GST Council Meeting Live Updates: Rate Hike On Textiles Deferred, Up For Footwear Effective Jan. 1
No Discussion On Extension Of Compensation Cess
Compensation cess was not on the agenda today. Some state finance ministers did mention issue of extending compensation cess, said Finance Minister Nirmala Sitharaman. However, no discussions were held.
"At the moment I have nothing before me," Finance Minister said on cess period extension.
GST Council Discussed Issue Of Inversions And Revenue: Sitharaman
Decision on correcting inversion in textiles has been referred to rate rationalisation committee, said Finance Minister Nirmala Sitharaman. Committee's full report to be submitted in Feb. 2022.
No decision was taken by the GST Council on the issue of reversing rate hike for the footwear industry, she added.
GST Council Agreed To Maintain Status Quo On Textiles
In the Sept. 2021 Lucknow GST Council meet it was decided to make correction on two inversions, said Finance Minister Nirmala Sitharaman.
Recently received representation from state finance ministers to reconsider rate change on textiles.
Today, council agreed to maintain status quo and not increase the rate to 12% from 5% in textiles, she added.
Finance Minister Nirmala Sitharaman Begins Briefing On GST Council Meeting
The 46th GST Council meeting was called under the emergency provision, said Finance Minister Nirmala Sitharaman.
Since 2019, in approx. 10 items the council has discussed how to correct inversion, she added.
GST Hike On Textile Industry Deferred
The GST Council deferred the increase in tax on the textile industry. A uniform rate of 12% was to come into force from Jan. 1.
The issue of GST rate hike on textile industry is likely to be discussed next in February 2022, Bikram Singh, industries minister of Himachal Pradesh, told reporters.
This issue has also been moved to the Group of Ministers on rate rationalisation, Palanivel Thiaga Rajan, finance minister of Tamil Nadu, told reporters.
A uniform rate on yarn, fabrics and apparel was aimed at addressing the inverted tax structure—a higher rate on raw materials than on finished goods—in the textile value chain.
Like man-made yarn and fibre are taxed at 2-18% compared to 5% GST on fabric. That led to accumulation of GST credit.