CBIC notified new rate of GST on Fabrics and Garments 12% which was earlier 5% from 1st January 2022. It will have a direct impact on all hosiery manufacturers as well as Fabric manufacturers earlier they were having refunds from GST department under inverted duty regime. But now purchase and sale both are at the same rate due to which there will be excess of Output Tax over Input Credit.
Earlier the rate of GST was 12% on the garments sold over Rs. 1000 MRP.
This could impact the customer/Ultimate Consumer to pay more for the Goods. But on a broader view it is great Economic Reform. Because it will cut all irregularities present in the economy of getting fraudulent Refunds.
This could lower the rate of GST Frauds.
CA Rajat Nayyar