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Reduce excise duty on branded garments: ASSOCHAM
Mar '12
Lead chamber the Associated Chambers of Commerce and Industry of India (ASSOCHAM) called for fiscal relief to the textile and clothing industry by reducing 10 per cent excise duty on branded garments to one per cent in line with 130 other items on which a similar levy was imposed in the previous Union Budget as a pre-cursor to the Goods and Services Tax (GST).

The Rs 1.5 lakh crore industry providing direct employment to 60 lakh people has witnessed lowering of growth by 25 to 30 per cent due to hike in excise duty, rising material and labour costs, and increase in interest rates.

“There has been a strong consumer resistance against increase in prices, resulting in a significant drop in demand, forcing retailers to resort to extended discounting and creating further stress on margins that are already under severe pressure,” said The Associated Chambers of Commerce and Industry of India (ASSOCHAM) in a pre-Budget memorandum to the finance ministry.

Sampling costs should be considered as part of research and development expenses, and thus qualify for expenditure deduction under section 35(2AB) of the Income Tax Act. Besides companies, this deduction needs to be extended to partnership firms and sole proprietorships as well.

Due to growing consumer class, rising disposable incomes and arrival of international brands, the domestic market size is expected to reach Rs three lakh crore by 2017 with direct employment opportunities for more than 70 lakh workers.

ASSOCHAM said the domestic branded apparel industry has suffered badly due to ten per cent excise duty and – despite advancing and prolonging discount offers to offload existing stocks – continues with Rs 1,400 crore worth of inventory.

It said reducing the excise duty to one per cent will provide relief to the industry, pave way for rebuilding the growth sentiment and be in line with rollout of the GST.

Associated Chambers of Commerce and Industry of India (ASSOCHAM)

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