Do You Know GST Increasing From 5% to 12% on Apparel, Footwear & Textiles?

If you love to splurge on items like clothing, footwear and textiles, then soon you will have to empty your pockets a little more. Yes, starting next year you might have to pay a little extra for the items you love to shop for. So, will it be a wise decision for you to go out on a shopping spree to save some bucks while you still can? Well, not exactly!   

However, for now, you should know that the Central Board of Indirect Taxes and Customs on November 18th 2021 announced that there will be a revision in the GST rates of Apparel, Footwear and Textiles. With this rule, now the retailers and business owners will have to make this update in their GST billing software and charge the revised prices from the consumers. 

Cloth Shopping

The revised rates on fabrics, footwear, and textiles will see a jump from 5% to 12% with the cost of up to INR 1,000. This will be inclusive of synthetic yarn, fabrics, tents, accessories, tablecloths, etc. These revisions on the GST billing software by the business owners will be done from January 2022. It needs to be noted that most of the clothing segment is priced below INR 1,000 and with this, there will be a significant inflationary rise in the prices of clothing along with the footwear as well. 

The Impact on Market

Experts too are of the opinion that this will have a negative impact on the market as already the industry is experiencing inflation with raw materials, packaging and logistics on a rise. 

As per the reports, even the Clothing Manufacturers Association of India (CMAI) is disappointed at this decision by the government. 

Thus, CMAI along with several other trade bodies are in talks with the government to not implement this particular change. 

This business chaos is apparent because even without the GST price revision the market is expected to see a 15-10 percent price increase in the cost of apparel and that too without the GST rate increase. And the additional hike in GST prices will only worsen the situation. For instance, if you are a footwear business owner or let’s say a clothing shop owner then you will have to make the required updates in your footwear billing shop software or readymade garment billing shop software accordingly. 

However, on the other hand, CMAI is of the belief that this step by the government is completely misplaced. It has been reported primarily for addressing the Inverted Duty Structure existing in a section of the industry and this sector is not more than a total of 15 percent of the total industry. 

But we also need to notice that on certain synthetic fibres and also on yarn the GST rates have been decreased to 12% from a good 18%. So, accordingly, the retailers will have to make an update to their garment billing shop software. This has been done to correct the inverted duty structure. It was in September that the GST council had vowed to correct the inverted duty by taking proper measures. 

MS Mani who is the senior director at Deloitte India was of the opinion that the revised GST rates will be putting an end to the inverted duty structure issues once and for all.

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