Thursday, June 1, 2017

Kindly safeguard Readymade garment by fixing GST @ 5%

TO THE HON'BLE PRIME MINISTER GOVERNMENT OF INDIA NEW DELHI RESPECTED SIR SEASON'S GREETINGS KHAGA ( KARNATAKA HOSIERY AND GARMENT ASSOCIATION ) is an association of Wholesalers Retailers​ & Manufacturers based​ in Bengaluru. We utilise this opportunity to appreciate your step of bringing in one tax throughout India in the form of GST. This will help reduce the multiple tax burden on the common man. We also ​would ​like to utilse this opportunity to bring to your notice some of the key facts of the Garment industry:- 1. Garment industry is one of the largest industry after agriculture that provides major employment opportunities. If the employee details of the industry are analysed it will show that majority of the employees are women as they feel safe and connected with the industry. In this way the garment industry helps the women to uplift her social standard in the society. Even the retail outlets provide huge opportunities for employment. 2. Earlier trends show that the textile industry directly supplied the finished product to the retailer. But with changing times the trend has changed. It is now been seen that the major primary consumer of the textile industry products is the garment manufacturer. Hence the garment industry has become one of the biggest support system for the textile industry. 3. As you are aware fashion trends keep changing and in case of the Readymade Garment sector fashion trends change with every season as the requirements change with each season. People have different requirements according the climate and also get influenced by various other internal and external factors. To accommodate new trends we have to remove the old stock through discount sale. Thus tax rates play a major role in determining the rate of discount. Higher the tax rate lower the discount rate leading to lower utilisation of old stock ultimately leading to financial loss to the retailer. Also major of the manufacturers, wholesalers and retailers work by taking loans from banks. ​4.Textile sector brief : The textile and apparel industry can be broadly classified into two segments: 1. Yarn and fibre 2. Processed fabrics, readymade garments and Apparels. ​Though b​eing part of a largely unorganised sector, it has been one of the highest contributors to economy and employment. The current incidence of excise duty is around 2% (with an abatement of 40%) and the vat rates are around 5 to 5.5% . Introducing a rate beyond 5% would result in high working capital requirements coupled with hasty business environment. The industry would bear the brunt of high compliance cost due to the proposed GST.Therefore, a higher rate would result in small businesses facing difficulties. It is pertinent to note that this will have a negative impact on employment due to cost cutting measures which is already visible in IT sector. The fitment of rates as of now is near to the current taxation of the products. Keeping this in the background, 5% would be an ideal rate to be made applicable on readymade garments and apparels. Hence considering the importance of Garment industry we request you to please consider the above mentioned points to decide the rate of GST so that it does not become a burden on the dealers. We would like to highlight about the GST system. The GST system designed is a very comprehensive system which makes it a very time consuming system. Also the system is a very costly structure. We request you to please consider the structure and make it a cost effective and time effective structure so that the common dealer can easily file the taxes and returns for the GST. In our humble request, we submit your good self for the rate of GST to be 5% for the overall benefit of the industry. Kindest Regards ​ SAJJAN RAJ MEHTA CHAIRMAN, TAXATION COMMITTEE KHAGA 09845501150

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