About: The GoI has notified uniform GST rate at 12% on MMF, MMF yarn, MMG fabrics and apparel that has addressed the inverted tax structure in the MMF textile value chain.
Previous Tax Rates: The GST on MMF, MMF Yarn and MMF Fabrics were 18%, 12% and 5% respectively.
Objective: This 12% uniform GST rate is likely to contribute positively to the growth of the sector in the following ways:
The uniform rates of 12 % for entire value chain of MMF textile sector will be benefiting and save lot of working capital. It will reduce the compliance burden of the industry.
The uniformity of GST rates will be helpful to resolve the ITC residues that accumulated due to the inverted tax structure earlier.
The uniformity of GST rates shall 12% GST on job work related to dying and printing service will benefit the industry to absorb and recover unutilized ITC.
The significant portion of MMF product is expected to be exported; it will lend a better scope for encashing the utilized ITC.
Uniform 12% GST will help the industry having huge portion of piled up opening ITC by enabling them to encash the same progressively.
ITC: Input Tax Credit means at the time of paying tax on output, you can reduce the tax you have already paid on inputs and pay the balance amount.
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