Demand of Zero GST on textiles cannot be accepted, will break input tax credit chain: Jaitley

New Delhi, July 18 (KNN) Responding to a question relating to the GST rate on the textiles, Union Minister for Finance, Defence and Corporate Affairs, Arun Jaitley told Rajya Sabha said that it is not possible to place textiles under zero per cent GST.

Jaitley informed that the demand of textile traders of not putting any tax on fabric isn’t possible since that would break the input tax credit chain. This would handicap the garments manufacturers from availing credit tax on the previous stages.

Also a zero per cent GST on fabrics would result in zero rating of imported fabrics, whereas the domestic fabrics would have to continue bearing the burden of input taxes which is not in the interest of the industry he added.

Responding to the repeated statement from the textile traders that since independence the sector was exempted from tax, Jaitley said that this isn’t true. The textile did fall under central excise duty after 2003-04.

The Minister further said that so far with the GST entering the third week, textile sector have not been affected by Goods and Services Tax (GST). He also informed about the tax rates for the industry.

While Jaitley stated that the sector cannot be exempted, textile traders in Surat continue to agitate against the GST. While some of the traders did start their businesses this week, another chunk is still protesting against the new tax regime. The agitating traders claim that due to the ongoing strike the sector has suffered a loss of over 4000 crores so far. (KNN/ DA)