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A group of MPs met Union Finance Minister Nirmala Sitharaman to demand rollback of the decision to increase GST rate on raw materials and products of weavers and craftsmen from five per cent to 12 per cent from 2022. The MPs, including Amar Patnaik, Tiruchi Shiva, Sonal Mansingh and Vandana Chavan, said in the letter that the decision is a big blow to the handloom sector.
The MPs said the current notification prescribes a uniform 12 per cent rate for man-made-fibre (MMF), yarn, fabrics and apparels and with this, the rates of synthetic yarns and fibres have been decreased from 18 per cent to 12 per cent, while increasing the rate on man-made fibres, yarns, fabrics and apparel from the existing five to 12 per cent.
“The Centre’s assertion of the new duty rate aiming to correct the Inverted Duty Structure for textiles under GST regime is not tenable since as according to the Indian textile industry, only 15 per cent of the textile sector faces problems under the Inverted Duty Structure,” they said.
They added that in the industry, the MSME units that make low-cost garments may suffer from a drop in demand as the hike in GST will lead to an increase in the prices of 80 per cent of the final products. They urged the FM to take the issue up aggressively in the forthcoming meetings of the GST Council. They have sent a similar letter to Finance Ministers of various States too.
In a separate letter, Patnaik demanded for reduction of GST on health insurance policy for senior citizens. “Presently, a standard 18 per cent GST is applied on insurance premium. Therefore, on the purchase of a ₹5 lakh insurance policy, an individual between the age group of 61-65 years roughly pays ₹22,867. The application of 18 per cent GST on these insurance premiums raises the cost by ₹4,116. As the age of the insured gradually increases, the cost of financial protection from medical risks also increases. At age 75 and above, individuals roughly pay ₹6,858 as 18 per cent GST on insurance premium for the purchase of a ₹5 lakh insurance policy. In order to provide relief to our senior citizens, it is necessary to reduce the existing GST rates on health insurance policies from 18 per cent to five per cent or exempt senior citizens from any GST on purchase of health insurance,” he said.
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