Finance Minister Nirmala Sitharaman-chaired Goods & Service Tax (GST) Council on Friday unanimously decided to defer the GST rate hike on textiles amid protests from traders.
ET Now has learnt that Council decided to defer the implementation of its previous decision to hike the rates on textiles products from 5% to 12%. The recommendations, which were to come into effect on January 1, 2022, have now been postponed until at least the next meeting of the Council, which will convene in February 2022.
Bikram Singh, Industry Minister, Himachal Pradesh also confirmed the development while speaking to reporters outside New Delhi’s Vigyan Bhawan after the 46th meeting of the Council.
“GST Council has decided to defer the hike in GST rate on textiles (from 5% to 12%). The Council will review this matter in its next meeting in February 2022,” Singh said.
It is to be noted that the Sitharaman-headed body, consisting of state finance ministers, had made certain recommendations in its 45th meeting for the revision in the GST rates on textiles and footwear. The move was aimed at correcting the inverted duty structure and other anomalies on the products.
Currently, a 5% tax on sales up to Rs 1,000 per piece is charged. The GST Council had recommended increasing the rates on textiles from 5% to 12%. The decision will impact a large number of small traders in the textile sector and consumers who will be forced to pay increased prices once the recommendations are implemented.
No decision was taken during the meeting on the proposed rate hike on footwear from 5% to 12%, which remains on schedule for implementation from January 1, 2022.
Before the meeting, Delhi Deputy Chief Minister Manish Sisodia, expressing his disagreement over the proposed rate hike, said the Delhi government will protest against the proposed tax hike on textiles. “The government won’t let the common man’s voice be suppressed,” Sisodia added.
The GST Council also decided to extend the time limit given to the Group of Ministers (GoM) formed to look into rate rationalisation. The next meeting of the Council will be held in February 2022.
