A

PROJECT ON
STUDY ON IMPACT OF GST ON TEXTILE INDUSTRY
A PROJECT SUBMITTED TO
UNIVERSITY OF MUMBAI FOR PARTIAL COMPLETION OF THE
DEGREE OF
MASTER IN COMMERCE
UNDER THE FACULTY OF COMMERCE
BY
GAURAV AGARWAL
ROLL NUMBER: - 4
UNDER THE GUIDANCE OF
PROF. ANITA AGARWAL

RAJASTHANI SAMMELAN’S
GHANSHAYAMDAS SARAF COLLEGE
OF ARTS AND COMMERCE
AFFILIATED TO UNIVERSITY OF MUMBAI
REACCREDIATED BY NAAC WITH ‘A’ GRADE
S.V. ROAD MALAD (WEST)
MUMBAI-400064
MARCH 2020
 RAJASTHANI SAMMELAN’S
GHANSHAYAMDAS SARAF COLLEGE
OF ARTS AND COMMERCE
AFFILIATED TO UNIVERSITY OF MUMBAI
REACCREDIATED BY NAAC WITH ‘A’ GRADE
S.V. ROAD MALAD (WEST)
MUMBAI-400064
MARCH 2020

Certificate
This is to certify that Mr. GAURAV AGARWAL has worked and duly
completed his project work for the degree of master in commerce under the
faculty of commerce in the subject of TAX and his project is entitled , “STUDY
ON IMPACT OF GST ON TEXTILE INDUSTRY” under PROF. ANITA
AGARWAL .
I further certify that the entire work has been done by the Gaurav Agarwal under
PROF. ANITA AGARWAL and no part of it has been submitted previously for
any degree or diploma of any university.
It is his own work and facts reported by his personal findings and investigations.

Internal Guide: Principal:

PROF. ANITA AGARWAL
Date:

External Examiner: College Seal:

Date:
 Declaration by Gaurav Agarwal

I the undersigned Mr. Gaurav Agarwal here by, declare that the work embodied
in this project work titled “STUDY ON IMPACT OF GST ON TEXTILE
INDUSTRY.” forms my own contribution to the research work carried out under
the guidance of PROF. ANITA AGARWAL is a result of my own research work
has not been previously submitted to any other university for any other degree
/diploma to this or any other university.
Wherever reference has been made to previous work of others, it has been clearly
indicated as such and included in the bibliography.
I, here by further declare that all information of this document has been obtained
and presented in accordance with academic rules and ethical conduct.

GAURAV AGARWAL.
Signature

Certified by
PROF. ANITA AGARWAL
 Acknowledgment
To list who all have helped me is difficult because they are so numerous
and the depth is so enormous.
I would like to acknowledge the following as being idealistic channels and
fresh dimensions in the completion of this project.
I take this opportunity to thank the university of Mumbai for giving me
chance to do this project.
I would like to thank My Principal, Dr. JAYANT APTE for providing
the necessary facilities required for completion of this project.
I take this opportunity to thank our coordinator DR. LIPI
MUKHERJEE, for her moral support and guidance.
I would also like to express my sincere gratitude towards my project guide
PROF. ANITA AGARWAL Whose guidance and care made the project
successful.
I would like to thank my college library, for having provided various
reference books and magazines related to my project.
Lastly, I would like to thank each and every person who directly or
indirectly helped me in the completion of the project especially my
Parents and Peers who supported me throughout my project.
 SUMMARY

In this project we analysis what the impact of GST (goods and service tax) will
be on textile sector.it is an accepted fact that GST is not merely a tax change but
a business change as it will impact all function of an organization such as finance,
product pricing, supply chain, information technology, contracts, commercials
etc. Thus it is imperative that all these functional teams should be aware about
the GST. But the underline question is what should this team member read/refer
for GST?
There are mixed response, inexplicit arguments and opinions among the
Manufactures, traders & society about the GST to be implemented by
Government of India.
GST is a comprehensive, indirect, multi-stage, destination-based tax that will be
levied on every value addition.
The Goods and Services Tax (GST) is aimed at creating a single unified market
that will directly affects all sectors and sections of our economy. This is the
biggest reform proposed in the tax regime of our Country after independence.
It is something that each of us must understand as it is going to affect our lives in
a very significant manner. France was the first Country to introduce GST in 1954.
Worldwide, almost 150 countries have introduced GST in one or the other form
since now. India has chosen the Canadian model of dual GST.
Introduction of GST could have a considerable impact on textile industry. It is
one of key sector in Indian economy with a direct linkage to the overall growth
of Indian and Global economy. Textile plays a major role in the Indian economy
India’s textile market size measure in (USD Billion). It contributes 14% to overall
index of industrial production(IIP) and 5% to GDP. GST will bring vast changes
in the textile industry of India.
In this project I have started with the introduction of GST & highlights the
objectives and proposed GST is trying to achieve. There after I have discussed
the impact on textile sector under GST regime.
 INDEX

Chapter Sub Title Of The Chapter Page No.

No. Point
1 INTRODUCTION & RESEARCH
METHODOLOGY
1.1 Introduction of GST 1

1.2 History 2-8

1.3 GST Rate 9-30

1.4 Types of GST Returns 30-33

1.5 Advantages And Disadvantages Of GST 34-35

1.6 Textile Industry In India 36-38
1.7 History Of Textile Industry 39-40
1.8 Impact Of GST On Textile Industry 41-47
1.9 Post GST & Pre GST 48-49
1.10 RESEARCH METHODOLOGY 50-52
2 REVIEW OF LITERATURE 53-57
3 COMPANY PROFILE
3.1 Profile 58-59
3.2 Vision & Mission 60-62
3.3 Balance Sheet 63-64
3.4 Profit And Loss Account 65-67
3.5 Ratios 68-70
4 DATA ANALYSIS, 71-85
INTERPRETATION &
PRESENTATION
5 CONCLUSIONS & SUGGESTIONS 86-88
BIBLIOGRAPHY
APPENDIX
 CHAPTER 1
INTRODUCTION & RESEARCH METHODOLOGY

Introduction of GST
Goods and Services Tax (GST) is an indirect tax (or consumption tax) used in India on the
supply of goods and services. It is a comprehensive, multistage, destination based tax:
comprehensive because it has subsumed almost all the indirect taxes except a few state taxes.
Multi-staged as it is, the GST is imposed at every step in the production process, but is meant
to be refunded to all parties in the various stages of production other than the final consumer
and as a destination based tax, it is collected from point of consumption and not point of origin
like previous taxes.
Goods and services are divided into five different tax slabs for collection of tax - 0%, 5%, 12%,
18% and 28%. However, petroleum products, alcoholic drinks, and electricity are not taxed
under GST and instead are taxed separately by the individual state governments, as per the
previous tax system.There is a special rate of 0.25% on rough precious and semi-precious
stones and 3% on gold. In addition a cess of 22% or other rates on top of 28% GST applies on
few items like aerated drinks, luxury cars and tobacco products. Pre-GST, the statutory tax rate
for most goods was about 26.5%, Post-GST, most goods are expected to be in the 18% tax
range.
The tax came into effect from 1 July 2017 through the implementation of the One Hundred and
First Amendment of the Constitution of India by the Indian government. The GST replaced
existing multiple taxes levied by the central and state governments.
The tax rates, rules and regulations are governed by the GST Council which consists of the
finance ministers of the central government and all the states. The GST is meant to replace a
slew of indirect taxes with a federated tax and is therefore expected to reshape the country's
2.4 trillion dollar economy, but it's implementation has received criticism. Positive outcomes
of the GST includes the travel time in interstate movement, which dropped by 20%, because
of disbanding of interstate check posts.

1
History

The reform of India's indirect tax regime was started in 1986 by Vishwanath Pratap Singh,
Finance Minister in Rajiv Gandhi’s government, with the introduction of the Modified Value
Added Tax (MODVAT). Subsequently, Prime Minister P V Narasimha Rao and his Finance
Minister Manmohan Singh, initiated early discussions on a Value Added Tax (VAT) at the
state level. A single common "Goods and Services Tax (GST)" was proposed and given a go-
ahead in 1999 during a meeting between the Prime Minister Atal Bihari Vajpayee and his
economic advisory panel, which included three former RBI governors IG Patel, Bimal
Jalan and C Rangarajan. Vajpayee set up a committee headed by the Finance Minister of West
Bengal, Asim Dasgupta to design a GST model.
The Asim Dasgupta committee which was also tasked with putting in place the back-end
technology and logistics (later came to be known as the GST Network, or GSTN, in 2015). It
later came out for rolling out a uniform taxation regime in the country. In 2002, the Vajpayee
government formed a task force under Vijay Kelkar to recommend tax reforms. In 2005, the
Kelkar committee recommended rolling out GST as suggested by the 12th Finance
Commission.
After the defeat of the BJP-led NDA government in the 2004 Lok Sabha election and the
election of a Congress-led UPA government, the new Finance Minister P Chidambaram in
February 2006 continued work on the same and proposed a GST rollout by 1 April 2010.
However, in 2011, with the Trinamool Congress routing CPI(M) out of power in West Bengal,
Asim Dasgupta resigned as the head of the GST committee. Dasgupta admitted in an interview
that 80% of the task had been done.
In the 2014 Lok Sabha election, the Bharatiya Janata Party-led NDA government was elected
into power. With the consequential dissolution of the 15th Lok Sabha, the GST Bill – approved
by the standing committee for reintroduction – lapsed. Seven months after the formation of the
then Modi government, the new Finance Minister Arun Jaitley introduced the GST Bill in
the Lok Sabha, where the BJP had a majority. In February 2015, Jaitley set another deadline of
1 April 2017 to implement GST. In May 2016, the Lok Sabha passed the Constitution
Amendment Bill, paving way for GST. However, the Opposition, led by the Congress,
demanded that the GST Bill be again sent back for review to the Select Committee of the Rajya
Sabha due to disagreements on several statements in the Bill relating to taxation. Finally in
August 2016, the Amendment Bill was passed. Over the next 15 to 20 days, 18 states ratified
the Constitution amendment Bill and the President Pranab Mukherjee gave his assent to it.
A 21-member selected committee was formed to look into the proposed GST laws. After GST
Council approved the Central Goods and Services Tax Bill 2017 (The CGST Bill), the
Integrated Goods and Services Tax Bill 2017 (The IGST Bill), the Union Territory Goods and
Services Tax Bill 2017 (The UTGST Bill), the Goods and Services Tax (Compensation to the
States) Bill 2017 (The Compensation Bill), these Bills were passed by the Lok Sabha on 29
March 2017. The Rajya Sabha passed these Bills on 6 April 2017 and were then enacted as
Acts on 12 April 2017. Thereafter, State Legislatures of different States have passed respective
State Goods and Services Tax Bills. After the enactment of various GST laws, Goods and
Services Tax was launched all over India with effect from 1 July 2017.The Jammu and Kashmir

2
state legislature passed its GST act on 7 July 2017, thereby ensuring that the entire nation is
brought under an unified indirect taxation system. There was to be no GST on the sale and
purchase of securities. That continues to be governed by Securities Transaction Tax (STT).
Starting
The GST was launched at midnight on 1 July 2017 by the President of India, and
the Government of India. The launch was marked by a historic midnight (30 June – 1 July)
session of both the houses of parliament convened at the Central Hall of the Parliament. Though
the session was attended by high-profile guests from the business and the entertainment
industry including Ratan Tata, it was boycotted by the opposition due to the predicted problems
that it was bound to lead for the middle and lower class Indians.The opposition used to call it
GABBAR SINGH TAX and leader of the congress party Rahul Gandhi opposed it as strongly
as he could. it is one of the few midnight sessions that have been held by the parliament - the
others being the declaration of India's independence on 15 August 1947, and
the silver and golden jubilees of that occasion.After its launch, the GST rates have been
modified multiple times, the latest being on 22 December 2018, where a panel of federal and
state finance ministers decided to revise GST rates on 28 goods and 53 services.
Members of the Congress boycotted the GST launch altogether.They were joined by members
of the Trinamool Congress, Communist Parties of India and the DMK. The parties reported
that they found virtually no difference between the GST and the existing taxation system,
claiming that the government was trying to merely rebrand the current taxation system.They
also argued that the GST would increase existing rates on common daily goods while reducing
rates on luxury items, and affect many Indians adversely, especially the middle, lower middle
and poorer income groups.

Goods and services tax (Australia)

The goods and services tax[1] (GST) in Australia is a value added tax of 10% on most goods
and services sales, with some exemptions (such as for certain food, healthcare and housing
items and concessions (including qualifying long term accommodation which is taxed at an
effective rate of 5.5%). GST is levied on most transactions in the production process, but is in
many cases refunded to all parties in the chain of production other than the final consumer.
The tax was introduced by the Howard Government and commenced on 1 July 2000, replacing
the previous federal wholesale sales tax system and designed to phase out a number of various
State and Territory Government taxes, duties and levies such as banking taxes and stamp duty.
An increase of the GST to 15% has been put forward, but is generally lacking in bi-partisan
support.

Goods and Services Tax (Singapore)

Goods and Services Tax (Abbreviation: GST) in Singapore is a broad-based value added
tax levied on import of goods, as well as nearly all supplies of goods and services. The only
exemptions are for the sales and leases of residential properties, importation and local supply
of investment precious metals and most financial services. Export of goods and international
services are zero-rated.

