VAT on RLNG (re-liquefied natural gas) used as fuel in captive power generation, MP Textile Mills Association has demanded rationalization of VAT imposed on the fuel in the state budget to be presented for 2013-14.

Secretary, MP Textile Mills Association, MC Rawat told DNA said that 13% VAT is imposed on captive power plants of the textile mills.

Rawat said that an input tax rebate of 8% is offered on this VAT later.

However, other states such as Rajasthan and Gujarat charge flat 5% VAT on the RLNG. The industries are demanding rationalization of this tax for long.

The association secretary said that industrial units are forced to pay 13% VAT and their capital remains stuck till the time they receive 8% input tax rebate in refund after a prolonged process and delays.

Rawat claimed that the issue is important as there are 38 textile mills in the state affiliated to the association and all of them have captive power generation facility.

These include; major manufacturers like Anant Spinning Mills, Dhar Textile Mills, Maral Overseas, National Textile Corporation, Pratibha Syntex Ltd, S Kumars Ltd, Vardhman Yarn etc.

Besides, a 15p per unit power cess is imposed on the textile mills who are engaged in captive power generation. The state assembly recently had given a go ahead for abolition of this cess but a notification is yet to be issued in this regard.