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The Southern India Mills’ Association

Committed to Foster the Growth of the Textile Industry

Scheme to rebate embedded taxes for garments gets nod

Will help make exports of apparels, made-ups zero-rated
The Union Cabinet chaired by Prime Minister Narendra Modi, on Thursday, approved a scheme to rebate State and Central Embedded Taxes for apparels and made-ups exports.
“This will enable the Government to take various measures for making exports of apparels and made-ups zero-rated. The government has a Rebate of State Levies (ROSL) for these two segments. However, some taxes were not covered under the scheme. The Cabinet decision is to rebate all embedded taxes of the Central and State Governments,” said a press release.
An official of the Ministry said that the new scheme would come into effect when the rates are notified. It is applicable for apparel and made-ups now and will be extended to yarn in the future. “This ROSL for apparel and made-ups will amount to Rs. 6,300 crore revenue foregone per annum,” the official said.
Apparel products currently get ROSL of 1.5% to 1.7%. The Apparel Export Promotion Council said that embedded taxes total up to 5%.
“We have been asking for reimbursement of all embedded taxes and it has been considered for the first time. It will help in making exports zero-rated,” said a spokesperson for the council.
The Union Ministry of Textiles also issued a notification reducing the hank yarn obligation to 30% from the existing 40%, with effect from January this year. Mills that pack yarn for the domestic market had to ensure that 40% was in hank form. This is now reduced to 30%.

www.thehindu.com