3
Tax
Taxes subsumed
The single GST subsumed several taxes and levies, which included central excise duty, services
tax, additional customs duty, surcharges, state-level value added tax and Octroi. Other levies
which were applicable on inter-state transportation of goods have also been done away with in
GST regime.GST is levied on all transactions such as sale, transfer, purchase, barter, lease, or
import of goods and/or services.
India adopted a dual GST model, meaning that taxation is administered by both the Union and
state governments. Transactions made within a single state are levied with Central GST
(CGST) by the Central Government and State GST (SGST) by the State governments. For
inter-state transactions and imported goods or services, an Integrated GST (IGST) is levied by
the Central Government. GST is a consumption-based tax/destination-based tax, therefore,
taxes are paid to the state where the goods or services are consumed not the state in which they
were produced. IGST complicates tax collection for State Governments by disabling them from
collecting the tax owed to them directly from the Central Government. Under the previous
system, a state would only have to deal with a single government in order to collect tax revenue.
E-Way Bill
An e-Way Bill is an electronic permit for shipping goods any another similar to a waybill. It
was made compulsory for inter-state transport of goods from 1 June 2018. It is required to be
generated for every inter-state movement of goods beyond 10 kilometres (6.2 mi) and the
threshold limit of ₹50,000 (US$700).
It is a paperless, technology solution and critical anti-evasion tool to check tax leakages and
clamping down on trade that currently happens on a cash basis. The pilot started on 1 February
2018 but was withdrawn after glitches in the GST Network. The states are divided into four
zones for rolling out in phases by end of April 2018.
A unique e-Way Bill Number (EBN) is generated either by the supplier, recipient or the
transporter. The EBN can be a printout, SMS or written on invoice is valid. The GST/Tax
Officers tally the e-Way Bill listed goods with goods carried with it. The mechanism is aimed
at plugging loopholes like overloading, understating etc. Each e-way bill has to be matched
with a GST invoice.
Transporter ID and PIN Code now compulsory from 01-Oct-2018.
It is a critical compliance related GSTN project under the GST, with a capacity to process 75
lakh e-way bills per day.
Intra-State e-Way Bill
The five states piloting this project are Andhra Pradesh, Gujarat, Kerala, Telangana and Uttar
Pradesh, which account for 61.8% of the inter-state e-way bills, started mandatory intrastate e-
way bill from 15 April 2018 to further reduce tax evasion. It was successfully introduced in
Karnataka from 1 April 2018.] The intrastate e-way bill will pave the way for a seamless,
nationwide single e-way bill system. Six more states Jharkhand, Bihar, Tripura, Madhya
Pradesh, Uttarakhand and Haryana will roll it out from 20 April 18. All states are mandated to
introduce it by 30 May 2018.
4
Reverse Charge Mechanism
Reverse Charge Mechanism (RCM) is a system in GST where the receiver pays the tax on
behalf of unregistered, smaller material and service suppliers. The receiver of the goods is
eligible for Input Tax Credit, while the unregistered dealer is not.
The central Government released Rs 35,298 crore to the state under GST compensation. For
the implementation, this amount was given to the state to compensate the revenue. Central
government has to face many criticisms for delay in compensation.
Goods kept outside the GST
 Alcohol for human consumption (i.e., not for commercial use).
 Petrol and petroleum products (GST will apply at a later date), i.e., petroleum crude,
high-speed diesel, motor spirit (petrol), natural gas, aviation turbine fuel.
GST Council
GST Council is the governing body of GST having 33 members, out of which 2 members are
of centre and 31 members are from 28 state and 3 Union territories with legislation. The council
contains the following members (a) Union Finance Minister (as chairperson) (b) Union
Minister of States in charge of revenue or finance (as member) (c) the ministers of states in
charge of finance or taxation or other ministers as nominated by each states government (as
member). GST Council is an apex member committee to modify, reconcile or to procure any
law or regulation based on the context of goods and services tax in India. The council is headed
by the union finance minister Nirmala Sitharaman assisted with the finance minister of all the
states of India. The GST council is responsible for any revision or enactment of rule or any rate
changes of the goods and services in India.

Goods and Services Tax Network (GSTN)

The GSTN software is developed by Infosys Technologies and the Information Technology
network that provides the computing resources is maintained by the NIC. "Goods and Services
Tax Network" (GSTN) is a nonprofit organisation formed for creating a sophisticated network,
accessible to stakeholders, government and taxpayers to access information from a single
source (portal). The portal is accessible to the Tax authorities for tracking down every
transaction, while taxpayers have the ability of connect for their tax returns.
The GSTN's authorised capital is ₹10 crore (US$1.4 million) in which initially the Central
Government held 24.5 percent of shares while the state government held 24.5 percent. The
remaining 51 percent were held by non-Government financial institutions, HDFC and HDFC
Bank hold 20%, ICICI Bank holds 10%, NSE Strategic Investment holds 10% and LIC
Housing Finance holds 11% .
However, later it was made a wholly owned government company having equal shares of state
and central government.
Criticism
Technicalities of GST implementation in India have been criticized by global financial
institutions/industries, sections of Indian media and opposition political parties in India. World
Bank's 2018 version of India Development Update described India's version of GST as too

5
complex, noticing various flaws compared to GST systems prevalent in other countries; most
significantly, the second highest tax rate among a sample of 115 countries at 28%.
GST's implementation in India has been further criticized by Indian businessmen for problems
including tax refund delays and too much documentation and administrative effort
needed. According to a partner at PwC India, when the first GST returns were filed in August
2017, the system crashed under the weight of filings.
The opposition Congress party has consistently been among the most vocal opponents of GST
implementation in India with party President, and leader of the opposition, Rahul Gandhi,
slamming BJP for allegedly "destroying small businessmen and industries" in the country. He
went on to pejoratively dub GST as "Gabbar Singh Tax" after an ill-famed, fictional dacoit in
Bollywood. Blaming the implementation of GST as a "way of removing money from the
pockets of the poor", Rahul has lamented it as a "big failure" while declaring that if Congress
Party is elected to power, it will implement a single slab GST instead of different slabs. In the
run-up to the elections in various states of India, Rahul has intensified his "Gabbar Singh" jibes
on Modi government.

Structure of GSTN
Private players own 51% share in the GSTN, and the rest is owned by the government. The
authorized capital of the GSTN is ₹10 crore (US$1.6 million), of which 49% of the shares are
divided equally between the Central and State governments, and the remaining is with private
banks.
The GSTN has also been approved for a non-recurring grant of Rs. 315 crores. The contract
for developing this vast technological backend was awarded to Infosys in September 2015.
The GSTN is chaired by Mr. Navin Kumar, an Indian Administrative Service servant (1975
batch), who has served in many senior positions with the Govt. of Bihar, and the Central Govt.

Shareholder Shareholding

Central Government 24.5%

State Governments & EC 24.5%

HDFC 10%

HDFC Bank 10%

ICICI Bank 10%

6
 NSE Strategic Investment Co 10%

LIC Housing Finance Ltd 11%

Total 100%

Salient Features of the GSTN

The GSTN is a complex IT initiative. It will establish a uniform interface for the taxpayer and
also create a common and shared IT infrastructure between the Centre and States.

1. Trusted National Information Utility

The GSTN is a trusted National Information Utility (NIU) providing reliable, efficient and
robust IT backbone for the smooth functioning of GST in India.

2. Handles Complex Transactions

GST is a destination based tax. The adjustment of IGST (for inter-state trade) at the government
level (Centre & various states) will be extremely complex, considering the sheer volume of
transactions all over India. A rapid settlement mechanism amongst the States and the Centre
will be possible only when there is a strong IT infrastructure and service backbone which
captures, processes and exchanges information.

3. All Information Will Be Secure

The government will have strategic control over the GSTN, as it is necessary to keep the
information of all taxpayers confidential and secure. The Central Government will have control
over the composition of the Board, mechanisms of Special Resolution and Shareholders
Agreement, and agreements between the GSTN and other state governments. Also, the
shareholding pattern is such that the Government shareholding at 49% is far more than that of
any single private institution.

4. Expenses Will Be Shared

The user charges will be paid entirely by the Central Government and the State Governments
in equal proportion (i.e. 50:50) on behalf of all users. The state share will be then apportioned
to individual states, in proportion to the number of taxpayers in the state.

7
 Volume of Type of expenses
expenses

Maximum IT system designed by Infosys

expenses

2nd part Fraud Analytics Tools, security audit and other security functions(will be
outsourced based on tender)

3rd part Operating expenses such as salary, rent, office expenses, internal IT facilities

Functions of GSTN
GSTN is the backbone of the Common Portal which is the interface between the taxpayers and
the government. The entire process of GST is online starting from registration to the filing of
returns.
It has to support about 3 billion invoices per month and the subsequent return filing for 65 to
70 lakh taxpayers.
The GSTN will handle:

 Invoices
 Various returns
 Registrations
 Payments & Refunds

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GST Rate Revision effective from 1 October 2019

Item Current Rate New Rate

Plates and cups made of flowers, leaves and bark 5% Nil

Caffeinated Beverages 18% 28%+12%

cess

Supplies of Railways wagons & coaches (without refund of 5% 12%

accumulated ITC)

Outdoor Catering (without ITC) 18% 5%

Diamond Job work 5% 1.50%

Other Job work 18% 12%

Hotels (Room Tariff of Rs.7501 or above) 28% 18%

Hotels (Room Tariff from Rs 1,001 to Rs 7,500) 18% 12%

Woven/ Non-woven Polyethylene Packaging bags 18% 12%

Marine fuel 18% 5%

Almond Milk 18%

Slide fasteners 18% 12%

Wet grinders (consisting of stone as a grinder) 12% 5%

Dried Tamarind 5% Nil

Semi-precious stones- cut & polished 3% 0.25%

Specified goods for petroleum operation under HELP* Applicable 5%

Rate

9
 *Hydrocarbon Exploration Licensing Policy

Item Current Rate New Rate

Cess on Petrol Motor Vehicles (Capacity of 10-13 passengers) 15% 1%

Cess on Diesel Motor Vehicles (Capacity of 10-13 passengers) 15% 3%

GST Exemption available for:

Supplies to FIFA- specified persons for the Under-17 Women’s Football World Cup in India
Supply to the Food and Agriculture Organisation (FAO) for specified projects in India
Imports of certain defence goods not made indigenously (up to 2024)
Supply of silver/platinum by specified agencies (Diamond India Ltd) for export
Import of Silver or Platinum by specified agencies (Diamond India Ltd)

INCOME TAX SLAB 2020 GST

The interim Budget presented by the government in February 2020 extended the full tax rebate
to resident individuals with total income up to Rs 5 lakh.

Upto 5 Lakh Income Nil

5 Lakh to 7.5 Lakh 10%
7.5 Lakh to 10 Lakh 15%
10 Lakh to 12.50 Lakh 20%

In New GST Changes, 28% Tax Only For 50 Items Now: Daily use items like shampoo,
deodorant, toothpaste, shaving-cream, aftershave lotion, shoe polish, chocolate, chewing gums
and nutritious drinks would become cheaper. Lowering tax rates on food served in air-
conditioned restaurants to 12 per cent, down from 18 per cent.
 Service providers with turnover up to Rs.20 lakh need not register even if making interstate
supplies.
 More time for filling returns for those under composition scheme.
 Refunds to be released every month
 E-wallet facility by APR
 No Tax on duty free scrips
 Merchant exporters need to pay 0.1% tax on domestic goods procurement.
 E-way bill to be rolled out from 1 April, 2018
 A committee to review the levy on restaurants.

10
The goods on which GST has been lowered to 18 per cent from 28 per cent at present include
pulleys, transmission shafts and cranks, gear boxes, retreaded or used tyres, power banks of
lithium ion batteries, digital cameras, video camera recorders and video game consoles.

OLD
Tax NEW
Items Rate Tax Rate
pulleys, transmission shafts and cranks, gear boxes, retreaded or used tyres,
power banks of lithium ion batteries, digital cameras, video camera
recorders and video game consoles 28% 18%
Monitors and TV screens up to 32 inches 28% 18%
third party insurance premium of goods carrying vehicles 18% 12%
Marble rubble, natural cork, walking stick, fly ash blocks 12% 5%

Air travel of pilgrims by non-scheduled/charter operations being facilitated by the

government under bilateral arrangements will attract a lower GST rate of 5 per cent.
The Council has decided that 5 per cent would be levied on renewable energy devices and
parts for their manufacture.
Services supplied by banks to Basic Savings Bank Deposit account holders under the Jan
Dhan Yojana will not attract GST.

OLD NEW
Tax Tax
Items Rate Rate
refrigerators, lithium batteries, vacuum cleaners, grinders, mixers, food
processors, water heaters, hair dryers, water coolers, ice cream freezers,
scents, perfumes, powder puffs, cosmetics, and electric ironing machines 28% 18%
Sanitary napkins, Stone, marble and wooden deities, Rakhis without
precious stones, brooms and commemorative coins , Fortified milk 5% NIL
Handloom items priced below Rs 1,000
Footwear priced below Rs 1,000
Handbags
Jewellery boxes
Wooden photo frames
Stone art wear
Ornamental frame mirrors
Glass art ware
12% 5%
Aluminum art ware

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Handmade carpets
Ethanol
Bamboo flooring
Hand-operated rubber rollers
Zip fasteners 18% 12%
All leather items 28% 18%

OLD Tax NEW Tax

Items Rate Rate
Second-hand medium and large cars and SUVs 28% 18%
LPG supply for household domestic consumers by private LPG
distributers 18% 5%
Bio Fuels Powered buses 28% 18%
Sugar boiled confectionery 18% 12%
Drinking water packed in 20 litre bottle 18% 12%
Drip irrigation system 18% 12%
Cigarette filter rods 12% 18%
Tailoring Service 18% 5%
The admission to Theme parks, water parks etc. 28% 18%

The GST council on Friday announced major cuts in taxes of 27 items along with a slew of
relief measures to support exporters and small businesses. Here are some items that are set to
get cheaper under GST:

Present GST New GST

Description Rate Rate
Mangoes sliced dried 12% 5%
Khakra & plain chapati / roti 12% 5%
Packaged Food 18% 5%
Namkeens 12% 5%
Ayurvedic, Unani, Siddha, Homeopathy medicines 12% 5%
Poster Color 28% 18%
Modelling Paste for children amusement 28% 18%

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Plastic Waste, Pairing & Scraps 18% 5%
Rubber Waste, Paring & Scrap 18% 5%
Hard Rubber Waste 28% 5%
Paper Waste & Scrap 12% 5%
Duty Credit scrips 5% Nil
Sewing thread of manmade filaments 18% 12%
All synthetic filament yarn, such as nylon, polyester, acrylic 18% 12%
All artificial filament yarn, such as viscose rayon, cuprammonium 18% 12%
Sewing thread for manmade staple fibres 18% 12%
Yarn of manmade staple fibres 18% 12%
Real Zari 12% 5%
Floor Tiles 28% 18%
Cullet or other waste of glass 18% 5%
Fittings for loose leaf binders, or files, letter clips, letter corners,
paper clips, staple in strips, 28% 18%
Plain shaft bearing 8483 28% 18%
parts suitable for use solely or principally with fixed speed diesel
engine of power not exceeding 15HP 28% 18%
parts for Pumps 28% 18%
E-waste 28% / 18% 5%
Biomass briquettes 18% 5%

Firms face ban for not passing on GST gains. HIGHLIGHTS = (1) The cancellation of
registration is in addition to the power to levy penalty, (2) Tax practitioners said that
cancellation of registration is too harsh, (3) The tax regime will get a mega launch on the night
of June 30.

13
Impact of GST on Household Expenses

Category Before GST After GST

Food 12.5% 5.00%
Entertainment 30.00% 28.00%
Transportation 15.00% 18.00%
Household – Personal Care 28.00% 18.00%
Mobile Phone 15.00% 18.00%
Insurance Premium 15.00% 18.00%
Credit Card Bills 15.00% 18.00%

SCHEDULE OF GST RATES FOR SERVICES AS APPROVED BY GST COUNCIL

The fitment of rates of services were discussed on 19 May 2017 during the 14th GST Council
meeting held at Srinagar, Jammu & Kashmir. The Council has broadly approved the GST rates
for services at Nil, 5%, 12%, 18% and 28% as listed below. The information is being uploaded
immediately after the GST Council’s decision and it will be subject to further vetting during
which the list may undergo some changes. The decisions of the GST Council are being
communicated for general information and will be given effect to through gazette notifications
which shall have force of law.
New GST Rates are applicable in all over India – New Delhi, Haryana, Assam, Mizoram,
Nagaland, Manipur, West Bengal, Uttrakhand, Rajasthan, Himchal Pradesh, Punjab,
Maharashtra, Kerala, Telangana, Tamilnadu, Odisha, Kanyakumari, Goa, Chandigarh, Bihar,
Uttar Pradesh, Arunachal Pradesh, Gujarat, Andhra pradesh, Meghalaya. Tripura, Chattishgarh
and Madhya Pradesh. Only Jammu kashmir are exempt.

