The Punjab Spinners Association, in a meeting demanded demanded that VAT be reduced from 6% to 2% through exemption certificate for not paying the advance tax. Members also criticised free power supply to farmers while 13% electricity duty has been imposed on other consumers.
In fact, Punjab’s own industry which has made huge investments in the state is not able to compete with yarn spinners from outside Punjab as state spinners have to pay VAT at 6% on yarn where as spinners from other states pay either 2 % or none as central sale tax (CST), Madan Mohan Vyas, senior BJP leader and president of the association. He added that Delhi, West Bengal and Uttar Pradesh have no VAT or CST on cotton yarn.
The tax disadvantage to the yarn spinners located in Punjab has further compounded the problems of spinners in Punjab as the power tariffs, wages and logistics costs in Punjab are already amongst the highest in the country, alleged the members.
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States such as Rajasthan, Maharashtra, Gujarat and Madhya Pradesh are promoting textile industry in their states by giving tax exemptions and interest subsidy which is posing a big threat for Punjab textile industry. Punjab, on the other hand is losing its niche in overall textile market due to non intervention by the state authorities to make the tax regime competitive to other states.