Textile trade and industry in shock on government’s decision of increase in tax on textile

CICU writes to Union FM 
Ludhiana, November 22, 2021: Upkar Singh Ahuja, President,  Pankaj Sharma, General Secretary, CICU and Rajat Sood, Representative from Textile Industry in a joint statement mentioned that the entire textile trade and industry is in shock on Government’s decision of increase in tax on textile, which is the second largest revenue generating commodity after agriculture. The textile trade was badly hit by COVID-19, and still is struggling for its survival. Under such circumstances this increase in tax rates on textile will act a setback in Textile Sector, Food, Cloth, House, education and health are the basic needs of a human. On agriculture, health and education there is no tax, on Residential houses the government is providing subsidy and tax rate is 196 and 5%. The Clothing which too is a basic need is taxed at 1296 which is not justified.
Further, there was no tax on Textile/Fabrics fora number of years. Bringing the textile Industry again under tax net it was a big blow to the entire textile Industry. The CICU had made representa¬tions immediately after the last GST Council meeting wherein it was proposed to correct the inverted duty structure on textile. It was requested on behalf of the industry that the Status quo be maintained @5% and the rate be reduced from 12% to 596 wherever applicable. However, instead of reducing the rate to 596 the Notification No. 14/2017 dated 18/11/2017 is issued increasing the rate of tax from S% to 1296. This will not only add to the financial burden on end user but will also affect small business men badly and will encourage evasion of and various malpractices. Further, the goods which are lying in stock oldie busi¬nessmen and sold on MRP the additional burden of 7% will be on the businessmen. This increase in tax rate will not only hamper the domestic trade it will affect the exports adversely. Already the textile industry is not at a competent status with Countries like Vietnam, Indonesia, Bangladesh and China. On the one hand the Government talks about Make in India and Atmanirbhar Bharat on the other hand levy such high taxes creating an atmosphere of uncertainty and gloom.
CICU sent a request letter to  Nirmala Sitharaman, Minister for Finance Government of India, in which CICU wrote that a single rate without any cap & category on value may be introduced and the No¬tification so issued increasing the tax rate from 596 to 1296 to May kindly be withdraw’. This action of Government will not only boost the economy, it will create an atmosphere of hope and certainty. If this request and condition of the textile Trade and Industry is not taken seriously the entire Industry will be in a state of struggling for survival and will eventually result to complete collapse.