Garment manufacturers cheer GST rate cut in job work

GST Council cuts tax rate on services rendered by third parties from 18% to 5%

Garment manufacturers have welcomed the government's decision to cut service tax (goods and services or GST levy) on the third-party services popularly known as job work. 

The GST Council on Saturday decided to cut the tax rate on services rendered by third parties from 18 per cent to 5 per cent. Earlier, the GST Council had lowered the rates on the job work in the jewellery sector while keeping the rate unchanged at 18 per cent on readymade garments.

"We welcome the decision. This is a major relief for the garments sector. The rate of 18 per cent was the biggest impediment for the growth of the garments sector.  With this relief garment sector in India will see a major jump in coming days," said Rahul Mehta, President, Clothing Manufacturers Association of India. 

In the unorganised garment sector, almost 75 per cent depends on job work such as stitching, trading and other associated work. The sector feared hundreds of thousands of job losses with high tax on third party work.

The textiles sector as a whole, in fact, has heaved a sigh of relief.