12% uniform GST rate on apparel and footwear from Jan evokes mixed reaction

Experts hail move, section of clothing industry decries it saying only a small group within the sector had inverted duty structure

The Central Board of Indirect Taxes and Customs has notified a uniform goods and services tax rate of 12 per cent on fabrics, apparel, and footwear to correct the inverted duty structure. The changed rates will come into effect from January one, 2022.

The GST rate on apparel and footwear of any value would be 12 per cent. Earlier the GST Rate was five per cent for sale value up to Rs 1,000 per piece in the case of apparels and per pair in the case of footwear.

While experts hailed the move, a section of the clothing industry decried it saying that only a small group of the sector had inverted duty structure.

"The GST rate changes will ensure that the inverted duty structure issues will come to an end on account of the 12 per cent uniform rate across the value chain," said M S Mani, senior director at Deloitte India.

Bipin Sapra, tax partner at EY, said the rate changes in the textile sector are the first such promised by the GST council with an aim to rectify inverted duty structure and bring an efficient GST structure.

The GST Council in its September meeting had approved the change in rates.