GST RATE with

ITC of input
Description of Services services
Transport of goods by rail 5%
Transport of passengers by rail (other than sleeper class) 5%
Services of goods transport agency (GTA) in relation to transportation
of goods [other than used household goods for personal use] 5% No ITC
Services of goods transport agency in relation to transportation of used
household goods for personal use. 5% No ITC

14
Transport of goods in a vessel including services provided or agreed to
be provided by a person located in non-taxable territory to a person
located in non-taxable territory by way of transportation of goods by a
vessel from a place outside India up to the customs station of clearance
in India 5%
Renting of motorcab (If fuel cost is borne by the service recipient, then
18% GST will apply) 5% No ITC
Transport of passengers, by-
(i) Air conditioned contract/stage carriage other than motorcab
(ii) A radio taxi 5% No ITC
5% with ITC of input
Transport of passengers by air in economy class services
Transport of passengers, with or without accompanied belongings, by
air, embarking from or terminating in a Regional Connectivity Scheme
Airport. 5%
Supply of tour operators’ services 5% No ITC
Leasing of aircrafts under Schedule II [5 (f)] by a scheduled airlines for 5% with ITC of input
scheduled operations services
Selling of space for advertisement in print media 5%
Services by way of job work in relation to printing of newspapers 5%
Transport of goods in containers by rail by any person other than Indian
Railways 12%
Transport of passengers by air in other than economy class 12%
Supply of Food/drinks in restaurant not having facility of air-
conditioning or central heating at any time during the year and not
having licence to serve liquor. 12%
Renting of hotels, inns, guest houses, clubs, campsites or other
commercial places meant for residential or lodging purposes having
room tariff Rs.1000 and above but less than Rs.2500 per room per day 12%
12% with ITC of
Services provided by foreman of chit fund in relation to chit input services
Construction of a complex, building, civil structure or a part thereof, 12% With Full ITC
intended for sale to a buyer, wholly or partly. [The value of land is but no refund of
included in the amount charged from the service recipient] overflow of ITC

15
Temporary transfer or permitting the use or enjoyment of any
Intellectual Property (IP) to attract the same rate as in respect of
permanent transfer of IP 12%
Supply of Food/drinks in restaurant having licence to serve liquor 18%
Supply of Food/drinks in restaurant having facility of air-conditioning
or central heating at any time during the year 18%
Supply of Food/drinks in outdoor catering 18%
Renting of hotels, inns, guest houses, clubs, campsites or other
commercial places meant for residential or lodging purposes where room
tariff of Rs 2500/ and above but less than Rs 5000/- per room per day 18%
Bundled service by way of supply of food or any other article of human
consumption or any drink, in a premises (including hotel, convention
center, club, pandal, shamiana or any other place, specially arranged for
organizing a function) together with renting of such premises 18%
Services by way of admission or access to circus, Indian classical dance
including folk dance, theatrical performance, drama 18%
Composite supply of Works contract as defined in clause 119 of section
2 of CGST Act 18%
Services by way of admission to entertainment events or access to
amusement facilities including exhibition of cinematograph films, theme
parks, water parks, joy rides, merry-go rounds, go-carting, casinos, race-
course, ballet, any sporting event such as IPL and the like 28%
Services provided by a race club by way of totalizator or a licensed
bookmaker in such club 28%
Gambling 28%
Supply of Food/drinks in air-conditioned restaurant in 5-star or above
rated Hotel 28%
Accommodation in hotels including 5 star and above rated hotels, inns,
guest houses, clubs, campsites or other commercial places meant for
residential or lodging purposes, where room rent is Rs 5000/- and above
per night per room 28%
Transfer of the right to use any goods for any purpose (whether or not
for a specified period) for cash, deferred payment or other valuable GST and
consideration (supply of service) to attract the same GST rate and compensation cess as
compensation cess as applicable on supply of similar goods which on supply of similar
involves any transfer of title in goods (supply of goods) goods
Any transfer of right in goods or of undivided share in goods without the GST and
transfer of title thereof (supply of services) to attract the same GST rate compensation cess as

16
and compensation cess as applicable on supply of similar goods which on supply of similar
involves any transfer of title in goods (supply of goods). goods
Supply consisting of transfer of title in goods under an agreement which GST and
stipulates that property in goods shall pass at a future date upon payment compensation cess as
of full consideration as agreed (supply of goods): value of leasing on supply of similar
services shall be included in the value of goods supplied. goods
All other services not specified elsewhere 18%

Auto Industry Prices after GST 2020

Vehicle Current Price New Price

Mercedes GLS 350 83 L 80 L
Mercedes E Class 55.7 – 69 L 53.7 – 67 L
Toyota Fortuner 26.6 – 31.9 L 24.5 – 29.8 L
Toyota Innova Crysta 14.2 – 21.4 L 13.3 – 20.5 L
Hyundai Creata 9.3 – 14.6 L 8.9 – 14 L
Hero Super Splendor 55.6 K 53 K
Triumph Street Twin 7L 7.15 L
Honda Activa 48.3 K 44.9 K
Royal Enfield 350 1.34 L 1.35 L
Royal Enfield 500 1.71 L 1.75 L

17
GST Rate revision in 36th GST council meeting
GST Council had its 36th meet via video conference on Saturday (27th July 2019). Read all
the highlights on 36th GST Council Meeting..
The following are the rate cuts announced at the 36th GST Council meeting:

Items Before After

Electric chargers 18% 5%

Electric vehicles 12% 5%

A full exemption is given to hiring of e-buses(seating capacity exceeds 12 passengers) by local

authorities

Note: Will come into effect from 1 August 2019 after the CBIC notification

GST Rate revision in 33rd GST council meeting

The latest meeting-33rd GST Council meeting is rescheduled on 24th February 2019 from
earlier date 20th February 2019.
It was chaired by the Finance Minister Arun Jaitley. Real estate was in limelight.
This is the first one after the Interim Budget 2019.
The GST rates were slashed on the under-construction houses without ITC benefit; No changes
to GST Rate on lottery or Cement.

18
GST Rate revision in 31st GST council meeting
31st GST Coucil meeting was held 22nd December 2018. GST Rates for 23 Goods and 3
Services have been revised*.
Here is a summarised version of the list of rate cuts on both Goods and Services:-

SL.no List of Goods/Services Changes in Tax

Rate

1 Vegetables provisionally preserved but unsuitable for immediate 5% to Nil

consumption

2 Vegetables cooked/uncooked via steamed, frozen or boiled (branded) 5% to Nil

3 Music Books 12% to Nil

4 Parts for manufacturing renewable energy devices falling under chapter 5%

84, 85 or 94 of Tariff

5 Natural cork 12% to 5%

6 Fly ash blocks 12% to 5%

7 Walking sticks 12% to 5%

8 Marble rubble 18% to 5%

9 Agglomerated cork 18% to 12%

10 Cork roughly squared or debugged 18% to 12%

11 Articles of Natural cork 18% to 12%

12 Movie Tickets < or = Rs 100 18% to 12%

19
 13 Premium on Third party insurance on Vehicles 18% to 12%

14 Accessories for Handicapped Mobility Vehicles 28% to 5%

15 Power banks 28% to 18%

16 Movie Tickets > Rs 100 28% to 18%

17 Video game consoles, equipments used for Billiards and Snooker and 28% to 18%
other sport related items of HSN code 9504

18 Retreated & used pneumatic Rubber Tyres 28% to 18%

19 Colour Television Sets & monitors up to “32 Inches” 28% to 18%

20 Digital & Video Camera recorders 28% to 18%

21 Pulleys, transmission shafts, cranks and gear boxes under HSN 8483 28% to 18%

22 Tax rate on Air travel of pilgrims reduced* 28% to 18%

*For travel by non-scheduled/chartered operations for religious pilgrimage which are

facilitated by GoI under bi-lateral agreements.

Others:-

GST on the composite supply of goods attracting 5% GST rate where it is supplied along with
the supply of construction services and other goods for solar power plant, is now levied as
follows:
 70% of value is considered as supply of goods and taxed at 5% GST.
 Remaining 30% of the EPC contract value is supply of service and attracts standard tax
rate for service.
-Rate of 5%/18% to be applied based on transaction value of footwear.
-Uniform GST rate of 12% on Flexible Intermediate Bulk Container (FIBC) from existing
5%/12% (depending on the value).

20
Goods recommended for exemption
Supply of gold by Nominated Agencies to exporters of article of gold Jewellery.
Proceeds received by Government from auction of gifts received by President, Prime Minister,
Governor or Chief Minister of a State and public servants, the proceeds of which is used for
public or charitable cause.
Vehicles imported for temporary purposes under the Customs Convention on the Temporary
importation of Private Road Vehicles (carnet de passages-en-douane) will be exempt from
IGST and Compensation cess.

Services recommended for exemption

Services supplied by banks to Basic Saving Bank Deposit (BSBD) account holders under
Pradhan Mantri Jan Dhan Yojana (PMJDY)
Services supplied by rehabilitation professionals recognised under Rehabilitation Council of
India Act, 1992 at hospitals, schools or rehabilitation centres established by Government or
charitable institute registered under Section 12AA of The Income tax Act,1961.
Loan guarantee services provided by Government to its undertakings and PSUs for bank loans.

GST Rate revision in 28th GST council meeting

28th GST Council Meeting was held 21st July 2018. GST Rates for 45 Goods and 2 Services
have been revised*.
Recent GST Rate Changes on Goods

GOODS

S.NO Items New Old

Rate rate

1 Rakhi (other than that of precious or semi-precious material ) Nil 18%

2 Sanitary Napkins Nil 12%

3 Circulation and commemorative coins Nil 5%

4 Raw material for broom Nil 12%

5 Stone/Marble/Wood Deities Nil 5%

21
6 Sal leaves and its products Nil 18%

7 Khali dona Nil 18%

8 Coir pith Compost Nil 5%

9 Chenille fabrics and other fabrcis under 5801 5% 12%

10 Handloom dari 5% 12%

11 Phosphoric Acid (fertilizer grade only) 5% 12%

12 Handmade Carpets, Textile Floor, Coverings 5% 12%

13 Knitted cap/topi having retails sale value exceeding Rs. 1000 5% 12%

14 Kota Stones and Simliar Stones (other than polished) 5% 18%

15 Ethanol for sale to oil marketing companies for blending with 5% 18%
fuel

16 Solid Bio fuel pellets 5% 18%

17 Marine Engine 5% 28%

18 Bamboo Flooring 12% 18%

19 Hand Operated Rubber Roller 12% 18%

20 Brass Kerosene Pressure Stove 12% 18%

21 Zip and Slide Fastener 12% 18%

22 Handicrafts (Excluding handmade) 12% 18%

23 Handbags including pouches and purses; jewellery box 12% 18%

24 Fuel Cell vehicle 12% 28%

22
25 Televisions upto 68 cm 18% 28%

26 Glaziers’ putty, grafting putty, resin cements 18% 28%

27 Refrigerators, freezers, water cooler, milk coolers, ice cream 18% 28%
freezer

28 Washing Machines 18% 28%

29 Food Grinders & mixer 18% 28%

30 Vacuum Cleaners 18% 28%

31 Paints and Varnishes (including enamels and lacquers) 18% 28%

32 Shavers, Hair Clippers 18% 28%

33 Hair Cleaners 18% 28%

34 Storage water heaters 18% 28%

35 Immersion heaters 18% 28%

36 Hair Dryers, Hand Dryers 18% 28%

37 Electric Smoothing irons 18% 28%

38 Scent Sprays 18% 28%

39 Toilet Sprays 18% 28%

40 Pads for application of cosmetics or toilet preparations 18% 28%

41 Lithium-ion batteries 18% 28%

42 Powder Puffs 18% 28%

43 Special purpose motor vehicles 18% 28%

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 44 Work Trucks (Self-propelled, not fitted with lifting or handling 18% 28%
equipment)

45 Trailers & Semi trailers 18% 28%

Recent GST Rate Changes on Services

SERVICES

Rate Change

Services New GST Rates Old GST Rates

Supply of e-books 5% 18%

Supply of Multimodal Transportation 12% Nil

List of Services Exempt

Senior Citizens

1. Sevices provided by Coal Mines provident fund organisation to the PF subscribers

2. Services provided by Old age home run by state government / central government to the
citizens aged more than 60 years upto Rs. 25000

GST exempted on the administrative fee collected by National Pension System Trust

4. Services provided by an unincorporated body or non profit entiy registered under any law to
own members upto Rs. 1000 per year of membership fees.

24
Agriculture/ Farmers

1. Services by way of artificial insemination of livestock (other than horses)

2. Services provided by FSSAI to food businesses.

3. Services provided by way of warehousing minor forest produce

4. Services provided by the installation and commissioning by DISCOMS for extending

electricity distribution network for agricultural use.

Banking/Finance/ Insurance

1. Reinsurance services provided to insurance scheme such as Pradhan Mantri Rashtriya

Swasthya Suraksha Mission

Government

1. Guarantees given by central/state government to their undertakings/PSUs.

2. Services provided by government to ERCC by assigning the right to collect royalty to mining
lease holders.

Miscellaneous

1. Import of services by Foreign diplomatic missions/UN other international organizations

2. GST rate slabs will apply on the actual rate for hotel services instead of declared tariff.

25
We already know that the GST slabs are pegged at 5%, 12%, 18% & 28%. According to the
GST latest news from the GST council, the tax structure for common-use goods are as under :-

GST Rates Structure for Goods and services under 5%, 12%, 18% & 28%

Tax Products
GRates

0% Milk Kajal

0% Eggs Educations Services

0% Curd Health Services

0% Lassi Children’s Drawing & Colouring Books

0% Unpacked Foodgrains Unbranded Atta

0% Unpacked Paneer Unbranded Maida

0% Gur Besan

0% Unbranded Natural Honey Prasad

0% Fresh Vegetables Palmyra Jaggery

0% Salt Phool Bhari Jhadoo

5% Sugar Packed Paneer

5% Tea Coal

5% Edible Oils Raisin

5% Domestic LPG Roasted Coffee Beans

5% PDS Kerosene Skimmed Milk Powder

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5% Cashew Nuts Footwear (< Rs.500)

5% Milk Food for Babies Apparels (< Rs.1000)

5% Fabric Coir Mats, Matting & Floor Covering

5% Spices Agarbatti

5% Coal Mishti/Mithai (Indian Sweets)

5% Life-saving drugs Coffee (except instant)

12% Butter Computers

12% Ghee Processed food

12% Almonds Mobiles

12% Fruit Juice Preparations of Vegetables, Fruits, Nuts or

other parts
of Plants including Pickle Murabba, Chutney,
Jam, Jelly

12% Packed Coconut Water Umbrella

18% Hair Oil Capital goods

18% Toothpaste Industrial Intermediaries

18% Soap Ice-cream

18% Pasta Toiletries

18% Corn Flakes Computers

18% Soups Printers

28% Small cars (+1% or 3% cess) High-end motorcycles (+15% cess)

27
 28% Consumer durables such as AC Beedis are NOT included here
and fridge

28% Luxury & sin items like BMWs, cigarettes

and aerated drinks (+15% cess)

HSN CODE
India is a member of World Customs Organization(WCO) since 1971. It was originally using
6-digit HSN codes to classify commodities for Customs and Central Excise. Later Customs
and Central Excise added two more digits to make the codes more precise, resulting in an 8
digit classification. The purpose of HSN codes is to make GST systematic and globally
accepted.
HSN codes will remove the need to upload the detailed description of the goods. This will save
time and make filing easier since GST returns are automated.
If a company has turnover up to INR 15 million in the preceding financial year then they did
not mention the HSN code while supplying goods on invoices. If a company has turnover more
than INR 15 million but up to INR 50 million, then they need to mention the first two digits of
HSN code while supplying goods on invoices. If turnover crosses INR 50 million then they
shall mention the first 4 digits of HSN code on invoices.
Rate
The GST is imposed at variable rates on variable items. The rate of GST is 18% for soaps and
28% on washing detergents. GST on movie tickets is based on slabs, with 18% GST for tickets
that cost less than Rs. 100 and 28% GST on tickets costing more than Rs.100 and 28% on
commercial vehicle and private and 5% on readymade clothes. The rate on under-construction
property booking is 12%.Some industries and products were exempted by the government and
remain untaxed under GST, such as dairy products, products of milling industries, fresh
vegetables & fruits, meat products, and other groceries and necessities.
Checkposts across the country were abolished ensuring free and fast movement of goods.
The Central Government had proposed to insulate the revenues of the States from the impact
of GST, with the expectation that in due course, GST will be levied on petroleum and petroleum
products. The central government had assured states of compensation for any revenue loss
incurred by them from the date of GST for a period of five years. However, no concrete laws
have yet been made to support such action.GST council adopted concept paper discouraging
tinkering with rates.

