NEW DELHI: The Confederation of All India Traders (CAIT) has called on Union Finance Minister Nirmala Sitharaman to drop the proposed GST on textiles.

The Goods and Service Tax Council unanimously voted to extend the increase in the textile tax rate from 5 percent to 12 percent in late 2021, and the topic was sent to the tax rate rationalisation committee, which will provide its report by February. The textiles industry is currently taxed at a rate of 5 percent, according to the traders' organisation.

"In communication to Mrs Sitharaman, we said that the proposed hike, which is in abeyance stage, should be withdrawn in the larger interest of consumers of the country as such hike will load an additional burden of 7 percent tax rate on general consumers and will also hit the traders by blocking their capital with the department in the form of refunds," CAIT National President B.C. Bhartia and Secretary General Praveen Khandelwal said in a joint statement. For several years, there was no tax on textiles or fabrics, according to the joint statement.

The hike in GST rates on textiles will not only increase the financial burden on end consumers, but will also negatively impact small businesses and encourage tax evasion and other legal malpractices, according to the trade association.

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