GST Impact on Textile Garment Business in india

The basic philosophy behind GST is to expand the tax base and not to enhance tax burden on Textile businesses. The Model GST law released by the Ministry of Finance captures this objective and mentions that any person with an aggregate turnover of above Rs 10 lakhs would be covered within the ambit of GST. 

This limit has been further lowered to Rs 5 lakhs for north eastern states. The significantly low thresholds are expected to be a game changer for the Small and Medium Enterprises . For example, Garments manufacturers enjoying an exemption from paying excise duty, if annual taxable turnover is up to Rs 1.5 Crores, would now be liable to pay full rate of GST. Even on the services side, SMEs would face an increase in tax rates due to the differential between the present service tax rate of 15 percent and the GST rate expected to be pegged at 18 percent. However, the actual impact of applicability of GST on SME products or increase in rates for services would need to be ascertained after acknowledging improved availability of input tax credits. As far as trading SMEs are concerned, introduction of GST is a welcome step for them as they are likely to have access to a single uniform market across the country with improved ease of doing business. 

Resource By - Indiatimes