28
GST Rates for goods and services with HSN

Chapter 1 Live Animals, Bovine & Poultry

Chapter 2 Meat & Edible Offal of Animals

Chapter 3 Fish Meat & Fillets

Chapter 4 Eggs, Honey & Milk Products

Chapter 5 Non Edible Animal Products

Chapter 6 Live Trees & Plants

Chapter 7 Vegetables

Chapter 8 Fruits & Dry Fruits

Chapter 9 Tea, Coffee & Spices

Chapter 10 Edible Grains

Chapter 11 Milling Industry Products

Chapter 12 Oil Seeds, Fruit & Part of Plants

Chapter 13 Gums, Resins, Vegetable SAP & Extracts

Chapter 14 Vegetable Material & Products

Chapter 15 Fats, Oils & Waxes their Fractions

29
 Chapter 16 Preserved/Prepared Food Items

Chapter 17 Sugar, Jaggery, Honey & bubble Gums

Chapter 18 Chocolate & Cocoa Products

Chapter 19 Pizza, Cake, Bread, Pasta & Waffles

Chapter 20 Edible Plants – Fruits, Nuts & Juices

TYPES OF GST RETURNS

The types of GST Returns filed by regular taxpayers include the following.

S.No Return Particulars

1. GSTR 1 Carries details of taxable goods or services, or both as well as that of outward
supplies.

2. GSTR 2 Carries details of inward supplies related to taxable goods and/or services,
along with ITC claim.

3. GSTR 3 Includes details of monthly returns based on finalised detail related to inward
and outward supplies.
It also includes details of total tax payable.

4. GSTR 4 Carries details related to Quarterly Return filing, specifically for compounded
tax liabilities of specific individuals.

5. GSTR 5 Includes details of GST return filing for non-resident foreign individuals.

6. GSTR 6 Serves as the form for Input Service Distributors to file returns.

7. GSTR 7 Serves as the form facilitates Return filing for authorities initiating TDS.

30
 8. GSTR 8 Carries supply details for e-commerce operators along with the tax amount
collected as per sub-section 52.

9. GSTR 9 Serves as the form to file Annual Returns.

10. GSTR Includes details to file Annual Returns relative to Compounding taxable
9A individuals registered u/s 10.

10 Steps to File GST Return Online

 1. Make sure that you are registered under GST and have the 15-digit GST identification
number with you based on your state code and PAN. In case you do not have this number,
first register online to get it.
 2. Next, visit the GST portal.
 E3. Click on the ‘Services’ button.
 4. Click on ‘Returns dashboard’ and then, from the drop-down menu, fill in the financial
year and the return filing period.
 5. Now select the return you want to file and click on ‘Prepare online’.
 6. Enter all the required values including the amount and late fee, if applicable.
 7. Once you have filled in all the details, click on ‘Save’ and you will see a success message
displayed on your screen.
 8. Now click on ‘Submit’ at the bottom of the page to file the return.
 9. Once the status of your return changes to ‘Submitted’, scroll down and click on the
‘Payment of tax’ tile. Then, click on ‘Check balance’ to view cash and credit balance, so that
you know these details before paying tax for respective minor heads. Next, to clear your
liabilities, you need to mention the amount of credit you want to use from the credit already
available. Then click on ‘Offset liability’ to make the payment. When a confirmation is
displayed, click on ‘OK’.
 10. Lastly, check the box against the declaration and select an authorised signatory from the
drop-down list. Now click on ‘File form with DSC’ or ‘File form with EVC’ and then click
on ‘Proceed’. Make the payment in the next step for your respective GST.

31
When is it required for a business owner to register for GST
It is mandatory for you register for GST and have a GSTIN if:
- You have an annual turnover limit above Rs.20 lakh for your intrastate business
- Your business located in any of the listed special states (such as Assam, Jammu & Kashmir,
Himachal Pradesh, etc.) has an annual turnover of over Rs.10 lakh
- If you own an e-commerce business
- If you own an inter-state business
- If you are required to pay tax under reverse charge
- If you are required to pay tax under Section 9, sub-section (5)
- You are a non-resident liable to pay taxes producing taxable supply

How to register for GST

Here is how you can register for GST:
- Use your PAN, email ID and mobile number to fill out GST REG-01 and submit the same
- Verify your mobile number and email ID with a one-time password after PAN verification
- Store the application reference number [ARN] sent to your mobile number and email ID
after verification is complete
- Put in your ARN number and attach supporting documents where required
- Fill out the automatically generated GST REG-03 form in case additional information is
required
- After verification of all information submitted, a certificate of registration will be issued to
you within 3 working days

What are the documents required for GST registration

- Certificate of Incorporation
- Authorised signatory’s photo
- Stakeholder’s photo (Promoter / Partner)
- Proof of business address which includes electricity bill or property tax receipt or Municipal
Khata Copy or legal ownership document
- Copy of Resolution passed by BoD/ Managing Committee and Acceptance letter or letter of
Authorisation
- Proof bank accounts details which includes a copy of your bank statement, cancelled
cheque, or the first page of your Pass Book

How to track the status of your GST registration

Here is how you can track the status of your application without logging in:
- Log on to http://gst.gov.in
- Click on the ‘Services’ tab
- Select ‘Registration’
- Choose the ‘Track application status’ option
- Enter your ARN in the new window and click on search
- Your application status will be displayed on the screen and sent to your registered mobile
number and email ID

32
Alternatively, you can also check your application status after logging in by following these
steps:
- Log in to http://gst.gov.in with the help of your credentials
- Move your mouse over the services tab for a drop-down menu and select ‘Registration’
- Click on ‘Track application status’, enter your ARN and click on search

Important facts about GST registration

- Every business with an annual aggregate of over Rs.20 lakhs is required to register for
GST.
- There are 11 special states that require you to register if you have half the turnover, which is
Rs.10 lakh. These special states are Arunachal Pradesh, Assam, Jammu & Kashmir, Manipur,
Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, Uttarakhand.
- If you are a supplier in more than one state you will need to register for GST in all the states
that you supply goods in.
- In case of multiple branches in multiple states, you can register one particular branch as
main and the remaining as additional. This is not applicable if your business has separate
business verticals as listed in Section 2 (18) of the CGST Act, 2017
- There are no fees to register for GST
- Failing to register for GST can result in a penalty of a minimum Rs.10,000 or 10% of the
amount due. In case of intentional tax evasion, the penalty can be 100% of the owed taxes.

33
 Advantages and Disadvantages of GST in India

The Goods and Services Tax aims to reduce the number of indirect taxes and unify the Indian
market. Though it was implemented midway in the last financial year, it has its fair share of
proponents and critics. Here’s a look at the advantages and disadvantages associated with GST.

Advantages of GST in India

GST has brought together a number of indirect taxes under one umbrella, simplifying taxation
for service and commodity businesses.
Experts believe that costs of products and services will be reduced in the long run with the
introduction of GST. This is because the cascading effect of a series of VATs and taxes has
now been erased.
Service provider companies with a turnover lower than Rs.20 lakh are exempt from paying
GST. In case of North Eastern states, the threshold is at Rs.10 lakh. This will help the small
businesses avoid lengthy taxation procedures.
Companies with a turnover up to Rs.75 lakh under the GST taxation process can benefit from
composition schemes and pay only 1% tax on their turnover. This will help them follow a
simplified taxation process.
GST is aimed at reducing corruption and sales without receipts.
GST reduces the need for small companies to comply with excise, service tax and VAT.
GST brings accountability and regulation to unorganised sectors such as the textile industry.
With GST replacing multiple state and central taxes, the tax collected is likely to be distributed
across the country, providing funds for development to the developing or underdeveloped
pockets in India.
GST has reduced taxes on certain goods by 2% and others by 7.5%, such as smartphones and
cars.
GST brings uniformity in the taxation process and allows centralised registration. This gives a
chance to small businesses to file their tax returns every quarter via an easy online mechanism.
This reduces the multiplicity of taxes as they do not have the resources to hire tax experts.
GST reduces logistics cost by eliminating border taxes and resolving check-post discrepancies.
A 20% price drop in logistics cost for non-bulk goods is clearly an expected outcome.
GST points toward a positive impact on India’s GDP. It is expected to increase by at least 80%
within the next couple of years.
The possibility of tax evasion is minimised completely with GST coming into action.

34
Disadvantages of GST in India
Increased costs of software purchase that can assist in GST filing process leads to higher
operational costs for many businesses.
GST has given rise to complexity for many business owners across the nation. SMEs with a
total income of Rs.75 lakh could avail the composition scheme, pay a mere 1% tax on turnover
and abide by less compliances; however, the trade-off is that they cannot claim credit for input
tax.
GST has received criticism for being called a ‘Disability Tax’ as it now taxes articles such as
braille paper, wheelchairs, hearing aid etc.
The complexities in taxation for products have seen manufacturers suspend their reward
programs, which are sure to affect consumers.
The GST transaction fees within the financial sector have become more expensive increasing
from 15% to 18%.
With GST, insurance premiums have become more expensive.
The impact of GST on the real estate market caused an 8% increase on real estate price leading
to 12% fall in demand closely after it was brought into action in June, 2017. This however,
may be a short-term trend.
Petrol is not under GST, which goes against the ideals of unification of commodities.

35
 TEXTILE INDUSTRY IN INDIA

The textile industry in India traditionally, after agriculture, is the only industry that has
generated huge employment for both skilled and unskilled labour in textiles. The textile
industry continues to be the second-largest employment generating sector in India. It offers
direct employment to over 35 million in the country. According to the Ministry of Textiles, the
share of textiles in total exports during April–July 2010 was 11.04%. During 2009–2010, the
Indian textile industry was pegged at US$55 billion, 64% of which services domestic
demand. In 2010, there were 2,500 textile weaving factories and 4,135 textile finishing
factories in all of India. According to AT Kearney’s ‘Retail Apparel Index’, India was ranked
as the fourth most promising market for apparel retailers in 2009.
India is first in global jute production and shares 63% of the global textile and garment market.
India is second in global textile manufacturing and also second in silk and cotton production.
100% FDI is allowedvia automatic route in textile sector. Rieter, Trutzschler, Saurer, Soktas,
Zambiati, Bilsar, Monti, CMT, E-land, Nisshinbo, Marks & Spencer, Zara, Promod, Benetton,
and Levi’s are some of the foreign textile companies invested or working in India.

36
Textile Industry in India is one of key sector in Indian economy with a direct linkage to the
overall growth of Indian and Global Economy. It Contributes 14 per cent to Industrial
Production and 4 Percent to GDP. With over 45 million people, the Industry is one of the largest
sources of employment generation in the country. The Industry accounts for nearly 15 per cent
of total exports. The Indian Textile industry is amongst very few Industries that are vertically
integrated from raw material to finished products.
The Textile and Apparel Industry can be broadly classified into two segments:
1. Yarn and Fibre
2. Processed Fabrics, Readymade Garments & Apparels.

The textile industry continues to be the second-largest employment generating sector in India.
It offers direct employment to over 35 million in the country.

37
The Indian textile industry can be categorized into Organized and unorganized sectors. The
organized sector is mainly technologically driven and use latest machineries and equipment for
production of textile products. The unorganized sector which forms a dominant part of this
industry is labor intensive in nature. It is represented by production of clothes through weaving
or spinning with the help of hands. The various processes involved in textile industry can be
broadly classified as :-

Process Output from the process

Ginning Man-made Fiber, Cotton, Jute, Silk, Wool

Spinning Yarn

Weaving/knitting Fabric

Processing Processed Fabric

Apparel making Garment

38
HISTORY OF TEXTILE INDUSTRY IN INDIA :-

The archaeological surveys and studies have indicated that the people of Harrapan
civilization were familiar with weaving and the spinning of cotton for as long as four thousand
years ago. Reference to weaving and spinning materials is found in the Vedic Literature. There
was textile trade in India during the early centuries. A block printed and resist-dyed fabric,
whose origin is from Gujarat was found in the tombs of Fostat, Egypt. This proves that Indian
export of cotton textiles to Egypt or the Nile Civilization in medieval times were to a large
extent. Large quantity of north Indian silk were traded through the silk route in China to the
western countries. The Indian silks were often exchanged with the western countries for their
spices in the barter system. During the late 17th and 18th century there were large export of the
Indian cotton to the western countries to meet the need of the European industries
during industrial revolution, apart from the domestic requirement at the Indian Ordnance
Factories.
The Textile industry was the major component of economic income in India before the English
colonies. "The hand-loom and the spinning-wheel, producing their regular myriads of spinners
and weavers, were the pivots of the structure of that society," described by Karl Marx. The
English colonies had changed the structure of the old Textile industry and pushed it moving
from small workshops into factories. They had exported extremely huge amounts of cotton and
brought industries and English free trade into India. Eventually, the traditional type of Textile
industry was weeded out.

Production
India is the second largest producer of fibre in the world and the major fibre produced is cotton.
Other fibres produced in India include silk, jute, wool, and man-made fibers. 60% of the Indian
textile Industry is cotton based. The strong domestic demand and the revival of the Economic
markets by 2009 has led to huge growth of the Indian textiles industry. In December 2010, the
domestic cotton price was up by 50% as compared to the December 2009 prices. The causes
behind high cotton price are due to the floods in Pakistan and China . India projected a high
production of textile (325 lakh bales for 2010 -11). There has been increase in India's share of
global textile trading to seven percent in five years. The rising prices are the major concern of
the domestic producers of the country.
Man Made Fibres :- This includes manufacturing of clothes using fibre or filament synthetic
yarns. It is produced in the large power loom factories. They account for the largest sector of
the textile production in India. This sector has a share of 62% of the India's total production
and provides employment to about 4.8 million people.
The Cotton Sector :- It is the second most developed sector in the Indian Textile industries. It
provides employment to a huge number of people but its productions and employment is
seasonal depending upon the seasonal nature of the production.
The Handloom Sector :- It is well developed and is mainly dependent on the SHGs for their
funds. Its market share is 13%. of the total cloth produced in India.

