Andhra Pradesh to reduce VAT on textile sales to one percent | SupportBiz

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Andhra Pradesh to reduce VAT on textile sales to one percent

The Andhra Pradesh government has taken a decision to reduce the rate of value added tax (VAT) on the sale of textiles in that state, to one percent, from the earlier rate of five percent, according to an industry body.

The state government, in a Cabinet meeting last Friday, took a decision to reduce the rate of VAT, said A Prakash, President, Andhra Pradesh Federation of Textile Associations.

The state Cabinet has decided to levy VAT of one percent from April 1, 2012, as against last year’s diktat which imposed a five percent tax beginning July, 2011, Prakash said.

The APFTA expects to receive a government notification to this effect in a fortnight or so, Prakash said.

The Cabinet decision will be communicated to the state law ministry. The law ministry’s take is communicated to the chief minister, who then informs the Governor of the state; and from there the state’s Principle Secretary, Prakash said.

The state could earn INR1,000 crore to INR1,200 crore in revenue from the decision to tax textile sales at five percent, a senior AP tax official told SupportBiz in April, while requesting anonymity.

The state government, had last year, imposed VAT on textile sales within the state, by manufacturers, wholesalers and retailers. State-wide protests and an eight-day trade holiday culminated in a meeting with the chief minister on April 22. The two sides agreed to a reduction in the VAT rate.

Traders allege that the state’s commercial taxes department harassed them and confiscated goods for not paying the tax, according to news reports. In some cases, seizes were made because traders had not registered their businesses with tax authorities, news reports said.