Karnataka Hosiery and Garment Association (KHAGA) is an association of Wholesalers and Retailers based in Bengaluru has appreciated the step of bringing in one tax throughout India in the form of GST. This will help reduce the multiple tax burden on the common man.
The association also would like to utilize this opportunity to bring some of the key facts of the Garment industry: –
1. Garment industry is one of the largest industry after agriculture that provides major employment opportunities. If the employee details of the industry are taken in to account, it will show that majority of the employees are women as they feel safe and connected with the industry. In this way the garment industry helps the women to uplift her social standard in the society. Even the retail outlets provide huge opportunities for employ.
2. Earlier trends show that the textile industry directly supplied the finished product to the retailer. But with changing times the trend has changed. It is now being seen that the major primary consumer of the textile industry products is the garment manufacturer. Hence the garment industry has become one of the biggest support system for the textile industry.
3. As you are aware fashion trends keep changing and in case of the Ready-made Garment sector fashion trends change with every season as the requirements change with each season. People have different requirements according the climate and also get influenced by various other internal and external factors. To accommodate new trends, we have to remove the old stock through discount sale. Thus tax rates play a major role in determining the rate of discount. Higher the tax rate lowers the discount rate leading to lower utilization of old stock ultimately leading to financial loss to the retailer. Also major of the manufacturers, wholesalers and retailers work by taking loans from banks.
4. Textile sector brief:
The textile and apparel industry can be broadly classified into two segments:
1. Yarn and fibre
2. Processed fabrics, ready-made garments and Apparels.
Though being part of a largely UN-organised sector, it has been one of the highest contributors to economy and employment.
The earlier incidence of excise duty was around 2 per cent (with an abatement of 40 per cent) and the vat rates were around 5 to 5.5 per cent.
Now above 1000/- ready-made garment is being charged GST @ 12 per cent. A rate beyond 5 per cent has resulted in high working capital requirements coupled with hasty business environment. The industry would bear the brunt of high compliance cost due to the proposed GST. Therefore, a higher rate has resulted in small businesses facing difficulties. It is pertinent to note that this will have a negative impact on employment due to cost cutting measures which is already visible in IT sector.
The fitment of rates as of now should be near to the earlier taxation of the products. Keeping this in the background, 5 per cent would be an ideal rate to be made applicable on ready-made garments and apparels in total.
Hence considering the importance of Garment industry, the association request finance minister Arun Jaitley to please reconsider the above mentioned points to decide the rate of GST further so that it does not become a burden.
They would like to highlight some points about the GST system. Karnataka has seen the model VAT era and we have provided maximum support/inputs to the team GST here. System designed is a very comprehensive system which makes it a very time consuming system. Also the system is a very costly structure. They want the GST Council reconsider the whole structure and make it a cost effective and time effective structure so that the common dealer can easily file the taxes and returns for the GST. They also need to get rid of eway bill for time being as all over all India.
– Apparel and Textile News, Apparel Talk, Indian Apparel
