Circular No. 205/17/2023
This circular provides guidance on the GST rate for imitation zari thread or yarn. The GST Council had earlier recommended a 5% rate, leading to insertion of Sl. No. 218AA in Schedule I. Questions were raised about whether metallised polyester or plastic film, when converted into metallised yarn and twisted with other fibres to make imitation zari, should also fall under this entry.
The circular explains that HS 5605 covers yarn made by combining textile material with metal thread or metal-coated plastic film, including products formed by layering metal-coated plastic film between plastic sheets. Based on this, it clarifies that imitation zari thread or yarn produced from metallised polyester or plastic film is covered under Sl. No. 218AA and attracts 5% GST.
It also states that refund of accumulated ITC will not be allowed on metallised polyester/plastic film due to inverted duty structure, with corresponding amendments made through Notification 20/2023-CTR dated 19.10.2023.
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