New Delhi, March 17 -- Central Goods and Services Tax (CGST) officials have launched investigations into more than two dozen textile manufacturing companies across India in recent months for allegedly misclassifying textile processing activities, resulting in lower tax payments.

According to official sources, the CGST department has observed that several textile manufacturers are recording activities that involve 'changing the nature of cloth' as 'washing and dyeing,' thereby paying a lower tax rate on those incomes, reported FT.

Under GST laws, washing and dyeing are classified as 'job work services' in the textile industry and attract a GST rate of 5 per cent.

However, processes that significantly transform the fabric, such as bleach...