Govt not to roll back garment excise duty: Sunil Mitra
April, 14th 2011
Despite demands from trade bodies, the government will not roll back excise duty on hosiery and readymade garments, said Sunil Mitra, revenue secretary, Union finance ministry.
The goods and services tax (GST) is going to come sooner or later. There is no scope for leaving out one entire sector out of taxation. From the time of Independence, the sector has been enjoying tax exemption. We tried to impose tax on it between 2002-2004, but it was rolled back. This time we are not rolling it back, said Mitra at an interaction with member of Merchants Chamber of Commerce here today.
In the last Union Budget, the government had announced a 10 per cent excise duty on hosiery and garment products. The garment industry has been urging the ministry to roll back the duty, with the Federation of Hosiery Manufacturers Association of India also calling a strike last month.
The intention of the government was not to tax the small manufacturers and accordingly, exemption to the SSI had been given.The garment industry has been paying VAT and why should it not pay excise? said Mitra.
Mitra said, the government aimed to moderate the tax rate, while increasing the tax compliance. Also, widespread exemptions had led to tax distortions.
The Budget document was aimed at economic growth, without fuelling inflation, he said. Supply side bottlenecks cannot be done away with in one year. The rate at which commodity prices are increasing globally, one has to learn to live with inflation, he said.
The government has set a revenue collection target of Rs 9 lakh crore for the present financial year, he said.
Buoyed by a higher than expected revenue collection, the government expects to end the last financial year with Rs 7.92 lakh crore, against the original target of Rs 7.45 lakh crore, which was later revised to Rs 7.82 lakh crore.