The textile industry of India is known for its craftsmanship and different designs all over the world. Starting as early as the Indus Valley Civilization India’s textiles are famous for their fine quality and craftsmanship.

In modern-day, India is famous for its finely created textiles in high demand all over the earth. Despite such high demand, the textile industry in India was unable meet up with 100% demand of Indian textiles both organic and fabricated.

The textile industry in India has witnessed several adjustments to taxation under the GST regime. The implication of GST will affect the marketplace and its growth in future. The textile production process contains synthetic & artificial fibers and naturally created fibers.

The GST regime offers many benefits to the industry players in the domestic market that target strengthening the domestic market creating new opportunities for new businesses in the textile industry. The advent of GST in the textile sector will encourage more organized structure in implementation in the textile industry.

The GST brings forth transparent as well as simple taxation process to get fast paced and saves time from filing taxation at multiple levels for Goods and Service Tax Registration in India Online and services offered by the textile industry. The textile industry has raised concerns for a while.

These are the concerns for duty disparity that is preventing the domestic textile producers from expanding their operations and scaling up their manufacturing for better revenue via exports. This is consequently hurting the nation’s exports in textiles leading to the loss of revenue.

Cotton based textiles are an important part of the country’s economy and duty relaxation plays a crucial role in business expansion in different areas. The cotton fibers and textiles witness more effort and time consumption compared to the production of the synthetic and artificial fibers.

Hence, it may happen the government will introduce special taxation relief and incentives for the cotton textile industry. Whole consumption of textiles made from synthetic and artificial fibers at the global scale are 70%.

With duties and taxation streamlined and simplified. This will make it easy for brand and existing businesses to get and sell synthetic and artificial linens.

In look at ICRA, a decreased rate of 12% is required by the Dr. Arvind Subramanian Committee is travelling to have a harmful impact on the textile category. In this case, especially the cotton value chain, that is at present attracting a zero central excise duty (under optional route).

Unlike the synthetic fiber sector, the location where fiber attracts excise duty at the production stage (unlike cotton). Hence, there is definitely an incentive for your downstream players in the synthetic sector to avail the Input Credit Tax (ITC).

The textile industry is broadly broken into nine categories when we talk about the taxation policy. The current taxes vary from 4% to 12% based on these sorts.

Further, unorganized players who are given tax exemptions on the basis of the measurements their operations dominate the textile community.

There are wide and varied taxation policies for cotton and man-made fibers: Zero duty for cotton fibers as compared to high excise duty structure of nearly 12.5% on man-made products.

With the implementation in the GST, there will be uniform taxation policies can cause an obstruction as the input taxes will be eliminated since GST is often a consumption taxes. Zero rating on exports under GST will increase exports further without the need for various subsidy schemes.

Goods movement within the states are going to much easier as many local state taxes which usually levied for your borders of states will evade and free movement of goods will get allowed. The cotton and synthetic fiber are also subject to 4%-5% state VAT, which will be evaded coming from the GST.

However, when the duty treatment of all cotton and synthetic fibers continues to be the same, prices of textile items made of cotton fiber could rise a tad bit.

Nevertheless, the equal tax treatment policy will give a rise to man-made fiber production this exports too. The industry has since a lengthy time, been complaining how the duty disparity is barring domestic producers from scaling up operations and, eventually ending up hurting India’s export competitiveness in artificial and synthetic textiles.

This happens because while artificial and synthetic fibers explain around 70% of the earth’s total fiber consumption, they can make up safeguard 30% of India’s demand.

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