With the announcement of #UnionBudget2016 Finance Minister Arun Jaitley has proposed 2% excise duty on branded readymade garments and made-up articles of textiles of retail sale price of Rs 1,000 or more under the ambit of Central excise on immediate basis i.e with effect from 1st March,2016.

The Revised Rate will be as follows:

The amendments involving increase in the duty rates will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

  • To increase tariff value of Readymade garments and made up articles of textile changes from 30% of retail sale price to 60% of retail sale price.


  • Branded readymade garments and madeup articles of textiles of retail sale price of Rs.1000 or more changes from NIL (without cenvat credit ) or 6% /12.5% (with cenvat credit) to 2% (without cenvat credit) or 12% (with cenvat credit)

Further it is stated that in case the Owner of Trade mark is not manufacturing himself the ready-made garments but getting it manufactured from Job worker then in this case also the principle or the brand owner or merchant manufacturer shall be liable to discharge the excise duty as per rule 4 of Central Excise Rules ,2002.

Now, the Obvious question would be whether the manufacturer of Ready-Made Garment is eligible to the benefit of Small Scale Industries SSI where Excise turnover of Rs 150 Lacs is exempt? The benefit shall depend upon the turnover of the previous year. If the Previous year turnover is less then 400 Lacs then the benefit of SSI can be taken otherwise we would not be able to take benefit.

Please Note that Turnover will be Calculated at 30% of Retail price of goods cleared in previous year for calculation of turnover for SSI purpose.

Since the Excise forms very vital tax compliance a due care is to be taken for timely compliance.

Please feel free to write to [email protected] for any further queries on the above if any.



Jay Parekh

About Jay Parekh

Jay has wide exposure of more than 8 years in field of direct and indirect taxation. Jay focuses on the representation and litigation side of the practice. This includes representing clients in various government authorities like Sales Tax, Income Tax, Service Tax, etc. He consults clients and guides them to reduce their tax exposures due to assessments, surveys, searches, scrutiny, etc. Jay has got a unique bend towards technology apart from tax expertise. He helps the firm to have a forward looking hardware and software implementation.

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