GST GoM Proposes Rate Tweaks on 148 Items, Textile Sector Faces Major Changes
The Group of Ministers (GoM) on GST rate rationalization has finalized a report recommending adjustments to tax rates on 148 items, with significant implications for the textile sector and luxury goods. These changes, expected to boost revenue, will be presented at the 55th GST Council meeting on December 21, 2024, in Jaisalmer, chaired by Finance Minister Nirmala Sitharaman.
Proposed Changes in GST Rates
Textile Sector
Current Rates:
5% GST on textiles priced up to ₹1,000.
12% GST on textiles priced above ₹1,000.
Proposed Structure:
5% GST for textiles priced up to ₹1,500.
18% GST for textiles priced between ₹1,500 and ₹10,000.
28% GST for textiles priced above ₹10,000, categorizing them as luxury goods.
Luxury Goods
Wristwatches:
GST for watches priced above ₹25,000 to increase from 18% to 28%.
Shoes:
GST for shoes costing over ₹15,000 to rise from 18% to 28%.
Essential Goods
Bicycles:
GST for bicycles priced below ₹10,000 reduced from 12% to 5%.
Exercise Books:
GST reduced from 12% to 5%.
Packaged Drinking Water (above 20 liters):
GST cut from 18% to 5%.
Impact on the Textile Sector
The revised slab structure for textiles aims to align luxury-priced items with higher GST rates while offering relief on lower-priced goods. This overhaul is expected to:
Simplify the GST framework for the textile industry.
Enhance revenue collection from high-value textile goods.
Potentially increase the cost of premium and mid-range textiles.
GoM’s Revenue-Positive Strategy
The proposals balance increased GST rates on luxury items with reductions on essential goods. This dual approach:
Addresses affordability concerns for the common man.
Ensures higher tax collection from non-essential luxury products.
Next Steps
The GST Council will deliberate on these proposals during its meeting on December 21, 2024. If approved, these changes could reshape the GST framework, impacting industries, businesses, and consumers.
