The textile industry of India is famous for its craftsmanship and different designs all around the world. Starting as early as the Indus Valley Civilization India’s textiles are famous for their fine quality and craftsmanship.
In modern-day, India is famous to the finely created textiles in high demand all over the world. Despite such high demand, the textile industry in India was unable to meet 100% demand of Indian textiles both organic and synthetic.
The textile industry in India has witnessed several adjustments in taxation under fresh GST regime. The implication of GST will affect the business and its boost future. The textile production process which includes synthetic & artificial fibers and naturally created fibers.
The GST regime offers many benefits to the industry players in the domestic market that aim at strengthening the domestic market creating new opportunities for online businesses in the textile industry. The advent of GST in the textile sector will encourage more organized structure in implementation in the textile industry.
The GST brings forth transparent and simple taxation process that is fast paced and saves time from filing taxation at multiple levels for goods and services offered by the textile industry. The textile industry has raised concerns for a while.
These are the concerns for duty disparity that is preventing the domestic textile producers from expanding their operations and scaling up their manufacturing for better revenue via exports. This is consequently hurting the nation’s exports in textiles leading to impacts revenue.
Cotton based textiles are an important part of the country’s economy and duty relaxation plays an important role in business expansion in different areas. The cotton fibers and textiles witness more effort and time consumption compared towards production of the synthetic and artificial fibers.
Hence, it is possible the government will introduce special taxation relief and incentives for the cotton textile industry. Your engine’s overall consumption of textiles made from synthetic and artificial fibers at the global scale are 70%.
With duties and taxation streamlined and simplified. It is then easy for new and existing businesses shop for and sell synthetic and artificial materials.
In view of ICRA, a lower rate of 12% is mandatory by the Dr. Arvind Subramanian Committee is inclined to have an unfavorable impact on the textile business. In this case, especially the cotton value chain, that is a present attracting a zero central excise duty (under optional route).
Unlike the synthetic fiber sector, where the fiber attracts excise duty at the development stage (unlike cotton). Hence, there is an incentive for your downstream players in the synthetic sector to avail the Input Credit Tax (ITC).
The textile industry is broadly divided into nine categories when we talk about the taxation insurance policies. The current taxes vary from 4% to 12% based on these categories.
Further, unorganized players that given tax exemptions according to the measurements their operations dominate the textile section.
There have different taxation policies for cotton and man-made fibers: Zero duty for cotton fibers as compared to high excise duty structure of nearly 12.5% on man-made fabrics.
With the implementation of the GST, blogs uniform taxation policies that will cause an obstruction as the input taxes will be eliminated since GST Registration in India can be a consumption taxation. Zero rating on exports under GST will increase exports further without the requirement for various subsidy schemes.
Goods movement within the states can much easier as many local state taxes which usually levied through the borders of states will evade and free movement of goods will get allowed. The cotton and synthetic fiber are also subject to 4%-5% state VAT, which will be evaded coming from the GST.
However, should the duty treatment of all cotton and synthetic fibers continues to be the same, prices of textile items made of cotton fiber could rise a tad.
Nevertheless, the equal tax treatment policy will give a rise to man-made fiber production this exports also. The industry has since a long time, been complaining that the duty disparity is barring domestic producers from scaling up operations and, eventually ending up hurting India’s export competitiveness in artificial and synthetic textiles.
This happens because while artificial and synthetic fibers contribute around 70% of the earth’s total fiber consumption, they can make up intended for 30% of India’s demand.
Get your online business an edge over other in GST Registration and GST Return Filing from experienced specialist at reasonable cost.