Only job workers or units with an annual turnover of Rs 20 lakh or more, need to register for GST. However, the textile industry, especially the power loom segment, is not impressed. There are a large number of small job workers with an annual turnover of less than Rs 20 lakh, whom the power loom industry, especially master weavers, has to engage. With exemption from GST registration, master weavers would end up with the reserve charge mechanism.
In other words, master weavers would have to pay duty on behalf of job workers. Decentralised units employ job workers’ services for weaving and embroidery work, which attracts GST at 18 per cent. Units in the powerloom sector feel they should have been given time to first come under formal taxation net before being subject to any duty.
The powerloom sector is also padding up for a double whammy. Much of the yarn twisting and embroidery work is done by women from their homes but labor, which along with power accounts for 80 per cent of input, is not under the input credit net in the GST regime. This would deprive power loom owners of a refund.