The Goods and Services Tax (GST) is seen as key to facilitating industrial growth and improving business climate in the country. A constitutional amendment measure, the GST Bill needs to be passed by a two third majority in both houses of parliament and by the legislatures of half of the states in the country to become law.
This will enable the GST to be introduced across the country. Following this, parliament and state legislatures will need to pass the GST bills that impose central and state GSTs. The Government is mulling the next target of implementing the GST around June 2016. The government earlier wanted to implement the new GST from April 2016.
According to V Lakshmikumaran, Managing Partner, Lakshmikumaran and Sridharan, introduction of this duty will boost Indian textile exports to a great extent easing the prices and making this industry internationally competitive. Hence, integrated companies should consider GST as a positive opportunity as the taxes will spur the textile sector with major capital investments bringing the cost of capital goods down for expansion of textile units, as it will be available as a creditor gain.
With the implementation of the much-awaited bill, an input credit will lead to lowered input costs and reduced prices of the finished synthetic textile at the consumer level. On the contrary, for the natural fibers namely cotton and wool which are tax-exempt because naturally produced goods, any tax imposed now under the GST regime will be an extra cost to the companies and the ultimate consumers.
On Indian textile export, that is one of the vibrant exports to all over the world. And as of now, all these things became cost and therefore, claiming the drawback or any other exemption became so cumbersome with the introduction of GST, the export market will open up, product will become cheaper, it will be internationally competitive and therefore, India can actually increase its share of the export market as far as textiles are concerned.
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