Kerala textile trade show discontent over turnover tax proposal

Textile and garment dealers in Kerala show disappointment over the proposal levying a turnover tax of two percent on textile dealers with turnover above Rs.10 million announced in the state budget for 2014-15.

The proposal is expected to raise additional revenue of Rs.1,000 million of the state. But allowing for the levy across wholesalers, dealers, distributors and retailers, this would lead to a 10 per cent rise in textiles for consumers.

The State will also be put to disadvantage as visitors to the South compare prices in individual States to strike the best bargain.

The dealers have demanded withdrawal of turnover tax on textiles. A meeting of the Kerala Textile and garments Dealers Welfare Association held in Thrissur has resolved to stop purchases from April 1 in protest.

Ban on purchases will be officially declared in the next meeting of the State Council to be held at Ernakulam by end of next month, last of the financial year.

Kerala being largely a consumer State, depends entirely on supplies of textiles and readymades from neighbouring States to meet its demand.
The tax will lead to flight of trade to these States where same products are available at a cheaper rate, say TS Pattabhiraman and K Krishnan, office-bearers of the Association.

Tamil Nadu and Andhra Pradesh introduced value-added tax but had to withdraw it in the face of protest from trade and general public. The association also noted with concern the proposal to introduce turnover tax of two per cent on textile articles. No other State levies tax on textiles, as the State stands to lose a substantial volume of business in this manner.