GST to make textiles costlier, 18 per cent tax on synthetic fabric

Textile industry buckled up to face the brunt of GST as the Union Minister Arun Jaitely announced an imposition of 5 per cent tax on cotton fibre, yarn and fabric from the erstwhile zero per cent tax. However, some states used to levy a value added tax of 2-4 per cent on the cotton yarns and fabrics.
 
While silk and jute will attract no taxes, man-made synthetic fibres are put in the 18 per cent tax slab under GST. All apparels will attract 12 per cent tax against a 6-7 per cent tax levied till now, whereas apparels costing below Rs 1000 will only attract 5 per cent tax.   
 
The imposition of taxes on the fabrics are likely to send the prices of a variety of goods including the ready made garments on an ascent. Furthermore, as Jaitely also clarified that the input credit above the prescribed limit will not be granted to the textile manufacturers.     
 
However, the low taxes on cotton fabrics will improve the cotton-produce demand from the farmers, also making the cotton segment more competitive in the global race.

At 09:40 hrs IST, Arvind Limited was trading at Rs 398.80, up by over 5 per cent on the BSE on June 5, 2017. Siyaram Silk Mills traded at Rs 2119.55, up by 3.72 per cent on the BSE at 10:10 hrs IST on the same day.