The state government on Sunday lifted value added tax (VAT) on textile goods. Chief minister Kiran Kumar Reddy also directed the officials to withdraw the government order issued last year levying 1% VAT on textiles.

The decision taken at a cabinet sub-committee meeting followed a series of deliberation between a group of ministers and traders' representatives on Sunday. Textile traders in Andhra Pradesh had been agitating for long, demanding removal of VAT.

"It was a long pending demand of the traders to abolish VAT on textiles. The cabinet sub-committee took the decision to recommend withdrawal of the tax. The CM consulted the officials and discussed with the traders before deciding to free textile goods from VAT," said finance minister Anam Ramanarayana Reddy who headed the cabinet sub-committee on VAT on textiles.

Ministers TG Venkatesh, G Prasad Kumar attended the sub-committee meeting, while the other members Danam Nagender, D K Aruna, and Botsa Satyanarayana consented the decision.

Five per cent VAT was imposed on textile goods in 2010, but it was reduced to 1% in April last year following month-long agitation by traders .