TEXPROCIL demands accumulated input tax credit on fabrics

New Delhi, Aug 2 (KNN) The Textile Promotion Council (TEXPROCIL) has urged the government to allow the accumulated “Input Tax Credit” on fabrics available with weavers as on July 31 to be adjusted to GST payment on outward supplies in both domestic and export markets.

In the last meeting i.e. on July 26, the GST Council recommended allowing refund of unutilized ITC to taxpayers in the textiles sector, but the notification had also stated that accumulated credit lying unutilized as on July 31, 2018 will lapse.

In this regard, TEXPROCIL Chairman, Ujjwal Lahoti said “this will lead to serious problems for the textiles sector as the costs will go up on the available stocks as on July 31, 2018.”

Lahoti said most of the dyes and chemicals, packing materials, fibre and yarn used by the textiles sector attract 12 per cent to 18 per cent GST, whereas the rate on fabrics is only 5 per cent leading to accumulated ITC on account of inverted duty structure.

As per the Central GST Act, section 54 allows "refund of unutilized Input Tax Credit shall be allowed where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies.

Lahoti said “while the government's intention is to bring down the cost of products by providing the refund of accumulated ITC, it appears the government took the decision to make accumulated credits till July 31 null and void due to some technical reasons.”

He said that the fabric manufacturers have paid the GST on all their inward supplies - both goods and services and have legitimately taken the Input Tax Credit and, therefore, these Input Tax Credits should not be denied on fabrics by making them null and void.