If you have been thinking of revamping your wardrobe this Spring Summer, you ought to check upon your wallet because the introduction of GST (Goods and Service Tax) may bump up the price of branded apparels.
If the industry veterans are to be believed, there would be a 3-4% rise in the prices readymade apparels and other finished textile products. As of now, textile industry pays 8-9% of tax. However introduction of GST may make this tax almost 12%, if not the government starts following the 18% tax rate, which will make the prices dearer further.
Industry experts, who spoke on condition of anonymity said, they are expecting a tax of 12% GST. But the duties they would now be paying at the manufacturers’ end will be quite high. For worse, the textile industry may witness inflation till third quarter of the financial year in 2017-18.
The textile industry is making sure the tax slab remains limited within a neutral rate as they fear a little above will hit this market like anything.
Garments industry as luxur y
There is a talk going on in the industry that textile is being seen as a luxury and is being planned to taxed accordingly. Putting a luxury tag will mean a t-shirt worth Rs 500 or a dress of Rs 5000 will have a higher tax slab because of the ‘branded’ label.
And if that actually happens, the middle class buyers that form the major chunk of consumer would be affected the most.
Well, tax experts say, in the long run GST would be beneficial for the industry. Currently as a value chain, in textile, too many inter-state transactions happen. This anyways bump ups the price. With GST the small and medium players would require to pay one tax and things may fell in place.