The Ministry of Finance makes further amendments to GST rates on apparels, footwears and other made up textile articles effective 1st January, 2022.
Notification 14/2021-Central Tax (Rate) dated 18th November 2021(the 'Notification') has been issued to effect rate changes on items in the nature of apparels, footwears and other made up textile articles.
As per the said Notification, fabrics which are presently taxed based on a value threshold of INR 1000 (i.e. 5 percent for all apparels, garments and other made up textile falling between Chapter 61 to 63 whose taxable value is INR 1000 or below and 12 percent for such goods with taxable value above INR 1000) would be subject to a flat rate of 12 percent irrespective of the value threshold effective 1st January 2021.
In case of footwear, which are being taxed at 5 percent where the selling price is below INR 1000 would be upped to 12 percent effective 1st January 2022 while those with selling price above INR 1000 would continue to be taxed at 18 percent.
A few things for business to keep in mind would include discussing margins with vendors, deliberating on the differential tax on stocks lying with the business as on 31st December, 2021 etc.