The Indian Footwear Association (IFA) and the Confederation of All India Traders (CAIT) have urged the government to reduce the Goods and Services Tax (GST) rate on footwear from 12 percent to 5%. The demand comes just days before a meeting of the GST Fitment Committee to discuss the proposed GST slab mergers.
CAIT and IFA held a press conference on April 7 to argue that nearly 85% of consumers use footwear that costs less than Rs 1,000, and that any increase in the GST tax rate will be passed on to consumers.
Any increase in the GST rate on footwear above 5% will be counterproductive to the footwear industry and its trade, according to CAIT National President B C Bhartia. CAIT and IAF, in addition to Finance Minister Nirmala Sitharaman, have sent letters to all state Finance Ministers urging them to keep footwear in the 5% GST tax bracket.
The effective GST rate on footwear costing less than Rs 1,000 has been increased from 5% to 12% as of January 1, 2022, while the rate on footwear costing more than Rs 1,000 has been reduced from 18% to 12%.
The increase in the footwear tax rate was intended to correct the inverted tax structure. However, according to CAIT’s data, only 15% of established large manufacturers and imported brands will benefit, while the vast majority of footwear manufacturers will continue to be subject to inverted duties.