IMPACT OF GST ON TEXTILES INDUSTRY

By growbiz

India’s textiles industry is one of the oldest industries in Indian economy dating back several centuries. Role of Textile Industry in India GDP has been quite significant and beneficial in the economic and social upliftment of the citizens of the country. The worldwide trade of textiles and clothing has boosted up the GDP of India to a great extent as this sector has brought in a huge amount of revenue in the country. The Indian Textiles and Apparel Industry contributes nearly to 10% of manufacturing production, 2% of India’s GDP and constitute 13% of Country’s export earnings.

Panipat, Ludhiana, Varanasi, Ahmedabad, Surat, Jaipur, Aurangabad are some of the famous textiles destinations of the region.

Introduction of GST regime w.e.f. 1st July 2017 will impact the whole textiles industry. Fabrics which was exempt under the old structure would now be taxed at 5%. Most of the textile items will be taxed @5% and 12%. Introduction of GST, replacing the present indirect taxation could have considerable impact on textiles industry. Impact of Goods & Service Tax (GST) on textiles industry could be determined only after some time as regular changes are taking place in the GST Law.

Under the current Indirect taxation System, tax is linked with production (as opposed to consumption) which leads to blockage of input taxes which tends to higher cost of production, whereas under the GST regime, it is expected that it will eliminate the blockage of input tax credit caused due to break of input tax credit chain as it shifts the tax burden from production to consumption. In GST regime, most of the indirect taxes such as Central Excise Duty, Service Tax, VAT/Sales Tax and Entry Tax would get subsumed. That is why it is said that GST IS ONE NATION ONE TAX

Comparison:

  • 1. Benefit to consumers:

    We can compare the old structure and GST structure as under:

    Current Taxation System

    Product Sold from Panipat To Karnal

    Price = Rs.1000

    Vat @ 10 % i.e. Rs.100/-

    Product Sold From Karnal To Pune

    Cost = Rs.1100

    Profit = Rs.1000

    Sale Price = Rs.2100

    CST @ 10% = Rs.210/-

    Total cost of Product= Rs.2310/-

    Current Taxation System

    Product Sold from Panipat To Karnal

    Price = Rs. 1000

    CGST @ 5% = Rs.50/- SGST @ 5% = Rs.50/-

    Product Sold From Karnal To Pune

    Cost = Rs.1100

    Profit = Rs.1000

    Sale Price = Rs.2100

    IGST @ 10% = Rs.110 /- i.e. 210- CGST - SGST

    Total cost of Product= Rs.2210/-

    Difference of Cost of Product between Current Tax and under GST system is Rs.2310-2210 = Rs.100/- which will ultimately benefit the ultimate consumers at large.

  • 2. Easy IT Compliance Structure:

    Under the current indirect taxation system, there is complexity in compliance and administration whereas GST provides simplified and automated procedure through a common portal GSTN, which improves the environment of compliance.
  • 3. Easy refund on Exports:

    Presently, Manufacturer and Traders are not inclined towards export due to extensive procedure cost and deferment in the processing of duty drawback, under GST, the system of duty drawback will lose its significance. Input tax credit will be provided as a refund under GST instead of current duty drawback scheme. And it would not be incorrect to say that it will lead to promote export of textiles products which leads the Indian economy at boom.
  • 4. GST Rate Matters:

    Besides the positive impacts there may be few drawbacks of GST due to high rate of taxes. For Textiles industry and its products, the GST rate of 12% can have a negative impact. Earlier, the assesses are paying 1.2% Excise duty + 5-6% of VAT which amounts to 6-7.2 % tax, on the other hand under proposed GST regime, the assesse have to pay 12 % tax which would be costlier for the assesse.

Besides of this drawback it would not be incorrect to say that GST will help this industry in the long run by getting more registered taxpayers and a well regulated system.

Praneta Mahatma

STORY OF KESH KING ENTREPRENEUR FROM AMBALA

By growbiz

‘Kesh King’ Entrepreneur who created a great brand and made Fortune in just 6 years

Have you ever heard the brand name ‘Kesh King’ and the entrepreneur behind the brand. He is Mr. Sanjeev Juneja; who created and launched this brand in

Ambala in the year 2009. In just 6 years, he sold this brand to Emami for Rs. 1651 Crore.

Here is the story of Mr. Sanjeev Juneja, a First Generation Entrepreneur who made huge money by creating a brand, working on its promotion and finally, selling it for Rs. 1651 Crore in just 6 years to Emami.

A young entrepreneur aged 41 years, started his career in 2008 when the idea to launch a hair oil brand struck him. His father was a Ayurvedic doctor who used to run a small clinic in Mohali. His father has formulated a hair oil but passed away before its launch. Although, Mr. Sanjeev Juneja was not a doctor, in took interest in Ayurveda and launched this hair oil product under ‘Kesh King’ brand in Ambala in 2009. In the first 2 years of launch, he used to visit shop to shop to convince retailers to stock and sell his product. He has to work hard to convince the consumers. But, soon things started to change and this brand was liked by consumer in Haryana and neighboring states. He invested heavily in creating this brand value in the consumer's mind and engaged former Miss India and the leading bollywood star Ms. Juhi Chawla, in its promotions. The brand ‘Kesh King’ was liked by everyone and became a leading brand in hair oil segment in India.

After creating this brand, he decided to sell ‘Kesh King’ brand and quoted Rs 2,200 crore. There were a plenty of FMCG players, such as Bajaj, Dabur, Wipro and Marico. This figure was more than 7 times its annual sales of Rs. 300 crore. Finally, Kolkata based Emami clinched the deal with Mr. Sanjeev Juneja for Rs. 1651 Crore. Emami sees a potential in the brand and looks at it as a strategic decision to expand its presence in the hair oil segment all over India.

Mr. Sanjeev Juneja has also created many other brands covering pain, skin and health segments. He created ‘Dr. Ortho’ a body pain solution, ‘Roop Mantra’ a skin care product, ‘Sachi Saheli’ women's health product and ‘More Power’ a health supplement product and many more.

Mr. Sanjeev Juneja always promoted Ayurveda and developed innovative solutions. He cover various healthcare segments such as pain, skin and health. He has adhered to the best quality standards of his products and able to convince his consumers.

So, create a entrepreneur in yourself and Create a Brand for You. Your Brand is your most valuable asset. Your hard work at present for some time may earn you great rewards in future.

(Source: Excerpts from Google. The Author disclaim any liability)

Gargi Arora

CREATE YOUR START-UP

By growbiz

Someone has rightly said that If You want to make a meaningful contribution to your country, young blood is a good place to start. Today, We are in the world where new START-UPS are born everyday by young guys after completing their education.

We think that all organisations and the Govt. should facilitate and support these young entrepreneurs and change makers/innovators who are the future of industry growth in India.

We have a clear purpose to support these Young People with innovative business ideas to take initiatives and become a successful entrepreneur. We strongly believe that business models will have to change now, and it can’t be business as usual anymore.

GROWBIZ model is a unique and universally acceptable business model for your business START-UP and growth.

Our mission is to support You to establish and grow your business while reducing procedural hurdles, work out your core competencies, envision your business, drive profitable growth for your brand, saving cost and fuelling innovation.

So, You Young Guys. Start Your Business Journey Today. If you have a Idea, We can support you to work out a business for You. We can ensure that You Start Your Business early.

CS Shweta Sagwal