A Preparatory Session on GST for textiles was held on July 25, 2016 at the Association premises. Dr K Selvaraju, Secretary General of the Association delivered the Welcome Address. During the course of his Address, he pointed out that GST would become a reality and the industry should prepare itself to face this reality.

Mr.Sayee Mohan, Senior Director, Deloitte Haskins & Sells, who has a vast experience in the textile industry, addressed the session. The highlights of the meeting are as follows:-

• GST Bill was originally brought during 2010 as constitutional amendment, but for one reason or the other it could not see its light;
• In order to comply with the global requirements and to have a level playing field, GST implementation is a must;
• With the implementation of GST, present levy of multiple indirect taxes will be converted into three categories of taxes;
• The point of levy has been transformed from manufacture and sale to “supply”. Supply is an inclusive definition where emphasis is on the transaction being carried out for a consideration in furtherance of business;
• Time of payment of tax shall be the earliest date of issue of invoice, receipt of payment (inclusive clause for advance payment) or completion of service;
• Reverse charge mechanism currently applicable to services like GTA may continue;
• Value of supply (goods / services) shall be based on transaction value;
• From raw material (cotton) to the final product, each value addition would be taxed and the tax will be credited thus making the ultimate prices to be competitive. GST would not be a burden for the consumer or the industry either;
• There will be three types of taxes one for CGST by the Centre, SGST by the State and IGST by the Centre. IGST is a tax levied on supply of goods / services in the course of inter-State trade or commerce;
• All centralized taxes such as service tax, central excise, CST would be abolished and CGST would become a comprehensive one;
• All State levies such as VAT, Octroi, etc., would be abolished and SGST would become a comprehensive one;
• SGST can be set off against only SGST, and the remaining amount if any can be utilized towards payment of IGST
• CGST can be set off against only CGST, and the remaining amount if any can be utilized towards payment of IGST. There is no cross utilization of credit between CGST and SGST;
• IGST shall be utilized first towards payment of IGST and the remaining amount if any can be utilized towards payment of CGST and SGST;
• It is a myth that manufacturing States will get affected due to implementation of GST, as the Central Government has promised to compensate the
  losses for a period of five years;
• Audit officials from both Centre and State governments will visit the factories;
• All petroleum products will be out of GST net and will continue to be under Central Excise net thereby denying the availment of credit if HSD is used as a fuel in the factory;
• The rate of GST for the products will be decided by GST Council;
• Stock transfer to depots / branches will be subject to GST net and depots / branches should obtain registration;
• Tax on MRP with respect to garments will go off;
• The threshold limit for obtaining registration certificate is Rs.10.00 lakhs with a facility for composite payment of tax up to Rs.50.00 lakhs. Tax paid under the scheme is not eligible for credit;
• All the job work will be out of GST. If the job worker opts to pay the tax, same can be availed as credit. However, the principal manufacturer has to pay GST;
• A single entity with different units in one State need to take only single registration, if it is in different States, separate registration should be obtained;
• Irrespective of GST implementation, pending litigations will be handled as per the prevailing law;
• All the procurements will be electronically maintained online, taxes paid and credit availed should be reconciled. Input tax credit can be availed only if the subsequent purchaser pays the tax;
• There will be credit register, cash register, monthly returns, six monthly returns and annual returns;
• As far as the compliance is concerned, Information Technology wing should be strong in industrial unit to cope up with the work;
• There will be no commercial taxes check posts on implementation of GST.

Transitional provisions

• Transfer of unutilized Cenvat and VAT credit will be permitted only if the amount is reflected in the return and the credit is admissible under the earlier law as well as the GST law;
• On the appointed day, every registered person under the earlier law will be issued provisional registration certificate which will be valid for six months.