Textiles to come under VAT

Textile items would come under the purview of value- added tax (VAT) from the next fiscal year, Empowered Committee Secretary Ramesh Chandra said today.

"From April 1, 2006, the decision is that all textile items would be brought under the framework of VAT. States have agreed that the rate will not exceed 4 per cent," Chandra said at a Traders National Conference here.

The empowered committee of state finance ministers onthe VAT had, in its white paper, stated that items such as sugar tobacco and textiles which are under additional excise duty would not attract VAT in the first year on account of organisational difficulties.

The paper had stated that the position would be reviewed after a year.

Chandra said that a formal notification to this effect would be issued by the centre. At present, the AED is collected by the Centre but given entirely to states.

He also urged traders to assist in convincing the non-VAT states to adopt the new regime. 'Chief ministers of two states have said they will implement VAT if traders agree. We need your (traders) help,' he said.

Uttar Pradesh, Uttaranchal, Tamil Nadu, Pondicherry and five BJP-ruled states of Gujarat, Madhya Pradesh, Rajasthan, Chhattisgarh and Jharkhand "� have so far refused to implement VAT.

Chandra said introduction of uniform vat rates in all sates would benefit the trade and industry as both consumer and wholesale price-based inflation rates had come down since April 1.