VAT agitation: textile traders lose Rs. 1,600-cr. business

Bone of contention:Textile traders gather in front of Vastralatha, a hub of textile business in Vijayawada, on Monday.—Photo: Ch.Vijaya Bhaskar  

The ongoing agitation against Value Added Tax (VAT) on textiles is causing a loss of Rs. 1,600 crore business in the city alone. The textile traders are on a warpath for the last 17 days demanding that the State government waive off one per cent VAT on textiles.

There are about 2,000 textile traders in the city doing a business of roughly Rs.100 crore every day. The VAT affects close to 50,000 people, who were either directly or indirectly dependent on textile business in the city. The shop owners would have to bear the brunt due to the VAT in view of the fact that most of them were less qualified, and cannot employ staff to carry out the paper work, they say.

The Vastralatha and Krishnaveni are hubs of wholesale and retail textile business in the city. Huge quantities of clothes and textiles arrive here from States like Tamil Nadu, Maharashtra, Gujarat, Uttar Pradesh and West Bengal, and retailers from neighbouring districts place orders here. If the textiles were brought under Sensitive Commodities List, the traders will have to obtain the Taxpayer Identification Number (TIN). In other words, they will have to submit the waybills for every transaction made as soon as they take the TIN. About three per cent of traders already have TIN.

The traders got a relief when the government accepted to waive off five per cent VAT just a year ago. Sensitive commodities list is a bolt from the blue for the traders, said AP Textiles Federation vice president B. Narasimha Rao. The government introduced VAT, which was not existing in any other State, he said. The Cloth Merchants Association president Chintalapudi Raghuram said that they were waiting for a uniform Goods and Service Tax (GST) in the country. The traders withdrew the strike last year, when the government assured that the GST would be in place. However some States opposed it, he explained. The business will be seriously hampered as the waybills are not easily available, says VAT convener B.J.P. Srinivas. The traders were up in arms against the government policies, including ‘made up tax’ (levied if value addition was to textiles), VAT and sensitive commodities list, he added.

Traders say sensitive commodities list is a bolt from the blue

They are waiting for a uniform Goods and Service Tax