Industrialists in the powerloom weaving sector have accused the Tax Research Unit (TRU) under the Union ministry of finance of denying the utilisation of accumulated input tax credit (ITC). TRU had thus superseded the decision taken by the GST Council to allow refund of ITC on fabrics in its 28th meeting on July 21, 2018. The meeting decided to allow refund of accumulated ITC because of inverted duty structure on the MMF fabrics, which attracts 5 per cent GST. It was also decided that the ITC shall be allowed only with the prospective effect on the purchase made after the issuance of the notification.

Weavers say, a meeting was held under the Chairmanship of Finance Minister Piyush Goyal along with Revenue Secretary Hasmukh Adhia, Textile Minister Smriti Irani and members of the textile industry from Surat on July 20. The meeting unanimously decided not to refund the accumulated credit of the past period, but income tax would be levied on the credit amount up to July 2018. The refund of accumulated ITC would be allowed on the inputs after August 1.