An important update for taxpayers and businesses in India. As per the recommendations of the GST Council, the CBIC is implementing a hike in GST on Footwear & Garments from 1st Jan 2022. The Hike in GST on Footwear & Garments will be effective from day 1 of the new year and thus it will directly impact you. In this article, you will understand the GST and the recent Hike in GST on Footwear and Garments.
What is GST?
GST(Goods and Services Tax) is an indirect tax in India. It is the tax levied on the end-consumer. It is the single tax applicable on specific goods and services in India.
Under GST, businesses providing goods and services charge different GST rates as decided by the GST Council and CBDT. The GST tax rates usually are:
- and 28%
The 5% tax is usually for the necessary items such as food. However, the highest 28% tax is levied on luxury goods.
Previous GST Rates on Footwear
The previous GST Rate on Footwear was only 5%. This rate was applicable before 1st January 2022. Furthermore, the GST Rates on Footwear exceed Rs. 1000 per pair were taxed at the rate of 18% before 27th July 2018.
Previous GST Rates on Garments
All garments or apparel under different HSN Codes under Rs. 1000 were attracting the GST Rate of 5%. However, apparel or garments exceeding Rs. 1000 were attracting the GST Rate of 12%.
Latest Updates from CBDT on Hike in GST on Footwear & Garments
- The Central Board of Indirect Taxes and Customs (CBIC) stated that the GST rate on clothes, textiles, and footwear will be hiked from 5% to 12% with effect from January 1, 2022, based on the GST Council’s suggestions. As a result of the proposed GST raise on the textile sector, all textiles and garments are likely to become much more costly and manufacture needs to submit the GST return filing for these products.
- According to a government announcement, every piece of footwear, regardless of price, would be subject to a 12% GST. All prefabricated textiles, with the exception of those manufactured with cotton, will be subject to a 12% GST. These goods were formerly available with a 5% GST charge.
Impact of Hike in GST on Footwear & Garments
The Impact of Hike in GST on Footwear & Garments will result in high costs. Experts estimate it will result in a spike in the costs of 80% of products. The market is anticipated to see a 15-20 percent price increase in clothes in the coming days due to extreme price hikes in raw goods such as yarn, packing materials, and freight. The shopkeepers complain about the fact that those who buy clothes for less than Rs 1,000 would be the worst hit.
The rise in GST would have a substantial impact on Andhra Pradesh’s textile sector. According to the textile dealers, the present 5% GST tax on buyers is Rs 1,500 crore, which would rise to Rs 3,600 crore if the 5% GST is raised to 12%. They said that a hike in GST will impose an additional tax of about Rs 2,100 crore on individuals in the New Year of 2022.
Therefore, it is the best time to buy clothes or garments before the prices go up this new year.
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