A day after GST Council's crucial meeting in which several landmark decisions were made, Sewing machine industry is in a fix. As on one side the GST on complete sewing machine and some parts has been reduced to 5 percent from 12 percent, but there are some components and raw material used for making sewing machine parts and machines which are currently under 18 percent tax slab, but no reduction has been made in their rates. This difference of 13% in GST rates is being seen as a big road block by the sewing machine industry in running their business smoothly as according to them huge amount of their capital will be blocked as GST refund. 

Confirming the development, Jatinder Kumar Nagpal, Finance Secretary of the Ludhiana Sewing Machine Industries Association (LSMIA), emphasized industry concerns following the GST Council’s sweeping new tax reforms, which include a substantial cut in GST on sewing machine parts, but leave raw materials taxable at the higher rate.

Speaking on the issue, Nagpal said, "Under the recent “next‑generation” GST reforms approved by the GST Council, the indirect tax structure has been simplified into just two main slabs: 5% and 18%, with 12% and 28% rates being eliminated entirely  . These reforms aim to streamline compliance and boost consumption,as part of these changes, GST on sewing machines and their parts, previously taxed at 12%, has been reduced to 5%. However some raw materials especially electrical components used in making the parts and sewing machines , remain taxed at 18%, creating a mismatch between input and output taxes. This leaves component makers paying higher GST upfront while receiving only a reduced rate on sales, forcing them to seek a 13% refund of GST from the tax authorities."

Nagpal highlighted the issue and called for urgent action: “With raw materials still at 18% and parts sold at 5%, manufacturers will necessarily seek GST refunds. We urge both the State and Central governments to ensure refunds are processed quickly, easily, and without burdensome procedures.”

He also recommended that the GST council should consider extending the 5% rate to remaining raw material, parts and electrical components used in making sewing machines & parts, which have not yet been covered by the tax cut.

This appeal mirrors concerns voiced by broader industry circles. In sectors across Ludhiana, including textiles and machinery, stakeholders have welcomed the move to two slabs but insist that timely refund mechanisms are critical to prevent cash-flow bottlenecks.

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