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The Confederation of All India Traders on Thursday urged Union Finance Minister Nirmala Sitharaman to withdraw the proposed GST tax on textiles.

In the GST Council meeting in late 2021, it was unanimously decided to defer the hike in tax rate on textiles from 5 per cent to 12 per cent and the matter was sent to the tax rate rationalisation committee which will submit its report by February.

Currently, the textiles sector is being taxed at 5 per cent tax rate, the traders' body said.

In a joint statement, CAIT National President B.C. Bhartia and Secretary General Praveen Khandelwal said: "In communication to Mrs Sitharaman, we said that the proposed hike, which is in abeyance stage, should be withdrawn in the larger interest of consumers of the country as such hike will load an extra burden of 7 per cent tax rate on general consumers and will also hit the traders by blocking their capital with the department in the shape of refunds."

There was no tax on textile or fabrics for a number of years, the joint statement added.

The increase in GST rates on textile will not only add to the financial burden on end users but will also affect small businessmen badly and will encourage evasion of tax and various malpractices being undertaken by habitual offenders of law, the trade body said.

"Bringing the textile Industry back under the tax net itself was a big blow to the entire textile industry. The trade associations across India led by CAIT had made representations immediately after the last GST Council meeting wherein it was proposed to correct the inverted duty structure on textile."

It was requested by the trade and industry that the status quo be maintained at 5 per cent and the rate be reduced from 12 per cent to 5 per cent, wherever applicable, it said.

"This view of the traders was also supported by Union Textile Minister Piyush Goyal who categorically assured a CAIT delegation that Textile Ministry is in favor of keeping the textile under tax rate of 5 per cent and the Ministry has already informed the Finance Ministry about the view," the statement said.