The decision of considering GST revision after three months would paralyze the decentralized garment/made-up segments that predominantly function with job work and the synthetic spinning sector, rendering thousands of units closed, Southern India Mills' Association said today.
More than 80 per cent of garment/ made-ups manufacturing units are in the decentralized sector and undertake job work and these units would become unviable with 18 per cent service tax on the job work when compared to vertically integrated manufacturing units, SIMA Chairman M Senthilkumar said.
The Garment/made-up sector, the largest employment provider in the textile value chain creating 100 to 150 jobs per Rs one crore investment was hoping that the GST Council would include job work relating to garmenting/made-ups under the service tax list of five per cent, he said.
The MMF yarn spinning sector also was hoping for GST reduction on man made fibre and its blended spun yarn from 18 to 12 per cent as the sector was opting for optional zero rate Cenvat route and paying 12.5 per cent Central Excise duty all along for MMF, he said.
However, the Council's decision of considering any rate revision only after three months has come as a severe blow for the garmenting, made-ups and synthetic spinning sectors, Senthilkumar said in a statement here.
He urged the Prime Minister and Finance Minister to consider including garment and made up segments related job works under five per cent list of service tax that are now exempted from service tax and also reduce GST rate on man made fibre and its blended yarn from 18 to 12 per cent at the Council meeting scheduled on June 30.
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