The GST Council, which meets in New Delhi on Friday, may discuss deferring the increase in GST rates on textiles and footwear from 5% to 12% and giving more time to the group of ministers on tax rate and slab rationalisation to submit its report.
The textile and footwear industries have been outraged by the GST Council's decision in September to correct the inverted duty structure by raising the GST rates on textiles and footwear beginning January 1.
At the moment, the tax rates on manmade fibre, yarn, and fabrics are 18%, 12%, and 5%, respectively.
The GST rate on apparel and clothing up to Rs 1,000 per piece is currently 5%. Synthetic and artificial yarns have been reduced to 12%, but natural yarns such as cotton, silk, and wool remain in the 5% slab.
With a uniform 12 percent GST rate, the price differential in footwear has also been eliminated. Shoes costing up to Rs 1,000 per pair are currently subject to a 5% GST.
The Council may also consider giving e-commerce operators (ECOs) such as Zomato and Swiggy more time to modify their software in order to comply with the requirement that they pay the 5% GST on restaurant services supplied through them beginning January 1, as the invoicing responsibility has shifted from restaurants to them.
It was announced in September 2021 that ECOs will be liable for tax on restaurant services provided through them. However, procedural aspects such as invoicing and other compliances were only clarified by a revenue department circular issued on December 17, giving them less than two weeks to switch software.
The Council is also likely to extend the time allotted to the seven-member group of ministers led by Karnataka Chief Minister Basavaraj S Bommai to propose measures to reduce GST rates, as the two-month period allotted to it expired on November 27.
It will examine current tax slab rates and recommend changes as needed in order to raise more funds. It will also examine special rates and recommend rationalisation measures, such as merging tax rate slabs, in order to achieve a simpler GST rate structure.