GST Council on Friday decided to defer hike in GST on textiles from 5% to 12%.

       Hike of Goods and Services Tax rate on textiles from 5% to 12% was to come into effect from January 1.

       "GST Council has decided to defer the hike in GST rate on textiles (from 5% to 12%). The Council will review this matter in its next meeting in February 2022," said Bikram Singh, Industry Minister, Himachal Pradesh after 46th GST Council meeting in Delhi.

       The Council's decision comes after several states on Thursday flagged higher tax rate on textile products from January 1 and demanded that the rate hike be put on hold.

       In the pre-budget meeting chaired by Union Finance Minister Nirmala Sitharaman, states like Gujarat, West Bengal, Delhi, Rajasthan and Tamil Nadu said that they are not in favour of a hike in GST rate on textiles to 12 per cent, from 5 per cent currently.

       The Council, in its previous meeting on September 17, had decided to correct the inverted duty structure in footwear and textile sectors. With effect from January 1, 2022, all footwear, irrespective of prices, will attract GST at 12 per cent, and all textile products, except cotton, including readymade garments were to have 12 per cent GST.

       West Bengal's former finance minister and current advisor to state Chief Minister Amit Mitra had earlier urged the Centre to roll back a proposed hike in textile from 5 per cent to 12 per cent saying this would lead to closure of around 100,000 textile units and 1.5 million job losses.

       Telangana Industries Minister KT Rama Rao too had made a case for withdrawal of its proposed plan to increase GST rates.

       Industry too has opposed the rise in tax from 5 per cent, citing higher compliance cost especially for the unorganised sector and MSMEs besides making poor man's clothing expensive.