In a move that will give relief to several people associated with the khadi industry,the Gujarat High Court has directed the state government to exempt establishments affiliated with the Khadi Gram Udyog (KGU) and the Khadi Village Industries Commission (KVIC) from value-added Tax (VAT) in the state.
These units were asked to pay up to 4 per cent of the VAT on Khadi and related products. Narayan Prajapati,president of the Mahagujarat Gram Udyog Mahasang (MGUM) said: The court has asked the government to exempt the khadi related establishments from VAT.
Establishments affiliated with KGU and KVIC were earlier given exemptions in sales tax,which were curtailed after VAT was introduced. This had put an additional burden on these organisations. There are about 700 such establishments employing about 75,000-80,000 people.
Moreover,the state government withdrew the benefits given to these establishments after the implementation of VAT. The MGUM had represented these establishments several times,asking the government to exempt these units from VAT. However,the government did not take any concrete steps.
The main objective of the KGU and KVIC is to increase employment opportunities in the rural areas of the country.
The rural workforce in the handicraft industry comprises mostly women and people from the weaker section of the society. The other objectives of KGU and KVIC include increasing the production of khadi and other traditional handicraft items so that they are not only sold all over the country,but are exported abroad as well.
For those units that have already paid VAT after the petition was filed,the court has directed the state government to refund the amount, Prajapati said,adding: This has come as a relief for the thousands of people associated with the khadi industry.