Cotton trading will not happen on December 15 across the nation, with millers and traders protesting against the 5 per cent GST on raw cotton.

Millers want cotton freed from the tax at the next meeting of the GST Council, slated for December 21. If it is not resolved, ginning mills have warned of a strike from December 22.

They alleged that the levy will cripple them and put a burden on farmers. Though the Centre initially agreed to remove this item from the GST list, it decided to keep it in the 5 per cent slab.

Cotton millers and traders in Telangana have said that though they are eligible for input tax credit, it would take at least four months to get the refiund.

“Most trade bodies, representing millers and traders, have demanded that the GST burden be removed as it blocks their working capital,” Bommineni Ravinder Reddy, President of Telangana Cotton Millers and Traders Welfare Association, told BusinessLine .

The association submitted memorandums to Telangana Finance Minister Eatala Rajender and to the Commercial Taxes Department, explaining how the new tax could hurt their business.

Ravinder Reddy pointed out that the cotton trade is facing a stiff competition, both at home and abroad. The additional burden could make things still more difficult for them.

The November 15 notification levied 5 per cent tax on raw cotton under the Reverse Charge Mechanism, where the supplier is not liable to pay any tax.

“Besides paying the supplier [farmer] for the goods or service, we will have to pay an additional tax of 5 per cent,” he said.

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