FM announces relief for readymade garment sector

Under the revised norms, 10% excise would be levied on 45% of the tariff value of retail price on branded readymade garments as against 60% proposed in the Budget. Finance Minister Pranab Mukherjee on Tuesday eased some of the pressure on the readymade garment sector by increasing the abatement available for levy of taxes on retail price of some branded garments and textile made-ups.

“I propose to enhance the abatement of 40% to 55% on the retail sale price. With this relief, a unit will continue to be eligible for SSI exemption in 2011-12 even if it had a turnover based on retail sale price of Rs. 89mn in the current year,” he said.

Under the revised norms, 10% excise would be levied on 45% of the tariff value of retail price on branded readymade garments as against 60% proposed in the Budget.

The Finance Minister, however, retained his proposal of 18.5% Minimum Alternate Tax (MAT) on SEZ developers and units.

With regard to the proposal to reduce basic customs duty on raw silk from 35% to 5%, the Finance Minister said that it was aimed at augmenting the supply to weavers in both handloom and the power loom sector.

Earlier, Mukherjee presented the Banking Law Amendment Bill 2011 and the Constitutional Amendment Bill for introduction of Goods and Services Tax (GST).

Referring to the financial sector reforms, Mukherjee said that the Government proposes to pursue three more financial sector legislations – PFRDA Bill, the Bill on Factoring & Assignment and the SBI Subsidiary Bank Law Amendment Bill.