Modified GST Rates on Man-made Fibres, Apparel, Fabrics

The GST Council in its 45th meeting has made the recommendations relating to changes in GST rates on footwear and textiles and also announced that the inverted duty anomalies in the textile sector would be corrected from January 1, 2022. Giving effect to this decision The Central Board of Indirect Taxes and Customs (CBIC) has notified Modified goods and service tax rate on man-made fibers, apparel, fabrics vide a Notification No. 14/2021- Central Tax (Rate) dated November 18, 2021.In this article, we look at the GST rate for apparel, fibers, and fabrics in detail.

Synopsis of Notification

The GST Council in its 45th meeting had decided to correct the inverted duty structure on footwear and textile. On the recommendations of the GST Council, the Ministry of Finance (Department of Revenue) has further amended the No.1/2017-Central Tax (Rate), dated the 28th June 2017, and issued Notification No. 14/2021.

The Central Board of Indirect Taxes and Customs (CBIC) has notified an increase in goods and service tax rate of various kinds of textiles, apparel, and footwear to 12% from 5% earlier
GST rates for certain synthetic fibers and yarn have been lowered from 18% to 12%
The new GST rate will be effective from January 1, 2022.

GST Rate on Article of Apparel

CBIC's latest notification specifies that the GST rate on articles of apparel of any value will be 12%, from next year (from January 1, 2022). So far, a 5% tax is levied on the sale value of up to Rs 1,000 per piece.

GST Rate on Article of Footwear

The GST rate on Footwear has been changed to 12% from next year. At present, 5% GST is charged on the sale value of upto Rs 1,000 per pair.

GST rate for Woven fabrics

GST rate for the following article on Woven fabrics has been increased from 5% to 12%.

Sewing thread of man-made filaments
Synthetic filament yarn other than sewing thread
synthetic monofilament
Artificial filament yarn including artificial monofilament

Knotted netting of twine, cordage or rope made up of fishing nets and other made up nets, of textile materials, pile fabrics, terry fabrics, knitted or crocheted, blankets and traveling rugs, bed linen, table linen, toilet linen and kitchen linen, curtains and interior blinds, sacks, and bags, of a kind used for the packing of goods, tarpaulins, awnings, and sun-blinds, will also be taxed at 12%. Tents; sails for boats, sailboards or landcraft, camping goods, sets, consisting of woven fabric and yarn, whether or not with accessories, for making up into rugs, tapestries, embroidered tablecloths or serviettes, or similar textile articles, put up in packings for retail sale, will also be charged 12% GST from January 1, 2022. The official notification of Modified GST Rates on Man-made Fibres, Apparel, Fabrics is as follows:

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Frequently Asked Questions

Common questions about Modified GST Rates on Man Made Fibres Apparel & Fabrics.

The purpose of the notification issued by the CBIC is to modify the Goods and Service Tax (GST) rates on various textile products, including man-made fibers, apparel, and fabrics. This is in line with the recommendations made by the GST Council in its 45th meeting to correct the inverted duty structure in the textile sector, effective from January 1, 2022.

As per the notification, the GST rate on articles of apparel of any value will be 12%, effective from January 1, 2022. Previously, a 5% tax was levied on the sale value of up to Rs 1,000 per piece.

The GST rate on footwear has been changed to 12% from January 1, 2022. Currently, a 5% GST is charged on the sale value of up to Rs 1,000 per pair.

The GST rate for various textile products, including sewing thread of man-made filaments, synthetic filament yarn, artificial filament yarn, knotted netting, pile fabrics, terry fabrics, blankets, bed linen, table linen, toilet linen, kitchen linen, curtains, interior blinds, sacks, bags, tarpaulins, awnings, sun-blinds, tents, sails, camping goods, and sets consisting of woven fabric and yarn, will be increased from 5% to 12%.

The article mentions that the GST rates for certain synthetic fibers and yarn have been lowered from 18% to 12%.

The modified GST rates on man-made fibers, apparel, and fabrics will be effective from January 1, 2022.

The correction of the inverted duty structure in the textile sector aims to address the issue where the tax on inputs is higher than the tax on the final product, which can lead to the accumulation of input tax credit and increase the overall cost of production.

The GST rate modifications are based on the recommendations made by the GST Council in its 45th meeting and have been notified by the Ministry of Finance (Department of Revenue) through an amendment to the Central Tax (Rate) notification.

This notification will impact the textile industry by changing the tax rates on various textile products, which may affect the pricing and overall cost of production for manufacturers and sellers. It aims to address the inverted duty structure and provide relief to the textile sector.

The notification provides a detailed list of the specific textile products, along with their corresponding GST rates, that will be affected by these changes. It also mentions that the new rates will be effective from January 1, 2022.