Highlights

GST on fabrics was increased to 12% from 5% and on apparel of any value to 12 percent.
Currently, garments under Rs 1000 attracted only 5% GST

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GST hike from January 1, traders' body to state govts request rethink of 'death knell' move

The union government had notified an increase in GST on natural fibre products from 5 per cent to 12 per cent, including apparels in the lower tax bracket with effect from January 1, 2022

Updated: Dec 28, 2021 04:42

EJ Biz Desk

Apparel, clothing and footwear used by the poorer sections will get costlier from January 1 as the Centre has decided to raise the Goods and Services Tax to 12 per cent on items costing less than Rs 1,000.

This move has attracted opposition from not just from the traders' body CAIT but also state governments across the country. The Confederation of All India Traders (CAIT) requested Finance Minister Nirmala Sitharaman to defer the hike in the good and services tax (GST) . The country's 700-strong small traders body said that the GST Council has stopped consulting traders and is taking decisions arbitrarily, having no touch with the ground realities of trade.

Telangana’s industries minister KT Rama Rao called the GST hike a death knell for industry has he tweeted as he highlighted the contradiction in the PM's promises and the actions taken by the Finance Ministry and GST Council. "Hon'ble narendramodi Ji, on the national handloom day you had talked of strengthening Vocal4Handmade. Contrary to the idea, your govt has enhanced GST on Handlooms & Textiles from 5 to 12 % which will be a death knell for the industry. Request you to intervene & save weavers," Rama Rao, son of Chief Minister K Chandrasekhar Rao, tweeted.

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Former West Bengal finance minister and currently advisor to the state's Chief Minister, Amit Mitra took to Twitter to appeal for a relook at the decision. Mitra tweeted "Modi Govt will commit another blunder on Jan 1. By raising GST on (man-made) Textiles (from) 5 per cent to 12 per cent, 15 million jobs will be lost and 1 lakh units will close. Modi ji, call a GST Council meeting now and reverse the decision before the sword of Damocles falls on the head of millions of people."

The price point will hurt not just hit shoppers but may also trickle down to the cotton producers as retailers may cut prices or reduce demand. Cotton producers are already seeking a lack of demand due to high domestic prices as per reports export shipments during October-November are down 42%.