Textile mills in Tamil Nadu have appealed to the Union Government to bring down the GST rate for manmade fibre and yarn to 12 % from 18 %.

About 430 mills recently sent their appeal to the Prime Minister’s Office in this regard, according to Prabhu Dhamodharan, Secretary of Indian Texpreneurs Federation.

While the rate for fabrics is 5 %, that for yarn and fibre is 18 %. Fabric manufacturers do not have the provision of refund and hence, this would become a “blocked credit”, he said. The GST on MMF and yarn should be brought down to 12 % and refund should be permitted for fabric manufacturers, he said.

According to M. Senthil Kumar, chairman of Southern India Mills’ Association, the textile industry was hopeful that the GST council would consider the demand of the industry at its meeting on June 18 on reduction of duty for manmade fibre and yarn. There would be an accumulation of excess credit at 18 % rate on yarn. This would increase the fabric cost and affect the independent weaving and spinning units.

For instance, an independent weaving unit having about 50 looms and producing 100 % viscose fabric would incur an additional cost of over Rs. 2 lakh a year with 18 % rate compared to Rs. 1.3 lakh at 12 % rate.

This would create an unhealthy competition with composite units. Mr. Senthil Kumar said differential rates and non-refund of accumulated input tax credit would not only affect the industry but also lead to wrong declarations and corruption. The Government should allow refund of accumulated input tax credit at fabric stage and should include job work for garments, made ups, and other textile products at 5 % rate, he said.

Source: The Hindu