GST rate rationalisation to boost revenue growth of organised apparel retail sector

The recent Goods and Services Tax (GST) rationalisation will add about 200 basis points to revenue growth of India’s organised apparel retail sector this fiscal, keeping it steady at 13-14% for the second consecutive fiscal, according to Crisil Ratings.

The GST rate cut on apparel priced below ₹2,500 is likely to lift the demand in the mid-premium segment, while the fast fashion/value segment, which account for 65 % of the sector’s revenue, will continue to drive the momentum. The uniform 5% GST, compared with the previous dual structure of 5% for apparel priced below ₹1,000 and 12% for those between ₹1,000 and ₹2,500, has widened the consumption base. The increase in the GST on apparel priced more than ₹2,500 from 12% to 18% has weighed on premium categories, including wedding wear, woollens, handlooms and embroidered clothing that account for about 35% of the organised apparel sales.

source:thehindu.com