Textile industry

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Dolly Ahuja (Querist)
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19 April 2013 Is VAT applicable on semi stiched textile products (Saree/dress). I know that it is applicable on Ready made garments but not on Textile products.
2. Can retail shop selling both readymade garment & exempted textile product get full input VAT credit on purchases made commonly (like printng & stationery, designer material etcs)

It would be compulsory for doing Vat Reg.under Form 101 in name of XYZ( main Co.) where one of its new branch is dealing in Retail now ??
Plz Help ..

CA. Hari Kishan

CA. Hari Kishan (Expert)
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20 April 2013 Textiles goods presently are exempted under all states except Andhra pradesh where it is taxable @ 5.5%. Hence no tax on sales textiles goods if you are selling from any state in India other than AP.

As to claim of input tax on packing material since both taxable and exempted commodities are traded. It is a very subjective thing and you shall be required to reasonable disallow the claim of input tax. Also the law prescribes PARTIAL REBATING scheme as to how to compute the amount of disallowance.

Dolly Ahuja

Dolly Ahuja (Querist)
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22 April 2013 Sir,
But what if hvng a textile industry XYZ , the owner is expanding his business ( new branch) and has started trading in ready made clothes -- Retail.
Then is he liable to get register for VAT in name of his original name of textile industry.since his retail branch is name of main co. name XYZ ??
Becuse VAt is applicable in RETAIL Business of Ready made Clothes.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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02 August 2025 Here's a breakdown of your query regarding VAT applicability and registration for a textile industry expanding into retail:

1. **VAT on Semi-stitched Textile Products (like sarees/dresses):**

* Generally, **textile goods are exempt from VAT** in most states in India.
* **Ready-made garments** are taxable under VAT in most states.
* Andhra Pradesh is an exception where textile goods (including semi-stitched) are taxed at **5.5%**.

2. **Input VAT Credit on Common Purchases for Both Exempt and Taxable Goods:**

* If your retail shop sells **both exempted textile products and taxable ready-made garments**, the input tax credit on common expenses (like printing, stationery, designer material) is **partially allowable**.
* The law prescribes a **partial rebate scheme** that requires you to disallow some input tax credit proportionally.

3. **VAT Registration Requirement for New Retail Branch Under Same Company Name:**

* If your textile industry (say **XYZ**) opens a **new retail branch** dealing in ready-made garments (which are taxable), then yes, you are **required to get VAT registration** for this activity under the same company's name (**XYZ**).
* Since VAT is applicable for retail sale of ready-made garments, registration becomes mandatory for the retail branch even if the main company was earlier dealing only in exempt textile products.

**Summary:**

* Textile goods are mostly exempt except AP.
* Input VAT credit on common expenses must be apportioned.
* VAT registration is compulsory for taxable retail operations, even if run under the same main company.

If you want, I can help you with a sample calculation of input tax credit disallowance or the process for VAT registration under Form 101. Would that help?

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