The continued focus on ease of doing business, as highlighted by Finance
Minister Arun Jaitley in his Union Budget augurs well for the industry. But
a section of the textile industry is already pressing the panic button. In
the Union Budget 2016-17, Finance Minister Arun Jaitley has proposed to
bring in high-end readymade garments
under excise duty
net. The
Budget proposed to levy 2 per cent excise duty on branded readymade
garments and made-up articles of textiles
of retail
sale price of Rs 1,000 or more. However, this duty will be applicable only
for those manufacturers who do not claim input tax credit (ITC) popularly
known as central value added tax (Cenvat) paid on various raw materials.
Manufacturers who claim ITC, however, will need to pay 12.5 per cent excise
duty. Until now, excise duty was “nil” on manufactures without ITC
claim and 6-12.5
per cent for those who claimed ITC.