job works related to textile yarns, other than manmade fibres and textile fabrics, was 5 per cent, while for manmade fibres, it was 18 per cent. The move assumes significance as the rollout of GST from July 1 had met with several protests from the textiles sector that had demanded a cut in the tax rate on fabrics, which were brought under the tax net for the first time, at the rate of 5 per cent.

The textile sector welcomed the move, but it had some reservations. “This will help in seamless credit flow. The Council, unfortunately, did not consider reducing the GST on man-made fibre from 18 per cent to 12 per cent,” Tirupur Textiles Association President Raja M Shanmugham said.

In a media briefing after the meeting, the Finance Minister said, "E-way bill system will be technology driven and will apply to goods consignments of the value of above Rs 50,000. E-way bills would not apply to goods exempted under GST”. He said the Council would take a call on the revision of rates for other items at its next meeting on September 9 in Hyderabad.