Surat’s low-cost saris will cost more with a 12% GST rate.

Surat (Gujarat) [India], November 22: There is some bad news for women in the country, particularly those in rural areas. In February 2022, the low-cost saris produced in Surat, the country’s largest man-made fabric (MMF) hub, will become more expensive.

It is because the Union Government’s notification has brought all textile goods, except for cotton yarn and cotton, which will continue to attract a 5% Goods and Service Tax (GST), under a 12% GST rate, thereby removing the inverted duty structure in which the fibre attracted an 18% GST, yarn a 12% GST, fabric a 5% GST, and garments under Rs 1,000 per piece, under a 12% GST rate. 5% GST on garments worth more than Rs 1,000, and 12% GST on garments worth more than Rs 1,000 starting from January 1, 2022.

According to industry sources, Surat’s low-cost saris commanded wholesale prices ranging from Rs 120 to Rs 150 per piece. The government’s decision to raise the GST rate on fabric from 5% to 12% will raise the price of low-cost saris by Rs 180-200 per piece—a direct Rs 50 increase. When it reaches the end-users—women—the same saris will cost between Rs 220 and Rs 250 per piece.

Mayur Golwala, leader of the power loom weaving industry in Surat told TBT, “Powerloom weavers are the 65% stakeholders in the entire MMF value chain. Without any representation to remove the inverted duty structure in the MMF sector, the government decided to make the GST structure uniform. IF the government is facing revenue loss then we do not have any problem in increasing the tax rate. But, the authorities seem to have misrepresented to the union government regarding the hike in GST tax rate”

Golwala added, “Powerloom industry is set to face the working capital issues with the implementation of the new tax rate. The changes in tax rate will disturb the smooth functioning of GST filing from the last two years. Goods are sold on the 60-90 days credit and that the weavers will have to file the returns every month with an increased tax rate of 12%”

Ashish Gujarati, president of, Southern Gujarat Chamber of Commerce and Industry (SGCCI) told TBT, “The tax authorities seems to have shown a false picture on the GST revenue to the Union Government. The industry is comfortable with the 5% tax rate and there was no need to increase it to 12%. We have represented the issue to Gujarat Chief Minister Bhupendra Patel and the Union Finance Ministry to revoke the notification”

 

Gujarati added, “Surat is known for its low-cost saris targeting the women consumers in the rural areas. Weavers and traders will have to pass on the hike to the end-user. This way, the low-cost saris will be more expensive for the rural women”

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