Several states on Thursday flagged higher tax rates on textile products from January 1 and demanded that the rate hike be put on hold

Ahead of the Goods and Services Tax (GST) Council meeting, states like Gujarat, West Bengal, Delhi, Rajasthan and Tamil Nadu said they are not in favour of a hike in the GST rate on textiles to 12 percent, from 5 percent currently, with effect from January 1, 2022.

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Delhi deputy chief minister Manish Sisodia said the move to raise GST on textiles from 5 percent to 12 percent is not people friendly and this should be withdrawn. "If a common man buys clothes of Rs 1,000, he has to pay GST of Rs 120. Delhi is not in favour of this," said Sisodia, who is also the Delhi Finance Minister.

Tamil Nadu finance minister P Thiaga Rajan said, "It is one point agenda (for tomorrow's Council meet). It is an agenda that many states have raised. In the agenda item, it says that it was raised by Gujarat but I know that many states raised it. It should be stalled (move to raise GST rate on textile)."

Rajasthan education minister Subhash Garg said Friday's GST Council meeting is likely to be on the rate hike on footwear and textiles and Rajasthan does believe that rate hike on textiles should be rolled back especially when countries like Bangladesh are giving us stiff competition in such sector.

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The Council in its previous meeting on September 17 had decided to correct the inverted duty structure in footwear and textile sectors. With effect from January 1, 2022, all footwear, irrespective of prices, will attract GST at 12 percent, and all textile products, except cotton, including readymade garments will have 12 percent GST.

West Bengal's former finance minister and current advisor to state Chief Minister Amit Mitra had earlier urged the Centre to roll back a proposed hike in textile from 5 percent to 12 percent saying this would lead to the closure of around 1 lakh textile units and 15 lakh job losses.

Telangana industries minister KT Rama Rao too had made a case for withdrawal of its proposed plan to increase GST rates. Industry too has opposed the rise in tax from 5 percent, citing higher compliance costs especially for the unorganised sector and MSMEs besides making poor man's clothing expensive.

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The 46th meeting of the GST Council, chaired by Sitharaman and comprising state FMs, is scheduled on December 31, with a single agenda to consider Gujarat's demand of putting the rate hike "decision on hold", as also representations received from trade in this regard.

(Edited by : Jomy Jos Pullokaran)

First Published:Dec 30, 2021 7:40 PM IST