Maharashtra furnishing fabric industry seeks VAT withdrawal

MUMBAI: The furnishing fabric industry in Maharashtra has requested the state administration to withdraw the 5 per cent VAT imposed on the sector earlier in the forthcoming budget to be announced on March 20.

The state administration through a notification last August had imposed 5 per cent VAT on furnishing fabric, which has severely hit the trade in furnishing fabric trade & industry in the state, Bharat Merchants Chamber President Yogenra Rajpuria said in a statement.

He claimed that this has led to an exodus in furnishing fabric trade and industry from the state to Gujarat, Karnataka and other neighbouring states.

Due to this, allied industries like packaging, dyes & chemicals, freight forwarding, transporters etc., also suffered huge losses, he said.

"In Maharashtra, there is no VAT on fabric except furnishing. Thus, it is not logical to impose VAT on furnishing fabric only. As such, VAT at yarn stage has already been imposed in the state. Hence the notification will lead to double taxation," said Rajiv Singhal, trustee of the chamber.

The association has already made representation to Ajit Pawar, deputy chief minister & finance minister, to abolish the VAT.

VAT on fabric is levied only in Delhi and Andhra Pradesh now. Previously Jharkhand, Odisha, Tamil Nadu, Rajasthan, Madhya Pradesh, Haryana had imposed VAT on fabric but all of them withdrew, he said, adding if the the levy is not withdrawn around 1.20 crore people in the state will be hit.

The national sales of furnishing industry is around Rs 1,236 crore, out of which Maharashtra's share is Rs 51 crore from organised sector and Rs 60 crore from un-organized sector.

The estimated VAT collection on this figure will be only around Rs 6.05 crore in a year, but it is feared that the state will lose Rs 28 crore due to VAT and inter-state sales tax on furnishing fabrics, Rajpuria said.