Bizmen welcome GST reforms

Members of the Punjab Pradesh Beopar Mandal reviewed outcomes of the recent GST Council meeting. Welcoming the council’s decision to approve only two tax slabs—5 and 18 per cent—the leaders described it as a ‘milestone step’ for the Indian trade and industry.

They noted that the prolonged slowdown in business, particularly in Punjab, caused by unfavourable policies and deteriorating law and order, would now see significant relief. Expressing gratitude to Prime Minister Modi, the leaders said the decision would increase disposable income in people’s hands and open new avenues for economic activity. With the upcoming Navratri and Diwali festivals, markets are expected to witness strong revival.

The leaders further pointed out that despite an estimated annual revenue loss of Rs 48,000 crore, the PM prioritised the interests of small and medium businesses by making raw materials more affordable. They also thanked the PM and Finance Minister for addressing the long-standing demand to reduce prices in the textile and bicycle sectors.

At the same time, they expressed concern over challenges in the bicycle industry. While output GST was reduced to 5 per cent, thereby easing the burden on consumers, the input tax rate remained at 18 per cent. This had widened the inverted duty gap from 6 to 13 per cent, creating higher working capital requirements and additional refund-related paperwork for businesses.

The leaders urged the government to introduce an automatic refund mechanism through the GST portal to save both time and money. They suggested that since the government was already charging 18 per cent GST on garments and footwear priced above Rs 2,500, the inverted duty refunds could be adjusted directly from this collection rather than imposing extra procedural burdens on traders and industry.

Highlighting Punjab’s unique challenges as a border state currently battling natural disasters and suffering from an 85 per cent decline in industrial and trade investments, the leaders urged the Central Government to announce a special economic package. Such a measure, they said, would enable Punjab’s traders, like its farmers, to regain self-reliance and restore economic stability.

Meanwhile, the Federation of Punjab Small Industries Association (FOPSIA) strongly condemned the increase in the inverted duty structure under the GST regime, terming it as a major setback for manufacturers. FOPSIA president Badish Jindal said nearly 50 per cent of manufacturers’ capital would get stuck with the GST department since the average refund time in Punjab was around four months. “This will not only choke working capital but also increase corruption, as the industrialists will be forced to pay huge bribes for getting refunds released,” he alleged.

He pointed out that traders and assemblers would gain from this move as the prices of cycles and sewing machines were likely to fall by 7 per cent. However, Jindal cautioned that bogus billing in the cycle industry would rise sharply. “Those indulging in such practices will sell invoices of bicycles at zero tax and buy bills by paying 9 per cent GST, thereby making a 4 per cent profit merely through billing manipulations,” he explained.

FOPSIA has urged the government either to bring down GST on steel or to automate the refund process with the filing of monthly returns. “The present system is unacceptable and will severely harm genuine manufacturers,” Jindal asserted.

18% GST on apparel blow to honest traders

The Punjab Textile Merchants Association said they had welcomed GST, but raising the rate to 18 per cent on apparel above Rs 2,500 while fabrics remained at 5 per cent would distort the market. It would hurt organised retailers, confuse consumers and benefit the unorganised sector. We urge the government to reconsider and keep a uniform 5 per cent rate for the healthy growth of the textile and apparel industry, said Sonu Nilibar from the association.

The Executive Committee of ATIU was held on Thursday to discuss the effects of GST reforms. The meeting, chaired by president Pankaj Sharma, termed these reforms as landmark for the Indian industry.

Pankaj said, “The landmark GST reforms announced by the government are unprecedented and transformative. For the first time, the tax system has been simplified into a two-slab structure, abolishing the earlier 12 per cent and 28 per cent slabs. This move will give a massive boost to local industry, particularly in Ludhiana, which has over one lakh registered MSME units.”