Govt to roll back proposed VAT on textile, footwear

Following protests from several MLAs, the Delhi government has decided to roll back the hike in VAT on low-cost footwear and textiles which was proposed in its Budget 2016-17.

Deputy Chief Minister Manish Sisodia, in his Budget speech on Monday, had proposed a VAT of 5 per cent on all textiles and shoes priced at below Rs 500, triggering protests from several AAP MLAs, including Madan Lal, Alka Lamba and Vishesh Ravi, and BJP’s Vijender Gupta.

“The Delhi government has decided to roll back the proposed hike in VAT on textiles and low-cost footwear,” sources said. Sisodia had proposed rationalisation of tax on textiles and fabrics by applying uniform tax of 5 per cent on all varieties, including sarees except khadi and handloom.

“At present, footwear costing above Rs 500 and school bags costing above Rs 300 are taxable at 12.5 per cent. It is proposed to apply uniform VAT rate of 5 per cent on all kinds of footwear and school bags irrespective of their price,” he had said. 

Terming the levy of five per cent VAT as an “onslaught on common man”, Gupta had told the Delhi government. 

Meanwhile, the Delhi Assembly on Wednesday passed the Rs 46,600 crore “tax free” Budget for 2016-17 with major focus on education, health and transport sectors, besides rationalisation of the VAT structure that will bring down prices of ready-made garments, shoes and watches among others.

“It is a Budget connected to the people. In the Budget, we have taken care of every section of the society. Within 24 hours of proposed imposition of VAT on textile and shoes, we reversed our decision.

“Yesterday (Tuesday), a delegation of cloth merchants had come to meet me and demanded the rollback of levy of VAT on textile,” Chief Minister Arvind Kejriwal said.