India to Impose 10% Excise Tax on Imported Branded Apparel/Textile Made-Ups
The Office of Textiles and Apparel has announced that effective March 1, 2011, a 10% excise tax will be collected on branded apparel and textile made-ups for retail sale in India.
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Tax to Apply to Imports and Domestic Items that Are Not for Export
Previously, apparel and textile made-ups classified under Harmonized System (HS) Chapters 61-63 were exempt from the tax. The 10% excise tax will be levied on both imported and domestically produced products in these Chapters. However, the tax will not apply to products for export.
Tax Change Included in India’s 2011-2012 Budget
The change in the tax law was included in India’s 2011-2012 budget, which was announced on February 28, 2011. In the Finance Minister’s budget speech, he said that:
“Ready-made garments and made-ups of textiles are currently under an optional excise duty regime. A manufacturer is required to pay duty only if he wishes to avail of Cenvat credit. Our garment and made-ups industry has come of age and has shown handsome growth in recent years. As part of base expansion, I propose to convert the optional levy into a mandatory levy at a unified rate of 10%. The levy would however, apply only to branded garments or made-ups and not to those tailored or made to order for a retail customer. Credit of tax paid on inputs, capital goods and input services would be available to manufacturers of these products. Keeping in mind the fragmented nature of this industry, full SSI exemption is also being extended to these products. Export of these items would continue to be zero-rated.”
Indian Finance Minister’s speech is available here.
Indian Central Excise Memo is available here.
Indian Central Excise Notification is available here.
OTEXA announcement is available here.