Page 23 - Unleashed BMM 2019-2020

the spinning of chips into yarn became costlier
as GST was levied on the process. This lead to
the shutting down of looms which were small
and highly unorganized,” he explained.

Transparency and Accountability
The Shiv Shakti Textile Market is one of the
oldest markets in the city. It along with the
same likes once used to boom with traders
lining up for buying the shops in the markets.
Now, the same markets has shops being closed
down and vacant, but with no personnel to buy
them. The small traders couldn’t sustain
themselves in the market. Due to which the
competition became less and the credit system Textile traders protesting against the implementation of GST. Picture Credits: Damayantee Dhar
became low which helped in stabilizing.
Also, transparency and accountability has which fabric is made. Talking about how GST involving GST irrespective of its nature, it led
increased as a dedicated personnel sits and affected his business, he said, “the new tax to reduction of working capital. Unlike VAT
checks everything. Tax checking has become system is good, but whole benefit has not been which could be set off against VAT only,” – he
formalized. reaped till now. The system is still erratic added further.
though.”
“Everything is on paper and recorded. This
has a major advantage as it shows the capability Running a textile business requires working GST in the long run
of the opposite party. Previously the weavers capital for the daily expenses. The liquid cash Choudhary and Jain both agreed that in the long
and spinners were hesitant to share important is needed for the purchase of raw materials as run GST is completely beneficial to the indus-
bank related documents. But now as it is well as associated expenses.
try irrespective of the size as the cost of pro-
compulsory to disclose everything, everything Commenting about the liquidity and the
duction would decrease.
has become fair and open,” explained working capital cycle Ashish said, “Earlier the
With the introduction of GST, the transport
Chaudhary of Kay Kay Textiles. working capital was stuck in the payment of
segment had a major revamp. E-Way Bill was
GST as the Input Tax Credit Refund was not
introduced which replaced the existing trans-
Smooth liquidity and ease in being passed on to the weavers. port regulations. However, the benefit of the
business Now, the accumulated tax credit refund could same has not been fully availed. Speaking on
be availed which includes the rent paid too.
Ashish Jain is a weaver which deals in purchase it, Jain from Jhumar Silk Mills Ltd said, “The
With the law being passed now, it would
of yarn to make grey (raw fabric) and outsource system is still at its nascent stage. Due to its on-
become beneficial for the weaving
it for printing (finished fabric) under the name line characteristics, the benefit of time reduc-
industry.“Also since being uniform tax system
of Jhumar Silk Mills. He has a total of 48 tion cannot be seen till now. But hopefully it
GST could be set off against any expenses
Power looms (High Speed Rapier Machines) on will get better in the upcoming years.”
Expert Advice

Q – How has the textile industry been affected after the implementation of GST?
A – The textile industry has overall benefitted due to implementation of GST rolled out from July 1, 2017. Consistent rate of 5% in
majority of textile goods and its related job work services helped to stabilize the market anomalies which prevailed during launch of GST.
Reducing rates on the raw material consumption from 18% to 12% on account of increase in cost of manufacturing due to inverted duty
structure in current GST provided great relief to this sector. Also, announcement by the Council to refund excess input tax credit which
gets accumulated starting from August, 2018 helped industry to again revive from the falling conditions since GST launch.

Q – Has the industry become more channelized after GST? How has it benefited the consumers?
A - In a bird’s eye view, Textile Industry due to GST has become more channelized removing the lapse of chain in tax levy which existed
pre GST due to exemption and less coverage of persons under tax regime. Now under GST, flow of tax benefits from source to end
consumer is possible as everyone in the textile sector is covered under the new regime. Also, provision under GST regarding strict norms
for payment within 6 months to supplier to avail Input Tax credit will make the credit cycle to flow in a smooth manner ensuring due
payments in the industry.

Q – With the rollout of GST, would it help the industry to grow in multiple folds?
A - The exports under GST being zero rated and liberal provisions under the law for refund of input taxes paid within 7 days will help
textile industry to increase their exports. Transition under the said law was a challenging task for textile industries in an uncertain
environment where significant changes were needed. With changes made effective and transition happened in a smoother manner, GST
rollout will pave a way for textile industry to grow in the coming days.

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