Branded garments in for more relaxations

Mumbai: The government proposes some more relaxations for the branded garments sector, besides enhancement of duty abatement from 40 per cent to 55 per cent.

One of the major relaxations proposed for the sector is exemption to job workers who work for brand owners in India. This category may not be required to pay 10 per cent excise duty, which the government imposed on branded garments in the Union Budget 2011-12.

Second, branded school and corporate uniforms and materials may also be exempted from excise duty. “This means any branded uniform or blankets, quilts, etc for schools, colleges, hotels, airlines or for any other industry is likely to be exempted from payment of excise duty,” explained an official source.

Third, documentation and procedures for availing exemption from excise duty for small-scale industries may be simplified. Sources said excise officials might not inspect documents. Rather, mere certification from a chartered accountant or documents submitted for value added tax (VAT) and VAT credit would be sufficient to claim excise exemption.

The finance ministry had imposed 10 per cent excise duty on branded garments in the last Budget but later decided to enhance the cut-off limit of industries for excise payment. This was done by increasing the turnover limit eligible for seeking exemption by allowing duty abatement from 40 per cent to 55 per cent but only for 2011-12. With this relief, a unit would be eligible for SSI exemption in 2011-12 even if it had a turnover based on retail sale of Rs 8.9 crore in 2010-11.

Besides excise duty imposition, the sector, however, received a slew of benefits, from reduction of custom duty on various chemicals used for manufacturing of synthetic textile to reduction of excise duty on textile machinery. Also, basic customs duty on raw silk of all grades had been cut from 30 per cent to five per cent and specific tariff rate of 10 per cent had been prescribed for jute yarn, while it was exempted from excise duty. Textile items have been exempt from additional duties of excise under the Goods of Special Importance Act, 1957.

For raw silk , the ministry has also reduced the basic custom duty from 30 per cent to five per cent ad valorem, for augmenting domestic availability for weavers, both in the handloom and the power loom segments.

In raw silk, the government is also keeping a close watch on import volumes and domestic prices, to take steps in mitigating any adverse impact on the domestic sericulture sector.