39
The Woolen Sector :- India is the 7th largest producer of the wool in the world. India also
produces 1.8% of the world's total wool.
The Jute Sector :- The jute or the golden fibre in India is mainly produced in the Eastern states
of India like Assam and West Bengal. India is the largest producer of jute in the world.
The Sericulture and Silk Sector :- India is the second largest producer of silk in the world.
India produces 18% of the world's total silk. Mulberry, Eri, Tasar, and Muga are the main types
of silk produced in the country. It is a labour-intensive sector.

Cotton textile
In the early years, the cotton textile industry was concentrated in the cotton growing belt of
Rajasthan, Maharashtra and Gujarat. Availability of raw materials, market, transport, labour,
moist climate and other factors contributed to localisation. In the early twentieth century, this
industry played a huge role in Bombay's economy but soon declined after independene. While
spinning continues to be centralised in Maharashtra, Gujarat and Tamil Nadu, weaving is
highly decentralised. As of 30 September 2013, there are 1,900 cotton textile mills in India, of
which about 18% are in the private sector and the rest in the public and cooperative sector.
Apart from these, there are several thousand small factories with three to ten looms.
India exports yarn to Japan, United States, United Kingdom, Russia, France, Nepal, Singapore,
Sri Lanka and other countries. India has the second-largest installed capacity of spindles in the
world, with 43.13 million spindles (30 March 2011)[13] after China. Although India has a large
share in world trade of cotton yarn, its trade in garments is only 4% of the world's total.

Jute textiles
India is the largest producer of raw jute and jute goods and the third largest exporter after
Bangladesh. There were about 80 jute mills in India in 2010–11, most of which are located in
West Bengal, mainly along the banks of the Hooghly River, in a narrow belt (98 km long and
3 km wide).
In 2010-2011 the jute industry was supporting 0.37 million workers directly and another
400,000 small and marginal farmers who were engaged in the cultivation of jute.
Challenges faced by the industry include stiff competition in the international market from
synthetic substitutes and from other countries such as Bangladesh, Brazil, Philippines, Egypt
and Thailand. However, the internal demand has been on the rise due to Government policy of
mandatory use of jute packaging. To stimulate demand, the products need to be diversified. In
2005, the National Jute Policy[14] was formulated with the objective of improving quality,
increasing productivity and enhancing the yield of the crop.
The main markets for jute are the United States, Canada, Russia, United
Kingdom and Australia.

40
 IMPACT OF GST ON TEXTILE INDUSTRY

The Indian textile industry provides employment to a large number of skilled and unskilled
workers in the country. It contributes about 10% of the total annual export, and this value is
likely to increase under GST. GST would affect the cotton value chain of the textile industry
including all garments for men and women like shirts, trousers, saree, apparels, shoes and any
more clothing materials which is chosen by most small medium enterprises as it currently
attracts zero central excise duty (under optional route). GST According to the Ministry of
textiles (Government of India) total textile export during 2011-12 was US$ 33161.74 and
the total value of textile machinery produced during the same period was Rs. 5280 crore.

It is expected that the tax rate under GST would be higher than the current tax rate for the
textile industry. Natural fibers (cotton, wool) which are currently exempt from tax, would be
taxed under GST. Despite this, the textile industry as a whole would benefit from the
introduction of GST due to following changes-:
Break in input credit chain
In the pre-GST era, textile industry mainly operated under duty exemption mode. As explained
above, benefit of CENVAT credit was not available to manufacturer availing duty exemption
which got baked in the cost of the product. Further, many persons operated at a small scale and
were either unregistered persons or took registration under composition scheme which again
disrupted the flow of credit and lead to cascading effect.
Under GST, Government has withdrawn the optional exemption route and imposed GST on
textile industry (supply of fabric attracts GST@5%, cotton fibre and yarn attracts GST@5%,
Synthetic yarn and Man-made fibre attracts GST@18%). An attempt has been made to organize

41
a fairly unorganized sector. If the players in the textile industry get themselves registered, it
would enable flow of credit to the end consumer and lead to reduction in prices of the
manufactured product.
A significant portion of the textile industry in India operates under the unorganized sector or
composition scheme, thus creating a gap in flow of input tax credit. Input tax credit is not
allowed if the registered taxpayers procure the inputs from composition scheme taxpayers or
the unorganized sector. GST would enable a smoother input credit system, which would shift
the balance towards the organized sector.
Reduction in manufacturing costs
GST is also likely to subsume the various fringe taxes like Octroi, entry tax, luxury tax etc.
which would help reduce costs for manufacturers in the textile industry
Input credit allowed on capital goods
Currently, the import cost of procuring the latest technology for manufacturing textile goods is
expensive as the excise duty paid is not allowed as input tax credit. Whereas under GST, there
will be input tax credit available for the tax paid on capital goods.
Reduction in compliance burden
With the introduction of GST, various indirect taxes which were earlier levied (such as Central
Excise, Value Added Tax/ Central Sales Tax, Octroi, Entry tax) have been subsumed. This has
led to substantial reduction in compliances to be undertaken by the manufacturer.
Under GST, such person is required to deal and comply with only GST law. It should also be
noted that merging of various taxes under GST would also lead to reduction in cost of
production of textile products.
Deferment of reverse charge provision
Reverse charge mechanism in respect of procurement of goods or services by registered person
from unregistered suppliers has been suspended till 31 March 2018. This would imply that
registered person obtaining services of weaving, spinning etc. from unregistered persons will
not be required to deposit the GST under reverse charge mechanism. However, this benefit is
temporary till 31 March 2018 post which the reverse charge mechanism will be activated on
such transactions.
Job workers status under GST
Under textile industry, processing of goods through job work is a normal phenomenon i.e.
movement of goods happens to job-worker and goods move back to the sender post completion
of process by the job-worker on the goods.
Under GST, any treatment or process which is applied to another person’s goods is treated as
supply of service. Job-worker receiving the goods for undertaking job-work is required to
register under GST and discharge tax liability (provided the turnover of job-worker exceeds
the threshold limit).

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Considering the labour intensive focus of job-work for textile products, the GST rate on job
work on textile-related items has been reduced from 18% to 5%. This would ensure that job-
worker is not severely impacted due to introduction of GST.

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GST Rates & HSN Codes For Cotton Products like :-
Dhoti, Saree, Zari Border Saree, Zari Border Dhoti, Shirting, Casement, Viol, Sheeting, Suti,
Cambric, Lawn, Latha, Lungi & furnishing fabrics.

HSN GST Tax

Cotton Composition Code Rate

Products with more than 85% cotton content & weight is less than 200 5208 5%
gm/sq mtr

Products with more than 85% cotton content & weight is greater than 5209 5%
200 gm/sq mtr

Products with less than 85% cotton content, mixed with additional 5210 5%
fabrics & weight is less than 200 gm/sq mtr

Products with less than 85% cotton content, mixed with additional 5211 5%
fabrics & weight is greater than 200 gm/sq mtr

Other Cotton Products 5212 5%

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GST Rates & HSN Codes For Synthetic Filament Yarn Products like :-
Parachute Fabrics, Tent Fabrics, Nylon Furnishing, Umbrella cloth, Polyester Shooting,
Polyester Shirting, Other polyester cloth, Nylon Brasso, Nylon jacket, Nylon saree, Terylene
saree, Dacron saree, Rayon Crepe, Rayon jackets, Rayon saree, Rayon shirting & Rayon
brocade.

GST
HSN Tax
Yarn Specification Code Rate

Synthetic Mono filament of 67 Decitex or more and of which No cross 5407 5%

sectional dimensions exceed 1 mm; strips & the Like of synthetic textile
material of an apparent width not exceeding 5 mm.

Artificial Mono filament of 67 Decitex or more and of which No cross 5408 5%

sectional dimensions exceed 1 mm; strips & the Like of synthetic textile
material of an apparent width not exceeding 5 mm.

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Export of textile products to get a boost :-

GST would streamline the process of claiming input tax credit thus allowing the textile industry
to be more competitive in the export market. The same opinion is shared by the secretary of
ITF (Indian Texpreneurs Federation) Prabhu Dhamodharan.
Currently, manufacturers/traders are not inclined towards exports due to the extensive
procedure costs and delays made in the processing of duty drawback.
Under GST, the system of duty drawback will lose its significance. Input tax credit will be
provided as a refund under GST instead of current duty drawback schemes. This would be a
significant boost for promoting the export of textile products.
Export promotion capital goods scheme is available for all the cotton-based textile exporters.
Under this scheme, exporters can claim the exemption for duty paid if they export six times the
value of duty within a period of next six years. It is expected that this scheme would lose its
significance under GST.

Current Taxation:-

Central Excise Duty: The domestic textile industry has an optional route to pay zero excise
duty across various stages of the value chain, provided they don’t claim the Input Tax Credit
(ITC) at any stage. Cotton based industry are exempt from payment of excise and apparels have
been attracting excise duty at effective rate of 1.2% (@ 2% with abatement @ 40%). Tax
payable at the time of removal.
Branded Readymade garments falling under Chapter 61, 62 and 63 having a Retail
Sales Price (RSP) of Rs. 1,000 and above attracted Central Excise Duty of 2% (without
CENVAT) or 12.5% (with CENVAT credit). Such excise duty was attracted on 60% of
RSP after allowing deduction of 40%.
Optional Central Excise exemption – In case of garments and articles other than those
mentioned above, an option was provided to the person to pay Central Excise Duty at
Nil rate without availing CENVAT credit. If the person exercis ed this option, he could
clear the specified goods without payment of Central Excise duty, however, CENVAT
credit was not allowed to him in this case.
If the manufacturer did not wish to avail optional exemption. Central Excise duty was
payable and CENVAT benefit was available to him. Garments/articles of cotton, not
containing any other textile material attracted duty of 6% (with CENVAT credit) and
other garments/articles attracted duty of 12.5% (with CENVAT credit).
However, majority of the persons opted for the optional exemption scheme since it is
beneficial from cash flow perspective and reduces compliance burden on the
manufacturer.

46
Job Work Under Central Excise : In terms of the Rule 4(1A) of Central excise rules, every
person who gets the goods, falling under Chapter 61 or 62 or 63 of the First Schedule to the
Tariff Act, produced or manufactured on his account on job work, shall pay the duty leviable
on such goods
Value Added Tax: VAT is levied by State Governments on Sale of Textile and Apparels with
Availability on Input Tax Credit of Vat Paid on Purchases. For Example, Currently
under Chhattisgarh Vat, Vat Rate is 4% for Textile Fabric. The levy of VAT and CST on sale
of textile goods varied from state to state in India. Most of the States in India levy VAT at a
lower rate on garments, usually in range of 5%-6%. Under VAT, many States also provide an
option to tax payers to opt for composition scheme in which tax was payable at concessional
rate.
Service tax : To manufacture apparels, textile industry availed various input services.
However, they could not avail the benefit of service tax paid on input services as the textile
sector mainly operated under optional duty exemption as explained in above paragraphs. This
therefore added to the cost of manufacturing the products.
Central Sales Tax: It is currently charged at the rate of 2% on the value of sale of goods. Tax
payable at the time of sale.
Entry Tax: Entry tax is an account based tax levied and collected by state governments on
entry of goods into a local area for consumption, use or sale therein. Entry tax was levied on
entry of goods into a local area for consumption, use or sale therein. In many States, entry tax
was levied on specified goods when goods entered local area. Even textiles such as cotton,
woolen or silk or artificial silks were liable to entry tax in some States like Karnataka at the
rate of 1% which added to the purchase cost.
Custom Duty: Custom duty on exports is normally nil rated except for raw cotton and cotton
waste, imports are leviable to CVD and special CVD.

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Post GST:
An important determinant of the tax incidence under GST will be the GST rate applicable to
the textile segments. While the final GST rates are yet to be announced, even at the 12% lower
rate recommended by the Dr. Arvind Subramanian Committee, the textile sector is likely to be
negatively impacted. The Cotton Value of Chain is likely to be worse affected as it is currently
attracting Zero central Excise Duty and tax in Inputs may not be more than 2-4%.

Currently the Vat Rate on apparels is 4.5% and 1.2 percent effective excise duty on branded
goods with MRP more than Rs 1000, the overall tax incidence on the finished goods is lower
than 12% , which is the lowest rate being proposed in India.
With Input tax credit chain becoming more transparent and integrated, the tax credit for
exporters will become easier and full credit of indirect taxes can be claimed.
Fiscal barriers for inter-state movement to be removed: Reduce time of movement and logistic
costs, stocking costs and carrying costs.
With textile sector coming under GST, textile players which are oriented towards domestic
markets will be able to set-off the GST paid on domestic capital goods (but not the import duty)
as their sales will be subject to GST. Accordingly, this will reduce the cost of capital
investments.
Recently the Textile Association from South India has urged the union government to make a
uniform levy of 5% on all textile and clothing products under GST. They also want the
government to continue the duty drawback benefits for garments and made up exports.

48
Pre GST:

CHALLENGES TO TEXTILE INDUSTRY

The textile industry involves interdependence between organized and the unorganized sectors
which will pose additional challenges to the industry.
Considering the mechanics of textile industry, many persons who cross the threshold limit may
prefer to opt for composition scheme since compliance burden on a person opting composition
scheme is relatively less than on a normal tax payer. There will also be small weavers and other
players who will not cross the threshold limit and will remain as unregistered persons under
GST regime.
Under GST, synthetic yarn and man-made fibre is taxable @ 18% whereas the output fabric is
taxable at a lower rate of 5%. This would lead to issue of inverted duty structure and
accumulation of credit. You may be aware there is a provision of claiming refund of unutilized
input tax credit in case of inverted duty structure. However, in case of specified woven fabrics
and knitted fabrics, the refund of unutilized input tax credit has been disallowed. This would
result in accumulation of huge input tax credit and working capital blockages.

49
 RESEARCH METHODOLOGY

Region of research :-

The geographical area of the research is Mumbai, Maharashtra. Mumbai is the financial
capital of India and hence most of the financial sector companies have their headquarters
in Mumbai. Thus Mumbai would be a good representative for the purposes of drawing
conclusions.

Research Design :-

The research would be descriptive, empirical as well as analytical. The design would be
based on the objectives of the study and the hypothesis of the study. Data in relation to
provisions for taxing of financial services would be collected from the existing law.The
data collected through the interviews and questionnaires will be subject to further
statistical methods of analysis.

Sampling :-

All assessee, accountants and tax professionals related to the financial sector are the
population. The different assessees, accountants and tax professionals selected - around
40 in number will form the sample. This sample of 40 individuals who will be interviewed
and questionnaires will be sent to and who are located in Mumbai are selected based on
purposive sampling. A larger sample size may not be practical since the questions to be
answered are technical and hence need to be answered by technical people in the financial
services sector. Such people who are available to provide the response are few and hence
the sample size is restricted to 40 also based on convenient sampling.

