The GST Council has decided to postpone a rate increase on textiles from 5% to 12%.

The GST Council voted on Friday to postpone the rate hike on textiles from 5% to 12%, with the subject being revisited at the next meeting in February, according to Bikram Singh, Himachal Pradesh’s Industry Minister.

The council was expected to put the raise on hold, according to early reports.

The hike in the tax rate from 5% to 12%, beginning January 1, has been challenged by Indian industry and other states, citing higher compliance costs for the unorganized sector and MSMEs, as well as claims that it will make the ‘poor man’s apparel expensive.’

“It’s a one-point agenda (for the council meeting on Friday). Many states have raised it as a priority. It is stated in the agenda item that it was raised by Gujarat, however, I am aware that it was raised by several states. The plan to increase the GST rate should be put on hold, ” Tamil Nadu Finance Minister P Thiaga Rajan remarked before the council meeting.

According to the Confederation of All India Traders (CAIT), the additional tax will increase the financial burden on end-users, have an adverse impact on small firms, and encourage tax fraud.

FM Sitharaman presided at the 46th meeting of the Goods and Services Tax (GST) Council, which was held in the national capital.

The conference was also attended by Union ministers of state in the Ministry of Finance, Pankaj Chaudhary and Bhagwat Kishanrao Karad, as well as senior officials from the Ministry of Finance.

The conference is significant because it takes place ahead of the presentation of the Union Budget for 2022-23 to Parliament on February 1, 2022.

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