The Group of Ministers (GoM) on rate rationalisation is expected to present a set of significant proposals that could trigger a sweeping realignment in GST rates across key segments, particularly textiles, garments, and footwear. The proposed restructuring is aimed at simplifying the indirect tax regime, correcting anomalies, and aligning GST rates with broader policy objectives.
Likely Government Proposals
According to sources, the GoM may recommend the following changes:
- Tax Cuts for Textile Products
- GST on textile products such as gimped yarn, metalised yarn, and rubber thread may be slashed from the current 12% to 5%.
- Similarly, GST on carpets, gauze, and other select textile products may also be cut to 5% from 12%.
- Higher Threshold for Lower Tax on Garments
- The price threshold for readymade garments attracting 5% GST is likely to be increased to ₹2,500, up from the present ₹1,000. This move is expected to bring relief to middle-income consumers and smaller apparel brands.
- Higher Tax on Premium Readymade Garments
- Readymade garments priced above ₹2,500 could be shifted to a higher tax bracket, attracting 18% GSTinstead of the current 12%. This step could impact the premium apparel segment.
- Footwear Tax Rate Hike
- Footwear priced above ₹2,500 may also see a steep rise in tax, with GST being hiked to 18% from the current 12%.
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