The textile industry of India is renowned for its craftsmanship and unique designs all around the globe. 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 because of its finely created textiles in high demand all over the earth. Despite such high demand, the textile industry in India was unable to 100% demand of Indian textiles both organic and manmade.

The textile industry in India has witnessed several adjustments to taxation under brand new GST regime. The implication of GST will affect the business and its boost future. The textile production process which includes synthetic & artificial fibers and naturally created fibers.

The GST regime offers many advantages to the industry players in the domestic market that aim at strengthening the domestic market creating new opportunities for small businesses in the textile industry. The connected with 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 services offered by the textile industry. The textile industry has raised concerns for some time 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 decline of revenue.

Cotton based textiles are an important part of the nation’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 on the production of the synthetic and artificial fibers.

Hence, it can be performed the government will introduce special taxation relief and incentives for the cotton textile industry. The existing consumption of textiles made from synthetic and artificial fibers at the global scale are 70%.

With duties and taxation streamlined and simplified. It is then easy for brand and existing businesses to buy and sell synthetic and artificial textiles.

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

Unlike the synthetic fiber sector, during which the fiber attracts excise duty at the fabrication stage (unlike cotton). Hence, there can be an incentive for that downstream players in the synthetic sector to avail the Input Credit Tax (ITC).

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

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

There have different taxation policies for cotton and man-made fibers: Zero duty for cotton fibers as the actual high excise duty structure of nearly 12.5% on man-made fibers.

With the implementation with the GST, you will hear uniform taxation policies can cause an obstruction as the input taxes will be eliminated since GST is really a consumption levy. Zero rating on exports under GST will increase exports further without the requirement for various subsidy schemes.

Goods movement within the states can much easier as many local state taxes that levied using a 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 is evaded coming from the GST.

However, generally if the duty treatments for all cotton and synthetic fibers remains the same, prices of textile items made from cotton fiber could rise a little.

Nevertheless, the equal tax treatment policy will offer rise to man-made fiber production specific exports also. 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 account for around 70% of the world’s total fiber consumption, they can make up for less than 30% of India’s demand.

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