GST circular of 18% interest on ITC credit irks weavers

Surat: Power loom weavers in the country’s largest man-made fabric (MMF) hub in the city are up in arms against Goods and Services Tax (GST) department after the latter raised interest demand of 18% on Rs650 crore worth of input tax credit (ITC).
More than 35 power loom weaving associations in the city and district on Monday opposed the decision of the GST department on 18% interest on accumulated ITC. The meeting was held at the office of Federation of Gujarat Weavers’ Welfare Association (FOGWA).

The weavers under the aegis of FOGWA have been holding a series of meetings to spread awareness on anti-industry decision taken by the GST department. Sources said the GST department implemented 18% interest on ITC so that power loom weavers willingly give up the credit and that the government won’t have to deposit the huge amount into the accounts of the unit owners.

FOGWA president Ashok Jirawala told TOI, “This is something which will ruin the entire industry. If you want ITC credit then you are bound to pay 18% tax. People here are not fools that for claiming ITC credit of 5%, they will pay 18% interest. It is a game plan of the GST department and Central government to pressurise power loom weavers to forgo ITC credit.”

Pandesara Weavers’ Cooperative Society president Ashish Gujarati said, “The 18% interest rate on ITC is totally baseless. Power loom weavers had filed a PIL in high court for claiming ITC refund. The circular issued by the GST department about 18% interest will be added in the PIL application.”