The State government decided to withdraw the one per cent Value Added Tax on textiles, giving relief to traders who are on agitational mode since a couple of months.

Over one lakh textile traders had been demanding that the government withdraw the tax till a uniform tax regime is put in place in the country. They lamented that Andhra Pradesh was the only State to implement tax on textiles besides including it under the sensitive commodities category.

The government had constituted a Cabinet sub-committee, under the chairmanship of Finance Minister Anam Ramanaryan Reddy, to study the issue since traders threatened to observe indefinite bandh. The Cabinet panel, which met here on Sunday, favoured scrapping of the VAT and recommended the same to Chief Minister N. Kiran Kumar Reddy in the evening.

Announcing the lifting of VAT amid cheer from representatives of the textile federation, the Chief Minister asserted that his government had no intention of putting traders to inconvenience. But, the government had to take some decisions after he took over the reins to put the difficult financial situation back on the rails.

Rs. 9,000 crore dues

The government was faced with dues of close to Rs. 9,000 crore and hence, decisions like levy of VAT on textiles. The issue was, however, referred to the Cabinet sub-committee in view of the representations made by the trade bodies and a decision to lift the VAT was taken after considering various aspects including the systems in place in other States.

Mr. Kiran Reddy explained the delegation about the welfare measures launched in the State and the government’s commitment to introduce new schemes to cover all the needy.

In the process, the administration had been made transparent.

Mr. Ramanarayan Reddy, his Cabinet colleagues T.G. Venkatesh and G. Prasad Kumar senior officials were present.