Increase in import of branded shirts in pieces into Kerala to evade tax

Recently, the Vigilance and Anti-Corruption Bureau (VACB) probed why readymade shirts were shipped into Kerala in parts. There is a 10 percent duty on imported readymade wear, but no tax on cloth. The levy is to protect the local tailoring industry, which employs thousands of people.

It said that it stumbled on a racket that involved major corruption at the border check-posts.

In order to squeeze profits by evading tax, law breakers in the cloth retail sector regularly bribe check-post officials to “fraudulently assess” imported readymade wear as cloth on which there is no levy.

Branded shirts are brought to Kerala in pieces. They arrive in bulk as “cut cloth” and corresponding sleeves from textile and knitwear hubs in neighbouring States. Cuffs, collars, and buttons are dispatched separately.

The pieces are stitched together and retailed through showrooms where, regrettably for buyers, there is no uniform pricing for readymade wear, which accounts for more than half the cloth sales in Kerala.

Investigators said that the finding, among others, is the outcome of a study launched by ADGP Alexander Jacob to identify “corruption risks and integrity gaps” in the State’s revenue collection and public delivery mechanisms.

It is found that the consignments were allowed to pass without checking for contraband.