Permanent solution sought for raw materials price hike.
Even as the Central Budget 2022 is to be announced shortly, industrialists across Coimbatore are expecting a reduction of GST, removal of import duty on cotton, cotton waste, exemptions under Income Tax, enhancement of the CAP of Rs.45 lakhs on affordable housing from the existing Rs.45 lakhs to Rs.75 lakhs in non-metro Cities, establishing new PSU in Coimbatore and permanent solutions for abnormal price hikes of raw materials etc., among other things.
The Confederation of Indian Textile Industry (CITI) Chairman, T Rajkumar stated:
1. Government should remove 10% Import Duty on Cotton and Cotton Waste (5% Basic Customs Duty and 5% Agriculture Infrastructure Development Cess).
2. Reduce Basic Customs Duty on Backing Textile Fabric, a raw material for making man-made textile carpets from 25% to 10%.
3. RoDTEP Scheme: Rates under RoDTEP Scheme may kindly be reviewed for the knitted fabric.
4. a) Duty Drawback Rates: Reimbursement of Central/ State Taxes not being reimbursed through GST credits. There has been a tremendous reduction in the duty drawback rates when compared with the rates before 30.09.2017, for entire textile value chain post GST resulting in exports showing a declining trend.
For achieving the Vision of T&C Industry of US$ 350 billion market size by 2025, it is imperative that many policy interventions are required from the Government's end. One of them is that the Ministry of Textile and Department of Revenue may be requested to seek cabinet clearance for the reimbursement of those central/state taxes which are not currently reimbursed through GST. This could be done by amending the duty drawback rules.
b) Viscose Staple Fibre (HS Code 5504): Government may treat all the segments of MMF equally and not favour any one of them. Hence, duty drawback rates for Viscose Staple Fibre (HS Code 5504) may also be increased from 1.5% to 1.9%.
c) Removal of Customs Duty on Dissolving Grade (DG) Pulp (HS Code 4702): Government may remove Basic Customs Duty on import of Dissolving Grade Pulp (HS Code 4702) from the current level of 2.5% to Zero. It will help the downstream segments to avail raw material at internationally competitive prices.
5. Utilization of Duty Credit scrips for the payment of IGST, CGST and SGST: As allowed, prior to implementation of GST, duty credit scrips may also be allowed for the payment of IGST, CGST and SGST. Otherwise, in spite of having substantial unutilized duty credit scrips, the Importer will be forced to pay duty at the time of import clearance / clearance of finished goods in domestic market."
The South India Mills Association (SIMA), Chairman, Ravi Sam said, "The textile industry stands second in generating more employment throughout the nation next to agriculture. 110 million people have got employment both directly and indirectly. In global garment exports, India's share is 5.2%. Since Government has identified the textile industry as trust area for economic growth of the nation and many schemes have been announced.
A) Remove Import Duty on Cotton
In the upcoming Central Budget, the Government should remove 10% Import Duty on Cotton and Cotton Waste (5% Basic Customs Duty and 5% Agriculture Infrastructure Development Cess).
ECLGS 2.0 - Appeal to remove the condition relating to the outstanding total loan limit of Rs.500 crores and cap the maximum loan eligibility at not more than Rs.100 crores.
B) GST on fuel used for Generation of Electricity.
C) TUFS (Technology Upgradation Fund Scheme).
The industry had requested for a fund allocation of Rs.9,000 crores to release the subsidy for the cases pending under ATUFS and committed liabilities under previous versions of TUFS viz., MTUFS, RTUFS and RRTUFS. Rs.700 crores has only been allotted for ATUFS and there is no provision made for the committed liabilities under previous versions of TUFS under the Union Budget 2021-22.
D) Increased GST Rates on garments below MRP Rs.1,000
Government to reconsider the decision of 12% GST on Fabrics and Ready made Garments below Rs.1,000 effective from 1st January 2022 and further request to find alternate solutions to address the Inverted Duty Structure issue in the MMF textiles value chain in the overall interest of the T&C Industry. In the absence of such a solution, we request the Government of India and the GST Council to maintain the current status quo.
