New Delhi, 26/12: Apparel, clothing and footwear used by the poorer sections will get costlier from January 1 as the Centre has decided to raise the Goods and Services Tax by 7 per cent on items costing less than Rs 1,000.
The new GST rate on clothing up to Rs 1,000 per piece and footwear up to Rs 1,000 a pair, will be 12 per cent, up from the current rate of 5 per cent. Synthetic and artificial yarn too will attract a higher GST of 12 per cent but cotton, silk and wool yarn have been spared as of now.
The move was taken to correct the inverted duty structure on textile and leather goods. An inverted duty structure arises when taxes on final products are lower than taxes on inputs. This bars the manufacturers from availing of input tax credit on higher taxes paid on raw materials.
The changes in tax rates were recommended by the GST Council, the apex decision making body on the indirect taxes, which the government said was in the favour of traders