GST Council deferred the decision to change GST rates on Textiles
The GST Council's 45th meeting held on September 17, 2021 had recommended correction in GST rates to mitigate inverted duty structure on textile and footwear.
Accordingly, the CBIC vide Notification No. 14/2021- Central Tax (Rate) dated November 18, 2021 amended Notification No. 1/2017- Central Tax (Rate) dated June 28, 2017 w.e.f. January 1, 2022 to change GST rate from 5% and 18% to 12% to overcome refund of Inverted Duty Structure.
However, in 46th GST Council meeting held in New Delhi on December 31, 2021, the GST Council has recommended deferring the decision to change the rates in textiles recommended in the 45th GST Council meeting. Consequently, the existing rates in textile sector would continue beyond 1st January, 2022.
Accordingly, the CBIC issued Notification No. 21/2021-Central Tax (Rate) dated December 31, 2021 in suppression of Notification No. 14/2021- Central Tax (Rate) dated November 18, 2021 so as to change GST rate from 5% and 18% to 12% w.e.f. January 1, 2022. Thus, now previous GST rates as appliablein textile sector would continueon or after January 1, 2022.
This notification shall come into force on the January 01, 2022. Similar notifications have been issued under Integrated Goods and Services Tax Act, 2017 and Union Territory Goods and Services Tax Act, 2017.
The decision to defer hike in GST rate on textiles from 5% to 12% w.e.f January 1, 2022 will give much needed impetus and support to textile sector. This convention attains special significance as it comes days ahead of Sitharaman presenting the much-anticipated Union Budget 2022-23 on February 1, for which she has been holding a series of pre-budget consultations with stakeholders.
