Cabinet approves Tax and Production Incentives for Job Creation in Garment Manufacturing Sector
Cabinet approves Special Package for Job Creation & Export Promotion in Textile & Apparel Sector
Special Package to create 1 Crore Jobs in 3 Years in Textile and Apparel Sector
The Union Cabinet chaired by Hon’ble Prime Minister Shri Narendra Modi has approved a set of tax and production incentives for creating additional employment in garment manufacturing sector. These measures form a part of the special package announced by the Government today, for job creation & export promotion in textile & apparel sector.
The tax and production incentives announced are the following:
Enhancing scope of Section 80JJAA of Income Tax Act
Looking at the seasonal nature of garment industry, the provision of 240 days under Section 80JJAA of Income Tax Act would be relaxed to 150 days for garment industry.
Additional incentives under ATUFS
The subsidy provided to garmenting units, under Amended-TUFS, is being increased from 15% to 25%, providing a boost to employment generation. The package breaks new ground in moving from input-based to outcome-based incentives; a unique feature of the scheme will be to disburse subsidy only after expected jobs have been created.
Employee Provident Fund Scheme Reforms
Govt. of India will bear the entire employer’s contribution of 12% under the Employers Provident Fund Scheme, for new employees of garment industry earning less than Rs. 15,000 per month, for the first three years.
This marks an increase from the present Government provision of 8.33% towards employer’s contribution, being provided under Pradhan Mantri Rozgar Protsahan Yojana (PMRPY). With today’s decision, Ministry of Textiles will provide the remaining 3.67% share towards employer’s contribution, amounting to Rs. 1,170 crores over next 3 years.
Impact in Three Years
This is expected to yield the following impact in three years:
- Increase in exports by 2.6 billion US$
- increase in employment by 12.25 lakhs
- increase in investment by 7 billion US$