Here, we will discuss all GST registration requirements in one single post. This article will...
One tax for one nation is what the GST is created to do for the entire country of India. It is an indirect tax which will be channelled and streamline the tax for the entire country as opposed to a central or state tax. The Goods and Services Tax is applied to all the goods and services that are sold in the country and would make it beneficial for the consumers to pay only one form of tax as opposed to what was happening throughout the years up until now. In this blog, we will analyse GST Impact on Textile Industry in India.
GST would make the system more organized for taxation and would not cause confusion as it was happening in recent years. There are different types of GST tax slabs for different industries, products, and services, and everyone should know the amount of tax that will become payable on a day to day objects as well. Let’s discuss in detail GST Impact on Textile Industry.
GST will affect all the industries in the country and change the tax rates and the way of working in almost all business forms. There is a certain GST Impact on Textile Industry, which employs many skilled employees and is one of the most important industries in India. The exports that happen from the textile industry are high, and it is one of the biggest industries for export in India. GST is set to increase the tax slabs of the textile industry higher than the one that was in place now for the traders and manufacturers in this field. Apart from this, many regulations will be in favour of the textile industry, such as follows:
The GST will concentrate on the organized sector of the textile industry and would allow for a smoother input tax credit system and bridge the gap that occurs in the input credit system.
The GST is set to reduce additional overhead costs such as Octroi, luxury tax, entry fees, etc. which would, in turn, reduce the cost of the goods and services in the textile industry.
The GST will allow for input credit on capital goods, and the manufacturers would be able to import the latest manufacturing technology to make technologically advanced products.
The GST will help boost the competitiveness of the textile industry because of the regulations that would be allowed in the industry and would keep the prices at a healthy level for the products in the industry.
The GST would help boost the exports as the manufacturers will be able to make a greater number of products using the latest technology and would not have to wait in obtaining a license or pay heavy export fees as they would all be made easier under the new GST laws.
The GST would provide the base for long-term growth as it would help the textile industry expand into domestic as well as international markets, create more consumer base, increase exports, and take advantage of the new policies.
There are many more advantages that the GST would bring for the textile industry, and the manufacturers should take advantage of the same and grow their business and boost the economy. However, under GST, the cotton value chain would not benefit as exporters will not be able to claim the duty paid as they could do now and the GST could make the cotton textile business come to a standstill under the new reforms.
There are a few more disadvantages of GST for the textile industry, such as follows:
Small business will have difficulty in understanding the new implications of GST and would have to hire professional help, who would be able to handle their taxation under the new GST laws. However, under GST there is a Composition Scheme Provision which is specifically designed for the MSME sector. Businesses with turnover up to 1.5 Crore can opt for GST registration in India under this scheme.
Small scale businesses will not be able to file taxes by themselves under the GST system as it would require professional help due to their complexity. The business will also have to train new employees who would be able to deal with the GST tax filing system, and this would increase their overhead cost.
Businesses that were using ERPs to file their taxes online will have to spend on buying new GST software, which will be compliant with the GST system, and they would also have to train to learn how to operate it and pay the taxes.
Since the taxes of some sectors of the textile industry will increase, it would cause an increase in the prices of the products as well. This will affect the final consumer, who will have to spend more money to buy the products.
There are two sides to the GST Impact on Textile Industry. It would take time for the businessmen to settle with the new taxation system, especially since it is being implemented in the middle of the year. Once the policies and the tax slabs are settled, the taxation process would be more streamlined, organized, and effective. It would bring a balance in the economy and help the government in keeping track of the money that flows in different sectors of the industry and the taxes that they should be paying responsibly in order to benefit the economy and the country as a whole.
The policies are yet to be clear, and there are many sectors in the textile industry that still need clarity on the policies and the tax slabs that it would fall under. The industry would have to deal with it over time as and when the government will streamline the new GST system. These businesses will also need to understand the way the filing of taxes under the GST system is done and learn to do it correctly.
Read our article: Overview of GST on Advertisement Services and its Taxability