The furnishing fabric industry in Maharashtra has requested the State administration to withdraw 5 per cent VAT imposed on the sector in the forthcoming Budget to be announced on March 20.

The State administration, through a notification last August, had imposed 5 per cent VAT on furnishing fabric, which has hit the furnishing fabric trade and industry in the State, the Bharat Merchants Chamber President Yogenra Rajpuria said in a statement.

He claimed that this has led to the exodus of the furnishing fabric trade and industry from the State to Gujarat, Karnataka and other neighbouring States.

Due to this, allied industries such as packaging, dyes & chemicals, freight forwarding and transporters had also suffered huge losses, he said.

“In Maharashtra there is no VAT on fabric except on furnishing. Thus, it is not logical to impose VAT on furnishing fabric only. As such, VAT at the yarn stage has already been imposed in the State. Hence, the notification will lead to double taxation,” said Rajiv Singhal, trustee of the chamber.

The association has made a representation to Ajit Pawar, Deputy Chief Minister and Finance Minister, to abolish VAT.

VAT on fabric is levied only in Delhi and Andhra Pradesh now. Previously Jharkhand, Odisha, Tamil Nadu, Rajasthan, Madhya Pradesh and Haryana had imposed VAT on fabric but all of them had withdrawn it, he said, adding if the levy is not withdrawn around 1.20 crore people in the State would be hit.

Domestic sales of the furnishing industry is around Rs 1,236 crore, of which Maharashtra’s share is Rs 51 crore from the organised sector and Rs 60 crore from the unorganised sector.

The estimated VAT collection on this figure will be around Rs 6.05 crore in a year, but it is feared that the State will lose Rs 28 crore due to VAT and inter-State sales tax on furnishing fabrics, Rajpuria said.

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