Textile Committee Cess abolished

The government today decided to abolish Textile Committee cess on ready made garments. 8220;The exemption of ready made garments from Textile Committee Cess will rationalise cess and tax burden on ready made garments and improve their competitiveness in global markets,8221; Information and Broadcasting Minister Priyaranjan Dasmunsi said after a Cabinet meeting.

The cess, which comes to 0.05 per cent of the production value of textile industry, is used to fund the activities of Textile Committee and came into effect in July 1977. The Committee in turn was set up by an Act of Parliament in 1963 to ensure quality of textile and textile machinery. The collection of the cess in fiscal 2005-06 was Rs 52.65 crore of which garments accounted for Rs 17.50 crore.

The cess was originally introduced to fund the committee8217;s activities like mandatory pre shipment quality inspection. Though the inspection was role was subsequently withdrawn as part of liberalisation of the industry, the collection of cess continued. At the time of introduction the rate of the cess was 0.025 per cent of the value of the product which was later doubled to the current level.