Small cloth manufacturers seek excise duty exemptions on branded garments to continue
Updated: Jul 02, 2014 04:57:42pm
Mumbai, Jul 2 (KNN) Small clothing manufacturers will find it difficult to survive if branded garments are brought under the excise net in the budget.
The Clothing Manufacturers Association of India (CMAI) has made a presentation to the Finance Minister contending to continue excise duty exemptions on branded garments to help the industry come out of the recession completely.
In a representation addressed to Finance Minister Arun Jaitley, the Association said since 80 per cent of the industry is still in the small scale sector, the move to revive excise would be a major deterrent to the survival and growth of these small manufacturers, reported media.
Rahul Mehta, President, CMAI, said the levy, if imposed, would put organised players at a disadvantage, as they compete directly with huge unorganised players who do not pay any tax.
“Nearly 50 per cent of a brand’s annual sales are made at discounted rates, ranging from 30 to 70 per cent. However, excise duty, which is levied at the time of dispatch from the factory, is calculated on the full price. Therefore, the burden of excise on the consumer is nearly twice than the intended levels,” Mehta said.
An excise duty of 10 per cent was levied on branded garments in the 2010-11 Budget by the then Finance Minister Pranab Mukherjee. He increased it to 12 per cent in the subsequent Budget, with 70 per cent abatement.
Later on, the next Finance Minister P Chidambaram removed the levy. The exchequer had to forego revenue of about Rs 1,300 crore because of this move. (KNN/SD)
The Clothing Manufacturers Association of India (CMAI) has made a presentation to the Finance Minister contending to continue excise duty exemptions on branded garments to help the industry come out of the recession completely.
In a representation addressed to Finance Minister Arun Jaitley, the Association said since 80 per cent of the industry is still in the small scale sector, the move to revive excise would be a major deterrent to the survival and growth of these small manufacturers, reported media.
Rahul Mehta, President, CMAI, said the levy, if imposed, would put organised players at a disadvantage, as they compete directly with huge unorganised players who do not pay any tax.
“Nearly 50 per cent of a brand’s annual sales are made at discounted rates, ranging from 30 to 70 per cent. However, excise duty, which is levied at the time of dispatch from the factory, is calculated on the full price. Therefore, the burden of excise on the consumer is nearly twice than the intended levels,” Mehta said.
An excise duty of 10 per cent was levied on branded garments in the 2010-11 Budget by the then Finance Minister Pranab Mukherjee. He increased it to 12 per cent in the subsequent Budget, with 70 per cent abatement.
Later on, the next Finance Minister P Chidambaram removed the levy. The exchequer had to forego revenue of about Rs 1,300 crore because of this move. (KNN/SD)
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