E) Income Tax Benefits: Government should carry out appropriate amendment by way of explanation to exclude the industries/ units from section 80JJAA(ii)(b) of the Income Tax Act 1961, which are covered under SPELSGU and create additional employment (new jobs) within the meaning of clause (ii) of section 80JJAA of the Income Tax Act 1961.
F) Hank Yarn Obligation
Government should reduce the hank yarn obligation from 30% to 15% (as already recommended by the Office of the Textile Commissioner) and also reduce the number of items from 11 to 3 items prescribing the fabric construction details under Handloom Reservation Act to enable Ease of Doing Business.
The Pesident of Indian Chamber of Commerce and Industry (ICCI) Coimbatore, C Balasubramanian said,
A) Ease of doing business under GST: We requested the Hon’ble Union Minster to take steps for simplification of GST and easing of compliances in the GST as per recommendation of the GST Council. We appealed for simplification and waiver of the stringent provisions under CGST Act 2017 / CGST Rules 2017 which have been incorporated to the year 2021 causing pains to the businessmen. We have prayed to make the GST a Good and Simple Tax as it was named when implemented.
B) Withdrawal of Section 194Q of the Income Tax Act 1961 and Section 206AB of Income Tax Act 1961
The undersigned met the Hon’ble Union Finance Minister at Chennai and submitted an elaborate memorandum for withdrawal of the above sections, and justifying the facts and figures for these withdrawals. We have also pointed out that MSMEs small and marginal assesses would benefit out of these withdrawals. The provisions of Section 194Q and Section 206AB is a retrograde step by the Government for Ease of doing business in the country and deserve a revisit to the provisions of the Income Tax Act and withdraw the applicability of these Section to render justice to the honest tax payers of this country.
We also appealed for extension of time for filing of GSTR Annual Return for the financial years 1917, 1918, 1919 & 2020, waiver of interest on payments as per GSTR 3B for all assesses up to annual turnover of Rs.10 crores, reduction of GST rates on medical oxygen and introduction of special scheme to make payment of all refund under GST law and requested for all pending disputes under Sab-ka-Viswas scheme should be reviewed and grievances to be redressed.
We have also mentioned about the impact of the raw material prices.
C) Financial Support to MSMEs
Chamber has submitted a memorandum to Hon’ble Union Minister for Finance, Smt Nirmala Sitharaman, pleading for her favourable consideration for sanction of certain relief measures for smooth functioning of MSEs. We appealed to treat the MSMEs as a Priority Sector, Formation of a Committee to examine their difficulties; Ease of financing assistance, much relaxed norms for MSME with regard to CIBIL score which is a must. We pointed out that MSEs play a crucial role in providing employment opportunities for more than 12 crores people in India.
But they struggle to get easy access to funds from banks when needed and hence we requested the Minister to sanction Covid loans to MSMEs without any delay. We also appealed that MSMEs should be a priority sector. We also appealed for 6% interest on loans for MSMEs for 7 years term, Provision of special capital subsidies upto 30% to all manufacturing industries whether new or for expansion and to increase NPA norms from 90 days to 180 days for MSMEs".
The 'CREDAI', Coimbatore, Past Chairman Rajesh Lund stated that "The Government should increase the limit of Home Loan interest reduction for Tax rebate to 5 Lakhs from the existing 2 Lakhs. Long term Capital Gains on sale of house property should be charged @ 10% and Individual Tax to be rationalised @25% (to boost demand). To enhance the CAP of 45 Lakhs on affordable housing from the existing 45 Lakhs to 75 Lakhs in non-metro cities and also increase the area to 120 Sq.Mts., from the existing 90 Sq.Mts.
To bring Realty under Infrastructure status and new provisions for encouraging Rental Housing, Single window clearances and Input Tax GST Credit for Developers. Extension of Credit Link Subsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana (PMAY) till March 2023 will be beneficial. These few changes will incentivise the Real Estate Sector and will have a Multiplier effect on 270 Allied Industries and aid job creation," he added.
