The Tiruppur Exporters' Association (TEA) has appealed to the Goods and Services Tax (GST) Council to reduce the rate for job work operations after garmenting activities to 5 per cent from 18 per cent. While the Council reduced the rate for job work in textiles to 5 per cent, it did not cover the job work on apparel within the ambit of this rate reduction.
The negative step of not considering job work on apparel is likely to cause huge hardships to several micro industries in textile clusters like Tiruppur, said the association.
Only the services which can be classified as 'job work in relation to yarn and fabrics of textiles' alone is eligible for the reduced rate of 5 per cent. The major concern was that in textile clusters like Tiruppur, a host of job work operations such as garment printing, embroidery, garment washing, tie and dye, checking, button fixing, labeling, ironing and packing are carried out by micro industries on job work basis only and this is in relation to wearing apparel, said Raja M Shanmugham, president, TEA.
Shanmugham pointed out that some of these processes such as checking, ironing and packing, button fixing, etc., are actually carried out by people ‘who take work to their home for job work’, which was also rightly described by finance minister Arun Jaitley in his press interview on June 11 after the Council meeting.
As the processes are only of B2B nature and since the final product garments is falling under the 5 per cent slab, levying 18 per cent on job work will create an inverted duty scenario disturbing the seamless credit flow thereby defeating the very object behind GST, said TEA in a press release.
TEA president emphasised that the laudable intention of removing the hardship for the MSME industry by reducing the GST Rate on job work will not be fully served if only these tiny and micro industries such as those listed above are excluded from the benefit of rate reduction. He also felt that as these job workers fall in the middle of the textile manufacturing value chain where the credit is ultimately passed on to the final manufacture, there is absolutely no revenue implication because of this change as suggested.
TEA has appealed to the Union minister of finance to discuss the concerned issue at the ensuing GST Council meeting scheduled for June 18, 2017 and requested to make a suitable amendment/clarification so that this unintended hardship faced by micro and small textile units in Tiruppur cluster are duly addressed. (KD)
Source:Fibre2Fashion News Desk – India