Garment traders in Jharkhand may close shop for a day in protest against the five per cent Goods and Services Tax (GST). They say it is extremely difficult for a trader doing his garment business in almost no space and sometimes at almost no profit to install a set-up for GST compliance. The systems, training and education and so many other things associated with it would only force traders to exit the business if GST is imposed on garments.

The Jharkhand Wholesale Garment Traders Association has strongly opposed the five per cent GST on garments saying that garments are a basic need of the poorest of the poor and imposing any tax on garments would be similar to imposing a tax on shrouds.

GST would benefit the industry in terms of lower logistic costs, low lead times, make pan-India selling easier by removal of forms needed, reduce administrative hassles by creating a single tax window, reduce costs by allowing taxes in all expenses to be adjusted etc.

However there a few oversights and anomalies which need to be corrected. Textiles is a very fragmented and unorganised industry. Mostly manufacturers just do a single process and hence a lot of job working is involved. Pre GST it was recognised as a manufacturing activity and exempt from service tax. However such exemption is missing in the current GST exemptions for services. This means it would have a 18 per cent GST rate which would make the job work segments and their principals uncompetitive against large composite mills who will not have this impact due to in-house production.