A Study on Impact of Goods and Services Tax on Indian Textile Industry

GST law has changed the whole scenario of indirect tax system in India. It is one of the biggest tax reforms since independence. It aims at boosting overall growth of Indian economy by integrating all indirect taxes into one. Textile sector has a great potential to contribute to such growth, but taxation norms in this sector are not transparent in its various segments. On the whole, the textile sector is lightly taxed and extensively subsidized. Though the current impact of GST on textile industry is negative, GST implementation is expected to produce impetus to various reforms and policy measures envisaged by the Government for the ease of doing business and to usher India into a simple, transparent and tax friendly regime in future. The paper aims to study the key role of textile industry in the Indian economy in order to understand the pertinent issues under previous taxation system and GST in textile industry and to examine the impact on textile sector under GST regime in order to provide some suggestions. From the findings, it can be concluded that GST in the Indian framework has plugged the revenue leakages in previous taxation system and at the same time has provided relief to taxpayer in terms of reduced tax burden, elimination of cascading effect and seamless flow of input credit on most of the commodities, in addition to unleashing a stream of commercial benefits untouched by the VAT system and hence it is expected that it would essentially lead to overall Economic Development of India which would eventually trickle down to the textile sector as well.