The planned rise in the GST rate from 5% to 12% would have a substantial impact on the costs of apparels that cost less than a thousand rupees.
One of India’s leading hosiery manufacturers” associations has requested a delay in the introduction of increased Goods and Service Tax (GST) rates on a number of garments, claiming it would have an effect on the ordinary man and those in the micro small and medium enterprises (MSME) sector.
Officials from the Federation of Hosiery Manufacturers Association of India claimed that the planned shift from the current 5 percent to 12 percent is likely to drastically boost the pricing of apparel that costs less than 1,000.
The poor, who often purchase clothing for less than Rs. 1,000, would be most hard hit by this change.
“What is more crucial is that more than 85 percent of India’s overall clothing market is below the 1,000 price range,” they said. Additional to that, a 30 percent rise in the GST rate for Garments is expected to be brought about by the planned unification of the 12 percent and 18 percent tax brackets into one.
After several requests from our members of the FOHMA, the government, and the GST Council, we were finally able to get them to postpone or cancel the hike. According to the association’s leaders, “Unfortunately, our ardent pleas have not been addressed at all and that is incredibly saddening.” There are a lot of small businesses in the textile industry, and raising the tax rate to 12 percent for textiles would have a negative impact on them since they are already short on resources and “financial capital,” they said.
According to the association’s leaders, any more pressure on small businesses is unnecessary at this point.