After food and shelter, man needs clothes. For a good part of the population, clothing is the means for covering nudity. They see expensive clothes only in their dreams. They spend most of their time wearing the cheapest clothes. That is why governments do not tax the clothing used by the general public or set the lowest tax rate but a decision was taken by the GST Council which met last September. The decision was taken to increase the GST on textiles from the current five per cent to twelve per cent. This was followed by the announcement that the increase would be implemented on New Year's Day itself. However, the Centre has postponed the implementation of the decision till February due to strong opposition from the states. Organizations of textile mills and textile traders came together to oppose the tax hike on textiles. Experts in the field say that if the tax hike is implemented, at least one lakh small textile units across the country will be shut down. The tax hike has been frozen till the next GST Council meeting. Union Finance Minister Nirmala Sitharaman has hinted that the hike will be implemented after that. The decision, which is detrimental to the textile-clothing sector, should not be frozen for the time being but should be abandoned altogether. The Goods and Services Tax (GST) system came into being by declaring that no product would be taxed excessively. But there are complaints that many of the tax slabs are set irrationally.

A revelation made at the GST Council meeting on Friday was shocking. The revelation was that at least Rs 40,000 crore in GST had been laundered across the country last year. Large companies and businesses are the main culprits behind such scams. It can be said that efforts are being made to consolidate revenue by imposing additional taxes instead of the billions leaked through GST cuts. Raising the tax on textiles from 5 per cent to 12 per cent would bring huge money to the exchequer. Stopping the tax evasion by many can increase the income of the exchequer without squeezing people for money. Tax evasion dates back to the time when the tax system was introduced. There are several mechanisms in place to detect and prevent it. In the meanwhile, the cunning ones are reaping billions. If at least part of this is prevented, the GST rate will not have to be changed frequently.

It was proposed to increase the tax on textiles and shoes below Rs 1,000 from five per cent to twelve per cent. Several states argued at the council meeting that this increase should also be avoided, but no agreement was reached. The increase was implemented on New Year's Day itself. The Centre considers footwear as a luxury item.