VAT reduction to have zero impact on shoddy yarn mills

11 Feb '10

2 min read

Though the government states otherwise, the members of Woolen and Shoddy Yarn Mill Association claimed that, the Haryana government's move to slash VAT on mutilated rags and used clothing under the Haryana Value Added Tax Act, 2003, would practically have no significant impact on the woolen and shoddy mills in Haryana, other than simplifying the refund procedure for woolen and shoddy yarn manufacturers.

With around 300 shoddy mills, Haryana's Panipat district is one of the leading producers of shoddy yarn in the world. Industries there utilize mutilated rags imported from foreign countries to manufacture these shoddy yarns.

The State government, in its recently held cabinet meeting proclaimed its decision to cut the rate of tax on mutilated rags under Haryana Value Added Tax Act, 2003 to four percent from current 12.5 percent. As per the government, the decision was taken with an eye to lift the woollen and shoddy yarn industry, stressed on account of recession.

Pawan Kumar Garg, President of All India Woolen and Shoddy Mills' Association, earlier remarked that the VAT on mutilated rags has been fixed at four percent owing to its inclusion in the specified goods category which was not the case earlier.

Association secretary, Suresh Gupta also ruled out the possibilities of the any significant impact on the industry following the decision.

Fibre2fashion News Desk - India

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