New Delhi, Dec 31 : Amid demands from a section of industry and several states, the GST Council on Friday decided to defer an increase in GST on textiles from 5 percent to 12 percent.

The new rate aimed at correcting the inverted duty structure was scheduled to kick off from January 1.

The inverted duty structure refers to a situation when rate of tax on raw inputs is higher than those on finished products.

Addressing the media after the GST Council meeting, Union Finance Minister Nirmala Sitharaman said the Council had decided to retain the status quo and not go for increase in rate to 12 per cent from 5 per cent now in case of textiles.

“There was only one agenda. It was trigger of a letter written to me by the Gujarat Finance Minister requesting reconsideration of the September 2021 decision in the Council and that decision was taken more in the process of correcting the inversion in the tax structure,” the Minister said.

Making a case for deferment of GST hike on textiles, the Gujarat Minister had said that the current time was not the best time to go for an upward revision in tax.

Reacting to the decision, the Delhi-based Confederation of All India Traders (CAIT) said the move to hold the hike in GST on textiles would bring relief to lakhs of textile traders of the country who were under immense stress for more than a month.

The issue of GST on textiles would now be first considered by a Committee headed by Karnataka Chief Minister Basavaraj Bommai which is already looking into rate rationalisation under the new indirect tax regime.

“As you already know there is already a Committee to look at the rate rationalisation being headed by the then Finance Minister of Karnataka who is incidentally the Chief Minister now. Under him there is a committee which is looking into rate rationalisiation. It was decided today in the emergency meeting that textile again will be put to the Committee to review it along with other items,” Sitharaman said.

The Committee would submit its report by February-end and then it will be taken up by the GST Council.(UNI)