After Punjab government rolled back controversial E-Trip system, yarn makers in the state have now pitched for reducing VAT on yarn in order to compete with the commodity from other states. The state industry is losing out to cheap yarn coming from other states.
Punjab levies 6.6 per cent VAT on yarn while some states like Gujarat, Uttar Pradesh, Rajasthan do not impose any tax on it, resulting in “dumping” of yarn into Punjab.
Punjab Spinners Association President, M M Vyas said the state government should reduce VAT on yarn which has been a long pending demand of the industry to provide them a level playing field.
The state government had abolished anti-tax evasion measure e-trip system on cotton and yarn on January 30 due to which yarn traders claimed that they suffered considerable drop in business. They welcome Punjab government’s step of rolling back e-trip and demanded for addressing VAT issue on yarn on priority basis. Because of high VAT rate, neighbouring states are dumping yarn in Punjab at a cheaper rate which is hitting their business, Punjab Yarn Dealers Association President, Radhey Sham said.
A high powered six-member committee, includitng representatives of trade and industry set up by Punjab government to resolve the issues has already taken up the matter with the concerned authorities. Punjab produces almost 500 tonne of yarn including cotton, acrylic per day.