Cheap blanket makers feel VAT pinch

Irked with the Punjab government for not abolishing the value-added tax (VAT) on polar blankets, local manufactures have threatened to shift their units to neighbouring states like Haryana, if action is not taken.

They have given a 15-day ultimatum to the Punjab government on this. The 50-odd blanket manufacturers of Ludhiana have alleged that more than 20 manufacturers have shifted their units to neighbouring states ever since VAT was imposed in August last year It is pertinent to mention here that the imposition of VAT has resulted in the price of blankets rising by almost 10 per cent, which has badly hit the market of these blankets, as the customers have started moving to the relatively cheap blankets being produced in the other states.

The president of the Ludhiana Textile Association, Shakti Jaggi, said, "Since polar blankets are low-priced, starting from Rs 50, we essentially cater for the weaker sections of society. In the case of Haryana, Uttar Pradesh, Himachal Pradesh and Rajasthan, no VAT is imposed, due to which our prices have increased. The businessmen there can still afford to deliver goods at a cheaper price due to absence of any such tax."

He further said it was in August last year that the government brought "blankets of any kind" under the purview of VAT.

"We have to charge industrialists having a sales tax number 4 per cent central sales tax, and those without one, 10 per cent sales tax. After various representations, Chief Minister Amarinder Singh announced that blankets and shawls would be exempted from VAT. He said the department concerned had issued instructions, but due to misinterpretation the VAT exemption was given only in the case of 'shoddy blankets' and not to all kinds of blankets."

"Since manufacturing polar blankets is a manual process, each unit engages about 100 workers. If units shift, there would be massive unemployment as well," Jaggi said.