Like wearing branded outfits? Then get ready to shell out more the next time you go shopping. The government on Monday proposed to introduce excise duty on branded ready-made garments and articles made up of textiles with a retail sale price of Rs 1,000 and above from ‘nil to 12.5%’.
“I propose to change the excise duty on branded ready-made garments... from nil without input tax credit or 6%/12.5% with input tax credit to 2% without input tax credit or 12.5% with input tax credit,” said finance minister Arun Jaitley while presenting the Budget.
Apparel giants including Woodland, Madura Garments, Future Retail among others may now find new ways to absorb and pass the implications of the duty.
“While there will be no immediate impact, gradually we need to pass on the increased duty to consumers,” said Harkirat Singh, managing director of Woodland. “The increase of about 4% will be passed to the end consumer,” he added.
Bipin Sapra, partner, indirect tax Ernst & Young, said, “The garments which attracted no duty so far will now fall under 2% excise duty slab going up to 12.5%. On about 65% to 70% of maximum retail price (MRP), 2% of duty will be applied. Hence, the overall impact on MRP will be around 1.4%, depending on the slab the manufacturer falls in.”
Condemning the move, Federation of Industry and Commercial Organisation, said prices of ready-made garments will go up in the range of 2% to 5% depending upon the retail price of the product.
“When consumer sentiments are already low, levy of duty will further hit the demand for items priced over Rs 1,000,” said Sandeep Jain, executive director, Monte Carlo Fashion.