VAT on Textiles - AP Traders shut down shops
THE Textile traders in Andhra Pradesh are up in arms against the 5% VAT on textiles imposed by the Andhra Pradesh Government. It seems Andhra Pradesh is the only State in India collecting VAT on textiles – other States are sure to follow soon. Incidentally Tamil Nadu withdrew in July 2011, the VAT it introduced on textiles. With cloth shops closed in AP, the tremors are felt in Surat. About 10% of Surat textile industry's production goes to AP.
But the cash starved and politically disturbed Government of Andhra Pradesh, on a distribution spree of money it does not have, is in no mood to sacrifice the 2000 Crore revenue from textiles.
It is also said that VAT is not the only thing that worries the textile trade – once they pay VAT, other taxes like Income Tax will follow and the thoroughly unorganised trade where hard cash and hardly any cheques are the hard realities, will find their accounts open for scrutiny.