IndexThe Previous Tax RegimeImpact of GST on Textile IndustrySome Adverse Impacts of GST on Textile IndustryThe Indian textile industry contributes significantly to the economy as it contributes around 12% to the GDP of the country. It is one of the oldest contributors to the economy and is the second largest contributor, just after agriculture. The Indian textile industry provides a huge chunk of employment to both skilled and unskilled workers. The industry contributes enormously to exports as 10-15% of total exports come from the textile industry itself. This is one of the few vertically integrated theft sectors and has enormous potential for considerable expansion. The textile industry has two main segments: Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay Yarns and fibers (natural and artificial) Processed fabrics and ready-made garments The previous tax regime The previous tax regime consisted of indirect taxes in various sectors. The textile industry was taxed under both central and state regimes. The scheme was charged central excise duty. A special excise duty and additional tax were also applied. Under this structure no input tax credit was charged on purchases and cotton duty was due upon removal. The structure includes VAT, which is a form of sales tax collected by the state. Tax is due at the time of sale and is added at each stage depending on the inputs added. The scheme taxed central sales tax which is collected by the union and retained by the state, as well as entry tax, customs duties and export incentives. Impact of GST on Textile Industry With the implementation of GST, the industry's contribution to exports has increased significantly. The GST has increased the tax rate for the sector compared to the past. Under the previous regime wool and cotton were completely exempted from the tax structure. A huge portion of the textile industry comes under the unorganized sector and this creates a gap in the flow of input tax credit as in the unorganized sector there are no registered taxpayers and there is no input from them. The implementation of GST has helped in curbing the unorganized sector and smooth flow in input tax credit. GST has helped reduce production costs by reducing peripheral aspects such as duties, entry taxes, luxury taxes, etc. GST has simplified the process of claiming input tax credit and made the textile industry more competitive in the global market. Under GST tax credit is given as refund and hence duty reductions have lost their significance. GST is helping the textile industry in the long term by getting more taxpayers registered under a well-regulated system and creating an environment for long-term sustainable growth. Some negative impacts of GST on transfers of goods of textile industry as shares: Transfer of goods to other places will be liable for GST if the transfer takes place in the course of interstate trade. If there are separate dealers of a dealer and a separate GST registration number is obtained for each such dealer, the transfer of any supply between such dealers will also be subject to GST. Whereas there is no CST/tax on share transfer. Advance Booking: In this industry it is necessary to book the goods in advance to meet the market demand by paying a certain amount as token money. In the system.