House approves Bill to provide tax sops for garments sector
A bill to provide tax incentives to the garment sector and enable the government to raise customs duty on marble and granite from 10 to 40 per cent was approved by Lok Sabha on Wednesday after Finance Minister Arun Jaitley said these measures will help in creating jobs and protect domestic industry from import surge. The Taxation Laws (Amendment) Bill, 2016 also seeks to expand the definition of “demerger” with a view to facilitate the splitting or reconstruction of erstwhile public sector companies.
The changes in the I-T Act will give effect to the conditions attached to the transfer of shares by the government, Jaitley said, adding it would enable the Centre to make use of land belonging to the erstwhile VSNL which has remained with the government following privatisation of the telecom PSU 14 years ago.
The taxation amendment bill, which provides for three changes, was passed by the Lok Sabha by voice vote after a short debate. As regards the garment sector, the bill eases the condition for availing tax incentives under Section 80JJAA of the Income Tax Act, 1961. “In view of the seasonal nature of the business of the manufacturing of apparel, there is need to reduce the period of employment of an employee who is employed in this business from 240 days to 150 days,” said the state of objects and reasons of the Bill. The incentive, Jaitley added, is aimed at making Indian “apparel industry competitive, so that they are able to make the cost advantage. I am sure with these incentives, the industry would be able to contribute a large number of jobs.”
As far as customs duty on marble and granite is concerned, he said the measure will give flexibility to the government to raise duty to WTO bound rate of 40 per cent to protect domestic industry from the onslaught of import. The amendments in the Customs Tariff Act is expected to give a boost to marble and granite producers as it will pave the way for hiking customs duty to 40 per cent from 10 per cent on marble and granite blocks and impose quantitative restrictions and import duty to check dumping from China. Jaitley said that currently there are measures like quantitative restrictions and minimum import price to control sudden imports.