CMAI looks forward to GST

The Clothing Manufacturers Association of India (CMAI) has welcomed the Goods and Services Tax rates for textiles and clothing. CMAI feels bringing the entire value chain of textiles under the GST regime will do away the fractured tax chain that exists in the current tax regime. Application of tax to the entire value chain in a fair and neutral manner will help this sector to comply with the tax laws of the country.

Availability of input tax credits under the GST regime will provide a boost to investment and job creation in the sector, which is the second largest employer after agriculture with a direct employment of over five crore and indirect employment of over six crore people.

CMAI has welcomed the decision to have two slabs of GST on garments. With input tax credits and local levies being merged with GST, essential garments having a selling price up to Rs1000 will save on the total applicable taxes, making the essential garments even more affordable. Though there would be a small increase in tax incidence on garments of a selling price above Rs1000, after accounting for all the input tax credits, indications are that manufacturers would absorb the same and there would be no change in customer selling prices.

CMAI is currently working with all stakeholders of the textile value chain to identify challenges that may need specific rules as the industry gets ready to adopt GST.