The Orissa government has put on hold the collection of five percent value added tax (VAT) on textiles following protests from traders.
In the state Budget for 2012-13, the Orissa government had announced imposition of five percent VAT on textiles from April 1, 2012.
The move was protested by traders who went on strike and threatened to stop selling textiles procured from other states.
Subsequently, the state Finance Minister Prafulla Chandra Ghadai assured textile traders that the government would look into the issue and the imposition of VAT was put on hold.
The government would now be consulting with neighbouring states of Andhra Pradesh, Madhya Pradesh and Chhattisgarh before finally deciding on the matter.
The Andhra Pradesh government has introduced VAT on textiles, but is yet to implement the same. While the Madhya Pradesh government has announced rollback of VAT after imposing the same, the Chhattisgarh government has slashed VAT rate from five percent to one percent.
Last year too, the Orissa government had announced levying of VAT on textiles at four percent, but subsequently the tax was withdrawn following intense pressure from protesting traders.
Fibre2fashion News Desk - India