June 19, 2017
The decision of considering GST revision after three months would paralyze the decentralized garment/ made- up segments that predominantly function with the job work and the synthetic spinning sector making several thousands of units be closed and throwing lakhs of people out of jobs, Southern India Mills’ Association (SIMA) said today.
More than 80 per cent of the garment/ made-ups manufacturing units are in the decentralized sector and undertake job work and these units would become unviable with 18 per cent service tax on the job work when compared to vertically integrated manufacturing units, SIMA Chairman M Senthilkumar said.
Garment /made-up sector, the largest employment provider in the entire textile value chain creating 100 to 150 jobs per Crore of investment was hoping that the GST Council would include job work relating to garmenting/made – ups under the service tax list of five per cent.
The MMF yarn spinning sector also was hoping for reduction of GST on man made fibre and its blended spun yarn from 18 to 12 per cent as the spinning sector was opting for optional zero rate Cenvat route and paying 12.5 per cent Central Excise duty all along for MMF, he said.
However, the decision of the Council of considering any rate revision only after three months has come as a severe blow for the garmenting, made-ups and synthetic spinning sectors, Senthilkumar said, in a statement here.
He appealed to the Prime Minister and Finance minister, to consider including garment and made up segments related job works under 5 per cent list of service tax that are currently being exempted from service tax and also reduce the GST rate on man made fibre and its blended yarn from 18 to 12 per cent at the Council meeting scheduled on June 30.