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Considering the inherent nature of textile industry, it is justified to keep the sector in the lowest slab of the Goods and Services Tax (GST), Indian Texpreneurs Federation (ITF) has suggested. In view of the past experience and ability of the industry to absorb the components of taxation, the tax rate can be fixed at eight per cent for cotton textiles and 12 per cent for blended and man made fibre-based products, ITF Secretary Prabhu Dhamodaran said in a letter to the Union Textile Minister Smriti Irani. Because of the scattered and unorganised nature of micro and small units in textile sector, the high rate of tax would only encourage violation, which in turn will affect even the organised sector, which will continue to be affected by the high rate and thus lose market, he said. Lowest band of tax at a reasonable level will enable absolute compliance by the entire value chain of textile industry to fully achieve the goals of GST. The reasonable and low rate will also give the much needed fillip to the industry whereby more investment will start pouring into the industry, creating millions of jobs in the process, Prabhu said. It was highly imperative that the entire chain of textile industry, right from cotton to final apparel, should be under GST so that the full benefit of end to end input credit and other benefits of national sales tax will be made available to the industry, he said, adding that keeping a particular segment out of the unified tax regime will entirely defeat the purpose of its implementation. Any negative impact on textile industry will have huge impact on the entire value chain right from Agriculture, Prabhu said.
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