Table of contentsThe old tax regimeImpact of GST on the textile industrySome negative impacts of GST on the textile industryThe Indian textile industry is a major contributor to the economy as it contributes about 12 percent of the country's GDP. It is one of the oldest contributors to the economy and second only to agriculture. The Indian textile industry provides a considerable share of employment to skilled and unskilled labor. The industry contributes immensely to exports as 10 to 15 percent of total exports come from the textile industry itself. It is one of the few industries that is vertically integrated and has huge potential for considerable expansion. The textile industry has two major segments: Say no to plagiarism. Get a tailor-made essay on “Why violent video games should not be banned”?Get the original essayYarns and fibers (natural and synthetic)Processed fabrics and ready-made clothingThe old tax regimeThe old tax regime consisted of indirect taxes in various sectors. The textile industry was taxed both centrally and by the state. The scheme was imposed central excise duties. Special excise duties and additional duties were also imposed. Under this structure, no input tax credits were applied and cotton tax was payable at the time of removal. The structure included VAT which is a form of sales tax collected by the state. Tax is payable at the time of sale and tax is added at each stage based on the inputs added. The scheme imposed central sales tax which is collected by the union and retained by the state along with entry tax, customs duties as well as export incentives. Impact of GST on Textile Industry With the implementation of GST, the industry's contribution to exports has increased. significantly. The GST has increased the industry's tax rate from what it was previously. Under the old regime, wool and cotton were completely exempt from the tax structure. A large part of the textile industry falls under the unorganized sector which creates a gap in the flow of input tax credit as in the unorganized sector there are no registered taxpayers and there is no there is no input from them. The implementation of GST has helped curb the unorganized sector and streamline input tax credit. GST has helped in reducing manufacturing costs by reducing margins such as gratification, entry tax, luxury tax, etc. GST has streamlined the process of claiming input tax credit and made the textile industry more competitive in the global market. Under GST, input tax credit is given in the form of refund and hence duty drawbacks have lost their importance. GST helps the textile industry in the long run by attracting more registered taxpayers under a well-regulated system and creating an enabling environment for long-term sustainable growth. Some Negative Impacts of GST on Textile IndustryTransfer of goods as inventory: Transfer of goods to another place will be liable for GST if the transfer is in the course of interstate commerce. If there are separate dealers of a dealer and a separate GST registration number is obtained for each such dealer, the transfer of any supply between such dealers will also be subject to GST. While there is no CST/tax on stock transfers. Early booking: it is necessary in this..