Feedback
A pioneer B2B media and publication platform connecting with Fashion Brands & Retail in India

GST: Proactive approach needed to ensure hassle free implementation

GST Proactive approach needed to ensure hassle free implementation

 

The textile sector, which has so far been out of the tax net, has now come under the GST scanner. While the government has tried to impose excise in the past too, it always failed. While there have been protests and strikes against GST, experts feel the government needs to now look into some crucial issues. Till date, significant part of the finances used to take place in cash. Now there are concerns on how they can continue cash trade. The news of e-way bills and squads inspecting goods and invoices has shocked this highly unorganised sector.

GST Proactive approach needed to ensure hassle free

 

The entire value chain, from yarn to finished goods, comprises more than half a dozen processes. Most weaving units or power looms don’t have the capabilities to execute all processes in-house, which requires them to send yarn out for further processing before weaving. Similarly, after weaving, they have to send grey cotton outside for washing and dyeing and processing and again washing. Add to that all transportation involved in moving material from one place to other and back in the factory.

A three-layered approach to branding

This essentially implies for every material movement in the job-work, they will have to do all the paper work and also pay GST on labour charges. If the units doing this job-work are unregistered, then the cloth manufacturer (powerloom owner) will have to pay GST under the Reverse Charge Mechanism (RCM). Reverse Charge Mechanism is a method of collecting tax wherein the recipient of goods and service pays tax on material and service he buys from unregistered dealers. The government’s intent to impose RCM is to increase tax compliance, resulting in higher tax revenues.

To build a higher-value position in functional textiles, Taiwan needs to take a three-layered approach.

The government has time and again failed to collect tax from unorganised sectors like goods transport and small sector industries (SSIs). According to the government, any exemption on account of backward area benefits or SSI limits is a tax leakage, which it is trying to stop. Compliances and tax collections will therefore increase through reverse charge mechanism. This means there will be additional compliance burden on power loom owners.

Taiwan still lacks the associations of industry-leading quality, innovation and sustainability, particularly when compared to manufacturers from Europe, Japan and the US. The textile industry in Taiwan needs to rebrand and focus on a set of strategic messages and supporting marketing communications that can change Taiwan’s perception as a destination for lower-value textiles.

The bug bears

Concern arises from the fact that now they may not be able to move their material for job-work at various places. Section 19 of GST Act read with Rule 43A is clear on procedure for sending goods out for job-work and availing input tax credit on them. For smaller players, it’s going to be erratic. The need is to simplify mechanisms to ensure systematized tax collection. Moreover, power looms operate on low margins, which make it financially unviable for them to hire professional services for tax. Additionally, inverted duty structure is also being looked upon as a hindrance. On the wake of that, the government has now finally GST on job work by 5 per cent.

Beyond all these, transparency in business dealings seems to be a major concern for companies evading tax for long. The government needs to provide proper training and create an awareness on why GST is important. This can be the most effective way to streamline the entire transformation process.

LATEST TOP NEWS
  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10

Fusion wear poised for bigger growth with increased brand play

Fusion wear poised for bigger growth with increased brand play

Unique to Indian catwalks, fusion wear is taking over as an innovative solution to changing fashion sensibilities. Global brands are competing with domestic players in mix-n-match apparel segment whose main... Read more

Revolutionising the clothing re-commerce market, some players take lead

Revolutionising the clothing re-commerce market, some players take lead

  As re-commerce, when particularly executed by partners, unleases a low-risk, high-reward market for goods, and offers a straightforward path into a more circular business model, clothing brands are increasingly turning... Read more

Innovation, customisation drives denim demand amongst women

Innovation, customisation drives denim demand amongst women

A plethora of factors such as growing urbanisation coupled with rising incomes in a rapidly growing India has resulted in continued success of women’s denim segment. To leverage growth in... Read more

CMAI Apparel Index : Q2 records lowest ever growth at 0.18, Small brands trailin…

CMAI Apparel Index : Q2 records lowest ever growth at 0.18, Small brands trailing the pack

  CMAI’s Apparel Index for Q2 (July-Sept FY 2018-19) indicates growth has fallen to almost a no growth level and touched 0.18 points. It is the lowest ever, in last five... Read more

Duke’s launches Austria inspired stylish options in sweaters, jackets

Duke’s launches Austria inspired stylish options in sweaters, jackets

Duke sweaters & jackets’ collection for 2018-19 is a gamut of styles in lush fabrics, trending colors, designer patterns and prints, inspired by Austria. The men, women, and kids collections... Read more

Value retail emerges a high profit business across India

Value retail emerges a high profit business across India

While premium brands maintain their exclusive tag by being present only in select stores and places, value retail stores offer high street designs at affordable prices for the multitude. These... Read more

Cambodia’s Tonlé sets sustainability goals for global fashion industry

Cambodia’s Tonlé sets sustainability goals for global fashion industry

The world is being plagued by environmental abuse from all kind of industries. Traditional economies, dominated by the use and throw policy, did not consider the material’s end use. It... Read more

Aiming to spreadout, Madame scouting for a partner in Southeast Asia

Aiming to spreadout, Madame scouting for a partner in Southeast Asia

Women’s fashion brand Madame is updating its sequenced stores in India. The brand’s joint venture with the Spanish unisex brand Camla Barcelona involves importing their products in men’s and women’s... Read more

AEPC organises the Fabric of Unity to commemorate the Indian Textiles Industry

AEPC organises the Fabric of Unity to commemorate the Indian Textiles Industry

AEPC, to mark the unveiling of the ‘Statue of Unity’ in Gujarat on October 31, 2018, organised the ‘Fabric of Unity", an event to commemorate the Indian textiles industry. Smriti... Read more

Online marketplace Voonik launches new retail format

Online marketplace Voonik launches new retail format

Voonik, the online market place for women's fashion has launched a new retail format known as the mini channels. As per Hari Prasadh, Senior Vice President these are neither pop-up... Read more

MOST POPULAR NEWS
Go to top