Levying excise duty on RMG of Rs1000 or more to hit the industry

In the budget 2016-17, Union Finance Minister Arun Jaitley said that he propose to change the excise duty on branded readymade garments and made up articles of textiles with a retail price of Rs 1,000 and above from ‘Nil without input tax credit or 6 per cent/12.5 per cent with input tax credit’ to ‘2 per cent without input tax credit or 12.5 per cent with input tax credit.

With the Union government levying excise duty on readymade products of Rs1000 or more, the prices of branded garment are set to move up by 2 to 5 percent.

The garment industry in Punjab described the levy as “most deplorable” step and said that prices of readymade garments will go up in the range of 2 to 5 per cent.

Ajit Lakra, Head Textile, Federation of Industry and Commercial Organization and a garment maker said on Monday that prices of readymade garment will go up in the range of 2 to 5 percent depending upon the retail price of the product. They strongly condemn this move of the Finance Minister as it will hurt small and medium size industries that are manufacturing garments for big brands.

Condemning the government for bringing small and medium enterprises engaged in garment manufacturing under the ambit of indirect tax, industry questioned the rationale behind the move when the Centre was pushing for bringing Goods and Service Tax (GST) from next fiscal.