Thanking the GST Council for timely intervention for reduction of GST rate for job work in textiles, TEA President Raja M Shanmugham said the council had unfortunately not covered ‘Job work on apparels’ within the ambit of this rate reduction.
This negative step was likely to cause huge hardship to several micro industries in textile clusters like Tiruppur, he said in a statement today.
He said that only services which can be classified as ‘Job work in relation to Yarn and Fabrics of textiles are eligible for the reduced rate of five per cent.
His major concern was that textile clusters like Tirupur, host of job work operations such as garment printing, embroidery, garment washing, tie and dye, checking, button fixing, labeling, ironing and packing are carried out by micro industries on job work basis only and this is in relation to wearing apparel.
Some of these processes such as checking, ironing and packing, button fixing are actually carried out by people ‘who take work to their home for job work’, which was also rightly described by Finance Minister Arun Jaitley on June 11,he said.
As the processes are only of B2B nature and since the final product garments fall under five per cent slab, levying 18 per cent on job work will create an inverted duty scenario disturbing the seamless credit flow, thereby defeating the very object behind GST, he said.
He emphasized that the laudable intention of removing the hardship for the MSME industry by reducing GST Rate on job work would not be fully served if only these tiny and micro industries such as those listed are excluded from the benefit of rate reduction
Shanmugham urged Jaitley to discuss the concerned issue at the June 18 Council meeting and make a suitable amendment/ clarification so that this unintended hardship faced by micro and small textile units in Tirupur cluster are duly addressed.
Source: Business Standard