First, the 18 per cent service tax on job working activities such as knitting, cutting, weaving and packaging could hurt small textile units badly. Integrated textile units, which do the job working internally, will not be impacted.
Second, GST of 18 per cent on manmade fibres will have considerable negative impact on manmade fibre manufacturing companies such as RSWM and Sutlej Textiles.
Third, subsuming of countervailing duty in GST for garments and fabrics will result in intense competition from companies in Bangladesh and Sri Lanka.
Fourth, the government will cap GST at 12 per cent on garments priced above Rs 1,000 and at 5 per cent on garment below Rs 1,000.
Experts say companies that sell garments below Rs 1,000 will see cost savings of 2-3 per cent while those selling garments above Rs 1,000 may report a 2-3 per cent increase in costs.
Source: Economic Times