Maharashtra furnishing fabric sector seeks rollback of VAT

11 Mar '13

2 min read

The furnishing fabric industry of the western Indian state of Maharashtra has urged the state government to announce roll back of the five percent VAT, levied on the sector since August 2012, in the upcoming state budget to be announced on March 20.

In a statement, Rajiv Singhal, Trustee of Bharat Merchants Chamber, said no other fabric segment, except furnishing fabric, has been subjected to VAT levy in Maharashtra, which is not justifiable.

He said the state government already levies VAT at yarn stage, and levying VAT on fabric leads to duplication of tax. The association has already urged the Deputy Chief Minister and Finance Minister of the state Ajit Pawar to end the levy, he added.

Mr. Singhal said earlier several states like Odisha, Rajasthan, Haryana, Jharkhand, Tamil Nadu and Madhya Pradesh that levied VAT on fabric, rolled back the same. However, Delhi and Andhra Pradesh are still continuing with levy of VAT.

If Maharashtra government fails to withdraw the same, it is likely to impact around 12 million people in the state, he added.

Chamber President Yogendra Rajpuria too said that the levy has laid an adverse impact on the state’s furnishing fabric trade and industry, resulting in a major part of the business going to other states like Karnataka, Gujarat and other nearby state.

This has also caused other linked industries such as dyes and chemicals, packaging, transporters and freight forwarders to suffer heavy losses, he added.

The organized and unorganized furnishing fabric industries of Maharashtra contribute around Rs. 600 million and Rs. 510 million, respectively, to the country’s Rs. 12.36 billion furnishing industry.

The Maharashtra government collects about Rs. 60.5 million in VAT on its total sales, however, it is apprehended that the VAT levy and inter-state sales tax on furnishing fabrics would cause the state to lose around Rs. 280 million in revenues, Mr. Rajpuria said.

Fibre2fashion News Desk - India

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