GST panel defers hike in GST on textiles from 5 to 12 percent

The Goods and Services Tax (GST) Council has unanimously decided to defer hike in GST on textiles from 5 percent to 12  percent, sources said, adding that matter will be re-considered and discussed again in the next Council meet for future roadmap. The increase in the GST rate on textiles from 5 percent to 12 percent was supposed to take effect on January 1st.

On December 30, some states announced that textile products would be subject to a higher tax rate beginning January 1 and urged that the rate increase be postponed. Gujarat, West Bengal, Delhi, Rajasthan, and Tamil Nadu declared they are not in favour of raising the GST  rate on textiles from 5 percent to 12 percent with effect from January 1, 2022, at a pre-budget meeting led by Union Finance Minister Nirmala Sitharaman.

The GST Council's 46th meeting, chaired by Sitharaman and comprised of state FMs, is set for December 31, with a single agenda to hear Gujarat's demand to put the rate hike "decision on hold," as well as trade representations.

Deputy Chief Minister Manish Sisodia said on December 30 that the Delhi government supported traders' protests against the hike in the goods and services tax on textiles and that the issue would be raised in the GST council meeting.

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