The impact of the GST is likely to be neutral to positive across segments in the textile industry compared to the current tax regime, ICRA said in a report. As per the rating agency's estimates, the effective tax incidence on cotton and man-made fibre (MMF) or blended textiles under the existing tax regime is in the range of 5-7 per cent and 11-14 per cent, respectively.
Besides excise duty, this captures the impact of other multiple levies such as VAT, Central Sales Tax (CST) and entry tax or octroi, the report said. Considering that the GST rates announced for these textile categories are more or less in line with the existing effective tax rates, ICRA does not envisage any impact on these product categories.