Objectives :-

1. To study the inexplicit opinions among the Manufactures, traders and society about the
Goods and Services Tax (GST).

2. To study about the Challenges of Introduction of Goods and Service Tax (GST in
India).

3. To Study on Prospects in Implementation of Goods and services Tax (GST) in India.

The Goods and Services Tax which is being implemented from 1st July, 2017 is proposed
to be a unified tax for the entire nation. The intended objective of GST 2017 is to replace
a lot of other indirect and direct taxes like the VAT, service tax, luxury tax etc. GST is
aimed at being comprehensive with most of the goods and services included in the GST
bill but alcohol and petrol exempted. GST rate is proposed to be 27% which is far higher
than the global standard of 16.4% for similar taxes. Our finance minister, Mr. Arun Jaitley
on several occasions has mentioned that the rate is way too high, whereas some of the

50
states want the rate to be still higher. In this article, we will look at the primary objectives
of GST 2017 bill.

1. Ensuring that the cascading effect of tax on tax will be eliminated.

2. Improving the competitiveness of the original goods and services, thereby
improving the GDP rate too.
3. Ensuring the availability of input credit across the value chain.
4. Reducing the complications in tax administration and compliance.
5. Making a unified law involving all the tax bases, laws and administration
procedures across the country.
6. Decreasing the unhealthy competition among the states due to taxes and revenues.
7. Reducing the tax slab rates to avoid further clarification issues.

With all of these being very significant objectives of GST, it is still facing a lot of
implementation issues. Some of them are:

1. Complete lack of adaptation mechanisms and trained staff.

2. In some cases, the double registration might annoy people. Also, these registrations
result in increase compliances and cost.
3. Unclear estimate of the exact impact of GST.
4. No clear mechanisms to control tax evasion.
5. The government is trying very hard to implement GST successfully for the benefit
of more than a billion people. Let's all join hands to welcome this bill.
6. History of GST, Historical Background of GST, Status of GST Law 2017

• One Country – One Tax

• Consumption based tax instead of Manufacturing
• Uniform GST Registration, payment and Input tax Credit
• To eliminate the cascading effect of Indirect taxes on single transaction
• Subsume all indirect taxes at Centre and State Level under
• Reduce tax evasion and corruption
• Increase productivity
• Increase Tax to GDP Ratio and revenue surplus
• Increase Compliance
• Reducing economic distortions

Scope :-

GST shall cover all goods and services, except alcoholic liquor for human consumption,
for the levy of goods and services tax. In case of petroleum and petroleum products, it has
been provided that these goods shall not be subject to the levy of Goods and Services Tax
till a date notified on the recommendation of the Goods and Services Tax Council.

51
Promulgation of GST Council: Proposed Article 279A of the Bill provides for constitution
of Goods and Services Tax Council to examine issues relating to goods and services tax
and make recommendations to the Union and the States on parameters like rates,
exemption list and threshold limits. The Council shall function under the Chairmanship
of the Union Finance Minister and will have the State Union Minister as its members.

• All goods and services are covered under GST Regime except Alcoholic liquor
for Human Consumption,
• Tobacco Products subject to levy of GST and Centre may also levy excise duty
• GST Council yet to decide the incidence and levy of GST on following;
 Crude Petroleum
 High Speed Diesel (HSD)
 Motor Spirit (Petrol)
 Natural Gas
 Aviation Turbine Fuel

Tools for Data collection :-

The study involves collection of both primary and secondary data. Primary data is being
collected by using the questionnaire.The questionnaire before actual use is put through
pilot testing. The difficulties identified in pilot testing are removed before finalizing the
final questionnaire.This questionnaire will be distributed to the selected sample.

Secondary data is collected through existing legislations, proposed legislations on GST

floated in public domain, published/unpublished reports on the GST impact in India and
globally, various websites on GST and financial services,

52
 CHAPTER 2
REVIEW OF LITERATURE

Major studies conducted by various researchers are as discussed below:

1 :- Chandra (1998) in his article wrote on challenges ahead of Indian textile and clothing
industry in post quota regime. It put special emphasis on production capabilities and
efficiencies as most essential elements to fight global competition. It suggests various strategic
decisions Indian textile manufacturers have to make to survive the competitiveness in post
quota regime.

2 :- Simpson and Shetty (2001) did a vast study on India’s textile industry. The purpose of
study is to analyze India’s textile and apparel industry, its structural problems, market access
barriers, and measurements taken by government of India to enhance the industry’s
competitiveness in the post – Multifibre Agreement (MFA) era. The study also assesses India’s
textile and apparel market potential and trade and investment opportunities for U.S. firms as
India steps into a more free and transparent trade regime. For the purpose of study exploratory
study is done in which in-depth interviews are done with various government officials in
Textile Export Promotion Council, Ministry of . 101 textile, Cotton Council of India, Apparel
Export Promotion Council (AEPC), Federation of Karnataka Chamber of Commerce and
Industry, Handloom Export Promotion Council, Madras Chamber of Commerce and Industry,
The South India Textile and Research Association, and almost all top executives of India’s
large textile mills.

3 :- Verma (2001) in his article emphasized on the impact on the Indian textile and clothing
industry after quota elimination. It says that Indian textile and clothing exporters have to bring
in necessary changes in their methods of production, management style, capacities, marketing
skills and productivity level in order to remain competitive in international market. Also it put
special emphasis on the size of Indian textile units when compared to its counterpart in China.

4 :-Verma (2002) did a comprehensive study with objective to evaluate the export
competitiveness of Indian textile and clothing sector. Because Indian textile and clothing sector
is predominantly cotton based, the study is focused on cotton textile and clothing and look at
the entire value chain from fiber to garment and retail distribution. The scope of study covers
the products in Indian export basket which have shown a promising growth in value. The Study
concludes that Indian exports to US and EU are export competitive as a whole. Sector wise
analysis of export performance of Indian textile and clothing sectors to US and EU reveal that
so far apparel or clothing and made-up is concerned; quota is the major constraint in the growth,
while it is not true in case of yarn exports. Indian textile and clothing sector has tremendous

53
potential and only a portion of which is explored till now and this shortcoming is due to policy
constraints.

5 :- Meenakshi (2003) did a comprehensive study on the opportunities that would be provided
by WTO to Indian Textile industry. This paper gives a lot emphasis on new capacity installation
to take the benefits to the fullest extent in India has to be a true gainer in competition to other
nations. Since India’s own consumption per capita is also on the rise with the rise of income
and consumption habits, the profit margins available to Indian textile and clothing producers
will be more. But in export market, the prices will be driven by international factors and profits
will be under pressure. So the exporters might have to go for strategy of partial exports and
partial domestic sale.

6 :- Pandey (2003) in his article expected that Indian textile exporter would be benefited with
quota elimination. It discusses on various sectors of textile and clothing. Also he expects that
hosiery industry will be one of the gainer and small scale exporters will be more competitive
due to small size and controlled cost and lower overheads.

7 :- Chugan (2005) emphasized that Indian textile Industry has to change to be more
competitive in the long run. This paper emphasis that merely cost competence is not enough to
maintain the lead while Indian companied has to have a global competitive view.

8 :- Trivedi (2005) in his article concluded that the textile is one sector where India has high
ambitions and can achieve robust growth through moderate human skills. India has skilled
labour and does better in this sector as compared to others. This will also Increase the
employment and the social structure will be better off.

9 :- Thomas (2005) in his article wrote on why in the competitive scenario wholesalers like
Nike are shy from keeping long inventories and stocks. So pressure is on garment . 104
companies to deliver the goods in time. India has bottleneck in infrastructure, which hinders
the time receipt of raw material and delivery of finished goods. This would cause rapid
airfreight and would squeeze the margins. Government has to invest heavily in Infrastructure
to keep the pace of growth of garment industry intact and take the benefits to fullest extent.

10 :- Adhikari (2006) did study for UNDP regional centre Colombo. It was expected that the
effect of quota elimination would not be same for all the countries. It has shown mixed results
so far. Moreover countries that have lost out the most had seen their exports decline earlier
which mean that their dismal performance merely be ascribed to the quota phase out. Several
countries that had been expected to loose out in the post quota world not only managed to hold
on to their past gains but also achieved significant growth in their export earnings. This is
mainly because of the re-imposition of quota on T&C exports from China not only by

54
developed countries but also by some developing countries, which were making use of
temporary safeguards measures as agreed to by China during the process of its accession to
WTO. Most analysts predicted that the situation will not remain same after the phasing out of
safeguard which will expire in 2008. At the same time the entry of Vietnam into the WTO from
11th January 2007, which enables the county to compete in global T&C market without any
quantitative restrictions on T&C exports, means that the competitive pressure is likely to be
intense for the small and marginal players. Therefore the real adjustment challenges are yet to
begin after December 2008.

11 :- Chaudhry (2006) did a very comprehensive study on the productivity of Indian Textile
sector and various related sectors. Very technical formulas are used to analyze the
competitiveness of Indian Textile Industry.

12 :- Chugan (2006) in his article discussed in detail the opportunities available to various
sectors of Indian Textiles in the post quota era. Also, it emphasizes the weaker link, competition
from china and the schemes run by government to support Indian textile Industry.

13 :- Elsayeed, Kulich, Lake & Megahed (2006) gave deep insight into the success factors of
Guangdong textile cluster of China. Also it discusses the national diamond analysis which
describes the competitive advantage and weakness in context of firm strategy, rivalry and
strength in the related and supporting industries and limited demand conditions. Also it
discusses the trade relations between China and Hong Kong and role of Chinese Diaspora and
its role in success of Guangdong textile cluster. Also, it put emphasis on China – H.K relations
as win-win situation for both. Then it discusses the cluster analysis.

14 :- Jayaswal and Sayed (2006) in his article presented how Pakistan has done excellent and
dominating the home furnishing and bed linen section in US and EU. India Bed linen is no
more preferred in US. Pakistan is completely dominating the US markets. If Indian companies
become more competitive in quality, price and deliveries, it will not be preferred destination
for EU and US.

15 :- Kumar (2006) did study of various sectors of Indian and Chinese textiles. This paper
concludes and highlights the various areas where India has efficiency over china and how India
should more capitalize on it. Also it gives equally weightage to Chinese advantages and how
India can win over its weaker areas to be more competitive in long run.

16 :- Singh and Kathuria (2006) in his article discussed in details the problems faced by Indian
garment exporters in post quota regime. The study focuses on the analysis of problems of
garment exporters located in Ludhiana and Delhi. It highlights the factors which are hindrance

55
in the growth of garment exports from the region and important determinants in increasing the
exports share from the region.

17 :- Texprocil (2007) in his article concluded that if India has to keep maintaining its edge in
hosiery and garment sector, it has to keep in control thru various measures. The various
measures Indicated are raw material, Methodology, Labor wages, Power cost and utilities that
need to be kept in check to keep the cost lower. This paper presents a comparative study of
Indian textile industry with other nations like China, Bangladesh, Vietnam, Egypt and Pakistan
and elaborates the competitiveness of Indian textile and various sectors in Textiles. It also puts
lots of emphasis on the areas where India in loosing its edge and has to keep a close monitoring
on it to remain competitive. It concludes that Vietnam and Egypt are coming up fast and can
prove to be tough competitor in near future due to high productivity and low steam cost.
18 :-Shen (2008) examined major changes in China’s textile and clothing industries, studies
their reactions to quota elimination, and explore the current status of China’s textile and
clothing industry. Fourteen in-depth interviews were conducted at the end of 2005 and
beginning of 2006 in China. Four themes were found. The study tends to examines: (a) overall
status of China’s Textile and Clothing Industries, (b) advantages and disadvantages of different
textile and clothing manufacturers in China, (c) main challenges and problems faced by China’s
textile and clothing companies, (d) corresponding strategies for the textile and clothing
manufacturing companies in China to address new challenges. There is a unique feature of this
study. This study was conducted in end of 2005 and beginning of 2006, when the fresh
agreement on quota between China and EU and China and US were reached and in place for
next 3 years. So, all interviewers were able to present their view on what happened during the
year 2005. If we look at the limitation part of the study, we find that the sample size was
comparatively small. Looking at the size of Chinese textile and clothing industry, sample size
of 14 is fairly small. Also, it is not exclusively for clothing or hosiery industry. China is more
competitive in clothing than in textile. Impact of increasing cost of energy is more on textile
than in clothing because the requirement of energy is more in textile than in clothing. Another
limitation of the study is the language used to conduct the interview. The language used was
Chinese and after it all data and information was translated into English for publication
purpose. During interviews lots of information is received which is not translated and it misses
some important information. This is because of difference of two languages. Also, it is still
very difficult to conduct any interview in China.
19 :- Zhang and Hathcote (2008) wrote on factor influencing apparel imports from China. This
paper gives detailed insight into the factors which are determinant of apparel and textile exports
from China to US. The Study examines the impact of quota phase out effect on apparel trade
between US and China poet 2005 quota elimination. To achieve the four critical variables –
Quota price, tariffs, labor cost, and freight cost, associated with US import volumes are
identified and studied. The study is based on Factors Proportions Trade Theory which is also
known as Heckscher-Ohlin theory is considering two factors of production, labor and capital
which are used to produce two commodities. The two commodities differ in labour/capital
ration employed to produce them. China has comparatively large abundance of labour and
scarcity of capital while US have shortage of labour and abundance of capital. Based on the

56
theory of factors proportion, a country should specialize in production and export of
commodity for which it has easily available resources.

20 :- Bedi (2009) in his article had prepared detailed report on Indian textile industry covering
various sector of textile industry. This is one of the most comprehensive reports -coveting all
aspects of textile industry, performance and hindrances in the growth of it.

21 :- Venkatachalam and Palanivelu (2010) did detailed study on marketing strategies adopted
by garment exporters in Tirupur. In this paper the authors highlight the problems of garment
industries and propose solution to overcome these problems. . 109 None of the studies given
above is concentrated on Ludhiana hosiery industry. So there is gap in the information available
on it. Therefore the need for study is felt.

57
 CHAPTER 3
COMPANY PROFILE

SWASTI VINAYAKA SYNTHETICS LTD.

Profile
Swasti Vinayaka Synthetics Limited (SVSL) is a public limited company, that was
incorporated in 1981. It is mainly engaged in the manufacturing of suiting, shirting and
apparels.

The company has modern weaving facilities comprising of Somet Super Excel Looms, yarn
doublers and stitching facilities at its two plants located at Tarapur and Palghar in Maharashtra,
which cater to over 4 lakhs of linear metres per month. Our design studio is equipped with the
latest CAD technology, adding a unique characteristic of freshness to the designs that are
finally delivered in the market. Our core focus and competence is in manufacturing high-end
cotton, cotton-blended and linen designer shirting. The company is marketing its products
directly to certain big retail chains, the RMG sector, garment exporters and corporate houses.
Our esteemed customers include prominent corporate houses like The Bombay Dyeing &
Manufacturing Co. Ltd., Arvind Lifestyle Brands Ltd., Pantaloon Retail(India) Ltd., Trent
Ltd.(Westside), Royal Classic Group(Classic Polo), Reliance Industries Ltd.(Vimal Brand &
Reliance Retail), Aditya Birla Nuvo Ltd.(Madura Garments), ITC Ltd. (John Players), Indus
League Clothing Co. Ltd., Raymond's Apparel Ltd., Lifestyle International Pvt. Ltd., Mafatlal
Industries Ltd., RSM Ltd.(Mayur Brand), S. Kumar's (Belmonte Brand) and BSL Ltd. We also
cater to corporate and government institutions for uniform fabrics. Among our clients are LIC
of India, Tata Power Co. Ltd., Tata Steel, Hero Honda, Coca Cola, Siemens Ltd., etc.

