The GST Council decides to postpone the interest rate increase on textiles from 5% to 12%


The GST Council decided on Friday that postpone the hike in the tax rate on goods and services (GST) on textiles from 5 percent to 12 percent, Minister of Finance Nirmala Sitharaman announced.

The GST interest rate increase on textiles from 5 percent to 12 percent was to take effect from January 1, 2022.

The meeting was convened under urgent provisions, the minister stated at the press conference.

Sitharaman said the meeting was convened after the Gujarat finance minister requested a postponement of the decision taken at the September 2021 Council meeting on inverting the tax structure.

“The September 2021 decision was made more in the process of correcting inversion in the tax structure,” she said.

Since 2019, the GST Council has considered such a correction in the reverse tariff structure in about 10 points, Sitharaman said.

The initiative from the GST Council comes after some states and industrial bodies opposed the increase in the tax from 5 per cent.

Last week, Amit Mitra, chief adviser to West Bengal’s chief minister, had urged Union FM Nirmala Sitharaman to roll back the proposed increase. He said the new tariff structure would result in the closure of about 1 lakh textile units and the loss of 15 lakh jobs nationally.

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