GST Council Defers Hike On Textiles From 5% to 12%

In the GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, Gujarat, West Bengal, Delhi, Rajasthan, and Tamil Nadu said that they are not in favour of GST rate hike on textiles

The GST rate hike on textiles will be discussed again in the next meeting, according to report. Image: Getty

New Delhi: In a relief to textile industry, the GST Council in its 46^th meeting on Friday unanimously decided to defer goods and services tax (GST) hike on textiles from 5 per cent to 12 per cent, said industry sources.

The matter will be discussed again in the next meeting. The GST rate hike on textiles from 5 per cent to 12 per cent was to come into effect from January 1.

On December 30, several states flagged higher tax rate on textile products from January 1 and demanded that the rate hike should be rolled back.

In the pre-budget meeting of GST Council, chaired by Finance Minister Nirmala Sitharaman, states such as Gujarat, West Bengal, Delhi, Rajasthan, and Tamil Nadu said that they are not in favour of a hike in GST rate on textiles to 12 per cent, with effect from January 1, 2022.

The Delhi government supported the protest of traders against increase in GST rate on textile, and said it would raise the issue in the GST council meeting, Deputy Chief Minister Manish Sisodia said on December 30 (Thursday).

Sisodia said on Thursday that the “increased tax on clothes will affect the business of small traders and will also put a burden on the budget of the common man. Therefore, the Kejriwal government will always fight for the rights of small traders and the common man.”

Among other things, the meeting also discussed report of the panel of state ministers on rate rationalisation.

Currently, the GST rates are 5, 12, 18, and 28 per cent. 

At the same time, cess is also levied on high slabs on luxury and disadvantaged items. The GST Council will also consider the demand for amalgamation of 12 and 18 per cent slabs and removal of certain items from the category of exemption. This will balance the impact on revenue due to the realisation of slabs.