Apparel, a major segment in the textile value chain, has been left out of the reduction. Garment exporters in Tirupur are now urging the government to levy only 5% GST for job working units in the apparel segment.
Raja M Shanmugham, president, Tirupur Exporters' Association (TEA) said that as only services classified as 'job work in relation to yarn and fabrics of textiles' are eligible for the reduced rate of 5%. This negative step would cause huge hardship to several micro industries in textile clusters like Tirupur.
In a representation to Union finance minister Arun Jaitley, Raja said that in textile clusters like Tirupur a host of operations like garment printing, embroidery, garment washing, ironing and packing are carried out by micro industries on a job work basis only.
Some of these processes such as checking, ironing and packing and button fixing are actually carried out by people who take work to their home for job work,
As the processes are only of B2B (business-to-business) nature and since the final product garments is falling under 5% slab, levying 18% on job work will create an inverted duty scenario disturbing the seamless credit flow thereby defeating the very objective behind GST.
TEA president said that the reduction in GST rate on job work will not be fully served if tiny and micro industries above are excluded from the benefit of rate reduction.
Since these job workers fall in the middle of the textile manufacturing value chain where the credit would ultimately be passed on to the final manufacturer, there would be no revenue implication if the rates are kept at 5 percent.
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