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Home > Business > Business Headline > Report

Duty on looms to stay

Subhomoy Bhattacharjee in New Delhi | April 22, 2003 14:04 IST

The finance ministry is unlikely to reduce the excise duty on powerlooms or restore the deemed credit facility for the sector in the Finance Bill. It has also decided to remove the distinction between branded and unbranded edible oils, imposed in the Budget for 2002-03.

The ministry issued a notification in April operationalising the norms for claiming the duty set-off by intermediate textile manufacturers like powerlooms under the central value-added tax (cenvat) rules.

Officials of the Central Board of Excise and Customs said the Budget for 2003-04 had brought powerlooms into the tax net and removed the deemed credit facility provided to them in view of the widespread tax evasion by the sector.

They said the new procedure no longer required powerlooms to apply for credit on inputs. The units can simply pay the reduced duty upfront by claiming the duty set-off on inputs in their invoice.

Powerlooms were earlier allowed the deemed credit facility, under which they did not have to produce any tax-related document. Therefore, despite the simplified norms, the units accustomed to negligible paperwork would complain, revenue officials said.

The officials further said a decision on equating the tax treatment for branded and unbranded edible oils was expected this week.

The Budget for 2003-04 has proposed an 8 per cent duty on refined edible oil that is branded and packed for retail sale. The ministry was expected to treat several other processed foods in the same manner, they added. The tax on edible oils yields more than Rs 700 crore (Rs 7 billion) to the Centre annually.

Speaking at a seminar on indirect taxes organised by the Associated Chambers of Commerce and Industry today, CBEC Chairman M K Zutshi said the Budget was a wake-up call to industry to get out of the habit of asking for concessions.

He said the government was disappointed with the attitude of several sectors, which did not realise the need to pay tax in proportion to their income.

Zutshi said despite a turnover of Rs 100,000 crore (Rs 1000 billion), the annual indirect tax revenue from the textile industry was barely Rs 2,000 crore (Rs 20 billion). On the other hand, the Centre was giving tax benefits worth Rs 500 crore (Rs 5 billion) to the sector through various measures, he said.


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