Punjab govt finally announces reduction in VAT rate on yarn to 3.63pc

The Punjab Government has finally announced reduction in VAT rate on all kinds of yarn except polyester filament, from 6.5pc to 3.63pc. In this regard, the excise and taxation department issued a notification today.

Additional chief secretary (taxation) DP Reddy, who issued the notification on Thursday evening, said new rates would be applicable from Friday.

This will prove very helpful for the hosiery trade and with this, the liablity of the refund will also decrease. Rate of tax on polyester yarn, polyester chips, staple fibre and its waste acrylic fibre will be 6.05 per cent.

President, Punjab Spinners Association (PSA) MM Vyas said that they were worried as the department did not issue the notification. It should ideally have done so at least a week back, before April 1. But finally, they published it before the new financial year started.

According to him, reduction in the rate of VAT would come as a relief for ailing spinning mills. But it could have been a big boost had it been applicable retrospectively.

Vivek Sharma, General secretary, district taxation bar association (DTBA) said that the move would raise construction cost in the state.

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