The Tamil Nadu Small and Tiny Industries Association (TANSTIA), Vice President, S Surulivel said, "Individual income tax to be enhanced.
i. The basic income tax exemption limit of Rs.2.5 lakhs to be enhanced to 5 lakhs.
ii) GST slab to be changed.
iii) GST for job work to be reduced to 5%.
iv) GST on Financial services to be reduced. The bank charges are more because of GST added to its service cost.
v) Working capital norms to be changed. Now the working capital is 20% of the turnover but this should be changed to 40% due to Corona impact which will help companies revive.
vi) GST on Automobiles to be reduced to 12% so that auto sector is also revived.
vii) Special packages to be announced for Micro sector to support unregistered and unorganized Micro sector in getting bank loans in an easy manner.
viii) Resume tax holiday benefits under Income tax Act u/s 801A for renewable energy undertakings which will increase the solar energy production."
The Tamil Nadu Open End Spinning Mills Association (OSMA), Administrator, Arulmozhi said, "OE Mills play a vital role in providing employment. More than 3 lakh people have got employment both directly and indirectly in the OE Mills sector. Bedsheets, towels, jeans, kitchen made-ups, and various other products are manufactured using the yarn (2s count till 40s count) manufactured by OE Mills.
Powerloom and Made up industry depend on OE yarn. OE Mills play a vital role in catering to the clothing needs of poor people. 70% of the powerlooms functioning in Coimbatore, Tiruppur and Erode districts and 100% made-ups manufacturing industries in Karur and Chennimalai depend on the yarn made by OE Mills.OSMA request accumulated input tax credit refund should be released every month, so it will be helpful for OE mills working capital during this pandemic period," he added.
Pet bottle recycle polyster gst should be reduced to 5% gst from 18% 2.openend spinning machines and spares are not manufacture in india its fully imported from other countries central govt should consider remove customes duty on oe machinery and spares.
Coimbatore, Tiruppur Districts Micro and Cottage Entrepreneurs Association (COTMA), President, C Sivakumar stated that "Interest rates for loans (both already existing and new loans) in public sector banks should be reduced. GST rates for micro industrialists must be reduced from 12% to 5%. The New Public Sector Enterprises should be started in Coimbatore. A permanent solution should be found for the abnormal raw material price hike issue," he added.
Laghu Udyog Bharati's State General Secretary, M Sivakumar stated:
"1. GST on Job Work on Engineering Goods
Laghu Udyog Bharati has been consistently escalating the pain undergone especially by the Micro Manufacturing Units – wherein, prior to GST they did not have any incidence of taxation – but now they are burdened with 12%, which is too high. Hence we strongly advocate to the Hon’ble Finance Minister the following:
GST on Job Work shall be immediately brought down to 5% and the Input Tax Credit for Capital Goods shall be distributed over three years. By this there would not be any situation of any refund, whatsoever. Most of the Micro Manufacturing Units (MMUs) supply to industries who are not covered under TReDs receive payments only after 90-120 days. This puts a huge financial burden on the MMUs, even to pay statutory dues such as GST, ESI, PF & Electricity Charges.
To alleviate this problem, we suggest to introduce a credit mechanism on the lines of Kissan Card for MMUs to meet their statutory obligations. This facility shall not be used for meeting other working capital needs and shall address only statutory dues. 90 days Interest Free Credit shall be given for repaying this amount. This would ensure prompt payment statutory dues which would ensure timely receipts to the Government. This would also ensure the MSME Credit Rating and help the MMUs in their growth and further development.
One Nation One Tax: Laghu Udyog Bharati sincerely appreciates the concept of One Nation One Tax. However, the same is not experienced in practicality. We have three modes of GST: IGST, CGST & SGST. This has to be done away with and following are our suggestions: "Government shall work out an internal procedure of sharing the GST amongst its stake holders and Tax Payers should be charged only ONE GST.
This would go a long way in simplification of the Tax structure and the complications thereof. Alternatively, Tax Payers should be allowed Inter-Usage of Credit and request Hon’ble Finance Minister for consideration on the above. Rationalization of GST slabs - Based on Essential, non-essential and intermediary – Under ease of doing business; which is a long-term vision missed out while introducing GST. A simple categorization of products based on their essentialness would avoid any litigation on applicability of slab rates and easy to administer.
This can be kept in mind for future rationalization of GST. CGTMSE” Scheme to be extended with an additional maximum limit of 10 crores with subsidy - 1.5 crores to the benefit of MSME’s. NPA NORMS to be increased from 90 days to 180 days for MSME’s," he added.