Impact of VAT amendment to imported fabric
As per the amendments made to Value Added Tax (Amendment) Act No. 25 of 2018, following exemptions were removed with effect from 16.08.2018.
- Supply or Import of;
fabric for domestic consumption subject to a cess at a specific rate in lieu of chargeability of any other tax payable on importation at the point of entry into the country, as specified in a Gazette Notification issued under the Sri Lanka Export Development Act, No. 40 of 1979
- Import of:
Fabric, specified under the Harmonized Commodity Description and Coding System Numbers for Custom proposes, for the sale in the domestic market without any value addition, subject to the chargeability of a Cess at a specific rate referred to in sub-item (ii) of item (xxxvii) of paragraph (b) of PART II of the First Schedule
As per the letter issued by Ministry of Finance & Mass Media on 20th August 2018 with regard to the VAT Amendment, fabric items classified under following HS codes are liable for VAT w.e.f 16th August 2018.
However VAT rate on fabric has been reduced to 5% w.e.f. 18.09.2018 though initial proposed to charge 15% as VAT.
HS Code | Type of Fabric |
5007 | Woven fabrics of silk or of silk waste |
5111 | Woven fabrics of carded wool or carded fine animal hair |
5112 | Woven fabrics of combed wool or of combed fine animal hair. |
5113 | Woven fabrics of coarse animal hair or of horsehair. |
5208 | Woven fabrics of cotton, containing 85% or more by weight of cotton, weighing not more than 200 g/m2 . |
5209 | Woven fabrics of cotton, containing 85% or more by weight of cotton, weighing more than 200 g/m2 . |
5210 | Woven fabrics of cotton, containing less than 85% by weight of cotton, mixed mainly or solely with man-made fibres, weighing not more than 200 g/m2. |
5211 | Woven fabrics of cotton, containing less than 85% by weight of cotton, mixed mainly or solely with man-made fibres, weighing more than 200 g/m2 . |
5212 | Other woven fabrics of cotton. |
5309 | Woven fabrics of flax. |
5310 | Woven fabrics of jute or of other textile bast fibres of heading 53.03. |
5407 | Woven fabrics of synthetic filament yarn, including woven fabrics obtained from materials of heading 54.04. |
5408 | Woven fabrics of artificial filament yarn, including woven fabrics obtained from materials of heading 54.05. |
5512 | Woven fabrics of synthetic staple fibres, containing 85% or more by weight of synthetic staple fibres. |
5513 | Woven fabrics of synthetic staple fibres, containing less than 85% by weight of such fibres, mixed mainly or solely with cotton, of a weight not exceeding 170 g/m2 |
5514 | Woven fabrics of synthetic staple fibres, containing less than 85% by weight of such fibres, mixed mainlyor solely with cotton, of a weight exceeding 170 g/m2 |
5515 | Other woven fabrics of synthetic staple fibres. |
5516 | Woven fabrics of artificial staple fibres. |
5801 | Woven pile fabrics and chemille fabrics, other than fabrics of heading 58.02 or 58.06. |
5802 | Terry toweling and similar woven terry fabrics, other than narrow fabrics of heading 58.06; tufted textile fabrics, other than products of heading 57.03. |
5804.21, 5804.29 & 5804.30 | Tulles and other net fabrics, not including woven, knitted or crocheted fabrics; lace in the piece, in strips or in motifs, other than fabrics of heading 60.02 to 60.06. Mechanically made lace 5804.21-Of man-made fibres |
| 5804.29-Of other textile materials |
| 5804.30-Hand-made lace |
5806 | Narrow woven fabrics, other than goods of heading 58.07; narrow fabrics consisting of warp without weft assembled by means of an adhesive (bolducs). |
5809 | Woven fabrics of metal thread and woven fabrics of metallised yarn of heading 56.05, of a kind used in apparel, as furnishing fabrics or for similar purposes, not elsewhere specified or included. |
5811 | Quilted textile products in the piece, composed of one or more layers of textile materials assembled with padding by stitching or otherwise, other than embroidery of heading '58.10. |
6001 | Pile fabrics, including "long pile" fabrics and terry fabrics, knitted or crocheted. |
6002 | Knitted or crocheted fabrics of a width not exceeding 30 cm, containing by weight 5% or more of elastomeric yarn or rubber thread, other than those of heading 60.01. |
6003 | Knitted or crocheted fabrics of a width not exceeding 30 cm, other than those of heading 60.01 or 60.02. |
6004 | Knitted or crocheted fabrics of a width exceeding 30 cm, containing by weight 5% or more of elastomeric yarn or rubber thread, other than those of heading 60.01. |
6005 | Warp knit fabrics (including those made on gallon knitting machines), other than those of headings 60.01 to 60.04. |
6006 | Other knitted or crocheted fabrics. |
6215 | Ties, bow ties and cravats of silk or silk waste |
However below exemption is still available as per the Value Added Tax (amendment) Act, No. 07 of 2012.
Exemption on supply of
locally manufactured fabric in the domestic market by any manufacturer who does not enjoy any concessions under any agreement entered into with the Board of Investment of Sri Lanka;
Gazette Notification issued under the Sri Lanka Export Development Act, No. 40 of 1979
Letter issued by Ministry of Finance & Mass Media on 20.08.2018
Custom notification to reduce the VAT rate on fabric to 5% w.e.f. 18.09.2018.
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