Garment makers seek excise duty rollback

In his latest Budget, the FM imposed 1% excise duty on readymade garments worth over Rs 1,000

Textile companies have urged the government to roll back the proposed excise duty on branded readymade garments and continue with the ‘optional duty regime’ that applies currently, until the goods and services tax (GST) is introduced. While presenting the Budget, Finance Minister Arun Jaitley had proposed a one per cent excise duty on readymade garments worth Rs 1,000 and above.

“Once GST is introduced, the whole value chain will be covered by duty and traceability as well as compliance will improve tremendously and implementation problems will also ease considerably. Till then, the government must do away with excise duty,” said Rahul Mehta, president, Clothing Manufacturers Association of India.

The excise duty on finished products was an experiment implemented a few years ago by the previous government, which was withdrawn later as it was found impractical.

“We have in the past pointed out that the task of collecting this excise duty from the highly dispersed and mostly tiny units in the garment sector would be a formidable one for the government, especially when the rest of the value chain remains exempted and, therefore, traceability is a serious issue,” said Mehta.

“The large number of small and tiny units in the sector will also find it impossible to follow the procedures involved. The result will be that evaders will prosper and compliant units will suffer. The introduction of the Rs 1,000 cut-off price point for the applicability of excise duty will further complicate and impact the sector.” Mehta added.

Jewellers and bullion dealers have been protesting the excise duty since the Budget was presented in Parliament on February 29.