The government has revised and announced a major relief by sharply allowing to cut down GST rate at 5 per cent from 18 per cent announced earlier, for the work provided by job workers in textile and apparel industry, enabling job workers full input credit.
The high level of 18 per cent tax on job working and merchant services would have offered inverted duty structure resulting into a negative impact on the business, since many inputs were kept under various tax slabs. The textiles and apparel industries in India are largely dependent upon the work with over two-thirds of the volume manufactured as job working activity.
"The move of the GST Council will help many job workers generate self-employment. Since captive plants attracted 5 per cent, it was only job work which was kept under 18 per cent slab. So, job workers needed to be aligned with captive manufacturers. Hence, the GST rate cut on job workers is a big relief for the entire textiles industry," said Siddharth Rajgopal, Executive Director, The Cotton Textiles Export Promotion Council (Texprocil).
"These are very good steps by the government, good for the highly decentralised sector. From processing of fabrics to embroidery, GST rate on making charges have been fixed at 5 per cent," said Srinarain Aggarwal, chairman, Synthetic and Rayon Textiles Exports Promotion Council ( SRTEPC).
Thanking government for the announcement of reduction of GST rate for job workers to 5% per cent, Rahul Mehta, president, CMAI, says "We had represented to the government raising possible issues and the negative impact of high duty on job working. This would help job workers survive and compete with those with captive manufacturing facilities," said.