Budget 2009-10
As per the IIP data, the textile group consisting of cotton, wool, silk and man-made and jute textiles and
textile products, grew by 7.5 per cent during April-November 2009, compared to 1.0 per cent during AprilNovember 2008. While wool, silk and man-made textiles grew by 13 per cent during 2009-10 (AprilNovember) shrugging off the weak performance in the corresponding period last year, cotton textiles barely
managed a recovery with 3.2 per cent growth. Textile products achieved growth close to 6.0 per cent in
2008-09 and topped it with 9.9 per cent growth during April-November 2009. However, jute textiles which
had slid by 3.9 per cent in 2008-09, declined again by 16.2 per cent in 2009-10 (April-November).Overall,
the production of textile fabrics increased by 10.7 per cent during April-November 2009-10 (provisional).
Major highlights of the budget 2009-10 were following:
1. The Technology Upgradation Fund Scheme (TUFS) and Scheme for Integrated Textile Parks
(SITP) are two flagship schemes of the Ministry of Textiles. TUFS, implemented with a view to
facilitating modernization and upgradation of the textile industry by providing credit at reduced
rates, has been fine-tuned to induce investments in targeted segments. Under the scheme,
`78,307 crore was sanctioned against the project cost of `1,79,856 crore and loans worth `
66,284 crore were disbursed to 25,777 applicants up to June 30, 2009 (provisional).
2. Under the SITP, 40 integrated textiles parks of international standards, covering the weaving,
knitting, processing and garmenting sectors with project proposals worth ` 4,141.39 crore (of which
assistance from the Government is `1,422.43 crore), have been sanctioned. So far, five textile
parks have been inaugurated.
3. One handloom mega cluster each in West Bengal and Tamil Nadu and one powerloom mega
cluster in Rajasthan to be set up. New mega clusters for carpets to be also set up in Srinagar (J&K)
and Mirzapur (UP).
TAX PROPOSALS
Indirect Taxes
Agreement has been reached on the basic structure of GST in keeping with the principles of fiscal
federalism enshrined in the Constitution.
The Authorities for Advance Rulings on Direct and Indirect Taxes to be merged by amending the
relevant Acts.
Tax reform, like all reforms, is a process and not an event. Thrust of reforms has been to improve
the efficiency and equity of our tax system. This is sought to be achieved by eliminating distortions
in the tax structure, introducing moderate levels of taxation and expanding the base and
accompanied by requisite re-engineering of key business processes coupled with automation.
Customs duties
List of specified raw materials and equipment imported by manufacturer-exporters of leather
goods, textile products and footwear industry which are fully exempt from customs duty, subject to
specified conditions, to be expanded.
Customs duty on cotton waste to be reduced from 15 per cent to 10 per cent.
Customs duty on wool waste to be reduced from 15 per cent to 10 per cent.
Central excise duties
Excise duty rate on items currently attracting four per cent to be raised to eight per cent.
Excise duty on manmade fibre and yarn to be increased from four per cent to eight per cent.
The scheme of optional excise duty of four per cent for pure cotton to be restored.
Excise duty for man-made and natural fibers other than pure cotton, beyond the fibre and yarn
stage, to be increased from four per cent to eight per cent under the existing optional scheme.
An optional excise duty exemption to be provided to tops of manmade fibre manufactured from
duty paid tow at par with tops manufactured from duty paid staple fibre.
Suitable adjustments to be made in the rates of duty applicable to DTA clearances of textile goods
made by Export Oriented Units using indigenous raw materials/inputs for manufacture of such
goods.
Service tax
Exemption from service tax being provided to inter-State or intra-State transportation of
passengers in a vehicle bearing ‘Contract Carriage Permit’ with specified conditions.
Two taxable services, namely, ‘Transport of goods through road’ and ‘Commission paid to foreign
agents’ to be exempted from the levy of service tax, if the exporter is liable to pay service tax on
reverse charge basis. However, present cap of 10 per cent on commission agency charges is
retained. Thus there would be no need for the exporter to first pay the tax and later claim refund in
respect of these services.
For other services received by exporters, service tax exemption to be operated through the existing
refund mechanism based on self-certification of the documents where such refund is below 0.25
per cent of FOB value, and certification of documents by a Chartered Accountant for value of
refund exceeding the above limit.
Direct Tax
No changes made in the Corporate Tax rates.
Fringe Benefit Tax on the value of certain fringe benefits provided by employers to their employees
to be abolished.
Scope of provisions relating to weighted deduction of 150 per cent on expenditure incurred on inhouse Research and Development to all manufacturing businesses being extended
Minimum Alternate Tax (MAT) to be increased to 15 per cent of book profits from 10 per cent. The
period allowed carrying forward the tax credit under MAT to be extended from seven years to ten
years.