The company has established itself as a leading brand and features in the top five players in
Maharashtra as well as south India which comprises states like Tamil Nadu, Andhra Pradesh,
Karnataka and Kerala. The company sales are made through a widespread national network of
agents/dealers who in turn service around 5000 retailers between them.

The company also supplies salwar kameez and tunics to Trent Ltd. (Westside), Pantaloon Retail
(India) Ltd. and Mahindra Retail Pvt. Ltd. The company designs high end bridal and formal
ethnic wear for its boutique at The Grand Hyatt Shopping Plaza, Santacruz (E), Mumbai, under
the brand “Ivy League”.

58
 Milestones

 2008 : - Launch of the brand “Ivy League”, a high-end ladies ethnic and formal wear segment.
Setup a boutique located at The Grand Hyatt Shopping Plaza, Santacruz(E), Mumbai.

 1999 : - Upgradation of plant. The company set up 18 Somet Super Excel looms at Tarapur
plant.

 1996 : - The company set up 15 new looms at the plants in Tarapur and Palghar.

 1993 : - 12,63,756 Rights Equity shares issued in propn. 1:2. (at par/Premium)
 1991 : - The Company launched a new ready-to-wear range of shirts through its own first retail
outlet at Swaroop Nagar, Boisar.

 1990 : - On 1st April, Shree Rani Sati Syntex and Shree Ganesh fabrics merged with the
company. The amalgamation strengthened the production capacity.

 1986 : - The second phase of the Tarapur project involving the addition of 28 automatic
looms with preparatories was implemented.
The Company installed and commissioned 21 automatic looms with preparatory under the
second phase of the Tarapur project.
In order to raise funds for their expansion project, the company offered 2,31,750 15% non-
convertible debentures of Rs 100 each aggregating to Rs 231.75 lakhs as rights to the existing
shareholders.

 1985 : - Company went Public & was listed on the BSE. 10,50,000 No. of Equity shares issued
at par as Rights in the proportion 2:1.
The name of the company was changed to Vinayaka Synthetics Ltd. with effect from 28th June.

 1983 : - Company set up its first plant at Palghar, comprising 36 auto looms.

 1981 : - Swasti Vinayaka Synthetics Ltd was incorporated as a private limited company on 9th
March, 1981.

59
Vision and Mission

Our Vision

To attain leadership in the domain of fashion and lifestyle in ladies ethnic wear and in the male
shirting segment. Our philosophy is best conveyed through 3 key words - Excellence, Quality
and Leadership - exceeding customer and stakeholder expectations.

Our Mission

SVSL aims to be a model company incorporating the best work ethics and corporate
governance. We aim to be an ethical, transparent and responsible organisation. We are creating
a participative, progressive and profitable enterprise for all our stakeholders encompassing
quality lifestyle, appreciating capital, better environment and empowerment.

We strongly believe that creativity backed by a strong infrastructure is the backbone of success
and that is why we have constantly invested in infrastructure development. We take pride in
our vision of providing the best possible services to our esteemed clients. We do our best to
abide by our mission to provide our customers with the highest quality of goods, on time and
at the most competitive prices. Enhanced customer satisfaction through continuous
improvement is our motto.

Fashion is diversity and the diversity of fashion is matched by the versatility of technology and
infrastructure. The latest technology and infrastructure is the cutting edge of the business,
providing quality enhancements and also aiding cost effectiveness. We aim at improving the
levels of productivity and efficiency, quality control, faster product innovation, quick response
to changes in consumer preferences and ability to move up in the value chain by building as
well as reinforcing brand value.

Management
The company is promoted by Shri Ramprasad Poddar, presently the chairman of SVSL, who
has been associated with several successful textile projects including their implementation,
production, marketing, finance and administration for the past 50 years. He is supported by his
two sons - Shri Rajesh Poddar, Managing Director, with a bachelor’s degree in Industrial
Engineering from University of Pittsburgh, U.S.A - and Shri Dinesh Poddar, Director, with an
M.B.A in Finance as well as M.S in Information from University of Pittsburgh, U.S.A. They
are mainly responsible for the successful functioning of the company, bringing it forward into
the 21st century, streamlining its processes and with their collective vision ensuring the
successful running of the business. Mr. Rajesh Poddar and Mr. Dinesh Poddar have together

60
charted a path of growth and progress for Swasti Vinayaka Synthetics Limited (SVSL) that
will take the company to newer heights.

Group Companies

 Ashirwad Capital Limited (BSE listed)

 Swasti Vinayaka Art and Heritage Limited (BSE listed)
 Swasti Vinayaka Investech Private Limited
 Ashirwad Shelters Private Limited
 Swasti Vinayaka Real Estate Development Private Limited
 Ma Passion (India) Private Limited
 Ivy League Fashions Private Limited
 Elan Realtors India Private Limited

Products
Our well-qualified team is committed to delivering the latest designs with a combination of
colours, weaves and blends so that aesthetics is never compromised when ensuring comfort for
our customers. The stringent quality checking at every stage in production process ensures
complete satisfaction to our valued customers. We offer a wide range of shirting fabrics
comprising of cotton, linen, lycra, polyester, viscose and their blends that do not just impress
but trigger the imagination too.

Our product bouquet comprises the latest design in a spectrum of colours using wide-ranging
weaves for varied textures. Azo-free dyes and various bio-finishes are the eco-friendly
measures we adopt to differentiate our products from the rest. Our relaxed scouring and
continuous dyeing imparts comfort, drape and precision in colour. Special finishes such as
'calendaring', 'wrinkle free', 'water repellent', 'stain free', 'coolant', 'moisture management' and
'fragrance' are given to certain fabrics at the request of our discerning customers. Colourful
prints, elegant brasso prints and high fashion embroidered ready to stitch fancy packaged kits
- all these constitute our cutting edge efforts on the creativity front.

Executives

NAME TITLE

Rajesh Kumar Poddar Chairman/Managing Director

Nagabhushan Hegde Chief Executive Officer

Rajesh Mukesh Raut Chief Financial Officer

61
Board Members

NAME COMPANY

Rajesh Kumar Poddar Swasti Vinayaka Synthetics Ltd

Dinesh Kumar Poddar Swasti Vinayaka Art &

Heritage Corp Ltd
Sanjiv Vishwanath Rungta Swasti Vinayaka Synthetics Ltd

PIVOT LEVELS

Type R1 R2 R3 PP S1 S2 S3

Classic 2.51 2.69 2.80 2.40 2.22 2.11 1.93

Fibonacci 2.51 2.58 2.69 2.40 2.29 2.22 2.11

Camarilla 2.35 2.37 2.40 2.40 2.29 2.27 2.24

62
Balance sheet
(Rs crore)

Particulars Mar ' Mar ' Mar ' Mar ' Mar '
18 17 16 15 14
Sources of funds
Owner's fund
Equity share capital 7.00 7.00 7.00 7.00 7.00
Share application money - - - - -
Preference share capital - - - - -
Reserves & surplus 2.70 1.48 1.04 0.83 0.67
Loan funds
Secured loans 0.13 0.16 0.61 2.33 0.81
Unsecured loans 0.34 0.30 0.19 0.09 0.03
Total 10.17 8.94 8.84 10.25 8.51
Uses of funds
Fixed assets
Gross block 18.03 18.02 17.66 17.65 16.46
Less : revaluation reserve 0.82 0.86 0.91 0.96 1.00
Less : accumulated depreciation 13.74 13.22 12.69 12.05 11.58
Net block 3.47 3.93 4.06 4.65 3.87
Capital work-in-progress - - - - -
Investments 1.78 0.83 0.83 0.83 0.26
Net current assets
Current assets, loans & advances 15.83 12.50 10.35 10.27 8.43
Less : current liabilities &
provisions 10.92 8.32 6.39 5.50 4.05
Total net current assets 4.92 4.18 3.96 4.78 4.38

63
Particulars Mar ' Mar ' Mar ' Mar ' Mar '
18 17 16 15 14
Miscellaneous expenses not
written - - - - -
Total 10.17 8.94 8.84 10.25 8.51
Notes:
Book value of unquoted
investments 0.18 0.82 0.82 0.01 0.01
Market value of quoted
investments 1.56 - - - -
Contingent liabilities 1.25 - 3.31 41.76 0.59
Number of equity
sharesoutstanding (Lacs) 700.00 700.00 700.00 700.00 700.00

64
Profit loss account
(Rs crore)

Particulars
Mar ' 18 Mar ' 17 Mar ' 16 Mar ' 15 Mar ' 14
Income
Operating income 19.31 16.52 16.09 16.07 15.60
Expenses
Material consumed 11.69 9.84 10.29 10.99 10.72
Manufacturing expenses 1.66 1.26 1.32 1.64 1.51
Personnel expenses 0.87 1.04 0.84 0.75 0.60
Selling expenses - - - - -
Adminstrative expenses 1.97 1.54 1.30 0.91 1.31
Expenses capitalised - - - - -
Cost of sales 16.21 13.68 13.75 14.29 14.14
Operating profit 3.10 2.84 2.34 1.78 1.46
Other recurring income 0.32 0.08 0.08 0.40 0.02
Adjusted PBDIT 3.42 2.92 2.41 2.17 1.49
Financial expenses 0.22 0.28 0.41 0.28 0.18
Depreciation 0.47 0.49 0.66 0.69 0.34
Other write offs - - - - -
Adjusted PBT 2.73 2.15 1.34 1.20 0.97
Tax charges 0.67 0.94 0.46 0.45 0.50
Adjusted PAT 2.06 1.21 0.88 0.75 0.47
Non recurring items -0.04 - - - -
Other non cash adjustments - - - - -
Reported net profit 2.02 1.21 0.88 0.75 0.47
Earnigs before
appropriation 2.04 1.23 1.05 0.76 0.50

65
Particulars
Mar ' 18 Mar ' 17 Mar ' 16 Mar ' 15 Mar ' 14
Equity dividend 0.56 0.50 0.44 0.39 0.35
Preference dividend - - - - -
Dividend tax 0.14 0.13 0.12 0.10 0.07
Retained earnings 1.34 0.60 0.49 0.27 0.08

Cash flow
(Rs crore)

Particulars Mar ' Mar ' Mar ' Mar ' Mar '
18 17 16 15 14
Profit before tax 2.73 2.15 1.34 1.20 0.97
Net cashflow-operating
activity 3.43 3.30 - 2.71 2.75
Net cash used in investing
activity -0.98 -0.31 - -2.02 -0.25
Netcash used in fin. activity -2.33 -2.77 - -0.72 -2.49
Net inc/dec in cash and
equivlnt 0.12 0.22 0.01 -0.03 0.02
Cash and equivalnt begin of
year 0.37 0.15 0.14 0.16 0.15
Cash and equivalnt end of year 0.50 0.37 0.15 0.14 0.16

66
Dividend

Year Month Dividend (%)

2019 May 10
2018 May 10
2017 May 9
2016 May 8
2015 Jun 7
2014 May 6
2013 May 5
2012 May 5
2011 Jun 4
2010 Jun 5
2009 Mar 10
2008 Mar 5
2007 Nov 5
2007 Feb 8
2006 Jan 5
1997 Jun 30

67
Ratios
(Rs crore)

Particulars Mar ' Mar ' Mar ' Mar ' Mar '
18 17 16 15 14
Per share ratios
Adjusted EPS (Rs) 0.29 0.17 0.12 0.10 0.06
Adjusted cash EPS (Rs) 0.36 0.24 0.22 0.20 0.11
Reported EPS (Rs) 0.29 0.17 0.12 0.10 0.06
Reported cash EPS (Rs) 0.36 0.24 0.22 0.20 0.11
Dividend per share 0.10 0.09 0.08 0.07 0.06
Operating profit per share (Rs) 0.44 0.40 0.33 0.25 0.20
Book value (excl rev res) per
share EPS (Rs) 1.39 1.21 1.15 1.12 1.10
Book value (incl rev res) per
share EPS (Rs) 1.50 1.34 1.28 1.26 1.24
Net operating income per share
EPS (Rs) 2.76 2.36 2.30 2.30 2.23
Free reserves per share EPS (Rs) - - - - -
Profitability ratios
Operating margin (%) 16.06 17.18 14.52 11.05 9.37
Gross profit margin (%) 13.61 14.23 10.39 6.73 7.20
Net profit margin (%) 10.66 7.30 5.49 4.66 3.00
Adjusted cash margin (%) 12.90 10.20 9.57 8.76 5.18
Adjusted return on net worth (%) 21.23 14.21 10.98 9.56 6.12
Reported return on net worth (%) 21.23 14.21 10.98 9.56 6.12
Return on long term funds (%) 29.97 28.13 21.74 18.86 14.85
Leverage ratios
Long term debt / Equity 0.01 0.01 - - 0.01

68
Particulars Mar ' Mar ' Mar ' Mar ' Mar '
18 17 16 15 14
Total debt/equity 0.04 0.05 0.10 0.30 0.10
Owners fund as % of total source 95.38 94.84 90.90 76.38 90.14
Fixed assets turnover ratio 1.86 1.69 1.54 1.55 1.57
Liquidity ratios
Current ratio 1.45 1.50 1.62 1.87 2.08
Current ratio (inc. st loans) 1.41 1.45 1.32 1.01 1.51
Quick ratio 0.94 0.95 1.07 1.22 1.41
Inventory turnover ratio 3.53 3.64 4.55 4.48 5.71
Payout ratios
Dividend payout ratio (net profit) 33.98 52.23 63.39 65.37 89.31
Dividend payout ratio (cash
profit) 27.64 37.17 36.17 33.95 51.85
Earning retention ratio 66.02 47.77 36.61 34.63 10.69
Cash earnings retention ratio 72.36 62.83 63.83 66.05 48.15
Coverage ratios
Adjusted cash flow time total
debt 0.18 0.27 0.51 1.68 1.04
Financial charges coverage ratio 15.60 10.41 5.95 7.76 8.26
Fin. charges cov.ratio (post tax) 12.56 7.04 4.82 6.15 5.50
Component ratios
Material cost component (%
earnings) 64.62 64.53 63.53 74.16 64.54
Selling cost Component 0.01 0.02 0.03 - -
Exports as percent of total sales - - - - -
Import comp. in raw mat.
Consumed - - - - -
Long term assets / total Assets 0.27 0.31 0.32 0.34 0.32

69
BSE ADVANCE TECHNIQUE CHART

NSE ADVANCE TENHINQUE CHART

70
 CHAPTER 4
DATA ANALYSIS, INTERPRETATION & PRESENTATION

SURVEY RESULTS:-

1. IS GST IS FULLY APPLICABLE ON TEXTILE INDUSTRY?

1 YES 43

2 NO 9

INTERPRETATION:-
According to the survey 82.7% people think GST is fully applicable on textile
industry.

71
 2. IS GST IS BENFICIAL FOR TEXTILE INDUSTRY?

1 YES 47

2 NO 5

INTERPRETATION:-
According to the survey 90.4 % people think GST is beneficial for textile
industry.

72
 3. WHAT IS TAX RATE SLAB FOR TEXTILE MATERIAL?

1 5% 28

2 9% 9

3 12% 6

4 18% 9

INTERPRETATION:-
According to the survey 5% tax rate slab for textile material.

