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Union Budget: Reduction of customs duty on specified textiles

"In the Union Budget 2016-17, presented yesterday by the finance minister Arun Jaitley, he has proposed a reduction in basic customs duty on specified textiles, including fibers, yarns and fabrics. The minister proposed a cut in basic customs duty on specified fibers and yarns from the existing five per cent to 2.5 per cent. This will benefit both importers and exporters of these fibers and yarns."

 

India Budget 2016 Mixed reaction from textile industry

In the Union Budget 2016-17, presented yesterday by the finance minister Arun Jaitley, he has proposed a reduction in basic customs duty on specified textiles, including fibers, yarns and fabrics. The minister proposed a cut in basic customs duty on specified fibers and yarns from the existing five per cent to 2.5 per cent. This will benefit both importers and exporters of these fibers and yarns.

 

Basic customs duty on import of specified fabrics (for manufacture of textile garments for export) of value equivalent to one per cent of FOB value of exports in the preceding financial year has been exempted subject to the specified conditions. The FM also proposed that tariff value for calculating excise/CVD on readymade garments and made up articles of textiles to be calculated at 60 per cent of retail sale price instead of the existing 30 per cent of retail sale price.

jaitley-budget

The Budget proposes to increase excise duty on branded readymade garments and made up articles of textiles of retail sale price of Rs 1,000 or more from nil to 2 per cent (without CENVAT credit) or from 6 per cent/12.5 per cent to 12.5 per cent (with CENVAT credit). Similarly, excise duty on PSF/PFY, manufactured from plastic scrap or plastic waste including waste PET bottles, is proposed to be hiked from 6 per cent to 12.5 per cent (with CENVAT credit), while keeping it unchanged at 2 per cent without CENVAT credit.

Meanwhile, TEA has welcome the Budget as President A Sakthivel has said the Budget has addressed the demands made by the Association. In his statement, the TEA chief also welcomed the nine pillars of the Union Budget: Agriculture and farmers' welfare, rural sector, social sector including healthcare, education, skills and job creation, infrastructure, financial sector reforms, ease of doing business, fiscal discipline, tax reforms to reduce compliance burden.

Sakthivel while describing the Union Budget as positive said that the focus of infrastructure and initiatives for ‘Ease of Doing Business’ will go a long way in improving the economy as well as reducing the transaction cost. However he expressed his concern on the proposal of excise duty on branded readymade garments and made up articles of textiles with the retail sale price of more than Rs 1,000. This will adversely affect the industry and will also be difficult to administer, he said.

The TEA president complimented the FM for allocating Rs 3,350 crores for Textile Industry which includes Rs 140 crores for amended TUF and Rs 300 crores for Development of Mega Cluster. Sakthivel welcomed the reduction of basic customs duty on specified fibers and yarn from 5 per cent to 2.5 per cent and also he said basic customs duty on import of specified fabrics (for manufacture of textile garments for export) of value equivalent to 1 per cent of FOB value of exports in the preceding financial year being exempted subject to the specified condition.

 
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