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Cotton industry asks for tax refunds

Cotton textile exporters want the GST Council to allow accumulated Input Tax Credit (ITC) on fabrics available with weavers as on July 31 for adjusting GST payment on outward supplies - both domestic and export. They want tax refund on inputs already acquired.

Although the GST Council, on July 26, recommended that refund of unutilised ITC to taxpayers in the textiles sector be allowed, the notification had, however, also stated that the accumulated credit lying unutilised as on July 31, 2018, will lapse.

This is expected to lead to serious problems for the textile sector as the costs will go up on the available stocks as on July 31, 2018. Most dyes and chemicals, packing materials, fiber and yarn used by the textile sector attract 12 per cent to 18 per cent GST, whereas the rate on fabrics is only five per cent leading to accumulated ITC on account of inverted duty structure.

Section 54 of the CGST Act allows refund of unutilized Input Tax Credit shall be allowed where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies. Apparently the decision to make accumulated credits till July 31 null and void was taken due to some technical reasons.

 
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