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Finance ministry notifies 12 per cent GST rate on MMF, yarn, fabrics from January 1; corrects duty anomaly

Finance ministry notifies 12 per cent GST rate on MMF, yarn, fabrics from January 1; corrects duty anomaly

The finance ministry has notified uniform 12 per cent GST rate on manmade fibre (MMF), yarn, fabrics and apparel, thereby addressing the inverted tax structure in the MMF textile value chain.

Currently, tax rate on MMF, MMF yarn and MMF fabrics is 18 per cent, 12 per cent and 5 per cent, respectively.

The taxation of inputs at higher rates than finished products created build up of credits and cascading costs. It further led to accumulation of taxes at various stages of the MMF value chain and blockage of crucial working capital for the industry.

The GST Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising state finance ministers, had in its previous meeting on September 17 decided that the inverted duty anomalies in the textile sector would be corrected from January 1, 2022.

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