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Coimbatore, May 30

THE Union Finance Minister, Mr P. Chidambaram, has asked the State Governments to desist from levying sales tax on textile items meant for exports.

The Union Minister said that he was ready to make common cause in this regard with textile manufacturers organisations/trade bodies. The trade can lead delegations to all State Chief Ministers to prevail upon them to spare textiles meant for exports from sales tax, he said.

"States can't levy sales tax on export of readymade garment or hosiery goods. Any levy of sales tax on exports should be either reimbursed or removed," Mr Chidambaram, said while addressing a textile exporters' meet at Tirupur.Mr Chidambaram, who was called upon by textile exporters to compensate for the various taxes including the State levy that pushed up their transaction cost, however made it clearthat there was no substance in their asking the Centre to reimburse a duty levied by the States.

"As for the Central sales tax data on exports, no sales tax has been levied on exports and India does not have an export tax on textiles. There has been no cess on textiles either." Mr Chidambaram said.

Referring to the four per cent sales tax being levied on cotton yarn which as an intermediary product goes into fabric/garment production which ultimately meant for exports , he felt that all the State Governments should extend exemption from payment of sales tax for yarn/fabrics used for exports. Either the tax collected on these items should be reimbursed or the tax on them should be done away with, he said.

(This article was published in the Business Line print edition dated May 31, 2005)
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