Site Loader

The VAT rates of silk for different states is 8% in AP, no VAT in MH and 8%, 8% and 6%respectively in BH, UP and WB. Effective Cenvat Rates for silk textile is 10.30%.POST GST:Silk is classified under chapter 50 of the HSN code system. Silkworm laying, cocoon, raw silk andsilk waste are exempt from GST. Other silk and silk products as under would attract 5% GST:• Silk yarn• Woven fabrics of silk or silk waste With no refund of ITC accumulationPresident of the Karnataka Silk Weavers’ Federation, T.V. Maruthi, feared that the quantum of taxwill be much more than 5%. “There is a chain of value addition like twisting, dyeing, processing,and embroidery before the final product comes out. So, the quantum of tax will work out to 9.5%,”he argued.Silkworm eggs, silkworm cocoon, raw silk and silk waste are exempted from GST, which is awelcome measure for the growth of the silk industry.• 5% GST is imposed on the twisted, noil and dupion silk yarns. Most of the silk reelers owntwisting operations. While there is no tax for the raw silk produced by them, 5% tax has to be paidon twisted silk. The tax revenue generated from the twisted silk may be negligible. Therefore, asper requests made by the reelers, twisters and weavers, the twisted silk may be exempted from thetax net under GST.• 5% GST has been imposed on silk fabrics.90% of the silk utilized for the production of silk sarees.70% of raw silk is consumed by the handloom sector30% of silk is utilized by power loom sector.There is no demarcation on the silk fabrics produced by the handloom weavers and power loomweavers in the GST rate schedule. Silk fabrics/sarees produced by the handloom weavers may befully exempted from the GST, as they are small and tiny operators.• In the 14th GST Council meeting conducted at Srinagar on 18.5.2017, GST rate for silkmachineries (HS code 8445) has been kept at 18%. Silk machinery manufacturers are operating intiny and small scale.As the raw silk is exempted from paying GST, the tax input credit on the machineries used for silkcannot be passed down to the value chain by the silk reelers, who purchase the machineries.Therefore, the entire tax burden of machineries is required to be borne by them.Increase in the cost of silk machineries would affect the profitability of silk reelers and silkmachinery manufacturers due to decline in sales.Considering the above and keeping the views of stakeholders during the awareness campsconducted on GST, it is opined that the silk reeling and twisting machineries may be fullyexempted or kept in the 5% tax band.Movements in prices and quantities produced post implementation of GST in comparison with thepre GST period: can be inferred from the below table that there is no significant change in cocoonand raw silk prices after implementation of GST

Post Author: admin


I'm Erica!

Would you like to get a custom essay? How about receiving a customized one?

Check it out