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Orissa traders protest VAT on textiles
Jun '11
Demanding an immediate rollback of Value Added Tax (VAT) on textiles, textile traders all across Orissa observed a bandh on June 7.

The traders claimed that Orissa is the first State which has subjected textile fabrics to a levy of four percent VAT from May 3, 2011. Earlier, Jharkhand and Rajasthan had levied VAT on textile items, but roll-backed the same following protests by traders.

After the introduction of VAT, the prices of Orissa textiles have gone up in comparison to its adjoining States of Jharkhand, Andhra Pradesh, Chhattisgarh and West Bengal. This would prove detrimental for the wholesale traders as many of the retailers would now opt to procure textile products from neighbouring States.

Textile prices in Orissa have gone up by six percent as besides four percent VAT, the State government is also charging two percent entry tax. The traders are expected to observe a strike on June 8 also, when they would take out a protest march.

The total turnover of State's textile industry, which has around 700,000 textile traders, comes to around Rs. 200 billion.

Earlier, on May 19, textile traders had submitted a memorandum to the State Chief Minister Naveen Patnaik requesting withdrawal of VAT. He assured that he would look into the matter and urged the traders to not to proceed with their protest plans scheduled for May 24 and 25.

Following this assurance, the traders had dropped the protest plans, but the government did not act. Subsequently, the traders met the State Chief Secretary BK Patnaik, but nothing materialized. The traders assert that they resorted to protest as they were not left with any other option.

On June 7, around 3,000 traders in Cuttack kept their shops shut and carried out a protest march. Calling the State government's imposition of VAT as illogical, they demanded that the tax levy should be immediately withdrawn.

It is being claimed that due to the State government's arbitrary decision, the traders are suffering heavy losses. This is mainly because the State meets its overall requirement for textiles from other States, and if the tax is levied, the traders would be compelled to pass on the burden to customers.

A delegation of wholesale textile merchants from Berhampur also handed over a memorandum seeking withdrawal of VAT to the Joint Commissioner of Commercial Tax. It was addressed to Finance Minister Prafulla Chandra Ghadei.

The States were allowed to levy tax on textiles after passing of the Union Budget 2011-12. Textiles were earlier exempt from VAT, as they were subjected to Additional Duties of Excise (goods of special importance) Act, 1957. Presently, around 550 products are subject to VAT.

Fibre2fashion News Desk - India

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