Lower GST on job work of textile yarn to help SMEs: CITI
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New Delhi: Reduction in the goods and services tax (GST) rates on job work of textile yarn and fabric manufacturing to 5% from 18% will give a leg-up to small and medium-sized enterprises (SMEs) in power loom, knitting and processing sectors, the Confederation of Indian Textile Industry (CITI) on Tuesday said.
According to CITI chairman J. Thulasidharan, reduction of service tax on job work would bring relief to the textile industry from the extra burden, as bulk of the work is with SMEs and carried out through job works.
A job work involves a manufacturer sending goods out of the factory for specialised processing job without having to pay taxes. The move “would now help SMEs of power loom, knitting and processing sectors not to face much financial burden”, he said in a statement.
Job work in the textile sector is taken as services and was subject to 18% goods and services tax (GST), Thulasidharan said. Under such situation, the manufacturer who does not have integrated composite units to complete the process of embroidery, printing and finishing as per the market requirements would have been in a great loss, he added.
The CITI chairman also welcomed the decision of the GST Council for increasing turnover limit from Rs50 lakh to Rs75 lakh under the composition scheme for traders and manufacturers. This is seen as helping micro, small and medium enterprises (MSMEs) grow their business and carry out their activities efficiently. However, the chairman suggested reduction in GST on speciality textile fabrics, man-made fibres and yarns.