The textile industry in India has warned the government that if goods and services tax (GST) is levied on maximum retail price (MRP) as proposed, it would have multiple ill effects on the entire sector. The industry has recommended the government to levy GST on ex-factory price, which is always much lower than the MRP, as it would leave some leg room for periodic discount offers. The textile industry offers heavy discounts on MRP of branded garments not only in their factory outlets but also in organised retails to attract business. Even branded garments are available at affordable prices especially in the lean season which otherwise remain un-affordable for the average middle class buyers.
Considering expenses incurred on branding, transportation and a host of other aspects, it is important to have GST levy on ex-factory, which would be determined on the basis of actual manufacturing cost. The ex-factory price can easily be arrived at on the basis of the current system of Central Sales Tax (CST) paid to the government, industry represented to the Finance minister Arun Jaitley.
The industry has also urged the government to keep this employment intensive industry in the lowest slab of GST. Trade sources believe that 12.5 per cent of GST would be a logical level without any ill-effect on the industry. India's textiles exports are set to record a marginal decline at $40 billion in the financial year 2015-16 as compared to $41.4 billion reported in the previous financial year.