73
 4. IS THAT TAX RATE ARE DIFFERENT ON VARIOUS FABRICS?

1 YES 40

2 NO 12

INTERPRETATION:-
According to the survey most of the people think tax rate are different on various
fabrics.

74
5. THE FIBRES WHICH ARE OBTAINED BY BLENDING NATURAL AND
SYNTHETIC FIBRES ARE CALLED?

1 JOINT FIBRES 9

2 MIXED FIBERS 30

3 REAL FIBRES 6

4 ARTIFICIAL FIBRES 7

INTERPRETATION:-
According to the survey most of the people think mixed fibers are obtained by
blending natural and synthetic fibers.

75
6. WHICH OF THE FOLLOWING IS MOSTLY USED FOR MAKING
CLOTHS?

1 COTTON 31
2 LINEN 11
3 SILK 3
4 POLYSTER 7

INTERPRETATION:-
According to the survey most of the people think cotton (59.6%) is mostly used
for making cloths.

76
 7. WHICH ONE OF THE FOLLOWING IS NOT A NATURAL FIBRE?

1 COTTON 11

2 NYLON 20

3 FLAX 16

4 WOOL 5

INTERPRETATION:-
According to the survey most of the people think nylon (38.5%) is not a natural
fiber.

77
 8. WHICH OF THE FOLLOWING WAS THE FIRST MAN-MADE FIBRE
TO BE PRODUCED COMMERCIALLY?

1 RAYON 13

2 POLYSTER 17

3 NYLON 6

4 ALL OF THE ABOVE 16

INTERPRETATION:-
According to the survey 32.7% people think polyster was the first man-made fiber
to be produced commercially.

78
 9. DOES THE BUYER OF RAW COTTON FROM THE FARMER NEED
TO PAY GST ON REVERSE CHARGE BASIS?

1 YES 34

2 NO 18

INTERPRETATION:-
According to the survey 65.4% people think the buyer of raw cotton from the
farmer need to pay GST on reverse charge basis because since the cotton under
heading 5201 & 5203 has been placed under 5% rate and cotton farmer is not
liable to registration. therefore, the buyer of raw cotton from the farmers are
required to pay tax on reverse charge basis as per section 9 (4) of the CGST act.

79
 10. WHAT IS THE DIFFERENCE BETWEEN FABRIC AND MADE-UPS?
WHEATER SHAWL IS A FABRIC OR APPEREL OR MADE-UP. WHAT
IS THE RATE ON SHAWLS?

1 5% 21

2 9% 17

3 12% 11

4 18% 3

INTERPRETATION:-
According to the survey 40.4% people think 5% rate applicable on shawls. Fabric
is the cloth made out of yarn by weaving or knitting. Fabric are made in running
length and packed in rolls. Whereas made-ups are the fabrics which have been
further worked upon but not stitched into usable garments like semi-stitched suit
pieces in which the neck design is already made.

80
11. I HAVE A MANUFACTURING UNIT OF COTTON TROUSER WHERE
CUSTOMER GIVES ME FABRICS AND I HAVE TO CONVERT IT INTO
TROUSER. WHAT WOULD BE THE RATE APPLICABLE ON ME?

1 5% 32

2 18% 20

INTERPRETATION:-
According to the survey 61.5% people think 5% rate applicable on manufacturing
unit of cotton trouser because the rate for job work in relation to textile yarn (other
than man-made fibre /filament) & textile fabrics is 5%.

81
 12. HOW MUCH TIME DO YOU CURRENTLY SPEND ON SERVICE
TAX COMPLIANCES? DO YOU THINK THIS WILL INCREASE OR
REDUCE IN THE LONG TERM WITH THE INTRODUCTION OF GST?

1 Less than 25% 31

2 More than 25% 18

3 More than 50% 3

INTERPRETATION:-
According to the survey 59.6% of people think less than 25% of people spend
their time on service tax compliance.

82
 13. COTTON UNDER CHAPTER HEADING 5201 AND 5203 HAS BEEN
KEPT IN 5% RATE SLAB. DOES THIS MEAN THAT COTTON FARMER
IS REQUIRED TO REGISTER UNDER GST?

1 YES 35

2 NO 17

INTERPRETATION:-
According to the survey 67.3% of people think cotton farmer is required to
register under GST but As per section 23 (1) (b) of the CGST act, an agriculturist,
to the extent of supply of produced out of cultivation of land is not liable to
registration therefore, cotton farmer is not required to register under GST.

83
14. DO YOU THINK THE EXISTING CENVAT CREDIT RULES ARE FAIR?
ARE THE EXCLUSIONS VALID?

1 YES 16

2 NO 12

3 MAY BE 24

INTERPRETATION:-
According to the survey 46.2% of people think that the existing cenvat credit rules
may be fair. The exclusions valid may be fair but 30.8% people think that the
existing cenvat credit rules fair & 23.1% people think that the existing cenvat
credit rules not fair.

84
 15.ARE YOU SATISFY WITH THE GST TAX SLAB RATE ON TEXTILE
INDUSTRY?

1 YES 28

2 NO 6

3 MAY BE 18

INTERPRETATION:-
According to the survey most of the people (53.8%) are satisfy with the GST tax
slab rate on textile industry.

85
 CHAPTER 5
FINDING SUGGESTION & CONCLUSION
FINDING :
Findings & Discussion Major changes in tax rates specific to textile inputs/outputs :-
1. Excise duty on fabrics made from cotton alone increased from 5% to 6%
2. Excise duty on synthetic textile inputs such as polyester and viscose also increased to 12%
3. Abatement applicable to branded ready-made garments increased from 55% to 70% of the
Retail Sale Price. The overall impact of GST on the textile industry and consumers will depend
on how the available policy options are exercised in implementing GST in relation to textiles.
There is three segments that would be in a relatively disadvantageous position are:
1. Khadi and Handlooms
2. Cotton textiles
3. Carpet weaving.
The maximum number of respondents chosen for studying impact of GST on branded cloth
33% of customers are changed their brand due to the high price. The maximum number of
respondents chosen for studying the factors which leads to brand preferences, majority of
customers preferred price and quality. Majority of customer’s opinion that there is high price
changed after the GST. But there is 37% customers are preferred quality. Under the study some
customers are mostly preferred quality in their life style. While to realize that there is no
discount and offers for the branded products after GST. Most of customers are changed their
behavior after the GST. From the study conducted we can conclude that implementation of
GST there is lots of changes created by the customers mind.
The main policy options, which may be considered for specific segments or all segments of
textiles, are as follows:
A) Zero Rating:- Zero rating involves an effective mechanism for refunds and even advanced
tax jurisdictions find it difficult to implement it. It should be recognized that zero rating will
not cover producers below threshold levels. On the other hand, it may lead to rush for
registration with the central and state governments to claim the refunds. It may also open up an
avenue for claims that may be fraudulent.
B) Exemption:- Exemption The second option is exemption for selected segments. Exemption
does not mean no incidence of tax since it results in blocked input taxes. It may result in higher
tax incidence due to blocked input taxes and tax cascading. The tax impact of exemption
becomes dependent on the nature of supply chain. For example, vertical integration may reduce
the magnitude of block input taxes. This option is also not recommended as it distorts resource
allocation choices. It shifts tax burden from consumption to production. Exemption to fabrics
leads to pressure from industry for exemption from production inputs as well. This leads to
complexities in the administration of tax. In general, selective exemptions detract from the

86
supply chain neutrality as well as fiber neutrality in the textile sector. Under the GST scheme,
area-based exemptions will be discontinued.
C) Lower rate of tax:- Lower rate of tax The next option is to subject the textile segments to
the lower rate of tax, which may be possible in a dual rate regime. This is an advisable option
if the government chooses to have a lower GST rate along with a standard rate. It is also suggest
that all textile fabric categories (e.g., khadi, cotton, synthetic, and readymade garments) should
be in the same category to avoid classification disputes and maintain fibre neutrality. However,
the scope of lower tax rate needs to be determined. There will be issues if inputs are taxable at
higher rate and outputs are taxable at the lower rate. It gives rise to issues relating to refunds
and requires monitoring of refunds.
D) Standard rate of tax with appropriate subsidies:- Standard rate of tax with appropriate
subsidies another option is to apply the standard rate of tax with appropriate subsidies. If the
country goes for a single rate regime, this option may be recommended in preference to zero-
rating and exemption even if there is a net positive effect on prices. However, the price effect
of GST will depend on the actual level of the standard GST rate. A GST regime with a standard
rate results in a clean tax sys - tem. It achieves production efficiency, which is the key concern
as opposed to the regressively of the tax system.

SUGGESTION :
Some of the possible suggestions are mentioned below:-
1. Raw material bank: Yarn constitutes more than 60% of the overall cost of handloom
products. Typically major yarn spinners are not located within or near the handloom clusters
and they do not sell yarn directly to the weaver/master weaver/cooperatives. There are a
number of agents involved in the process of delivering the yarn from mill to weaver, which
increases the price of yarn and sometimes creates artificial shortage of raw material availability,
which in turn increases the price of yarn. Development of raw material (yarn) bank at a cluster
level will not only ensure continuous supply of raw material but will also help in reducing the
price of yarn.
2. Supply of handloom parts at subsidized rate: Many times handloom weavers can’t change
the defective handloom parts due to its high price. This reduces the efficiency level of the
handloom weavers and also deteriorates the quality of the products. Supply of handloom parts
at subsidized rate will help handloom weavers to improve their efficiency, which will help in
reduction of cost of production. Also, an improvement in quality will enable the handloom
weavers to charge a premium for their product.
3. Improved Dyeing facility: Colour fastness is the most common quality problem with
handloom products. Many consumers hesitate to purchase handloom products due to this
problem. Usage of age old dyeing facility is the reason behind such quality problem.
Installation of better dyeing technology at cluster level will help in solving this quality issue,
which will help in increasing the demand of handloom products and its price as well.
4. Product & design development: Supporting handloom weavers in product and design
development will help them in reducing the cost of manufacturing and developing higher value
added products, which can be sold with higher premium. This facility can be provided to
handloom weavers through training or opening facility Centre at the cluster level. It is

87
important to mention here that Ministry of Textiles is implementing many such interventions
through different schemes. The scale and coverage of those interventions might be expanded
to improve its effect on overall handloom industry.
CONCLUSION:
The impact of GST on textile industry would be substantial involving lot of transitional issues
and industry needs to gear up for implementation of GST after understanding the impact. The
Government is determined to introduced GST from 1st July 2017. We think that ideally 1st
September 2017 looks fair considering that the assesses should be given adequate time to transit
to the new regime. Early preparation could provide lot of benefits including better transition
planning. Professionals need to highlight the importance and assist the assesses in this regard
especially the SME sector.

I have studied the attached balance sheet, profit and loss account, with its ratio & with the help
of some questionnaires.

So on the above data and feedback I conclude that GST is fully applicable on textile industry
and many of people are satisfied with the GST tax slab rate on textile industry.

So therefore finally we concluded that GST was beneficial for textile industry.

88
 BIBLIOGRAPHY

 www.gst.com
 gov.gst.in
 www.gst rates in india.in
 www.gst charge.in
 www.changes in gst.in
 www.textile industry.in
 www.impact of gst on textile in india.in
4/13/2020 IMPACT OF GST ON TEXTILE INDUSTRY

IMPACT OF GST ON TEXTILE INDUSTRY

* Required

1. EMAIL ADDRESS *

2. AGE

Mark only one oval.

15-30

31-45

46-60

60 ABOVE

3. GENDER *

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MALE

FEMALE

4. QUALIFICATION *

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POST GRADUATE

GRADUATE

12TH PASS

10TH PASS

OTHER

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4/13/2020 IMPACT OF GST ON TEXTILE INDUSTRY

5. OCCUPTION *

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STUDENT

SALARIED PERSON

BUSINESSMAN

OTHER

6. Q. 1) IS GST IS FULLY APPLICABLE ON TEXTILE INDUSTRY? *

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YES

NO

7. Q. 2) IS GST IS BENIFICIAL FOR TEXTILE INDUSTRY? *

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YES

NO

8. Q. 3) WHAT IS TAX RATE SLAB FOR TEXTILE MATERIAL? *

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5%

9%

12%

18%

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4/13/2020 IMPACT OF GST ON TEXTILE INDUSTRY

9. Q. 4) IS THAT TAX RATE ARE DIFFERENT ON VARIOUS FABRICS? *

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YES

NO

10. Q. 5) THE FIBERS WHICH ARE OBTAINED BY BLENDING NATURAL AND

SYNTHETIC FIBERS ARE CALLED? *

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JOINT FIBRES

MIXED FIBERS

REAL FIBRES

ARTIFICIAL FIBERS

11. Q. 6) WHICH OF THE FOLLOWING IS MOSTLY USED FOR MAKING CLOTHS? *

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COTTON

LINEN

SILK

POLYESTER

12. Q. 7) WHICH ONE OF THE FOLLOWING IS NOT A NATURAL FIBER? *

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COTTON

NYLON

FLAX

WOOL

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4/13/2020 IMPACT OF GST ON TEXTILE INDUSTRY

13. Q. 8) WHICH OF THE FOLLOWING WAS THE FIRST MAN-MADE FIBER TO BE

PRODUCED COMMERCIALLY? *

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RAYON

POLYSTER

NYLON

ALL OF THE ABOVE

14. Q. 9) DOES THE BUYER OF RAW COTTON FROM THE FARMER NEED TO PAY GST
ON REVERSE CHARGE BASIS? *

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YES

NO

15. Q. 10) WHAT IS THE DIFFERENCE BETWEEN FABRIC AND MADE-UPS? WEATHER
SHAWL IS A FABRIC OR APPAREL OR MADE-UP. WHAT IS THE RATE ON
SHAWLS? *

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5%

9%

12%

18%

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4/13/2020 IMPACT OF GST ON TEXTILE INDUSTRY

16. Q. 11) I HAVE A MANUFACTURING UNIT OF COTTON TROUSER WHERE

CUSTOMER GIVES ME FABRICS AND I HAVE TO CONVERT IT INTO TROUSER.
WHAT WOULD BE THE RATE APPLICABLE ON ME? *

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5%

18%

17. Q. 12) HOW MUCH TIME DO YOU CURRENTLY SPEND ON SERVICE TAX
COMPLIANCE'S? DO YOU THINK THIS WILL INCREASE OR REDUCE IN THE
LONG TERM WITH THE INTRODUCTION OF GST ? *

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LESS THAN 25%

MORE THAN 25%

MORE THAN 50%

18. Q.13) COTTON UNDER CHAPTER HEADING 5201 AND 5203 HAS BEEN KEPT IN
5% RATE SLAB. DOES THIS MEAN THAT COTTON FARMER IS REQUIRED TO
REGISTER UNDER GST? *

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YES

NO

19. Q. 14) DO YOU THINK THE EXISTING CENVAT CREDIT RULES ARE FAIR? ARE THE
EXCLUSIONS VALID? *

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YES

NO

MAY BE

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4/13/2020 IMPACT OF GST ON TEXTILE INDUSTRY

20. Q. 15) ARE YOU SATISFY WITH THE GST TAX SLAB RATE ON TEXTILE INDUSTRY?
*

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YES

NO

MAY BE

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