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GST council reconsidering rates on textiles

Date: 03 January 2022 Tags: Bills & Laws


The GST council meet will be held for revision of rates in the textiles sector.  This will be the 46th meeting of the council.



The meeting will be held to correct the inverted duty structure currently existing for footwear and textiles.


Inverted duty

  • Inverted duty structure is a form of duty structure in which the taxes on output or final product is lower than the taxes on inputs. This tax has to be refunded in most of the cases.

  • This structure has resulted in outflow of government’s revenue, forcing the government to relook the duty structure.



The government decided to bring manmade fibre (MMF), yarn, fabrics and apparels under a uniform rate of 12% from January.



  • There are concerns that government has hiked tax rates for textiles to 12% from 5%.

  • Many state governments have urged the Finance ministry to rollback the hike as it can result in closure of around 1 lakh textile units and losses of 15 lakh jobs nationally. 

  • There is also a belief that increase in tax rate may impact a large number of taxpayers dealing in the textile sector. Such decision may cause negative impact resulting in drop in demand and recession.