Government Clarifies, Industry Not Happy .

Even while the unhappiness around the levy of 10 per cent excise duty on branded garments carries on, the Union government clarified its position through an ad on the matter. First, it states that the duty is to be paid on a reduced value that is 45 per cent the retail sale price of the garment. Hence the effective rate of duty is only 4.5 per cent on the retail sale price. Moreover, it has introduced a SSI exemption resolution to relieve manufacturers whose turnover was up to Rs 4 crores in the previous year. It clarifies that manufacturers with a turnover of Rs 4 crores in the previous year are eligible for SSI exemption from excised duty of upto Rs 1.5 crores. Moreover, readymade garment manufacturers with retail sale price turnover of up to Rs 8.9 crores in the previous year will get SSI exemption of up to Rs 3.5 crore on retail sale price clearance.

In addition, since manufacturers with annual turnover of over Rs 10 lakh pay VAT and keep record of it, the maintenance of records for central excise duty payment will not add to their compliance. Also full exemption from excise duty will be given on duty paid goods returned to the manufacturer upto 10 per cent of the total clearance value in the preceding fiscal.

However, the industry associations are not too optimistic about the clarifications. As Rahul Mehta, President, Clothing Manufacturers Association of India (CMAI) said, “There is nothing new in this. They have said this from the beginning that where the MRP turnover is less than Rs 4 crores, the unit will be entitled to SSI exemption. If your turnover is less than Rs 9.25 crores, you need a chartered accountant’s declaration that your turnover is less than Rs 9.25 crores.”

Source : fashionunited.in