GST Council Defers Hike On Textiles From 5% To 12%: Finance Minister Nirmala Sitharaman

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

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

In the press meet, Nirmala Sitharaman said, “The GST Council meeting has decided to retain the status quo on GST rate on textile to 5 per cent and not raise it to 12 per cent. The issue of GST rate on textile will be sent to the tax rate rationalisation committee which will submit its report by February.” “GST rates on textiles a complex matter,” she added.

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.

Meanwhile, Sitharaman in her reply to a question on the I-T raid in Kanpur said that law enforcing agencies act on actionable intelligence in conducting raids.

According to ANI, the minister said, “Today’s Income Tax raids (at the properties of perfume businessmen & SP MLC Pushpraj Jain and others) are also being carried out based on actionable intelligence. Unconnected materials are surfacing in today’s IT raids.”

She responds to allegations regarding searches on properties of fragrance businessmen in UP’s Kanpur and Unnao. The minister took a dig at Samajwadi Party leader Akhilesh Yadav and said, “Raids were conducted at the right places… Is former UP CM Akhilesh Yadav scared and shaken due to these searches?”

“He (SP chief) should not raise doubts about the professionalism of the organisation. The height of (seized) cash is proof that law enforcement agencies are working honestly… Should we wait for post-poll ‘muhurta’ or catch the thief today itself?,” Sitharaman said.

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