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Excise duty on Readymade garments – All Latest Updates

Today we discuss on excise duty on Ready made garments , Which dealer will required to do excise registration, rate of excise duty on ready made garments etc.

You need to register, effective excise will be 1.2% on MRP, documents required are attached

When readymade garments industry need to register for Central excise ?

Need to register for central excise if your cross the turnover of Rs 1.5 Cr in a year, also need to intimate to the department once the turnover cross the 90 Lacs limit.

Click here to register your premises under central excise.

Can readymade garments industry claim SSI Exemption?

Yes , SSI exemption can be claimed if the previous year turnover not exceeds 4 Cr than in current year you can sold the goods upto 1.5 Cr without excise duty provided further you cannot claim the cenvat credit on the goods.

Rate of Excise duty  on readymade garments ?

Rate of Excise duty is bifurcated into two things on the basis of Retail price of Goods.

First category – Excise Duty on Ready Made Garments having Retail Sale Price (RSP) of Rs. 1000/- and above they bear or are sold under a brand name.

In this First category two condition need to be fulfilled RSP more than 1000 and goods should bear brand name.

Central Excise duty has been levied with two options in first category with cenvat credit or without claiming cenvat credit:-

First option is to pay Central Excise duty at the rate of 12.5% and claim cenvat credit on inputs.

Second option is to pay Central excise duty at the rate of 2% and can not claim cenvat credit. In this option abatement is available 40%.  Example to know the effective tax –

Retail sale Price 2000
Abatement 800 (40% on RSP)
Effective price for excise duty 1200  (2000-800)
Excise Amount Rs 24 ( Excise duty @2%)
Value of the goods 2024/- (2000+24)

 

Second Category – Goods having RSP less than 1000 or not sold under a brand name.

In this category any one condition need to be fulfilled goods having RSP less than 1000 or goods sold without brand name.

Central Excise duty has been levied with two options in second category with cenvat credit or without claiming cenvat credit:-

First option the optional levy of “Nil (without CENVAT credit) or

Second Option  6% (with CENVAT credit)” in case of garments / articles of cotton, not containing any other textile material 12.5% (with CENVAT credit)” in case of garments / articles of other composition, as the case may be, shall continue.

In Which goods Excise duty is leviable ?

Articles of textiles falling under Chapters 61, 62 and 63 (heading Nos. 6301 to 6308) of the Central Excise Tariff except those falling under 6309 and 6310,

Liability to Pay Excise duty?

Who will pay the excise duty Job worker or Manufacturer, In ready made garment only packing or repacking or labeling or relabeling is considered as manufacturing. So if brand owner does any activity than Brand owner will pay the excise duty.

Note – If the Job worker not comply with the excise the ultimate liability is on brand owner.

Goods news for Readymade garments

Excise officer will not physical visit the premises of readymade garments office while taking the excise number.

About TAX BANIYA

I am passionate about my work , What ever it be . Life has its own way to express , stay positive and keep going . Life doesn't go the way you want, " Learn to adapt and modify". My mantra to be happy in life " Life has always been uncertain why worry ...forget the past , live your present focus it

2 comments

  1. sir when shall be the excise duty become payable? on the removal of goods from job worker’s premises to brand name owner premises or on the sale by brand name owner?

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