AP textile body opposes 4% VAT on 'made ups'

Plans protest march to Assembly on March 22

The Andhra Pradesh Federation of Textile Associations, the apex body of textile traders in the state, has strongly opposed the imposition of 4 per cent VAT (value added tax) on textiles under the 'made ups' category. Citing unfavourable response from the government, the federation has planned a 'Chalo Assembly' programme on March 22, 2006.

The programme is likely to be attended by around 50,000 people from various districts in the state. A delegation comprising presidents of district textile associations will also submit a memorandum to chief minister Y S Rajasekhar Reddy on the same day.

The relevant GO imposing VAT on bedsheets, blankets, curtains, crochet laces, pillow covers, towels, zari, embroidery articles and other made ups was issued in August 2005.

Announcing this at a press conference on Monday, Ammanbolu Vijay Kumar, president of the federation, said, "We are totally against this GO. As per our knowledge, Andhra Pradesh is the first state in the country that has brought out a GO that imposes VAT under the'made ups' category. We appeal to the government to completely do away with the amendment that has been brought in the AP VAT Act 2005 rather than making any changes to it."

Textiles is exempted from sales tax and only additional excise duty is being levied by the Union government at first point-of-sale (manufacturing point) since 1957.

"Items of mass consumption such as textiles, tobacco and sugar have always paid duty at manufacturing point since 1957," Kumar said.

Minister clarifies

Responding to protests by textile traders over imposition of 4 per cent VAT on 'made ups', minister for Commercial Taxes, K Ramakrishna has stated that even prior to bringing in VAT, sales on all textile made ups derived from powerloom cloth in the state attracted sales tax at 4 per cent under the APGST.

Briefing mediapersons here on Monday, Ramakrishna said, "The definition of 'made ups' is not something new and the same textile items as listed in the APGST now attract tax under VAT. Further, only those dealers whose taxable goods turnover is more than Rs 1 crore pay at 4 per cent." There are about 150-200 dealers in the state who would fall within this category, he said.

"Earlier, there was some confusion on the aspect of sales turnover and we made clarification to the lower level officers," he said.

While dealers with taxable goods turnover between Rs 5 lakh and Rs 40 lakh are liable to pay 1 per cent, dealers having less than Rs 5 lakh turnover are outside the purview of the tax.

The computation of turnover for the purpose of registration and levy of tax under VAT is based on sales of taxable goods and turnover relating to sales of cloth exempted (such as khadi and handloom) is not taken into consideration.