Skip to main content

Footwear manufacturers rue high tax, dual rates

By

The proposed tax structure for footwear under the goods and services tax (GST) has manufacturers unhappy.While the 18 per cent tax bracket for footwear priced over Rs 500 could lead to an increase in product prices, the ´dual taxation´ structure will add to their woes, as pricing will get more complex, they say.

GST, many fear, could hit growth prospects of the Rs 30,000 crore domestic industry, already under margin pressure. Signs of worry began to appear soon after the Council announced on Saturday that footwear priced below Rs 500 would be taxed at 5 per cent and the rest at 18 per cent.

Dual taxation has left “scope for distortion” for organised players, says Adesh Gupta, chairman of the Council for Footwear, Leather and Accessories (CFLA) and chief executive officer of Liberty Shoes.“A dual tax structure usually creates confusion and increases complexity.

Also, we were expecting a 12 per cent tax rate at most.While we are still assessing the impact, additional burden will eventually have to be passed on to consumers,” says Harkirat Singh, managing director, Woodland Worldwide.

According to the CFLA, prices of footwear are set to rise up to seven per cent from July. “The government is least bothered about growth of the industry.The 13 per cent gap between the two tax slabs will have to be passed on to the consumers as companies are already under margin pressure,” says Gupta.

Major footwear manufacturers had been lobbying the government through the past year for a uniform tax structure for all categories of footwear.CFLA had made several representations to Finance Minister Arun Jaitley, Commerce Minister Nirmala Sitharaman and other government representatives.

Two of their key demands were to keep footwear under 5 per cent tax bracket and discourage imports from China, which according to the council holds over 20 per cent share of the market by value.

Jharkhand Chief Minister Raghubar Das had written to the finance minister requesting similar tax rates for footwear and apparel, citing the importance of the sector in India´s manufacturing capabilities.

Business Standard New Delhi, 06th June 2017

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more