Effect of GST on Footwear, Jewelry & Garment Industry
Three major industries namely Footwear, Jewelry & Garment industry got their final GST rates. There has been a mixed reaction from the different industries but with the clarification on the rate part everyone is happy.
- Effects of GST on Jewelry end consumers
The gold has finally been taxed at 3% as told by Finance Minister Arun Jaitely. The whole Jewelry association is happy with the announcement made by the minister and said that many unorganized sector will be able to join the main stream.
The gold is a luxury product for a rich class but also a important commodity for middle class people so that it could help them when they have a financial urgency. In Kerala the only state where the gold was earlier taxed at 4% will now have Gold taxed at 3% so a big relaxation for all the gold buyers in the State.
2. Effect of GST on Textile Industry
Textile sectors plays a major role in development of the Indian economy with regard to GDP and is one of the oldest manufacturing industry in India. The textile industry in the present tax regime pays taxes which is in between 5% to 7 % and will ultimately end up with a 12% GST. Moreover the cotton fabrics which were exempted from the tax slab will now be taxed at 5% GST.
Ready made clothes which are below Rs.1000 will be charged with 5% GST which under the present taxation system allowed a tax rate between 5% to 7%. The clothes costing above Rs 1000 will have to pay a 12 % GST thereby increasing the pocket burden for end users.
The textile industry has a very low compliance level because businesses which were earlier not paying any taxes will be entering the taxation system to pay the taxes for the first time.
With the final rates clear on GST for textile industry it is for sure that in the long run the textile industry will have more registered taxpayers. Moreover it will help them to get more competitive in both the global and domestic markets.
3. Effect of GST on Footwear Industry
The footwear industry has a dual tax rate slabs as announced by the GST council on last Saturday.Footwear is categorized under two main categories i.e. footwear which is costing below Rs 500 will be charged with 5% GST as compared to the present rate of 9%. And the rest footwear categories which are costing more than Rs 500 will be charged with 18% GST.
With a big variation in both the categories the customer will need to pay 13% more tax on a product which is priced even slightly more than Rs.500. It is therefore very clear that the dual tax structure will add to more complexity when it comes to pricing and lets hope we will get all our branded shoes at slightly.