Increase in GST on textiles will affect small businesses, common man: TG Textile Association

Ammanabolu Prakash, President, Telangana State Federation of Textile Association | Photo credit: Arrangements

The Telangana State Federation of Textile Associations has warned against any move to increase the Goods and Services Tax (GST) rate on textiles as it will affect small businesses and burden the common man.

“We are writing to express concern about the proposed GST levy of 18% (from existing 12%) on garments priced ₹1,500-₹10,000 and 28% levy on garments priced above ₹10,000. Such rapid growth in textiles will have dire consequences for the industry and the general public, said TSFTA President Ammanabolu Prakash in a letter to Union Finance Minister Nirmala Sitharaman.

Bread, cloth and makan (food, clothing and shelter) are the basic necessities of life. Imposing a higher GST on garments will disproportionately affect the textile and garment industry, which is an important contributor to economic growth as well as substantial employment generation, he said. The high tariffs will affect many small-scale textile and garment businesses that operate on thin margins, forcing them to raise prices, leading to reduced consumer demand and the possibility of business closures. Additional GST on textiles will also increase unorganized trade and tax evasion. Consumers will turn to informal content where taxes are not applicable thereby reducing revenue instead of increasing it.

In the letter, marked by the union to Union Coal and Mines Minister and Secunderabad MP G. Kishan Reddy, Mr. Prakash said that at high rates, middle and low-income families struggle to afford quality clothes. Any other item above Rs 10,000 does not attract GST, gold and silver are also charged at 3%. The textile trade leader said the appeal came in the backdrop of reports that the GST Council was considering an upward revision in rates and a new rate slab on textiles at its meeting later this month.