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Punjab slashes VAT on yarn
17 Mar '16
2 min read
The cotton spinning industry in Punjab has welcomed the reduction of VAT on cotton and other yarn from 6.05 per cent to 3.63 per cent in the state budget.
The reduction of VAT had been a long standing demand of the cotton spinning industry. Punjab has around 100 spinning mills, of which 10 mills with installed capacity of 1.5 lakh spindles had closed recently due to unfavourable tax regime. Following the reduction of VAT, the industry is hoping to get a level-playing field to compete with the spinning industry in neighbouring states, The Times of India has reported.
Ginners feel that although the development though has no direct bearing on cotton ginning factories, it will provide some relief as demand for yarn will increase and spinning mills will increase cotton purchases. Ahead of the government announcing the reduction of VAT, the weaving industry in Punjab preferred to buy yarn from spinners from Himachal, UP and Uttrakhand.
"The spinning industry was facing tough times in Punjab due to higher VAT. The spinners from neighbouring states used to sell it at 2 per cent VAT but with reduction in tax rates, the spinning industry will be able to compete," said Bathinda-based Indian Cotton Association Limited (ICAL) former president Rakesh Rathi.
Barnala-based Trident Group spokesperson Rupinder Gupta said, "Reduction in VAT will prove a big relief to Punjab-based spinning industry. Trident has a spinning unit at Dhaula near Barnala. (SH)
The reduction of VAT had been a long standing demand of the cotton spinning industry. Punjab has around 100 spinning mills, of which 10 mills with installed capacity of 1.5 lakh spindles had closed recently due to unfavourable tax regime. Following the reduction of VAT, the industry is hoping to get a level-playing field to compete with the spinning industry in neighbouring states, The Times of India has reported.
Ginners feel that although the development though has no direct bearing on cotton ginning factories, it will provide some relief as demand for yarn will increase and spinning mills will increase cotton purchases. Ahead of the government announcing the reduction of VAT, the weaving industry in Punjab preferred to buy yarn from spinners from Himachal, UP and Uttrakhand.
"The spinning industry was facing tough times in Punjab due to higher VAT. The spinners from neighbouring states used to sell it at 2 per cent VAT but with reduction in tax rates, the spinning industry will be able to compete," said Bathinda-based Indian Cotton Association Limited (ICAL) former president Rakesh Rathi.
Barnala-based Trident Group spokesperson Rupinder Gupta said, "Reduction in VAT will prove a big relief to Punjab-based spinning industry. Trident has a spinning unit at Dhaula near Barnala. (SH)
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