Arvind Ltd. — Regulatory Filings 2021

Nov 19, 2021

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As you may be aware, that GST rates for fabrics and garments of all types and value have been rationalized and with effect from January 1, 2022 there will be a uniform rate of 12%.

The following are the key changes in GST rates:

• 1) Fabrics of all types -12% from 5% for cotton and 12% for non-cotton

• 2) Manmade Fibre 12% from 18%

• 3) Garments -12% (as of now, garments below Rs. 1000 were taxed at 5% and rest at 12%)

The following rates have been maintained at existing levels.

• 4) Manmade yarns at 12%

• 5) Cotton, Cotton Yarn at 5%

Currently, the textile sector has inverted duty structure (which means that input taxes as a whole are higher than output taxes). This resulted in a very large amount of funds getting blocked in GST credits. As an example, Arvind Limited has about Rs. 80 + crores funds blocked in GST. This welcome change will help textile companies including Arvind to utilize the GST credit and improve the cash flow and reduce the working capital.

Arvind’s exports constitute 55% of sales on which there is no GST and sale to domestic garment companies and brands (which in turn take input credit) constitute about 20-25% of sales.