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Knitwear manufacturers look beyond tax structure in GST

Knitwear manufacturers here are not ‘much’ concerned about the ‘mere rate structures’ of Goods and Services Tax (GST) but eagerly been looking at the macro approach that would be adopted for fixing various raw materials in the production chain into different slab categories. According to the consensus reached, the GST rates have been fixed at 5 per cent for items of mass consumption or essential use, at 12 and 18 per cent for ‘standard items’ and at 28 per cent for ‘de-merit goods’. Garment manufacturers feel that apparels should have been considered on the 5 per cent slab because clothing was considered an essential thing as in the class of food and water. “Rate structures overall looks o.k. But, unless the classification of items is done properly, the real benefits cannot be obtained. For example, the situation could become complex even if the textile products are classified at lowest slab but some of the key raw materials been taxed at 18 per cent. “Moreover, the cumulative tax on the textile products presently comes to around only 7 to 8 per cent so any categorisation beyond the lowest slab could make the products from the cluster not gain much under the Goods and Services Tax regime except for logistical benefits”, said Tirupur Exporters Association president Raja Shanmugam. R.M. Senthil Kumar, former chairman of Institute of Chartered Accountants of India (Tirupur chapter), cautioned that the tax refund rates should have be to proportionally raised if the rates under GST was fixed at higher slabs.

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