GST to increase from 5 percent to 12 percent; clothes, footwear to get costlier

NEW DELHI: With the Centre deciding to increase the Goods and Service Tax (GST) on clothes, textiles and footwear up to Rs 1,000 from 5 per cent to 12 per cent from January 1, the cost of living will go up for the common man. For example, the price of a cloth, which costs Rs.1000, will increase to Rs 1120 with 12 percent GST. Eighty per cent of the fabrics sold in India cost less than Rs 1,000. The new tax rate will also apply to blankets and table sheets.

At present, 12 percent GST is being charged for clothes and footwear that cost more than Rs 1000. The hike was based on the recommendations of the GST Council. It was the Central Board of Indirect Taxes and Customs (CBIC) that notified the new tax rates on November 18.

The tax on raw materials used in the manufacture of garments also ranges from five to 18 per cent, depending on the price. This has also been consolidated at 12 per cent.

Decision to hike GST rates a setback: manufacturers
The decision to hike GST rates comes at a time when it is certain that prices of raw materials will go up by 15-20 per cent due to inflation. With this prices will rise more than expected, the Clothing Manufacturers Association of India (CMAI) said.

GST for online food delivery
E-delivery companies like Swiggy and Somato will be levying GST from customers on food purchased online from January 1. The only difference is that delivery companies will be charging taxes instead of hotels. There will be no change in food prices.