Centre to bring textile products under VAT
The Gujarat textile industry may suffer heavy losses if the state fails to shift to Value Added Tax (VAT) regime before April 2006. The Central government has decided to bring textile products under VAT from April 2006.
“The textiles, sugar and petroleum products were exempted from VAT chain when the new tax regime came into force from April 1, 2005. The Central government has announced that textile products would be brought under VAT from the next financial year,” said Arun Jariwala, chairman, The Surat Art Silk Cloth Manufacturers Association.
“This would be a very tricky situation for the textile industry. If Gujarat does not implement the VAT from April 2006, the traders of other states would not get set-off against the tax paid by them on the textiles purchased from Gujarat On account of this, for the traders of other states, costing of textiles purchased from Gujarat would be higher than that of textiles purchased from the VAT states,” he said.
“The traders of other states would not find buying textiles from Gujarat beneficial, and would turn to other states. This would naturally lead to a decline in demand for textiles from Gujarat. The industry would have to suffer heavy losses because of this. To avoid such a situation, it is extremely important that the state government shifts to VAT regime from the next financial year,” Jariwala added.A leading textile businessman asked the state government to shift to VAT at the earliest.
More: business-standard.com