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Govt increases GST on footwear; apparel, effective from January 2022
New Delhi, India: The Goods and Services Tax (GST) on finished goods including clothes, textiles, and footwear has been raised by the government. GST rates would rise from 5% to 12% in January 2022, based on the state.
the Central Board of Indirect Taxes and Customs (CBIC) is increase was announced on 18 November 2021. GST rates for particular synthetic fibres and yarn have been reduced from 18 percent to 12 percent, according to the notification.
As a consequence, GST Rates will be more consistent across the textiles industry. This approach also avoids inconsistencies caused by the inverted duty design. The term "inverted duty construction" refers to a situation in which the tax rate on the inputs is higher than the tax rate on the finished output.
From January 2022, the GST rate for fabrics will be raised to 12% from 5%. The GST rate on clothes has been increased from 5% to 12%.
Textiles, which include woven and pile textiles, blankets, tents, and tablecloths, had their rates increase from 5% to 12%. Conversely, all footwear prices have been raised by 12% (up to Rs 1,000 per pair).
In the textile and footwear sectors, the GST Council vowed to reform the inverted duty structure. On January 1, 2022, it was estimated that the same would apply.
The Clothing Manufacturers Association of India (CMAI) expressed its dissatisfaction with the government's proposal to raise GST on clothes beginning January 1, 2022.
Group of ministers of Govt of India reviewing the GST rates has been decided to remove exemption for packaged food items, if sold under unregistered brands in India . These items will be taxed at 5%, the rate for branded food.
