The Tamil Nadu government on Friday called the current division of direct and indirect taxation powers unfair in the contest to limit the direct powers of states and said this was exacerbated after the implementation of the goods and services tax (GST), while even most of the powers of indirect taxation have been reduced.
Tamil Nadu, according to Finance Minister PTR Palanivel Thiagarajan, is one of the major states producing handlooms, mechanical textiles and hosiery in the country and this sector is second only to agriculture in terms of job creation.
Speaking at the 46th GST Council meeting held in the nation’s capital under the chairmanship of Union Finance Minister Nirmala Sitharaman, Thiagarajan said the rise in fabrics, including looms made from of natural fibers, will dampen demand and therefore farmers and MSMEs will be indirectly affected.
Before the introduction of the GST, under Tamil Nadu’s VAT regime, textiles were given full exemption and ready-made clothing was subject to a 5% tax, he said.
“Therefore, I ask the Chairman of the GST Council to kindly consider rescinding the GST hike. Alternatively, it can be considered that ready-made clothing with a sales value above Rs 3,000 or Rs 5,000 be taxed at the higher rate of 12% and allow the current rate of 5% on textiles below this level, ”Thiagarajan said.
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