GoM Eyes Relief on GST for Textiles & Footwear: What It Means for Consumers & Businesses
In a move aimed at stimulating domestic demand, the Group of Ministers (GoM) on GST rate rationalisation is likely to propose an increase in the price threshold for lower GST on textiles and footwear, sources close to the government told Moneycontrol.
Currently, GST on textiles priced below ₹1,000 stands at 5%, while prices above that attract 12% GST. Similarly, footwear is taxed at 12% up to ₹1,000 and 18% beyond. The GoM is reportedly reviewing these limits and may recommend raising the cap to ₹1,200 or even ₹1,500 in the next GST Council meeting.
🧵 Proposed Changes in GST Slabs
| Item | Current GST Rate | New Proposed Threshold | Proposed GST Rate |
|---|---|---|---|
| Textiles | 5% (Below ₹1,000) 12% (Above ₹1,000) | Up to ₹1,500 (likely) | 5% |
| Footwear | 12% (Below ₹1,000) 18% (Above ₹1,000) | Up to ₹1,500 (likely) | 12% |
📈 Why This Change Matters: Economic & Sectoral Impact
1. Boost to Middle-Income Consumers
Price-sensitive consumers often face an indirect price hike due to the sudden jump in GST slabs. For example, a shirt priced at ₹1,050 attracts 12% GST instead of 5%, inflating the final cost significantly.2. Demand Push in MSME Sector
The textile and footwear sectors are MSME-heavy, and tax rationalisation could encourage higher sales volumes.🎯 According to a Ministry of Textiles report, the Indian textile sector contributes around 2% to GDP and employs over 4.5 crore people directly and indirectly.
3. Aligning Direct and Indirect Tax Relief
🗣️ “Price sensitivity in these sectors is high. A lower effective tax burden on mid-range goods can incentivise volume-driven growth,” – Govt source quoted by Moneycontrol.
By combining GST tweaks with direct tax relief from Budget 2024, the government aims to trigger demand-side revival, especially in rural and semi-urban India.
⚖️ Legal & Policy Perspective: Scope for Rationalisation
- The GST Council, under Article 279A of the Constitution, has powers to recommend rate changes.
- Past legal discussions on tax slab complexity have also reached the Supreme Court in cases like Hero Motocorp Ltd vs UOI (2022), where multiple GST slabs on similar goods were questioned for discrimination.
- The ongoing rationalisation aligns with the 15th Finance Commission’s call for a simpler GST framework to reduce litigation and improve compliance.