New Delhi: The Ministry of Finance has notified a 12% GST tariff uniform on artificial fibers (MMF), threads, cloth and clothing, thus overcoming the reverse tax structure in the MMF textile value chain.
At present, the tax rate on MMF, MMF thread and MMF cloth is 18%, 12% and 5%.
Taxation input at a higher level than the finished product that is made a buildup of credit and cascading costs.
Furthermore, it causes tax accumulation at various stages of the MMF value chain and important working capital for industry.
The GST Council, chaired by the Finance Minister Union Nirmala Sitharaman and consisting of the previous state meeting on September 17 decided that the anomalous task reversed in the textile sector would be corrected from January 1, 2022.
Studying this decision, the tax council and customs indirect (CBIC ) On November 18 told 12% GST Rate for MMF, MMF thread and MMF cloth.
Experts say even though there are provisions in GST law to claim input tax credits that are not used (ITC) as a refund, there are other complications and produce more compliance loads.
Reverse tax structure causes an effective increase in the rate of taxation this sector.
World Textile Trade has moved towards MMF but India cannot utilize trends as the MMF segment summarized by the reverse tax regime, they said, adding corrections in anomalous tasks to help the grown segment and emerge as a great job provider.
Tax Partner Partners Bipin Sapra said changes in tariffs in the textile industry are the first of the promised change by the GST Council with the aim of improving the structure of the task upside down and carrying an efficient tax structure for the sector.