The GST Council decided to maintain the current tax structure on ready-made garments (RMG) at its 55th meeting held in Jaisalmer last Saturday. Earlier, a tax hike of up to 35 per cent on RMG had been proposed by a Group of Ministers (GoM) on Rate Rationalization, led by Bihar Deputy Chief Minister Samrat Chaudhary.
The meeting, chaired by Union Minister for Finance and Corporate Affairs Nirmala Sitharaman last Saturday, did not address or discuss the proposed tax hike.
The GoM had suggested imposing a 35 per cent GST on RMG priced above ₹10,000 (approximately $118). It had proposed a GST of 18 per cent on RMG priced between ₹1,500 and ₹10,000, and 5 per cent on RMG priced below ₹1,500. Additionally, it had proposed raising the highest GST slab from 28 per cent to 35 per cent. This highest slab is typically applied to luxury goods and sin goods and services.
Textile industry organisations had opposed the proposal, arguing that it could have catastrophic consequences for the textile and garment industry, particularly for small retailers, traditional brick-and-mortar businesses, and the millions of workers dependent on this sector for their livelihood.
In 2022, another proposal to increase taxes on downstream products to resolve the issue of an inverted duty structure was also poorly received by the industry and opposed.
The labour-intensive textile industry is the largest job generator after agriculture in the country.
